Jefferies spooked over iPhone production cuts, Bluefin sees changeover to iPhone 6s/Plus

“Shares of Apple have returned to their downward trajectory after a couple up days, falling $4.30, or almost 4%, to $115.42, the main focus this morning being the surprise devaluation by China of its currency, as my colleague Shuli Ren reported,” Tiernan Ray reports for Barron’s. “That won’t help iPhone sales in Apple’s most promising market, presumably, as it raises the effective price of the iPhone, goes the thinking on Wall Street.”

Ray reports, “At the center of it are varying reports of production cuts in iPhone, but the interpretation of the data is conflicting.

“On the one hand, Jefferies & Co.’s Sundeep Bajikar, who reiterates a Hold rating, cuts his price target to a $130 from $135, warning of ‘macro demand uncertainty for iPhone primarily in China.’ Bajikar’s main concern is that Apple is cutting production orders with suppliers for iPhone assembly while it gauges the effect on demand in China,” Ray reports. “With a slightly different take on things today are Bluefin Research Partners analysts John Donovan and Steve Mullane, who write that actually what is going on is a delay in production while Apple shifts suppliers to making the next model, presumably the iPhone ‘6S,’ cutting short builds of the existing iPhone 6”

Read more in the full article here.

MacDailyNews Take: Analysts who keep trying to analyze Apple using single data points are doomed to failure.

15 Comments

  1. “Bajikar’s main concern is that Apple is cutting production orders with suppliers for iPhone assembly while it gauges the effect on demand in China…”

    Didn’t another report come out in the last couple of days saying that their definitive research with suppliers shows that Apple IS NOT cutting orders?

    Clearly, these guys are just making this stuff up!!!!!

    1. The market is panicking over China’s currency devaluation, which means products based on a U.S. Dollar will now cost more in China’s currency. Since Apple is increasingly dependent on China sales to increase its revenues, the thought goes that the effective price increase will either discourage consumers from buying, or opt to buy an alternate clone-like, but cheaper product. Either alternative would mean Apple’s China revenues would either slow down, or reverse. Hence, the stock price drop.

      1. How about the benifits Apple gains from a stronger dollar with their Chinese suppliers and manufacturers … Same dollar buys Apple more now !
        Looking at only look at the one side of the dollar yuan effect…. Is Stupid !
        Plus the drop is not 50%.. Its only 1.9%… …
        Apple is under attack by Wall street.. Right now shorts are dominating the narrative.
        Apple wake up and change narrative… Or maybe you are liking this as it works beautifully for your buyback program !?

        1. One of the comments made on the WSJ report stated that “While the contracts with companies like Foxconn may be in $, they are based on an assumed exchange rate. The $ contract is then adjusted for changes in the exchange rate. Also, a very high portion of parts that Apple buys for their products are also manufactured in China, and will experience similar cost reductions. For Apple, on the whole they will likely benefit from the Yuan devaluation: virtually all of their manufacturing is in China, while a relatively small amount is sold in China.

  2. Oh no! Apple’s production costs plummet. Sell the stock!!! They can’t possibly make any more money now. They will have to charge the Chinese twice as much or something to survive.

    Come on people, get a brain and think it through.

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