No 2013 Rotation From Bonds Into AAPL

Tyler Durden's picture

AAPL is now in the red for 2013 having filled its January 2nd opening gap. Down around 5% from its highs of that day, AAPL is down over 2% today alone (on decent volume) on the back of further concerns (prompted by Deutsche Bank) about iPhone 5 sales. It seems the meme on rotation from bonds to stocks is just not holding up for AAPL - perhaps it is time to plunder our Social Security fund to buy AAPL?

 

$526.75 seems like next support...

 

Via Deutsche Bank: Major output adjustment risk for iPhone 5-related components following on from iPad

1Q 2013 (current quarter) production of electronic components and materials for Apple's mobile products is exposed to major adjustment risk. This is the result of sales to end-2012 having not been as strong as expected. We view 4Q 2012 production and shipments for iPhone 5 as having been slightly under 40m on a finished product basis, and around 45m on a major device basis, close to the upper limit expected one month previously. Value chain movements, however, suggest a QoQ decrease of more than 30% for 1Q 2013 to respective figures of 28-30m and 25-27m.

 

Taking LCD panels as an example, there is a strong risk of further decreases in component requirements as both panel and component makers are holding component inventories. Feb, which has two fewer working days, should see the bottom on a single-month basis, but as component enquiries for 2Q currently lack strength, there is little likelihood of a V-shaped recovery in 2Q, and neither are there moves for components seen for 5S (new product). We expect radical adjustments in 1Q 2013 for iPad (9.7") to 7-9m (-50% QoQ) for finished products, and to 4m or less (-60% QoQ) for LCD panels, of which inventories are high. The only product we expect to continue favorable is iPad Mini, for which we anticipate around 10m for finished products, and 14-15m (+60% QoQ) for panels.

 

Although we view Japanese device and component makers as having performed in line with guidance in 4Q 2012, we see a strong likelihood of major shortfalls from guidance, except for iPad Mini, in 1Q 2013, and are concerned about adverse effects on capacity utilization, sales, and profits. Despite major benefits from yen depreciation vs the euro and US dollar, we plan to pay attention to undershooting key volume-basis demand.