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Apple: The iPhone Demand Saga

Oct. 07, 2019 10:32 AM ETApple Inc. (AAPL)87 Comments
Bill Maurer profile picture
Bill Maurer


  • Nikkei reports production has been boosted up to 10%.
  • Is this due to strong demand or a variety of other factors?
  • Street estimates not yet buying this scenario.

Last week I discussed how technology giant Apple (NASDAQ:AAPL) was looking for a reason to see shares hit a new all-time high. The stock is threatening to take out its old high as optimism over the iPhone 11 line has combined with enthusiasm over newly-launched services. Last week, a report came out that discussed the potential of increased production for the smartphone, but it doesn't necessarily tell the whole story.

I discussed some analysts being positive in my previous article, but it was a Nikkei report late last week that production for the 11 line was up by up to 10%. Shares jumped nearly 3% on the news Friday, eliminating a good chunk of the losses seen in last week's market rout. Of course, in a separate article, Philip Elmer-Dewitt points out how bulls love production news from the Nikkei Asian Review when it is good, but discount any bad news. In previous years, we've seen production cut reports from Nikkei, and a lot of times investors have dismissed them as being overly negative with regard to Apple.

Now it's certainly possible that demand for the iPhone 11 line is doing well. Of course, as the note points out, production plans for the top of the line model have been revised lower. That means ASPs are likely to be a little softer than last year, especially given the larger than usual price cut to the legacy phones, the elimination of the 256 GB tier for the legacy phones, as well as the 11's $50 lower price.

As I discussed when the company unveiled this set of devices, management did a much better job this year of providing more value to the consumer. The lower price of the iPhone 11 as compared to last year's XR launch plus the free year of

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Bill Maurer profile picture
I am a market enthusiast and part-time trader. I started writing for Seeking Alpha in 2011, and it has been a tremendous opportunity and learning experience. I have been interested in the markets since elementary school, and hope to pursue a career in the investment management industry. I have been active in the markets for several years, and am primarily focused on long/short equities. I hold a Bachelor of Science Degree from Lehigh University, where I double majored in Finance and Accounting, with a minor in History. My major track focused on Investments and Financial Analysis. While at Lehigh, I was the Head Portfolio Manager of the Investment Management Group, a student group that manages three portfolios, one long/short and two long only. I have had two internships, one a summer internship at a large bank, and another helping to manage the Lehigh University Endowment for nearly a year. Disclaimer: Bill reminds investors to always do their own due diligence on any investment, and to consult their own financial adviser or representative when necessary. Any material provided is intended as general information only, and should not be considered or relied upon as a formal investment recommendation.

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