Neil Hughes
While recent reports about iPhone 5 component orders being reduced have caused "great confusion," the reality is consumer demand for the iPhone 5 has not waned.
Analyst Shaw Wu with Sterne Agee revealed in a note to investors on Tuesday that his checks with suppliers indicate that demand for the iPhone 5 "remains robust." He's not concerned by recent reports that interpreted iPhone 5 order cuts as a sign of weak demand.
Wu joins a growing chorus of market watchers who believe any order cuts for iPhone 5 components are not representative of consumer interest. Mark Moskowitz of J.P. Morgan said the reports are just "more noise" that will prompt investors to overreact, while Maynard Um of Wells Fargo said any cuts are actually "not news."
For his part, Wu believes that reduced orders for iPhone 5 components are a result of improved yields, which has required Apple to place fewer orders for components. In addition, he said supplier shift changes made by Apple have contributed to the cuts.
With so much attention on Apple's future, Wu believes Apple's guidance for its March quarter will be the "trickiest" that he can remember.
He expects Apple will give "vintage conservative" guidance, as it has traditionally done. But while in the past investors would brush aside Apple's soft guidance, this time some may view the guidance as a sign of weak demand.
As for Apple's recently concluded December quarter, Wu expects iPhone sales and gross margins will likely surprise investors to the upside. His forecast calls for sales of 47.5 million iPhones, above market consensus of 46 million to 47 million, with gross margin of 38.7 percent, versus expectations of 38.3 percent.
Sterne Agee has a price target of $840 for AAPL stock, with a "buy" recommendation for investors. Apple will report its earnings next Wednesday, Jan. 23 — a call that is viewed by some as the company's most important in 10 years.
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89 Comments
Buy. Hold. Put it aside, ignore the noise, and stay focused on the long horizon.
And this new news will make Apple's stock price drop some more. I'm not even going to try to come up with an explanation since the traders pushing the stock down apparently don't care about logic or reason, anyway. Meanwhile, the WSJ who foisted the ridiculous rumor about weak sales will continue to be cited by sites around the world and continue to be believed no matter what nonsense they publish.
I though demand had slowed. Had I held an iPhone 5 before buying one I wouldn't have bought it. They are either badly made or badly designed. They rattle like a toy. I thought I got one that slipped through quality control and took too long to take advantage of my Apple Care and couldn't return it when a "Guinness" told me rattling is "normal". Ended up selling it privately and lost $500 in the process cause I got sick of anyone who was nearby when it rung asking me what's wrong with it. Hope the iPhone 5S?6 is better quality or ill have to decide between windows android or blackberry.
geoadm, you're a dope
It is Cramer and other pundits that are talking the stock down. This way they can make a killing by buying low on Apple stock as the stock is propelled upwards by Apple's every enlarging cash hoard and profits. Happens all the time. Apple is the most manipulated stock in history. But all you have to do is to ride it - buy low, sell high.