Apple's iPhone Shortage Is Probably Just That

So here we are again, wondering about missing Apple (AAPL) iPhones.

The last time this became an issue, the question was why Apple’s iPhone unit sales were so much higher than the sales being reported by AT&T (T), its exclusive partner in the U.S. The Street tossed around two explanations. One theory was that partner inventories were too high; the other was that an extraordinary number of phones were being purchased here but then “unlocked” for use on unauthorized carriers around the globe.

Now it’s a new issue. This time, the question is why Apple stores seem to have run out of iPhones.

Yesterday, Piper Jaffray’s Gene Munster theorized that there is an 80% chance that the lack of iPhones in Apple retail stores means a new, 3G version of the phone could arrive sooner than expected.

But Bernstein research analyst Toni Sacconaghi thinks there is another explanation.

Sacconaghi examined the situation in a research note this morning. He points out that both 8GB and 16 GB iPhones are completely out of stock at essentially all Apple retail stores. On the other hand, he notes that both models appear widely available in AT&T stores. And he says both models are in stock at O2 and Carphone Warehouse stores in the U.K. They are available as well at Orange in France and T-Mobile in Germany.

Sacconaghi does not agree with Munster’s explanation of the lack of supply in Apple retail stores. He thinks the most likely explanation is a production shortfall, “possibly due to a component shortage.” He notes that if supply is tight, it would be in Apple’s interest to ship to distribution partners over its own stores, especially late in the quarter. Why? Because shipments to partner stores are recorded as sales; shipments to Apple’s own stores are not.

Sacconaghi also notes that there is no reason that demand for the phones would have taken a sudden jump - no new models, no price cuts and no other obvious catalysts. He points out that Sony Ericsson several weeks ago cited unspecified component shortages in its recent lower-than-expected sales report.

Inventory shortages of Apple products do sometimes indicate a product refresh, Sacconaghi concedes, but he does not think that is the case this time. For one thing, he notes that 3G phones would be particularly important for the European market, where the phones are freely available. He also notes that Apple yesterday released three new Apple TV ads, none of which highlighted any new features. He also notes that the stock-out seems too selective to signal a new model: “Apple’s distribution partners would likely be extremely upset if Apple managed the product transition only for its own stores,” he says. The evidence, he contends “rules out that the stock-out is attributable to the imminent launch of a 3G phone, additional iPhone models or a price cut.”

Sacconaghi still thinks a 3G phone is likely to be introduced at mid year. He maintains a Market Perform rating and $165 price target on the stock.

Apple today is up 19 cents, to $149.72.

Comments

[jcrash:]

Love it. First they all said where are the phones going. Then they said, Apple is reducing production. Then the analysts were all cutting sales estimates saying no way they make 10 million in sales by 2009. Now there aren't enough phones, so once again it must be something bad.

2008 Apr 02 03:18 PM

[Wisdom-Seeker:]

My immediate bet would be that there was a component supplier issue in China during their huge winter storms (which shut down large chunks of the country for a while), and we're seeing the effects of that now.

2008 Apr 02 03:59 PM

[taojones:]

Apple has supply management down to a science. They also know how to get rid of old technology. Nothing apple lays around on the shelf there are always people who will buy a slower machine to save money. Jobs is not going to give up a month of sales in his flagship stores for nothing. Somethings up here my guess is the phones will ship about a day after the fcc approves them. if there's a problem id bet its the fcc is taking longer than they should with the final approval of the device and the bureaucrats are as usual gumming up the Jobster's schedule
Im buying all i can hold the only dip i see is folks selling this month to pay there taxes

2008 Apr 02 04:45 PM

[steveballmer:]

iPhone is in BIG trouble! Everyone is in breathless anticipantion of the ZunePhone!

2008 Apr 02 09:00 PM

[Tantrum:]

iPhone exports are distorting demand in a big way. Unintended markets in developing countries are driving demand. Looking at Western Europe to figure out overseas demand for iPhone misses the point completely.

People in France and Ireland like the iPhone but they do not consider it value for money. No 3G and high price is a deal-breaker. People in China, non-industrialized Asia and Russia see the situation very differently. Perception of value is very different, cheap dollar is very good, people are used to buying things through grey market channels and Apple Store versus AT&T is obvious, no risk of bureaucracy.

2008 Apr 02 11:03 PM

[tom1234:]

where ERIC --i said is WHERE are all the nay sayers on the 10 million sold iphones by end of 08---and i might add food for thought ---aapl has a quarterly forcast which is normally low and what will be the actual results when apple has missed the demand by not 100,000 and more likely 1 million iphones ---i hear a stampede--

2008 Apr 03 10:00 AM

[tom1234:]

where ERIC --i said is WHERE are all the nay sayers on the 10 million sold iphones by end of 08---and i might add food for thought ---aapl has a quarterly forcast which is normally low and what will be the actual results when apple has missed the demand by not 100,000 and more likely 1 million iphones ---i hear a stampede--

2008 Apr 03 10:00 AM

[AJ, Washing...:]

Isn't Toni Sacconagghi the analyst that started the Quest for the "missing iPhone" in the first place? I hope he has tracked them all down, all 10 million... I am an anxious shareholder, and appreciate his diligence in figuring out where all the bits and pieces that make up the iPhone come from, where they are going, and who is buying the iPhones. I know there are a lots of folks in India and China who are waiting for the chance to buy a 3G iPhone with no hacking required, and who dont mind the price since they have beaucoup $$$ of discretionary income these days....

2008 Apr 08 02:05 PM