January 15, 2013
Apple iPhone Orders Not Being Slashed, According To Analysts
Michael Harper for redOrbit.com — Your Universe Online
This weekend, the Wall Street Journal released a troubling report about Apple´s iPhone– specifically the iPhone 5– claiming that the company has had so much trouble selling the phone that they´ve had to cut orders for components in half.
The report was troubling because all indications previous to this report showed strong iPhone 5 sales. Adding to the somewhat unbelievable report is the way the numbers were reported. Early on, the report cited Nikkei as saying Apple had halved their order of 65 million units for the upcoming quarter. Nearly one day later, the Journal removed any reference to 65 million units, but kept the words “in half,” implying that Apple was still having trouble moving these phones.
As one might expect, this story ruffled many feathers and has opened the door to plenty of debate on when Apple typically begins to decrease their orders before a new iPhone launch and if a new iPhone is in the works. Today, one analyst is saying the iPhone 5 is still selling quite well and worriers needn´t be afraid.
Shawn Wu, analyst with Sterne Agee wrote a note to investors today saying that any cut in Apple´s order to component suppliers is not an indication of weak sales. In fact, Apple may be cutting their orders because they´ve improved the process, resulting in "much improved yields meaning lower component builds and supplier shifts,” said Wu in a CNET interview.
"As far as we can tell, iPhone 5 demand remains robust,” he added.
Another analyst, William Power with Baird, agrees with Wu, saying his firm is "actually raising our calendar fourth quarter iPhone forecast slightly.” Both Wu and Powers agree that demand remains strong for the iPhone 5.
As the Wall Street Journal piece was released over the weekend, shares of Apple stock dipped below $500 on Monday as investors became worried about a sudden collapse in demand for the best-selling smartphone. Yet, even as this report made headlines, something about the story didn´t ring true.
The iPhone 5 burst onto the scene with record breaking numbers, selling more than 5 million units in its first 3 days of availability. The latest numbers from Apple´s holiday season showed that some 50 million iPhones were sold last quarter. Furthermore, Verizon has said in an SEC filing that they activated 9.8 million smartphones last quarter with “a higher mix of Apple smartphones.”
It seems as if many analysts are quick to disagree with the WSJ story today, each noting that any cuts are a direct result of Apple improving their manufacturing process. Furthermore, the Journal´s claim that Apple cut their order “in half” is also under question.
According to NPD DisplaySearch analyst Paul Semenza, Apple may have only cut their order down from 19 million displays to between 11 and 14 million, nowhere near “in half.”
John Gruber of DaringFireball.net summed up the news storm rather succinctly, saying yesterday: “If you don´t smell stock manipulation here, I have a bridge to sell you.”