“On Monday, Katy Huberty of Morgan Stanley cited channel checks and a customer intent survey as the basis for predicting the potential for iPhone sales to fall by as much as 2.9 percent over the next year, reaching a total for 2016 as low as 224 million in a ‘worst case scenario,'” Daniel Eran Dilger writes for AppleInsider. “The idea of “Peak iPhone” generated clickbait headlines, but the real story is that channel checks have historically been extremely worthless at predicting Apple’s actual performance.”
“While Huberty’s report was exaggerated and presented out of context by a number of sites, there are also some key problems in the data itself. As noted by Philip Elmer-DeWitt of Fortune, Morgan Stanley’s data was based on channel check estimates by Jasmine Lu, who covers the Asian supply chain for the bank,” Dilger writes. “Lu’s component orders estimate described a 10 percent cut in orders (of some sort) for the current quarter and a 20 percent cut for the first quarter of 2016. Such channel checks and their interpretations have repeatedly proven to be wrong.”
MacDailyNews Take: Those who are interested in actually analyzing companies vs. ginning up low-year-end action from gullible clients, Katy, are those who listen to what Apple’s management tells them:
Even if a particular data point were factual it would be impossible to accurately interpret the data point as to what it meant for our overall business because the supply chain is very complex and we obviously have multiple sources for things, yields might vary, supply performance can vary. The beginning inventory positions can vary, I mean there is just an inordinate long list of things that would make any single data point not a great proxy for what’s going on. Apple CEO Tim Cook, January 23, 2013
“When Huberty asked Cook in the call’s Q&A about the company’s ‘December quarter revenue guidance for only low single digit revenue growth,’ and whether ‘Apple isn’t on the verge of X growth for the first time in a decade,’ Cook offered some real information,” Dilger writes. “‘You have to consider the constant currency growth rates,’ Cook said, referencing the strong US Dollar. ‘And so if you do that, our guidance is actually 8-11 percent, because we have about a 700 basis point FX headwind in Q1. And so, the [guidance for iPhone] growth is actually quite good.’ He added, ‘we believe that iPhone will grow in Q1, and we base that on what we’re seeing from a switcher point of view. We recorded the highest rate on record for Android switchers last quarter at 30 percent. We also look at the number of people that have upgraded, that were in the install base prior to iPhone 6 and 6 Plus, and that number is in the low 30 percentages, so we feel like we have a very open field in front of us.'”
Read more in the full article here.
MacDailyNews Take: These specious analyst notes are put out at year-end to increase brokerage house commissions. Don’t fall for that sort of manipulative garbage.
The calls from the brokers to their clients would be something along the following lines:
• To a client that is already long the broker would say, “our analyst just found out some information not yet out on the Street and he says shares will remain weak for weeks and quarters and you should sell your shares in Apple and buy XYZ instead.”
• To a client that has no position in Apple, the broker would say, “our analyst just made a great call on Apple and the shares are down around $3 per share and I know you have wanted to buy Apple and here is your opportunity. He still has an Outperform on the stock with a $140 price target.”
So, what the analyst did here is come out with a negative note that will get the shares moving, in this case lower (matters not actually) and allow the brokers to call their clients and ask them to buy/add/sell as the case may be.
It’s called an “actionable” research report in the business. — Jay Somaney, Forbes, November 10, 2015
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Some analysts see Apple iPhone sales seen turning negative in 2016 – December 14, 2015
Cramer: Apple shares may not have momentum but they’re cheap – December 14, 2015
Morgan Stanley slashes Apple price target by 12%; shares fall in pre-market trading – December 14, 2015
Apple stock slides on Credit Suisse claims of iPhone component order cuts, weak iPhone 6s demand – December 2, 2015
UBS analyst’s latest ‘research’ note on Apple is just another ‘actionable’ note and should be totally ignored – November 16, 2015
Apple shares continue to get slammed on commission/bonus related ‘actionable research’ – November 10, 2015
Apple lower after Credit Suisse notes substantial supply-chain cuts – November 10, 2015