Claims of weakening demand for Apple's iPhone 4S disputed
Taiwan's Commercial Times cited unnamed sources in reporting that Apple has cut orders for the iPhone 4S and iPad 2 leading into the fourth quarter of calendar 2011. The report claimed that sales for the iPhone 4S in particular have not been as strong as Apple anticipated, prompting the company to reduce shipments by 10 percent to 15 percent.
But that report was quickly disputed Wednesday morning by analyst Maynard Um with UBS Investment Research, who said the claims are entirely "without merit." He cited his own sources who said that the iPhone 4S continues to see strong demand as it continues its rapid expansion to new countries around the world.
In addition, Um said that various Apple suppliers indicated they have seen strength going into the holiday buying season, which also contradicts any claims of weakening demand. He said that if Apple were to be reducing orders for any product, it could be the iPad, though he shared no evidence of Apple reducing orders for its touchscreen tablet.
Separately, analyst Mike Abramsky with RBC Capital Markets also pounced on the report out of Taiwan, noting that it's at odds with the strong sell-through the iPhone 4S has seen thus far at multiple carriers in countries around the world.
"One explanation is that the reduced orders (if true) may be related more to AAPL pulling back its typical over-ordering of components... to secure availability, particularly for this high profile launch during the holidays, rather than slowing sellthrough vs street expectations," Abramsky wrote in a note to investors.
He noted that online availability of the iPhone 4S remains at shipping times of one to two weeks. He also said checks conducted on Nov. 4 showed the iPhone 4S is the top smartphone at all major U.S. carriers: AT&T, Verizon and Sprint.
Gene Munster of Piper Jaffray also chimed in Wednesday morning, calling any talk of reduced iPhone 4S orders from Apple "off base." He remains confident in his forecast of 26 million iPhone sales for the quarter, and 112.5 million in calendar year 2012, both of which would be new records for Apple.
Munster and his team polled 30 Apple retail stores this Monday, and 17 of them, or 57 percent, indicated they were completely sold out of iPhone 4S units. Of the remaining 13 stores that had stock, none of them had availability of all of the different models.
"Given the stock outages at U.S. Apple stores nearly one month after the launch, we believe it is unlikely that Apple would cut production, when it clearly cannot build iPhones fast enough to meet demand," Munster said.
The claims by the Commercial Times are especially surprising because the iPhone 4S has already gotten off to a record setting start. Sales of Apple's latest smartphone topped four million in its first weekend alone, and during his company's quarterly earnings conference call last month, Apple Chief Executive Tim Cook said he's confident that a new record for iPhones will be set in the current holiday quarter.
Since then, strong sales have been a continued storyline for the iPhone 4S, with one report earlier this week indicating that 85 percent of Apple's retail stores are seeing daily stock-outs of the company's flagship smartphone. International interest has been strong as well, as preorders in Hong Kong sold out in just 10 minutes last week, while South Korean carriers sold 200,000 units in the first day of preorders.
44 Comments
Commercial Times' track record is pretty lousy. My favorite is their insistence that Apple was going to produce a netbook in 2009. Not only did they make that prediction, but they claimed that Wintek would do the assembly and that the panels had already been ordered. Probably using the same unnamed sources.
Commercial Times' track record is pretty lousy. My favorite is their insistence that Apple was going to produce a netbook in 2009. Not only did they make that prediction, but they claimed that Wintek would do the assembly and that the panels had already been ordered. Probably using the same unnamed sources.
Quoting Commercial Times (Taiwan) is like quoting Paul Thurrott or Rob Enderle on Apple products.
That being said, IF there is any reason for a reduction in component supply purchasing it is probably due to re-sourcing or updating to newer/different components, say like a shift from hard drives to SSDs for example.
Anecdotally that hasn't been my experience. On top of that it goes against past iPhone trends without showing any signs to suggest such a change in interest.
Nothing more than market manipulation here, IMHO. Rumors, rumors, and more rumors: the easiest way to drive AAPL (or any other equity) down.
Commercial Times' track record is pretty lousy. My favorite is their insistence that Apple was going to produce a netbook in 2009. Not only did they make that prediction, but they claimed that Wintek would do the assembly and that the panels had already been ordered. Probably using the same unnamed sources.
Sounds about right.
The only reason they might have reduced orders slightly (but likely more like 5-10% at some factories) is because they need to use some production lines to gear up for the iPad 3 if it is going to come out in the first half of Q2. But I suspect they aren't and never were. I think part of the whole thing with moving the iPhone to the beginning of Q1 was to get the iPhone kicking off the fiscal year and to get the rollouts closer together to try to reduce resellers from pulling their stunts of buying to ship overseas because X isn't getting it for 3 months.
Now that the iPhone is top of Q1, the iPad will likely be more like the end of Q2 to top of Q3 so there's no need to bother with stock pilling now, wait until January and start that. This info is likely totally wrong or it is old info based on old trends that aren't being applied this time. Or they just read it wrong. Perhaps the whole thing was that after they get past the launch rush they would reduce the lines as demand slowed by 10-15% (which hasn't been triggered yet). Whatever it is, I don't trust them to have sources reliable enough to take it as they say it.