Apple (AAPL) -1% after Deutsche's Japanese team writes supply chain activity suggests a 30%+ Q/Q...


Apple (AAPL) -1% after Deutsche's Japanese team writes supply chain activity suggests a 30%+ Q/Q drop in iPhone 5 production for the March quarter. UBS, Jefferies, and others have already cautioned iPhone production is set to fall sharply this quarter, thus some bad news on this front appears to be baked in. CRUS -1.2%.

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Comments (47)
  • nguyenvanphuoc
    , contributor
    Comments (388) | Send Message
     
    Anybody have any idea how qualified Deutsche's Japanese team is to evaluate the activity? Or how successful they've been at doing so in the past?

     

    Would also be interesting to know if any other Deutsche branches initiated short positions before this revelation.
    4 Jan 2013, 09:42 AM Reply Like
  • WisPokerGuy
    , contributor
    Comments (1312) | Send Message
     
    Next up some faceless stock "analyst" will walk past an Apple store and won't think there are enough people inside and the stock will continue to get punished on pure rumor. Tell me what other company with projected 20% growth margins trades like this?

     

    I guess "projected" is the key word there. However, we will all know in a couple of weeks when Apple reports earnings. Seriously, anyone who doesn't think this stock is being manipulated better get a clue. Personally, I think people should go to jail for this type of behavior. No wonder the "average Joe" doesn't trust the market anymore. Why should they when they see stuff like this happen?
    4 Jan 2013, 10:36 AM Reply Like
  • rocback
    , contributor
    Comments (1098) | Send Message
     
    On January 14, 2008, Samsungs Chairman Lee's home and office were raided by the Korean police for an ongoing probe into accusations that Samsung is responsible for a slush fund used to bribe influential prosecutors, judges, and political figures in South Korea.[17] On April 4, 2008 he denied allegations against him for his role in the Samsung Slush Funds scandal.[18] After the second round of questioning by the South Korean prosecutors which occurred on April 11, 2008, Lee was quoted by reporters saying "I am responsible for everything. I will assume full moral and legal responsibility.” On July 16, 2008, The New York Times reported that the Seoul Central District Court found him guilty on charges of financial wrongdoing and tax evasion. Prosecutors requested that Lee be sentenced to seven years in prison and fined $347 million. The court fined him $109 million and sentenced him to 3 years suspended jail time. Lee has not responded to the verdict.[19]
    On December 29, 2009, the South Korean government moved to pardon Lee Kun-hee.
    4 Jan 2013, 11:21 AM Reply Like
  • Eric Jhonsa, SA Eye on Tech
    , contributor
    Comments (1264) | Send Message
     
    It's easy to trash analyst reports that cite supply chain checks, but let's not forget analysts were completely on the mark when they cut their calendar Q2 and Q3 iPhone forecasts ahead of Apple's earnings. A lot of the same attacks were being made back then.

     

    When several different firms independently claim that their checks indicate iPhone/component orders have been cut for calendar Q1, there's probably some truth to the reports. That said, I agree with Deutsche that the news seems to be priced in.
    4 Jan 2013, 01:46 PM Reply Like
  • Thomas903
    , contributor
    Comments (106) | Send Message
     
    Eric Jhonsa - "When several different firms independently claim that their checks indicate iPhone/component orders have been cut for calendar Q1, there's probably some truth to the reports."

     

    I agree with this statement as far as it goes, but it is also important to consider recent history.  Pretty much everyone has agreed that Foxconn was unable to assemble as many iPhone 5's as Apple had ordered last fall, so analysts became convinced that Apple's Oct-Dec earnings (released in Jan. '13) would be disappointing.  To deal with the supply constraint, Apple reportedly signed new contracts for greater iPhone production last fall, not only with Foxconn but also with another company, Pegatron.

     

    By several accounts, that move increased Apple's iPhone 'build rate' to 60 million iPhone 5's and helped the company (in my opinion) come to terms with the supply constraint.

     

    So far, so good.  But by ramping up production to catch up to its Oct-Dec target, eventually more iPhone 5's would roll off the assembly line than originally planned. That is taking place now (Jan-Mar quarter). To avoid accumulating too many inventories, then, Apple needs to temporarily slow down production and reduce its components orders. Once production is back on track, components orders will return to normal.

     

    This is like constructing highways.  If the new super-durable concrete you switched to dries 20% less quickly than you anticipated and you absolutely must finish 50 miles of highway by the end of the year, then you quickly hire more workers, lease more equipment and purchase more cement and start pouring more concrete on the ground than you originally planned.  But eventually all of that concrete does dry, and you'll be ahead of schedule.  So for a few weeks/months you send some of the workers home and lower your concrete orders until construction is back on schedule.

     

    So that's where Apple is today. It's mis-calculations in the early fall led to temporarily high components orders in the late fall, and components orders were temporarily depressed in the early winter. Just what one would expect AFTER learning about the supply constraint (Foxconn's CEO said the iPhone 5 is the most difficult-to-assemble device it has ever produced) and Tim Cook's need to flood the market with iPhones before the end of the quarter.

     

    The December reduction in component orders is actually a positive signal for the January '13 earnings report. It means that Tim Cook is satisfied that 'enough' iPhone 5's had been produced to satisfy analysts. If he hadn't believed that, he would have continuing ordering more components and today we wouldn't be reading about component orders being lowered.

     

    Regardless of one's position regarding iPhone vs. Android phones, Apple did NOT lower component orders because it discovered that iPhone demand is weak. In December, when component orders were being lowered, Apple had yet to begin selling iP5's in China or India.   If iPhone 5 demand is weak, we'll discover that later in the model year ... not one quarter after its USA launch (where it's still selling out) and nearly at the same moment as its launch in dozens of other countries.

     

    Analysts probably have their objective facts right, but evidently lack the analytical skills to interpret what those facts mean.
    4 Jan 2013, 08:57 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9251) | Send Message
     
    I am always amazed how little professional analysts know, and how cursory analysis by retail investors (invariably bullish) always is so much more spot on.
    4 Jan 2013, 10:18 PM Reply Like
  • hx88
    , contributor
    Comments (112) | Send Message
     
    The key is "independent". Lot of times we are seeing the following - one analyst, presumably one with a good record, publishes a report to either upgrade or downgrade a stock because of his check. Within a few days, definitely less than a week, 2 or 3 analysts will publish similar reports citing their own checks. This is yet followed by more analysts. A good example is before google eps last quarter, one after another and yet another analyst upgraded the stock citing their findings that mobile CPC would be higher. Ummmm, we all knew now ....

     

    Some analysts, especially the ones at firms without resources to perform research, are copying others' reports. They need to publish something to make themselves productive. We need to ignore these "independent " reports.
    5 Jan 2013, 01:30 AM Reply Like
  • Macro Investor
    , contributor
    Comments (9251) | Send Message
     
    I am always amazed that professional analysts who get paid to do nothing but analysis always have so little resources and time to do in depth analysis, while retail investors can do a much better job part time.
    5 Jan 2013, 01:38 AM Reply Like
  • docsbp
    , contributor
    Comments (9) | Send Message
     
    This is another indication that Apple's assembler, Hon Hai, may have solved the problems which were causing a high rejection rate on iPhone 5 assembly lines. If so, Apple's cost per unit should decline and margins should improve.
    4 Jan 2013, 09:47 AM Reply Like
  • doc47
    , contributor
    Comments (1641) | Send Message
     
    Even if they are right with this "information," they are not clear on the demand part of the data. Is production down because of supply delays or demand delays? Big difference!
    4 Jan 2013, 09:50 AM Reply Like
  • losmarinos
    , contributor
    Comments (36) | Send Message
     
    Samsung negative Propaganda
    4 Jan 2013, 09:51 AM Reply Like
  • pagreen1966
    , contributor
    Comments (661) | Send Message
     
    Apple is doomed! Run for the hills!!!
    4 Jan 2013, 09:53 AM Reply Like
  • nguyenvanphuoc
    , contributor
    Comments (388) | Send Message
     
    Also curious are the rumours that the next iphone (being called the 5S) is set to launch in the "March quarter". Would kind of make sense to stop making the old one if you're starting to make a new one, wouldn't it?
    4 Jan 2013, 10:10 AM Reply Like
  • Thomas903
    , contributor
    Comments (106) | Send Message
     
    nguyenvanphuoc - It is by no means certain that a 5s will appear in the spring, but even if it does nearly all of the component parts will be the same as those in the iPhone 5.  Switching from the 5 to 5s will involve swapping out a couple of components such as the processor and (possibly) display screen, and no significant slowdown in the build rate. So I find it difficult to believe that a switch to the 5s can explain a widespread, significant (30%) reduction in component orders.

     

    It seems more likely that any new iPhone launch in March would be the recently rumored low-price model for less developed countries or a big-display model to compete with jumbo Android devices. Those moves would result in *increased component orders for the new devices, and possibly some offsetting *reductions in component orders for the iPhone 5 to the extent the new iPhones 'cannibalize' the 5's sales.

     

    It seems possible that cannibalization could lower iPhone 5 sales by 30%. If it does, consider the impact on TOTAL iPhone sales implied by that number. 

     

    With an iPhone 5 build rate of (let's say) 40m in the Apr-Jun quarter, that means the new model(s) would be cutting into iP5 sales by about 12m units. However, the new iPhone(s) form factors would be most appealing to consumers who are uninterested in purchasing an iPhone 5. So perhaps 3/4 of all of these sales would go to 'new' customer cohorts. Since the 1/4 amount to 12m units (cannibalized from iP5), three times that number (36m units) would represent net new iPhone sales. This 36m + original 45m = 81m total iPhone sales in the April-June 2013 quarter.

     

    This is not a firm prediction, because it rests upon several key assumptions: iP5 component orders are down by 30%, solely because of a one or more new iPhone devices being introduced in approximately March. IF those assumptions are accurate, then Apple's TOTAL iPhone sales would possibly increase from 45 to 81 million units per quarter: 80%. A cautious forecast would phase this figure in over the course of a few months ...
    5 Jan 2013, 02:10 PM Reply Like
  • Tmgrl2
    , contributor
    Comments (11) | Send Message
     
    Dang! These kinds of sketchy analyses hit the stock since media can run with these and selling follows. AAPL. Is the rare stock I hold over earnings. Most solid analyses point to blowout quarter coming up.
    4 Jan 2013, 10:15 AM Reply Like
  • bgold1955
    , contributor
    Comments (2348) | Send Message
     
    How many times did we have to go through these type articles, which were mostly proven wrong, in Nov and Dec. and now in Jan all over again? Very disappointing that if in fact the reason for current sell off is due to the above statement. Statement may be correct but based on the odds, it is dead wrong. This is beginning to feel like child's play. Still think 50-51m iPhone sales in last qtr. expect a very good beat Jan 24 but who knows if it will move the stock as it appears money is going into that solid company, HPQ.
    4 Jan 2013, 10:25 AM Reply Like
  • MAdeelA
    , contributor
    Comments (62) | Send Message
     
    If the stock hovers around this level (low 500's) till earnings..I don't see it going any higher than 590-600 after a strong beat. Seems like the market is pricing that in. Don't want to know where it will be if they miss.
    4 Jan 2013, 10:31 AM Reply Like
  • drmwsunner
    , contributor
    Comments (127) | Send Message
     
    Rocco Pendola's latest comments on AAPL haters is quite interesting and informative for those who care to think. Isn't it interesting as to why the market psychology re: AAPL has changed from 'winner" to "loser" for this stock.....Rocco indicates in his piece that when you're on top, people in this country begin to hate your success, to wit, listen to the CNBC "dumbos" who are constantly shaking the AAPL tree. There's more distrust as to AAPL's future than ever before, and the haters say, how many IPhones can you sell before the world is sated. As the competition ratchets up, and people begin to buy cheaper products, AAPL sales will surely be impacted, however, the APPL juggernaut will surely roll onward, but the stock price, perhaps not. As more and more AAPL haters take to the podiums and air waves, people are beginning to doubt that the company will regain its dominance and prominence as the largest and best company in the world. Guys like Gundlach and Kass jump on this psychological downbeat bandwagon and the downward spiral of its stock price continues as selling becomes the norm each day pushing more people out of the AAPL empire because they believe the stock is done as a leader. Sometimes being too good can be destructive as is the case with this wonderful American company. So, until the incessant drumbeat of negativity abates, this stock will languish in the mid $500's. Watch as they beat earnings this quarter, the price probably won't move much, if at all, as holders will sell, sell, sell as the naysayers will come out of the woodwork with shouts that this is it, it's over for AAPL. Sad commentary on our country as we can't stand a winner. Check out CNBC for the biggest group of naysayers who are promoting APPL's demise on a daily basis. The power of the media is titanic when it comes to this particular stock.
    4 Jan 2013, 10:30 AM Reply Like
  • birdyhoof
    , contributor
    Comments (46) | Send Message
     
    i was convinced a handsome, highly educated, successful businessman who was tried and tested, a picture of perfect would excel against the person that was not. i cried in november. I hope i don't end up crying over this beautiful company too. What is going on here?
    4 Jan 2013, 12:14 PM Reply Like
  • tom434
    , contributor
    Comments (21) | Send Message
     
    Bit by bit I´m getting tired of this analysts but of this stock, too. The public relations department of Apple is doing a terrible job...
    4 Jan 2013, 10:32 AM Reply Like
  • Snoopy1
    , contributor
    Comments (1124) | Send Message
     
    Cook is motivated by his long-term stock options and AAPL has a deep bench of talent. If you're a long-term investor, the numbers will drive the price over time. If you're a short-term trader and can't deal with volatility, seek profits elsewhere.

     

    "The market is designed to transfer money from the active to the patient."
    -- Warren Buffett
    4 Jan 2013, 11:14 AM Reply Like
  • szeducate
    , contributor
    Comments (190) | Send Message
     
    This could also mean something entirely different. It might imply that Apple is already developing the Iphone 6 and does want to load up on Iphone 5s.
    4 Jan 2013, 10:35 AM Reply Like
  • gsweeney510
    , contributor
    Comments (3) | Send Message
     
    So in other words the new replacement for the Iphone 5 will begin production.
    4 Jan 2013, 10:35 AM Reply Like
  • gstromb101
    , contributor
    Comments (39) | Send Message
     
    Interesting how this hit right before market open. The decline in AAPL over the past few months has made investors & traders quite skittish. Easy for 'well-placed' shorts to 'spook' market. Can't seem to find any detail analysis of this report - other than repitition of the same release. Anyone have any further details?
    4 Jan 2013, 10:49 AM Reply Like
  • dab3z
    , contributor
    Comments (311) | Send Message
     
    There aren't further details because they don't exist. This same story played out last year too.

     

    1Q12 was going to be underwhelming. There were cuts to 2Q12 orders.

     

    Blah blah blah. We all know how that turned out.

     

    -The iPhone 5 sets record first day sales numbers across the globe,
    -Has a record rollout in over 100 countries before the end of Q4,
    -50M iOS and Android devices are activated over Christmas week,
    -The iPad mini is a booming success

     

    Yet all that is forgotten with one report, which may or may not be correct, and may or may not be interpreted correctly.

     

    Good luck ever getting retail money back in the market when stocks are traded in this fashion.
    4 Jan 2013, 11:19 AM Reply Like
  • croatkid1
    , contributor
    Comments (206) | Send Message
     
    Sure enough - but these SOBs manage to keep the AAPL share price down where they want it .....
    4 Jan 2013, 11:29 AM Reply Like
  • rocback
    , contributor
    Comments (1098) | Send Message
     
    There will be continued "strategically" placed negative articles like this by the hedge funds that sold Jan 19th options to keep the price down until they expire.
    4 Jan 2013, 10:54 AM Reply Like
  • bgold1955
    , contributor
    Comments (2348) | Send Message
     
    Roc.... Believe you may be right as the hedggies averaged 1-4% gains in 2012. They can't stand when retail investors beat their butts.

     

    Watch earnings for crus - 1-21
    VZ - 1-22
    T - 1-24 (before bell) aapl is usually after bell

     

    If aapl beats like they did last year on rev/eps/margin it will go higher for a bit until techies detect a Siamese twin head and shoulder that would represent a potential downward slide to a monkey finger just prior to Debt Cliff Armageddon.

     

    Long aapl past earnings.
    4 Jan 2013, 11:11 AM Reply Like
  • tclark13
    , contributor
    Comments (168) | Send Message
     
    I've seen many dooms day articles based on parts inventories and I can't think of one yet that's been correct. Sometimes written year after year by the same author! Anyway, happy to wait for earnings reports to make my investment decision. In the meantime I am happy to add on the dips. Patience is quite a virtue in the world of investing.
    4 Jan 2013, 11:09 AM Reply Like
  • pedroaf
    , contributor
    Comments (42) | Send Message
     
    Market still buy this non-sense story because the stock is extremely manipulated. One more purchased article released today. All this supply chains previsions are proved dead wrong in the past.

     

    Apple anticipates demand drastically with new products released and specially at Christmas and then happens the adjustment. It would have taken seriously this article if they do not comment about the end-2012 sales being weak. Total nonsense after all sales records across the globe (included the 1 line person country China).

     

    So it's all BS and IMO one of the last opportunities to jump in the Apple train before the ER.
    4 Jan 2013, 11:09 AM Reply Like
  • User 509088
    , contributor
    Comments (1652) | Send Message
     
    put apple in your sa porfolio for one day and see your portfolio listing get overwhelmed with stories about aapl.
    4 Jan 2013, 11:15 AM Reply Like
  • Mortonk
    , contributor
    Comments (176) | Send Message
     
    Blah blah ....Deutsches Japanese team suggests.......blah blah...supply chain......blah blah.......UBS.....blah blah, is there any real evidence here.....? I never blew out on all my credit cards before the 21st Dec either because.....blah blah....someone suggested it was the end of the world....blah blah.....!
    4 Jan 2013, 12:10 PM Reply Like
  • Mark Cianchetti
    , contributor
    Comments (11) | Send Message
     
    Go Nokia!
    4 Jan 2013, 12:24 PM Reply Like
  • Caligula66
    , contributor
    Comments (36) | Send Message
     
    nokia?
    4 Jan 2013, 04:11 PM Reply Like
  • MarketView
    , contributor
    Comments (46) | Send Message
     
    If they know the percentage drop, why don't they know the actual unit drop? If these analyst putting out the total units produced in Q4, 2012 and planned in Q1 2013, everyone can see clearly the actual demand for iPhone 5. I think that 30% drop (assume it is true) is an indication of heavy demand for the following reason:

     

    1. Calendar Q1 has a 15 days off for the Chinese new year (in Feb.) in China. Apple certainly will build a lot more in Q4 2012 to prepare for the factory shutdown in Feb. 2013, which translate to 17% less production capacity in Q1.

     

    2. In general, Q1 is the slowest season for any consumer goods, including Apple. a market demand of 20% drop is normal. So from pure supplying chain point of view, a 35% - 37% drop is normally expected. For iPhone to have only 30% drop for Q1 production point of view, it indicates great market demand for the product.

     

    3. A few days ago, street news indicated that Hong Hai (iPhone's manufacturer) already asked some of its worker to keep the production lines open during the Chinese New Year. This is another indication that Apple can't afford to have Hong Hai to shut down for 15 days, otherwise the market supply/demand will not be balanced. With Apple built up the volume in Q4 2012 anticipating the 15 days factory shutdown in Q1, and now saying that they still can't afford to have the Chinese New Year shutdown, it is strong indication that the demand is much stronger than what Apple expected in Q4 2012. Therefore, the 30% drop in Q1 production can not even be true!
    4 Jan 2013, 12:27 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9251) | Send Message
     
    http://seekingalpha.co...

     

    AAPL will end at or around $560 by earnings.
    4 Jan 2013, 12:41 PM Reply Like
  • RaulReina
    , contributor
    Comments (35) | Send Message
     
    Definitively, there are obscure campaigns against the Co. A baseless rumor not confirmed by any reliable source, run by the media and ready! a selloff again..
    Significant facts like two of Apple's main manufacturing partners in China deciding to disallow breaks even during the forthcoming Chinese New Year celebrations as an attempt to meet the increased demand for the iPhone 5 and iPad mini in calendar Q1 2013, has been diminished or ignored by media..
    4 Jan 2013, 01:33 PM Reply Like
  • dolbo
    , contributor
    Comments (4) | Send Message
     
    Is this the reason for another brutal sell off today?
    4 Jan 2013, 01:33 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9251) | Send Message
     
    It's not that brutal.
    4 Jan 2013, 01:35 PM Reply Like
  • RaulReina
    , contributor
    Comments (35) | Send Message
     
    Any garbage is good to incentive a selloff on the stock. Obscene manipulation.. Recent upside put nervous some bears and funds and they had to produce something..
    I’ll see who laughs last on Jan 23
    4 Jan 2013, 01:36 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9251) | Send Message
     
    After a long time, TQQQ is doing fine even as AAPL drops. We really need to reduce the influence this one stock AAPL has on TQQQ. Thankfully the other techs are rallying.
    4 Jan 2013, 01:36 PM Reply Like
  • globalbusy
    , contributor
    Comments (43) | Send Message
     
    I am firmly LONG AAPL. I am in sync with most of the commentators who are bullish too. I will be lying if I said I don't worry about the multitude of negative comments whether they come from honest analysts or the heavy shorts/manipulators.

     

    With its market capitalization falling like a lead balloon, one has to wonder why is AAPL helpless. Does it not have any recourse to set the record straight without violating any of the SEC rules? I think AAPL has a moral responsibility to protect the interest of its supportive stock holders. It is high time AAPL opened up.

     

    There is a trace of doubt sown in my mind due to the inaction of AAPL management if these negative comments may be true! Heavens forbid.
    4 Jan 2013, 01:36 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9251) | Send Message
     
    "Does it not have any recourse to set the record straight without violating any of the SEC rules? "

     

    Reg FD.
    4 Jan 2013, 01:37 PM Reply Like
  • vk007
    , contributor
    Comments (81) | Send Message
     
    Samsung and Nokia are behind this news. APPL's losing market share...
    4 Jan 2013, 01:37 PM Reply Like
  • John1138
    , contributor
    Comments (161) | Send Message
     
    Wow yes. To the point they killed it!
    APPELL PETE CORP (APPL)
    http://yhoo.it/VAy4RP

     

    Kudos Sammy & Nokey!

     

    [Giggle]

     

    Oh and why yes I do think not being aware you've misstated the company's actual symbol is relevant to comment on: goes to credibility as I see it.
    4 Jan 2013, 04:10 PM Reply Like
  • John1138
    , contributor
    Comments (161) | Send Message
     
    The issue being profit share rather than raw numbers of loss leaders. While volume can make up for razor thin margins (or in the case of Amazon, per unit losses... for what is for them a storefront gateway) the gap in marketshare has to be enormous and neither Samsung nor Nokia have that sort of overall edge on Apple.
    4 Jan 2013, 05:00 PM Reply Like
  • jdhawk
    , contributor
    Comments (44) | Send Message
     
    Perhaps, the reason for the sell off today was not because of any sort of unsubstantiated supply chain rumours, but because the anti trust case against GOOG was dropped by this administration. GOOG was up nicely today +2%.

     

    Remember the hell that MSFT went through when they were harrassed by both US and EU anti-trust regulators. The company has never really recovered since. Dropping this case was a big deal for GOOG. As GOOG is becoming more and more a rival of AAPL, this bode ill for APPL.
    5 Jan 2013, 09:02 AM Reply Like
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