Oh Apple, About That 'Win' You Thought You Got...

| About: Apple Inc. (AAPL)

There's dumb, there's really dumb, and then there's Tim Cook:

Samsung Electronics, the world's largest technology firm by revenue, raised the price of mobile processor supplied to Apple by 20% recently, Chosun Ilbo reported Monday, citing a person familiar with negotiations between the two tech giants.

"Samsung Electronics recently asked Apple for a significant price raise in (the mobile processor known as) application processor," the person was quoted as saying in the report. "Apple first disapproved it, but finding no replacement supplier, it accepted the (increase.)"

Suing someone who is a single-source supplier is usually one of the dumber things you can do, as they're quite capable of making sure that any judgment you "receive" comes right back to them and out of your hide.

This is especially true when you try to sue because you "patented" a box with rounded corners.

So, let's see if we get this right -- if Apple (NASDAQ:AAPL) pays $20 (for example) for these application processors, it now pays $24. At 200 million units that's a cool $800 million annually that Apple gets to swallow. (Incidentally, the various BOM analysis sites say that the actual cost on that chip is somewhere between $14 and $28 in quantity depending on the generation - I4, I4s or I5 with the chips being the A4, A5 or A6 -- so this is a fairly-decent estimate.)

It requires an amazing of arrogance to take actions that are this self-destructive. The hubris required to file and maintain such a suit without recognizing that this is likely to be the result, and thus you will lose even if you win, is the hallmark of management that has its head so far up its ass that they will happily march the entire company right off the cliff and onto the rocks 300' below.

This isn't a small mistake, it's a marker of a company that is bereft of basic logic in the executive suite.

Disclosure: No position at the present time but I've been quite happy with the short side of late and likely will be again.

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Tagged: , Personal Computers
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