Apple Inc. (AAPL) stalled Internet sales of its products in Russia on account of the economic instability in the nation and the consequent volatility in its currency, the ruble.
The online store was closed by the iPhone-maker. Its workers have been asked to carry out a price review. However, Apple didn’t mention any time frame for reopening its online stores in Russia. Til that time, users in Russia will have to keep themselves contented by purchasing Apple’s products from third-party outlets only.
Of late, the Russian currency has been witnessing significant devaluation owing to to the dual problem of European sanctions against President Vladimir Putin’s regime and declining oil prices.
In spite of the government’s endeavors to control volatility, such as raising interest rates, the currency has shown no signs of improvement.
The ruble has fallen approximately 30% against the US dollar since Jan 2014.This, in turn, has compelled companies that sell foreign goods in Russia to pass on the increased cost of importing goods to customers in the form of a price hike. Apple was no exception.
Apple recently launched its official online store in Russia but the site was closed the following day pending an adjustment of prices for iPhones, iPads and computers. It was again reopened on Nov 26, 2014 but with average price increases of 25% for its latest smartphones, iPhone 6 and iPhone 6 Plus.
We believe that even this price hike failed to ensure profitability for Apple in the nation and it had to resort to the drastic decision of closing its online store.
We believe that taking a cue from Apple’s closure of Internet sales in Russia, very soon other tech giants including Lenovo, Hewlett-Packard (HPQ), Sony (SNE) and Google (GOOGL) are likely follow suit. This, in turn, may reduce the available choices for brand-conscious Russian consumers.
Currently, Apple sports a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment