As per CNBC, Russian customers who might have been shopping for online for Apple Inc (NASDAQ:AAPL)’s products were met by a surprise message saying that all online sales to that country had been put on halt till further notice. Attributing this latest and drastic development to unprecedented Ruble fluctuations which shook the currency market on Tuesday, 16th December, 2014, Apple’s spokesperson Alan Hely explained –
“Our online store in Russia is currently unavailable while we review pricing. We apologize to customers for any inconvenience.”
Having opted to settle for an online position in Russia as against a brick-and-mortar store, Apple Inc (NASDAQ:AAPL) has been selling its products since 2007 via direct sales. But now even that option has been cut off and although the tech giant may be the first high-profile American corporate to flee the communist country, it is definitely not the last. With Russian economic debacle now becoming a reality more than ever, American entrepreneurs are doing all they can to salvage their revenue and quit before the collapse occurs.
Playing a big role in this crisis is the falling price of crude Brent Oil over the last couple of months. For an economy which depends on oil exports as a major source of revenue, it has been hard hit by the fact that oil is now trading at half the price per barrel, thus causing the devaluation of Ruble against the American Dollar. Political spat between the two countries over Ukraine has also had its impact and companies like Apple Inc (NASDAQ:AAPL) have had to put up with sanctions and re-adjust their pricing in accordance with developments.
Ultimately, it is a question of revenue and the following comment by analyst Andrew Bartels of Forrester Research Inc sums up the bottom line –
“Anything you earn there now in rubles is going to be coming back to dollars or into euros at very depressed rates, so the bottom line for tech vendors right now should wisely be pulling back from Russia as Apple has done.”
With an economic slowdown looking imminent on a global scale courtesy of the Russian economic crisis, Apple Inc (NASDAQ:AAPL)’s CFO, Luca Maestri is likely to be busy performing a lot of calculations in the near future.
This article has been written by Vinita Basu.