Apple shares drop below $500 after reported cuts in iPhone 5 parts orders

“Apple Inc. (AAPL) shares declined after the Nikkei newswire reported that the company scaled back production plans for the iPhone because sales have trailed expectations,” Amy Thomson reports for Bloomberg. “The stock fell as much as 4.5 percent to $497 in early U.S. trading.”

“Apple, based in Cupertino, California, reduced its original target to order 65 million iPhone 5 displays this quarter by about half, Nikkei said, citing an unidentified senior executive at a component maker it didn’t name,” Thomson reports. “First-quarter iPhone shipments may decline 25 percent from the previous period, Peter Yu, an analyst at BNP Paribas, said today in a note.”

Read more in the full article here.

Reuters reports, “Apple Inc has cut orders for LCD screens and other parts for the iPhone 5 this quarter due to weak demand, the Nikkei reported on Monday, in a further sign the U.S. firm is losing ground to Asian smartphone rivals.”

MacDailyNews Take: We looked for proof that “weak demand” is the reason in the Reuters report, but found none. Journalism is dead – at Reuters, at the very least.

Reuters reports, “The move, if confirmed, would tally with analysts saying that sales of the new iPhone 5, which was released in September, have not been as strong as anticipated.”

MacDailyNews Take: We only see one analyst, Jefferies analyst Peter Misek, cited in Reuters‘ “report.” Singular, not plural. Actually, as usual, analysts are all over the map with their iPhone unit sales prognostications, ranging from 43 million to 63 million.

Reuters reports, “Apple also cut its orders for memory chips for its new iPhone from its main supplier and competitor Samsung, Reuters reported in September, quoting sources with direct knowledge of the matter.”

MacDailyNews Take: Gee, that must be the proof that iPhone sales are “weak.”

Reuters reports, “The company has been cutting back its orders from Samsung as it seeks to diversify its memory chip supply lines.

MacDailyNews Take: Oh, wait, it’s not.

If you’ve read Reuters for the last few months, you’ll have noticed a pervasive anti-Apple/pro-Samsung theme in many of their Apple-rleated articles. After all, we read every single word and buried lede. Oh look, right on cue, it’s time for the Samsung commercial in the Reuters “report.”

Reuters reports, “Samsung said on Monday that global sales of its flagship Galaxy S smartphones had topped 100 million since the first model was launched in May 2010. The Galaxy S3, launched last May, sold more than 40 million in seven months.”

“The new Galaxy S IV is widely expected to be released within months, and may have an unbreakable screen, full high-definition quality resolution boasting 440 pixels per inch, and a more powerful processor,” Reuters reports. “Samsung has overtaken Apple, helped in part by the popularity of its Galaxy Note II phone-cum-tablet, reinforcing the benefits of offering a wider range of handheld devices at most price points, while Apple rolled out just a single new smartphone last year globally, analysts have said.”

Reuters reports, “Samsung is expected to increase its smartphone sales by more than a third this year, and widen its lead over Apple, according to researcher Strategy Analytics, which has forecast Samsung will sell 290 million smartphones in 2013 versus iPhone sales of 180 million.”

MacDailyNews Take: We’re left with only one question: When did Samsung buy Reuters?

Must have been a private sell-out.

Don’t bother reading the report for news that unit share does not each profit share or that Apple’s share of worldwide smartphones is 71%, roughly 3X that of Samsung’s.

When you heard people talk about Samsung “widening its lead over Apple” and then only quoting market (unit) share, keep in mind that they are idiots and/or liars.

“Market share is mistakenly being used by Wall Street as a proxy for platform value and dominance. According to comScore, as of November 2012, Android is ahead in market share at 52.6% versus Apple at 34.3%. However, Apple generated 71% of the entire mobile industry’s operating profits, according to Canaccord. In any other industry, the analysis would end right here, as investors and analysts would never seriously contend that market share is more important than profit share.” – Bert Danner, January 11, 2013

Full article – Think before You Click™here.

MacDailyNews Take: Wait, Apple paring back orders after the Christmas quarter and ahead of an expected June model refresh? “Let’s make up nonsensical reasons for the cause and hope people fail to use common sense and panic instead!” say the shorts. “This way we can make even easier money!”

The fact is that nobody outside the top levels of Apple Inc. really knows what’s happening inside Apple Inc. Without knowing when the next iPhone is coming or what Apple’s real plans are, attributing shifts in component orders to “slowing demand” or some other concoction is disingenuous, at the least, and criminal, at the most.

Sometimes we think the recent U.S. capital gains tax hikes are causing extra desperation on the fomenters, people who can’t pick winners very well, so they try to rig the game by manufacturing “losers.” You know, the leeches of Wall Street? Now these blood-suckers have to make more money in order to offset their tax burden, so the anti-Apple FUD is rolling out even thicker. Joy.

Perhaps it’s time to severely limit or disallow the ability of investors to generate profits on a declining stock? Logically, wouldn’t that cure the greedy fomenting that plagues Apple Inc. and other successful compnaies? What if the only real reward went to investors who back companies that perform well, rather than creating an obviously high incentive to drive down share prices via whatever means they can get away with and thereby punish excellence?

And, BTW, “iPhone component cuts means weak demand” bearshit is a month old. You’d think they could come up with something new, or not quite as recently overused, wouldn’t you? Desperate times call for desperate measures, we guess.

Ah, well, the market is game. More like a rigged crapshoot right now. Good luck if you’re playing!

MacDailyNews Note: Apple reports earnings after closing bell, right around 4:30pm Eastern, on January 23rd.

Related articles:
The Android engagement paradox – November 26, 2012
People buy more Android phone units and do less with them vs. Apple’s revolutionary iPhone – November 14, 2012
Study: iPhone users vastly outspent Android users on apps, respond much better to ads – August 20, 2012
Apple utterly dominates mobile device market with 6% market share – and 77% of the profits – August 6, 2012
Game over, Android: Apple owns 84% of mobile gaming revenue – May 7, 2012
Wealthy smartphone users more likely to have iPhones; less likely to play games, tweet – April 2, 2012
U.S. Apple product users split evenly between Republicans and Democrats; Half of U.S. households own at least one Apple product – March 28, 2012
Study: iPad users more likely to buy – and buy more – online than traditional PC users – September 29, 2011
Apple iPhone users most open to mobile payments – August 22, 2011
iPhone users smarter, richer, less conservative than Android phone users – August 16, 2011
Apple iPhone users spend significantly more on their credit cards than non-iPhone users – November 5, 2010
Study: Apple iPhone users richer, younger, more productive than other so-called ‘smartphone’ users – June 12, 2009
Nielsen: Mac users are better educated and make more money than PC users – July 12, 2002

57 Comments

  1. citing an unidentified senior executive at a component maker it didn’t name,”

    …neither of which actually exist.

    Apple suppliers know better than to talk about Apple’s orders with third-rate news hacks who are trolling for page hits. You don’t fuck around with your biggest customer’s proprietary information.

    1. Even if the screen story is true, wouldn’t that mean many different things (many are good)!
      • Apple is diversifying the screen sources away from Samsung as has been written about many times.
      • Due to component production limits, the iPhone production is being slowed to redirect the maxed out production of other more profitable devices (like the iPad mini).
      • If the iPod touch uses the same screen, could people be buying the bigger more expensive iPad mini reducing the need for the smaller retina display screen.
      • etc.

      We will know more in 9 days from the quarterly report on the 23rd. This was just a cheep way to beet up Apple’s stock AGAIN.

    2. Of course it could be Samsung who have no selfish reason at all to pass on such sentiments to the willing hacks. That said I do think that Apple has heaped some of this upon themselves by being less flexible and responsive than they could have been. The iPad mini is an example of doing the opposite and I cant but help wonder if that was done as a direct result of the phone experience. Even that was later than it should have been.

  2. I know the iPhone 5 is selling well, but does anyone (well any sane person anyway) really think Apple or anyone else in the supply chain thought Apple would sell 65 million iPhone 5 phones in the first calendar quarter of 2013? That is probably close to half of all expected top of the line iPhone (5 then 5S or 6) sales for all of 2013 — and the first calendar quarter is typically the weakest for all mobile phone sales.

    Sounds like pure BS to me.

    1. There’s no way they were expecting to sell 65 million iPhones this coming quarter.

      If first quarter iPhone sales are only 25% lower than the holiday (and essentially launch) quarter, that’s a very good quarter. Not a bad number at all.

      1. “Monday, January 14, 6:20 AM Apple’s (AAPL) shares are -3.4% premarket following reports that the company has cut iPhone 5 component orders for calendar Q1.”

        Note: CALENDAR Q1, not fiscal.

      1. Are you sure?
        When I read “First-quarter iPhone shipments may decline 25 percent from the previous period”, it just can’t be the holiday quarter he’s talking about. There’s simply no way the holiday quarter (Oct, Nov, Dec) could have 25% lower iPhone sales than the previous quarter. If he said that, no one would believe him.

          1. I guess that’s what I’m saying. How in the world is that possible?

            I can believe AAPL would drop irrationally for an anonymous rumour of a cut to Jan, Feb, Mar quarter’s estimated production/sales. Sad, but I can believe people would buy that.

            But trying to say iPhone sales in the first full quarter that the iPhone 5 was available (and just happened to be the holiday season) were 25% lower than the quarter before that (which was obviously not during Christmas, and was at the tail-end of the iPhone 4S’ year-old product life) is totally unbelievable.

            It’s so unbelievable that that can’t possibly be what they meant.

            1. Discussing whether the quarter mentioned in the original article is Oct-Dec or Jan-Mar is not ‘ravings’ or a banshee wailing in the woods.  You should switch over to the right nut to do your thinking.  Your left one is too random and emotional.

              There is NO WAY that Apple lowered its component orders in Oct-Dec compared to the previous quarter.  However, Apple makes several iPhones (4, 4s, 5) and iPods and may be getting ready to launch a new product (5s), so it is simply not possible to use random pieces of news to discern what is happening inside of Apple.

              I believe the most likely possibilities are: (a) component orders were lowered recently because of a huge increase in component orders in Sept-Oct-Nov to increase the iPhone 5 build rate and address the ‘supply constraint’ associated with Foxconn’s inability to assemble an adequate number of iPhone 5’s and (b) preparation for a new iPhone launch in spring ’13.

  3. Re: MDN’s Take:

    Like it or not, this is the free market. If people are stupid enough to believe these rumors and sell, well, “a fool and his money are soon parted”. One could, theoretically, make the analogy to crying “Fire” in a crowed theater. But what’s the alternative? We have this really annoying law call “freedom of speech” which pretty much allows you to say any stupid thing you want. No one has to believe these guys.

    I guess all I’m saying is that the “cure” for this problem would probably be worse than the disease…

      1. Stupid.  Short sellers discover and reveal information about companies that optimistic investors never see.  This is just as dumb as MDN’s comment: “Perhaps it’s time to severely limit or disallow the ability of investors to generate profits on a declining stock?”

        Here, as so many websites, the market is ‘good’ and everyone is well-intentioned as long as AAPL is trending higher, but every selloff is explained as market manipulation or some other type of evil behavior. 

        People who look at the world this way rather than trying to understand the operation of a (mostly) impersonal, competitive, efficient market are simply ill-equipped to be investors. 

        1. Well, in the other side you are completely naive if you think apples stock price is the product of a free market.

          Between high freq trading, naked short selling, and dark liquidity pools we are far and away not a free market associated with healthy capitalism.

    1. Have a different opinion.

      MDN’s take should also win an Emmy if they had an applicable category. One of the BEST I have read to date.

      MDN covered all the bases and citied the unholy convergence of outside influences running down the finest company in the world for their own gain. Whether your’re a short trader, clueless analyst, jealous competitor, paid plant, or an irresponsible journalist with a bias and hidden agenda — all have been called out.

      Hello, SEC. Citing unidentified source whispers your staff ran out of suntan lotion in Margaritaville.

      @macman1984: Yes indeed, we enjoy freedom of speech. We also have freedom to lie (if your not caught), obfuscate, hide behind unnamed sources, report half-truths, spread rumors, mock, and influence negative perception for the purpose of negating positive reality.

      Have a feeling this won’t be the end of FUD leading up to January 23rd. The volume will most likely increase. How far we have fallen.

  4. The ones with any common sense keep buying AAPL on these big dips. When they blow away the street on 1/23 during their quarterly earnings call you’ll be glad that you did.

  5. Don’t let it be forgot
    That once there was a spot
    For one brief shining moment
    That was known as Camelot!
    – King Arthur [singing], Camelot (1967) –

    The king is dead. Literally.

  6. I thought sales of iPhone5’s were doing quite well? Perhaps not? But I wonder if this is more about new models coming out rather than poor sales? We’ll know soon enough. Earnings is next week. Facts will come out then. I’d be careful picking up AAPL this morning on weakness. It may be going down for a while.

        1. “That makes you question what you know is true”? You have inside information because you work at Apple? You have proof that anything that isn’t praising Apple is a malicious rumor? Personally, and this is just an opinion because I don’t work at Apple, I believe that this is accurate news as far as cutting parts orders. I don’t believe it is due entirely to poor iPhone five sales. In fact I don’t think it is related at all. I believe it is more about new product in the pipeline. But again, I could be wrong because I don’t work at Apple. I did learn long ago to be objective about investing. Never to take it personally and never to fall love with a stock. Therefore I have no reason to act as though Apple is my best buddy. That would be irrational and immature. Apple is just a company making stuff. Great stuff but still just stuff. I have no reason to defend it or attack it. I make my living with their products but I can separate that when it comes to investing in the company. And I do.

  7. “Journalism is dead.”

    Not at MDN.

    Mainstream Media circa 2007: “What if we backed a guy for U.S. President who had virtually no qualifications and ignored his inevitable screw ups? What would happen?”

      1. Prior to being elected U.S. President, G.W. Bush served two 4-year terms as Governor of Texas, winning the 2nd with a record 69% of the vote. Texas’ GSP is comparable to the GDP of India or Canada, which are the world’s 12th- and 11th-largest economies.

        Obama was a “community organizer” and a one-term senator who served a total of 2 years and 10 months before resigning to run for president.

        1. How come this “newbie” president it doing so much better than the former governor of Texas?

          With that much experience, Bush has no excuse for bankrupting the economy, turning the world against us, and violating basic American values during his presidency.

    1. Will have?
      You can’t compress much more than what we’re seeing. At this rate, we’ll soon see a P/E of zero.

      A $500 share that represents $150 in CASH, which is generating $50 a year in EARNINGS (that’s a trailing P/E of only 7). And it’s still GROWING.

      1. I think the market can compress Apple’s P/E as much as it wants if the hedge funds actually control the market. There doesn’t seem to be any rules for Apple’s value. It doesn’t have to connect to anything solid. It appears to be a broken stock. If you ask me, it’s just trading on rumors and speculation with no regard to fundamentals or revenue and profits. Same with Amazon, but in a different direction.

      2. I’ve been saying for a long long time that we’ll probably see the aapl share price achieve parity with its cash holdings. I wouldn’t even be shocked if it dipped below that threshold lol.

    2. That might be true but why didn’t anyone see this three months ago. Most of the analysts were calling for higher than $700. This is supposedly Apple’s best quarter. It just seems unusual for Apple to lose money in this quarter. Especially enough to knock the share price down a couple of hundred dollars. You talk about margin compression. So, is Amazon immune to margin compression? It’s already got razor thin margins, but the share price is continually rising. Apple is doing better than most of the tech companies and supposedly has stolen a fair amount of their Windows PC business. Yet Apple shares are still declining even as computer market share is rising. I’m sorry, but it really makes little sense that the share price is dropping this much due to a couple of percent of margin compression. Don’t high iPad sales even count?

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