RBC Sees Buying Opportunity In iPhone Component Order Cut

Apple Inc. (AAPL) shares have bounced back somewhat after rumors of iPhone component order cuts led to a big dip on Tuesday. The reports were confirmed the next day, with RBC Capital Markets’ contacts in the supply chain world indicating that orders for 2007 were cut from 8 million to 5 million.

So what?

With Apple executives confirming that iPhone demand is meeting expectations and RBC’s checks showing sales momentum for the much-hyped smart phone remains healthy, analyst Mike Abramsky sees a buying opportunity for investors.

He spoke with Apple’s vice president of Worldwide iPod and iPhone Product Marketing, Greg Joswiak, who indicated that there is no pressure to stimulate demand by cutting prices.

Meanwhile, the 5 million component order number is in line with RBC’s forecast for 3.7 million iPhone unit sales in 2007, which is based on demand and sales, not production data, Mr. Abramsky wrote in a note to clients. He maintained his “outperform” rating and US$175 price target on Apple, while advising clients to buy shares on weakness related to the expected volatility from developments and glitches with the iPhone.

Comments

[Neil Anderson:]

Looks like a buying opportunity.

2007 Aug 03 01:05 PM