Are Investors Doing Exactly What Apple Wants Them To Do?

Jan. 25, 2016 10:53 PM ETAAPL
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Apple share price has dropped from above $130 to below $100, amidst a slowdown of iPhone sales mainly attributed to reports of suppliers losing revenue. Could it be the case that Apple is testing new screens, and new suppliers that offer the same or better technology from their existing suppliers? Would it be advantageous for Apple to send signals to the market that iPhones are slowing down, by switching suppliers that many analysts follow? Yes, it would be beneficial to Apple!

Apples has something like $60 or more billion left of its share repurchase program. The lower the share price, the more shares Apple can take off the market with that $60 billion. By switching suppliers and reducing orders from suppliers that all of the major analysts follow, Apple knows the analysts will write reports of a slow down and people will begin selling the stock. At the same time Apple will gladly repurchase their shares for 30% less than what they could have 6 months ago. We all know Apple is testing new screens with many reports of switching screen technologies. Apple could very well be placing orders with different suppliers that the market knows nothing about and older suppliers would not have a clue what is happening. Several years ago Tim Cook said that watching suppliers is not a good indicator of device production, because their supply chain was so good, and supplier options are plenty.

Sure, iPhones may slip in the coming year, but that does warrant a sell of greater than 30%. Even when the major analysts talk about a slowdown of iPhone sales, they still have $130, $150, & $170 price targets for Apple. They know that a slowdown of iPhone revnue will not destroy apple. They also know that Apple TV, Apple Watch, Ipads and the continued push into enterprises can make up for a few million less iPhone sales.

My case is that Apple wants the share price to be as low as possible in the coming year, as they know the long term strength of their company is as good as it ever was, and when Mr. Market recognizes this, shares will jump back to record highs. By sending signals to the market that a slow down is occuring, Apple will take an additional 30% of shares out of the market with the money they have already committed. Any thoughts?

Disclosure: I am/we are long AAPL.

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