CIBC: iPhone Demand Has Seen Significant Decline

CIBC's Ittai Kidron is out with monster call on Apple (NASDAQ:AAPL) saying based on their store checks, they believe that demand for the iPhone has seen a significant decline in the past 10 days. CIBC has noticed decent inventories at stores, and thin demand at best. In fact, most Apple store visitors were not looking at the device and only a very small subset bought it.

With the weakness, they wouldn't be surprised to see AT&T and Apple step up their marketing efforts. Firm's channel checks suggest Apple is actually looking to introduce a 3G version of the iPhone for the U.S. market in November, ahead of the holiday season and earlier than currently expected.

Recent survey of iPhone buyers suggested that the key shortcoming of the current device is its poor data connectivity [EDGE network]. This isn't a surprise and Apple's CEO Steve Jobs admitted the iPhone's cellular connectivity can use an improvement. CIBC now believes the "improvement" could come soon.

Notablecalls: AAPL stock is going to get hit today. Big time! Positive iPhone flow has driven AAPL up 50 bucks over the past months. CIBC's call will erase some of this.

I expect to see 5 bucks of downside today. Actionable call! Short at will!

P.S.: Note that ThinkEquity upped their target on Synchronoss (NASDAQ:SNCR) yesterday to $44 from $36 based on increased expectations for the iPhone. The stock was also added to Think's Top Picks list. SCNR has enjoyed a nice run, fueled by iPhone flow. I would not be surprised to see weakness in SCNR following CIBC's call.

Disclosure: Author has no position in AAPL or SNCR

See also: AT&T Compensating Apple Handsomely for iPhone -- TheStreet

Comments

[akieiwasaki:]

The Edge network is $20 a month. This is a lot cheaper than 3G. The two year cost of the iPhone is less than my current Smartphone. In January Steve announced that they would add 3G to the iPhone.

2007 Jul 24 06:27 AM

[kkeenan3:]

A monster call or a hatchet job? The note is filled with silly anecdotal information (according to Kidron, most Apple store visitors were not looking at the device and only a small subset bought it. We have noticed decent inventories at stores, and thin demand at best) and short on facts. This is precisely the kind of vague research note you would expect from an analyst that DOES NOT EVEN cover Apple shares. I will be looking forward to Kidron's follow up note on Thursday after Apple puts up a blockbuster quarter due to surging Mac sales and a very strong iPhone launch. But, then again, he does not cover Apple shares so I doubt we will get the follow up.

2007 Jul 24 08:53 AM

[peter:]

Stability from fact...let's all remember AT & T stated that they had some issues relative to the flood of activations on the IPhone. Their current quarter only allowed for 30 hours of transactions. Likely the overwhelming activation issues curtailed the reporting numbers. Should I also remind you that ALL AT&T stores sold out of the IPhone within 4 days and 80% of ALL APPLE STORES SOLD OUT during the same period.

Remember what happened during December right before the Apple quarterly report...Some One and I won't mention names reported that Steve Jobs was NOT OUT OF THE WOODS on options back-dating...That dropped the stock price $12 in 3 days, allowing those that were late to the game to get in at $82.00 Well folks the same is true today.

I'll even stick my neck out and say that from June 29th till today, IPhone sale are in the neighborhood of 1.1 million, MAC CPU sales increased 6% and ITV remain at expectations while IPOD sales remain strong. And while Estimates range from $0.64 from AAPLE to $0.72 Wall Street, I'll bet the numbers are closer to $0.82.

2007 Jul 24 09:20 AM

[Neil Anderson:]

Looks like you were a tad optimistic ... Apple closed today down $8.81.
Cheers, Neil www.cyclelogicpress.co...

2007 Jul 24 04:57 PM

[peter:]

Speculation not substantiation...key your eyes peeled

2007 Jul 25 08:43 AM