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Report: U.S. carriers to have "grotesquely" low iPhone 5S inventories

  • Multiple U.S. carrier sources tell AllThingsD their iPhone 5S (AAPL +1.2%) inventories will be much lower than expected when the device goes on sale on Friday.
  • "We will have grotesquely unavailable inventory," says one source. Another also expects relatively low shipments, while adding demand could be less than expected thanks to interest in the 5C.
  • Likewise, U.S. Apple Store sources tell 9to5 Mac the 5C will account for "about 70-80% of new iPhones" available on Friday.
  • Meanwhile, Apple's Chinese online store, which began taking 5S reservations today, quickly sold out most of its 5S stock. The sell-outs have been taken as a sign of low supply. Apple won't begin taking 5S pre-orders elsewhere until Friday.
  • Jefferies and others have reported fingerprint sensor production issues are limiting 5S supply.
  • Apple remains higher, but has pared its Tuesday gains, which follow a Monday drop that came in the wake of disappointing China Unicom 5S/5C reservation data. iOS 7 launches tomorrow.
Comments (47)
  • financeminister
    , contributor
    Comments (572) | Send Message
     
    Maybe this underestimation is a good thing... AAPL might come out with a surprise quarter and sentiment might improve a lot after that.

     

    wait, I said the same thing for Q4 last year... we'll see! Giving the board two to four quarters to change sentiment.
    17 Sep 2013, 03:10 PM Reply Like
  • apple long
    , contributor
    Comments (72) | Send Message
     
    I sure hope Apple has been buying like crazy today through their share re-purchase. Can't see Apple staying below $500 once China Mobile is officially announced.
    17 Sep 2013, 03:15 PM Reply Like
  • Energysystems
    , contributor
    Comments (875) | Send Message
     
    The reason this is done is very similar to Apple's once very known policy of sandbagging quarterly estimates. If you're suddenly "sold out", it'll help peak interest in the product from other consumers, as well lessen the chance of quicker price reductions. Throttling inventory in the mobile phone space is as common as throttling high data users in the telecom space.
    17 Sep 2013, 03:16 PM Reply Like
  • kimboslice
    , contributor
    Comments (1442) | Send Message
     
    So, we shall see if Apple can sell a gazillion more iPhones shortly won't we?
    If there is any problem with the fingerprint scanner or anything else, Apple will stop and fix it.
    The real upgrade is required for the iPad mini but they'll do it soon enough.
    One nice thing about the plastic 5C is that they can crank them out quickly to satisfy customers.
    iOS 7 will look slick and people will love their iPhones even more. It's funny my friends who have them never put them down.
    17 Sep 2013, 03:49 PM Reply Like
  • Energysystems
    , contributor
    Comments (875) | Send Message
     
    As a shareholder, my eye is on the margins. If they can stop the margin erosion, I'll be a happier and more confident shareholder. If it continues, well I hope it doesn't.
    17 Sep 2013, 03:51 PM Reply Like
  • kennehtpm
    , contributor
    Comments (2) | Send Message
     
    they'lll make it up in 'volume' lol
    18 Sep 2013, 12:01 PM Reply Like
  • awakeinwa
    , contributor
    Comments (278) | Send Message
     
    i always extrapolate the macro from the microeconomic. from what i see, they've done a great s release, plus the c is a great counter to android while retaining healthy margins.

     

    what they're executing is a solid strategy that is inevitably the best strategy if you think about it.
    20 Sep 2013, 04:30 AM Reply Like
  • velvetbulldozer
    , contributor
    Comments (44) | Send Message
     
    Meanwhile, Apple's Chinese online store, which began taking 5S pre-orders today, quickly sold out most of its 5S stock. The sell-outs have been taken as a sign of low supply.

     

    lol poor aapl cant win.
    17 Sep 2013, 03:17 PM Reply Like
  • gensearch2
    , contributor
    Comments (1341) | Send Message
     
    Spot on.

     

    If they didn't sell out then "demand was disappointing".

     

    If they did sell a cheap iphone .... "There goes margins down the toilet."
    17 Sep 2013, 03:26 PM Reply Like
  • synchrogeddon
    , contributor
    Comments (143) | Send Message
     
    yeah, it seems that whatever happens Apple is always doomed, iPhones are sold out - bad because they produced only 14 iPhones, iPhones aren't sold out - bad because no one is buying it
    17 Sep 2013, 03:26 PM Reply Like
  • cshoxie
    , contributor
    Comments (235) | Send Message
     
    I can't believe Cook would release a new I Phone knowing he could not meet demand. Hopefully(which is not a good investment strategy) the phones and the demand are there and the analysts eat crow.
    17 Sep 2013, 03:24 PM Reply Like
  • Humble Eagles
    , contributor
    Comments (1247) | Send Message
     
    I think Apple is trying very hard to sell a higher percentage of iPhones from the Apple store. They are concerned (legitimately) that the carriers try to talk people into other phones at their stores. I actually experienced this at S and VZ last time I was shopping. The VZ guy quickly backed off when I told him I wanted iPhones, but the S guy was very aggressive. It also makes a lot of sense for add-on sales. People typically add-on chargers, cases, warranty, etc., when they purchase, so driving more customers toward Apple stores will make for higher sales. Finally, people may go to the store to see the S and go home with a C. I think it is likely to be the second best mobile phone available, and the typical customer will see this when they use the phone.
    17 Sep 2013, 03:25 PM Reply Like
  • Kevin Murphy
    , contributor
    Comments (55) | Send Message
     
    Samsung & others provide a lot more incentives to sales reps at VZ & other stores to push Samsung & etc products. It's called a 'spiff' - a bonus paid for by the phone manufacturer directly to the sales rep/

     

    AAPL does not do that, Samsung spends a lot of $$ on that, so I've seen documented.
    17 Sep 2013, 03:53 PM Reply Like
  • Humble Eagles
    , contributor
    Comments (1247) | Send Message
     
    I could believe that because I have been pushed pretty hard that way for a number of Samsung products. Do they give salespeople "spiffs" for selling TVs, too?
    17 Sep 2013, 05:02 PM Reply Like
  • Mimi261
    , contributor
    Comments (28) | Send Message
     
    Seems like I just read that because of the subsidies the carries make less on iPhones than other phones. They have to offer them to attract business, but I can see why they wouldn't promote them. I don't think this can last. Love how $APPL is restraining supply to create lines at the release!
    17 Sep 2013, 05:27 PM Reply Like
  • milehr
    , contributor
    Comments (463) | Send Message
     
    The question is how many pre-orders.
    17 Sep 2013, 03:31 PM Reply Like
  • TaylorH
    , contributor
    Comments (47) | Send Message
     
    pWe'll this isn't good for Apple share price. Lower supply means they won't meet demand, sales figures will be lower than possible and when results come out everyone will hammer Apple and the stock for having dissappointing revenue. It won't matter if demand is unprecedented because that's not what the story will be about.
    17 Sep 2013, 03:38 PM Reply Like
  • Alan1967
    , contributor
    Comments (177) | Send Message
     
    I'm wondering if this is a sign of low yield on the new A7 CPU which some (SA authors) think is running on a new process.

     

    My (wild) guess is TSMC isn't able to get a good yield on is newest process, and thus A7 CPUs are in short supply.
    17 Sep 2013, 04:28 PM Reply Like
  • TaylorH
    , contributor
    Comments (47) | Send Message
     
    Also some speculation on supply constraints with the fingerprint reader. It could be multiple parts.
    17 Sep 2013, 05:31 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4076) | Send Message
     
    "Traders" sell, then ask questions later,

     

    "Investors" Buy when they see the lemmings run into the sea..

     

    Long AAPL
    17 Sep 2013, 04:28 PM Reply Like
  • twist54
    , contributor
    Comments (58) | Send Message
     
    AAPL probably felt pressured into the September release date by so much recent talk about ┬┤lack of innovation┬┤that when it came to the crunch there was not sufficient inventory. Whatever, squeezing the 5s & c into this quarter was essential to boost flagging sales. Without phones to sell, the quarter is going to look miserable anyway.
    17 Sep 2013, 04:34 PM Reply Like
  • VictorHAustin
    , contributor
    Comments (772) | Send Message
     
    Apple is on a model year calendar.
    18 Sep 2013, 05:54 PM Reply Like
  • Gary Bushwacher
    , contributor
    Comments (475) | Send Message
     
    I see the low inventories as a possible supply chain issue, (although I second the comment - would be surprised Cook would let that happen).

     

    I've also experienced carrier indifference. I was in ATT store and commented to employee about his carrying an Android. He said he was required to, but his personal phone was Apple. 'enough said.

     

    I also believe that Apple launched their own trade-in program, so they could do the job, the carriers weren't doing.

     

    AND - they'll resell all those refurbed iPhones in developing countries at inexpensive prices. So yes Virginia, they do have a reasonably priced iPhone - with strong margins, because they got back the used iPhone for next to nothing

     

    Genius, I tell ya - pure Genius !
    17 Sep 2013, 04:45 PM Reply Like
  • nguyenvanphuoc
    , contributor
    Comments (355) | Send Message
     
    The 5S is sold out on the Apple site, but reservations through China Unicom are 'disappointing'?

     

    Something doesn't seem right with that equation...
    17 Sep 2013, 04:56 PM Reply Like
  • VictorHAustin
    , contributor
    Comments (772) | Send Message
     
    I guess it's true all zero of the 5S are sold out.

     

    The 5S isn't on the Apple site. Only Chinese telecoms are taking "reservations" and hey say those are more than the available inventory.
    18 Sep 2013, 05:57 PM Reply Like
  • Humble Eagles
    , contributor
    Comments (1247) | Send Message
     
    What is the problem with this picture? The biggest one is why did Apple *expand* the rollout countries if they knew they would be constrained?? Doesn't make sense unless they want a shortage.
    17 Sep 2013, 05:21 PM Reply Like
  • TaylorH
    , contributor
    Comments (47) | Send Message
     
    I think they just haven't been in production very long and didn't build up any inventory this year like they previously had.
    17 Sep 2013, 05:38 PM Reply Like
  • VictorHAustin
    , contributor
    Comments (772) | Send Message
     
    Wondered the same thing myself. Apple wouldnt do that

     

    But the constrained production theory seems to have one or two old sources. And there is the reported complaining by telecoms, though they may have a just in time shipment coming from Apple. Almost all the players have well earned Apple's distrust.

     

    And it feels plausible, but that could just be gun shyness from last year.
    18 Sep 2013, 06:02 PM Reply Like
  • JsThoughts
    , contributor
    Comments (35) | Send Message
     
    So the message is they are going to sell all of the 5S that they can make and the 5C is expected to be a hot seller even at its "high" price. Sounds good to me.
    17 Sep 2013, 05:27 PM Reply Like
  • TaylorH
    , contributor
    Comments (47) | Send Message
     
    Since they can make 5C faster and with improved profit margin, They are going to push them really hard this season. Assuming production numbers come up over the next few weeks, this is likely to be a hot holiday season for Apple.
    17 Sep 2013, 05:39 PM Reply Like
  • jjkiam
    , contributor
    Comments (294) | Send Message
     
    I certainly hope these rumors of severe supply constraints aren't true. If there is a significant supply problem again after last year's similar inventory problems which lasted months, and Apple didn't make sure the mfg. process for components and the assembly process for the new phones were capable of producing the anticipated volume to meet demand then Tim Cook should absolutely be fired. If they repeat the same movie again this year that would be incredible incompetence and almost criminal negligence towards the shareholders.
    17 Sep 2013, 05:51 PM Reply Like
  • ConservativeOutperformer
    , contributor
    Comments (530) | Send Message
     
    It was, in fact, one of the easiest reason to avoid the shares up above $600. Expecting a company to grow their sales x% when they can't supply enough to begin with is shallow analysis.

     

    See here,

     

    'There is X amount of smartphone/tablet manufacturing capacity in the world and currently AAPL cannot supply enough phones/tablets to meet demand. There are other manufacturers (NOK, RIMM, Samsung, MMI, etc) who currently carry lower margins than AAPL and are selling units built by the same manufacturers. If the manufacturing capacity doesn't meaningfully increase (20% per year or whatever ridiculous metric people were claiming AAPL would grow by), how can AAPL keep its margins anywhere near what they were in the past if manufacturers can take on work at better yields? Even further, if AAPL is going to increase their revenues at some of the ridiculous rates analysts were projecting, how can they accomplish that with this simple competitive scenario? I could draw the pictures and put together 4 slides that completely obliterate any AAPL bullish scenario out there. I'll let the readers on this forum do the creative thinking based on the above sentences......'

     

    http://seekingalpha.co...

     

    Good luck!
    17 Sep 2013, 06:25 PM Reply Like
  • jjkiam
    , contributor
    Comments (294) | Send Message
     
    So are you making the case that the suppliers are constraining Apple to support their other customers? I find this had to believe that they would risk doing this, aside from Samsung since Apple is their biggest customer and has usually been aggressive in dealing with suppliers. My point is that fool me once shame on you fool me twice shame on me and if Apple didn't learn from the months long supply constraints on the launch of the Iphone5 then the people (cook)are seriously incompetent. I am hoping that the limited supply at the carriers is due to their efforts to sell more phones at Their retail outlets and we aren't going to see a repeat
    17 Sep 2013, 06:40 PM Reply Like
  • sjmohr
    , contributor
    Comments (74) | Send Message
     
    Tom Cook's strategy to drive a larger percentage of sale through Apple stores is already out there (results in higher sales of accessories, iPads, Macs, etc.). What better way to accomplish that goal than restricting the stock to carriers? Nice payback for pushing Android phones over Apple.
    17 Sep 2013, 07:24 PM Reply Like
  • Island_Dweller
    , contributor
    Comments (339) | Send Message
     
    FWIW, I'm currently living in Japan and since the release of the iphone here, the demand is staggering. Everyone one I talk to, teens on up to adults are expressing their interest and intent to buy. Bottom line there's a lot of demand here, and while China is getting a lot of the press, once should not overlook the 3rd biggest economy where the iphone is considered #1.

     

    Also noteworthy is it seems like there's more demand for the regular 5 rather than the 5s/5c. From the many people I've talked to (yes in Japanese), they don't see the value in the 5s when software hasn't met the power of 64bit yet and fingerprint is viewed as less of a boon to the 5s because of potential 1st gen tech problems.
    17 Sep 2013, 08:40 PM Reply Like
  • awakeinwa
    , contributor
    Comments (278) | Send Message
     
    this is where apple's retail strategy is genius.

     

    people will change their minds when they actually have a c or s in their hands. instant biometrics is something you have to see to grok. because nobody has done it before one has no frame of reference.

     

    when they actually see it in action, instantly, that for the rest of their lives they no longer have to deal with passwords, the light bulb in people's heads will explode big ah-hahs
    20 Sep 2013, 04:34 AM Reply Like
  • gensearch2
    , contributor
    Comments (1341) | Send Message
     
    The biometrics only applies to the 5s.

     

    There is a $13K reward out so far for the first hacker that can crack/bypass the fingerprint reader.

     

    No one knows very much about the reader and authentication process so far. Apple has taken on a far more difficult problem than what appears on the surface. In particular, for mobile payments.

     

    A digital extraction of points on your finger are stored on the A7 chip in a security enclave. How the authentication and authorization works is the hard part from a security perspective.

     

    Access to apps on your own phone is one thing. Passing some electronic token for a mobile payment is a far more challenging problem.

     

    There wasn't any point in making mobile payments available via the biometrics until it was shown to be good.

     

    1. Apple puts enough faith in it to use it for their own mobile payment system. That's not a small expression of their own confidence in the system.

     

    2. The hacker community will be the next gauntlet.

     

    Aside from my bias as an investor of Apple, I spent my career in system security and if they can pull this off, it is going to be a major leap forward in securing mobile payment systems.

     

    If I wasn't an Apple investor, I wish them the best of luck.
    20 Sep 2013, 09:04 AM Reply Like
  • name999
    , contributor
    Comments (107) | Send Message
     
    This time Apple wants to sell every possible 5S/C they could. However, the price of 5C is higher than expects and the supply of 5S is restrained. If they could meet the demand, the customers might switch to other devices. Be cautious!
    17 Sep 2013, 08:48 PM Reply Like
  • HighonStock
    , contributor
    Comments (7) | Send Message
     
    The way you guys talk on here is very annoying. Anyways, IOS7 is coming out tomorrow and there's a demand. Apple is a buy. Especially in this low target range. The ITunes radio is coming out tomorrow to. Especially, expecting a sharp rise in Apple's stock price tomorrow. Have a good one and everyone else can go f themselves.
    17 Sep 2013, 08:58 PM Reply Like
  • Bmgue12
    , contributor
    Comments (93) | Send Message
     
    The same thing happen before, what is wrong with estimating future sales? Is AAPL unsure of how many iPhones will be sold?
    17 Sep 2013, 09:11 PM Reply Like
  • frankfantasy
    , contributor
    Comments (4) | Send Message
     
    New iPhone 5S sold out quickly: The supply is constrained. Bear case.
    New iPhone 5C is still available four days after pre-order started: The demand is poor. Bear case.

     

    Apple can't win.
    17 Sep 2013, 09:57 PM Reply Like
  • 2puttwo
    , contributor
    Comments (382) | Send Message
     
    I remember reading FoxCom did a little hiring (over 50,000) a little while ago. I'm really not sure, but I thought it was mid June. The article didn't say which companies product they would be working on. The author thought it was Apple. If it's true then either FoxCom is really slow or demand is through the roof. If this is true that demand is through the roof, let's get together and have a party. I feel a lot of investors in Apple deserve it. Maybe we should have it in Jefferies office? Do you think they would supply the Champagne? I don't think they know what it is. Ouch! Anyway, we could hand them our little class action law suite for providing false information. For their sake,that's a gamble I would not take. After we are done, Apple could and should do it just because they can. But wouldn't that put a crimp in the party. Oh well! Good luck tomorrow, I hope it's a great day!!!
    17 Sep 2013, 10:00 PM Reply Like
  • HighonStock
    , contributor
    Comments (7) | Send Message
     
    I see a lot of strong feedback from the new IPhone 5s and its features. I am so excited about tomorrows big apple picking rally;)
    18 Sep 2013, 12:15 AM Reply Like
  • stvej
    , contributor
    Comments (3) | Send Message
     
    The only thing I would read into this is, is this...
    http://bit.ly/1eOWCSu
    18 Sep 2013, 05:53 AM Reply Like
  • paramdham
    , contributor
    Comments (42) | Send Message
     
    ANALYSTS ARE HAVING A FIELD DAY DRIVING AAPL INTO THE NET HERWORLDS are they going long on the'friends' route or is iy conviction sell!
    the cook co has borrowed money to buyback
    the cheaper it buys back the better for the co
    the launch of new products is the occasion for quote to shoot up
    it obediently did 470 to 506!
    the unveiling on a low key - no clarity on china- and pricey products ,all argue for the furryclaws to tear into marketcap--506 to
    451 huge volumes too helps buybacking cheap.
    meanwhile the fingersensor glitch and other bugs r dealt with.
    [size of margins not known on new products]--
    no businessman will offer his goods at reasonable price initially.
    will test wha the market bears and.and then he gives spiff dealer discount tradein offer [to reurb and push into brand-snobby em bazaar-souk!]
    the throttle on inventory is held light till the pricepoint customeraffordability and profitmargins balance nicely to warrant speedier logistics
    then the a7 is highlighted
    then the dragon is unveiled
    then the trend-up is found to have already gone up60%
    the scramble for the middle meaty portion then the suckers'dash!!
    guys hv we not seen this all before!
    are these great analysts commentators all so wiser than the teams of business strageists of the aapl?
    is most of this not fed into its data and computers to printout alternative strategies!-ahead of the launch-presentation date
    some of this crowd may come near to the roadmap reading approximation yes and his day in the sun is got!
    so till this is played out I keep adding till it goes down to 381..[started at 457-464] not checked how the buy back is going on
    to relate it to the price and yield numbers.
    wonder when the barmy admn will welcome the foreignlands-resident profits to be brought to the us of a at a concessional tax rate and boost our economy labour, housing, and manufacturing
    jobs !!! where will be the aapl quote then? my retirement is secure and I will be thinking of a nice villa in southasia for my winter vacation
    thanks guys see you-hear you in november

     

    thanks to all of you
    18 Sep 2013, 05:54 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4076) | Send Message
     
    Avoid the noise & keep it simple ,,

     

    http://seekingalpha.co...
    18 Sep 2013, 08:32 AM Reply Like
  • Keep It Simple
    , contributor
    Comments (470) | Send Message
     
    Couldn't agree more! Longs will be the winners.
    18 Sep 2013, 11:27 AM Reply Like
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