AAPL Under $500 Premarket Following Reports Of iPhone 5 Demand Collapse

Tyler Durden's picture


AAPL stock is currently trading at or just under the $500 "generational bottom" in the premarket session, or nearly a one year low, following news first from Japan's Nikkei that Apple has slashed orders for iPhone 5 components, and then from the WSJ, that demand for the flagship phone was far less than expected, resulting in a cut in orders in the supply chain. Per the WSJ: "Apple's orders for iPhone 5 screens for the January-March quarter, for example, have dropped to roughly half of what the company had previously planned to order, the people said.  The Cupertino, Calif., company has also cut orders for components other than screens, according to one of the people.  Apple notified the suppliers of the order cut last month, the people said."


The move comes as the company has been facing greater challenges from Samsung Electronics Co. 005930.SE +1.24% and other makers of smartphones powered by Google Inc.'s Android operating system. While Apple has set the agenda for the smartphone market since it released its first iPhone in 2007, South Korea's Samsung, which sells many Android-based models at various price points, has already overtaken the U.S. company as the world's largest smartphone vendor by market share. Demand is also growing for inexpensive smartphones from Chinese makers such as Huawei Technologies Co.


While the popularity of iPhones and iPads has been boosting Apple's earnings and investors' expectations over the past few years, there have been concerns in recent quarters about how long the growth momentum can continue. Apple's stock price, which peaked at about $705.07 in September, closed Friday at $520.30, down 0.6%.


In the 2012 third quarter, Apple held 14.6% of world-wide smartphone shipments, down from a peak of 23% in the fourth quarter of 2011 and the first quarter of 2012, according to IDC.


Samsung's market share, meanwhile, rose to 31.3% in the third quarter of 2012, compared with 8.8% in the third quarter of 2010. The Korean company said earlier this month that it expects to report another record operating profit for the fourth quarter of 2012, capping its best year ever amid strong sales of its Galaxy line of smartphones. The company expects an operating profit of between $8.1 billion and $8.5 billion for the three months ended in December.




Apple's cut in orders may also affect first-quarter sales of component makers, some of which are largely dependent on the U.S. company. The fact that some iPhone components are highly customized makes it difficult for suppliers to find alternative buyers in a short time frame. Sharp, one of the suppliers of the screens, has been struggling financially with a cash crunch and losses from its television operations.

Perhaps most surprising is that this actually comes as a surprise to some, and yet we look forward to Gene Munster's explanation for how his channel checks may have been so very off. Then again there is always the iPhone 6. And then, a few months later, the iPhone 7, and so on. That time(s) will be different.

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Mon, 01/14/2013 - 07:48 | 3150166 koaj
koaj's picture

i sell phone related products on various websites. iphone 5 is a big seller but nothing like when the 4 or 4s came out


the note 2 is insane right now and has been for a month.

Mon, 01/14/2013 - 07:51 | 3150168 Karlus
Karlus's picture

Just bought a note 2, its what iphone 5 shoulda been.

This is a $200-250 stock, they have no new ideas except for iWatch

Mon, 01/14/2013 - 08:04 | 3150177 GetZeeGold
GetZeeGold's picture



Steve left a hard drive full of ideas to take Apple through the next 1000 years.....but sadly the cleaning staff reformatted it.


Gotta hand it to them......that drive is squeaky clean now.

Mon, 01/14/2013 - 08:15 | 3150189 Popo
Popo's picture

Did Steve tell them to keep making phones with small screens even though the public clearly wanted bigger ones?  

And did Steve tell them to make the phone even thinner (and the battery smaller) even though battery life completely sucked?

And did Steve tell them to release it with a completely substandard mapping application?

And did Steve tell them to get rid of the scuffless exterior and replace it with an easily scuffed one?

And did Steve tell them to change the dock connector, requiring users to go and replace their sound systems, keyboards, chargers and car docks?

Because if all those genius ideas were on Steve's hard drive, the rest of the ideas probably sucked too.    The competition (not just Samsung) is going to eat their lunch.

And now Apple's in a corner because if they release another screen size, their developers have to re-release every app *again*. 




Mon, 01/14/2013 - 08:16 | 3150193 GetZeeGold
GetZeeGold's picture



We have to make phones with smaller screens.....we have a planet to save here. I'm sure the public will understand our superior thinking.

Mon, 01/14/2013 - 08:32 | 3150211 GetZeeGold
GetZeeGold's picture




Mon, 01/14/2013 - 09:02 | 3150252 trav777
trav777's picture

it's time for a "windfall profits" tax on Samsung, isn't it?

I mean, 8.5B...that's almost XOM profits.  Yes, nevermind that Samsung's margin is WAY the fuck higher than XOM's meager 8% ROR.  Any profitable company must be taxed to hell.

Samsung makes good devices; their OLED screens are the best out there and they have their own cpus and the 9 yards.

Mon, 01/14/2013 - 11:11 | 3150535 DosZap
DosZap's picture

Samsung makes good devices; their OLED screens are the best out there and they have their own cpus and the 9 yards.

But crappy cameras.

Makes no sense to have a great phione, and a crappy camera.

Mon, 01/14/2013 - 13:36 | 3151098 Dumpster Fire
Dumpster Fire's picture

Yah cant even get a good pic of my junk to pass along

Mon, 01/14/2013 - 08:45 | 3150225 What is The Hedge
What is The Hedge's picture

And Roads!!!

Mon, 01/14/2013 - 08:14 | 3150192 JPM Hater001
JPM Hater001's picture

Just in time for my Jan 19 $510 puts.

Mon, 01/14/2013 - 09:11 | 3150266 max2205
max2205's picture

Been nice if they released this friday.  What a crock of crooked shit. They shorted on insider info on the spike to 535 last week.   Fuck them. 


Mon, 01/14/2013 - 07:49 | 3150167 resurger
resurger's picture

Badnews for Central Bank of Israel...

But dont worry, Liberty 33 will defend the critical 500 handle

Mon, 01/14/2013 - 08:05 | 3150180 Popo
Popo's picture

More government attempts at thread disruption.   Please ignore the above poster.    We're here on this page to talk about how Apple is about to tank.   Your efforts to try to get us to talk about something else won't work.   Btw, how's your shitty job in Langley?   Still watching tranny porn in the off hours?

Mon, 01/14/2013 - 08:22 | 3150200 Temporalist
Mon, 01/14/2013 - 08:06 | 3150182 GetZeeGold
GetZeeGold's picture



Blame it on the Benjamites? Well......OK then.

Mon, 01/14/2013 - 07:52 | 3150169 Inthemix96
Inthemix96's picture

What a shame.


Mon, 01/14/2013 - 07:55 | 3150172 jubber
jubber's picture

Guess the FED will be buying IBM hand over fist to counteract the move on the indexes?

Mon, 01/14/2013 - 07:54 | 3150173 LongSoupLine
LongSoupLine's picture

Wow, I need to research this on my Samsung.

Mon, 01/14/2013 - 08:08 | 3150186 GetZeeGold
GetZeeGold's picture



Those cats make everything I own. It's reasonably priced and highly functional.

Mon, 01/14/2013 - 07:55 | 3150174 Jason T
Jason T's picture

I remember when I worked in printed circuit board manufacturing, we had 1/4 of our revenue from a huge Intel order back in 1999 and then suddenly, it got cancelled to a fraction as they way over estimated demand.. we were running 3 shifts ..place was crazy busy, OT galore.. times were  good in America back then.

This apple collapse reminds of me that irrattional exuberance just like Intel back in 1999/2000.

Intel order never came back and our reveune peaked in 1999.  Closed shop for good 2007.  PCB industry is dead in America.

Mon, 01/14/2013 - 08:05 | 3150181 PhD
PhD's picture

Interesting, where was the plant? California?

Mon, 01/14/2013 - 08:49 | 3150232 rtalcott
rtalcott's picture

WI/MN?  Allied-Signal/Johnson-Matthey?

Mon, 01/14/2013 - 07:58 | 3150175 Karlus
Karlus's picture

Look, apple did a lot of things right, but not to justify biggest company. Bottom line, they changed the smart phone world, but do not have any ideas to keep momentum.

Note 2 is just the latest evolution, nothing revolutionary.

Mon, 01/14/2013 - 08:41 | 3150217 EscapeKey
EscapeKey's picture

There is a lot more innovation in the Note 1/2 product line than iPhone 4/4S/5 combined.

Mon, 01/14/2013 - 09:04 | 3150257 trav777
trav777's picture

yeah, but Android ain't it.  Android sucks and it makes only Microsoft any money.

Samsung has had the best handsets for some time, which is why I've been using them for so long

Mon, 01/14/2013 - 10:04 | 3150350 EscapeKey
EscapeKey's picture

Android "only makes Microsoft money".

Uh right. Except that Samsung is wildly profitable (S3 and Note are both Android-based, which means you must be using a really great handset with shitty OS), HTC until recently, and a flux of Chinese manufactors work to reduce margins, with a net benefit to consumers.

Of course that Android is actually Google's must mean that you think licensing agreements make Microsoft the lions share of profits in the Android ecosystem. Care to back that up with some links?

Mon, 01/14/2013 - 08:02 | 3150178 rodocostarica
rodocostarica's picture

Anyone want to share a list of publicly traded Apple suppliers? Just symbols,  we can do the research.

Mon, 01/14/2013 - 08:46 | 3150228 rodocostarica
rodocostarica's picture

Thanks dobermangang! will get on it.

Mon, 01/14/2013 - 08:52 | 3150242 dobermangang
dobermangang's picture

This article gives a very good breakdown of components in the iPhone5.


Mon, 01/14/2013 - 08:03 | 3150179 lunaticfringe
lunaticfringe's picture

Jobs was Apple. Without him, it's just a high priced electronics company using slave labor. Why the fuck would anyone give them 1800 for a laptop?

Mon, 01/14/2013 - 08:51 | 3150238 rtalcott
rtalcott's picture

Jobs was apple because he could not/would not have it any other way...end result a weak organization left behind.

Mon, 01/14/2013 - 08:06 | 3150183 Inthemix96
Inthemix96's picture

To be honest, I dont know how many of you lot are like me.

I have never seen the attraction to gadgets?  Its never bothered me all me life?  Must be made different I suppose, but my older brother is shit-hot when these toys come out.  He paid £600 for this new Iphone 5.  Waste of money in my eyes like, but it would be a strange world if we all like me, now theres a thought?


Mon, 01/14/2013 - 08:31 | 3150209 Chump
Chump's picture

It's just something you get used to in my opinion.  Once you have the ability to look up directions on the fly or order a pizza with your phone that just becomes a part of your life.  I'm watching it happen with a guy I work with occasionally.  We were in the field the other day and I made a comment that it looked like it may rain in a few hours and mentioned that I wasn't expecting rain that evening.  He proceeds to pull out his new smartphone and check the radar, hourly forecast, and so on.  Me, I give less than half a shit and was sort of just making a comment and mentally preparing for the possibility that I'd have to pack up a little earlier than I was planning.  Him, he now how has something he would "miss" if he no longer had access to it, and he didn't have a smartphone until two weeks ago.

I wouldn't even buy a laptop for what some people are paying for their phones, and I have more means than some of them.  I also don't continue conversations where they cry poor and bemoan economic conditions.  There's no telling how long it would take for me to call them a dumbass or something similar.

Mon, 01/14/2013 - 08:38 | 3150216 Inthemix96
Inthemix96's picture

Aye its a strange thing to see when you see a grown man (my brother in this case) atatch an emotional bond to something like a phone, and especially one which will be out of date by this time tommorow?

I'm pleased I never found the atraction to electronic toys.  Now power drills though, thats a different story.


Mon, 01/14/2013 - 08:45 | 3150223 EscapeKey
EscapeKey's picture

No emotional bond here, but gadgets do make our lives easier.

Then again, working in the tech sector probably means I'm biased...

Regardless, I've got both Android and iOS devices, and essentially, the Apple world has largely stood still for the past few years. Very little real innovation, whereas Android has now overtaken iOS in just about every category.

Mon, 01/14/2013 - 08:50 | 3150234 Inthemix96
Inthemix96's picture

Without a doubt escapekey,

I know plenty more like him, just yesterday I went for a pint and it struck home just how many people are glued to these toys all the time.  Even the lad who phoned me up to go for a pint spent more time playing on his phone than talking to me.  Seriously I give up??

Mon, 01/14/2013 - 09:08 | 3150256 Temporalist
Temporalist's picture

Maybe he's just not that into you?


I just leave my phone in my pocket nowadays to observe people like those that go out socially and then use Disgracebook so they can be social with people they don't know, feign interest in, and will never meet face to face, while ignoring their actual real life friend sitting next to them. 

Observing things in the real world...is there an app for that?

Mon, 01/14/2013 - 09:09 | 3150265 Inthemix96
Inthemix96's picture

Could be temporalist?

Its not just him, its everybody!, every one you see is glued to them.  Dont get me wrong,if thats you're cup of tea fine, but it is disturbing how many folk are atached to bloody phones?  Even me better half has started using the one I got her for christmas more and more, its a samsung S2 I think?  Strange world nowerdays?

Mon, 01/14/2013 - 20:58 | 3152710 helping_friendl...
helping_friendly_book's picture

My wife got t-boned a year ago by some college kid on his way to see/scrump his gf. The dumbass barrelled through the intersection right by a school trying to take a left as he almost killed my wife and totalling her Volvo. We have to go to see the doctor tomorrow because her back is ruined. I'll BET MY LIFE THE JACKASS WAS ON HIS CELL PHONE. 

I can't wait to get this guy's phone records. If he was on the fucking phone while he almost killed my wife....game over....instant judgement/settlement w/ his insurance company.

Mon, 01/14/2013 - 08:50 | 3150235 Chump
Chump's picture

No doubt, and certainly a lot of people do need the functioning of smartphones as they've become fundamental equipment in various industries.  In my own experience, completely unscientific and anecdotal, that's about 4 in 10 users.  The rest just luv luv luv to be able to update their facebook status with a witty comment as soon as they've thought of it.

Mon, 01/14/2013 - 09:08 | 3150259 trav777
trav777's picture

Android?  LOL.

You mean the UIs that each of the manufacturers has to write atop that shitty OS?

We'll see how google's freeware business model works out in the longrun lol.

Mon, 01/14/2013 - 09:52 | 3150346 EscapeKey
EscapeKey's picture

Uh, except of course that Android does come with a standard UI. Manufactorers do not have to write their own.

And good luck backing a closed-system horse. That has traditionally worked out so well in the computing space, right?

Mon, 01/14/2013 - 08:59 | 3150250 blown income
blown income's picture

Same here , all we  ever had was phones to talk , time came up for to get new phones , so we went 4s and paid $64


I always said I would never buy one as a phone was to talk , I do like that I can watch a video or look something up , read ZeroHedge at lunch etc.


Then just recently Ihad a problem where the dam thing wouldn't come on ,so , I had to drive to the Apple store which is 80 miles from me (2 hours 1 way,traffic ,etc) with a appointment at 8:30 in the evening , store was packed , Iwas like what -the-fuck  finger fucking everywhere..hope Inever have to go there again...


Only reason I bought the 4s was it was small and the Samsung size is like my daughters portable dvd player..Still keep all my contacts in a book , and never do banking or buying...

Mon, 01/14/2013 - 10:19 | 3150401 VisualCSharp
VisualCSharp's picture

There's the utility of it, which can be very useful (your weather example was a good one). But then there's the sick emotional connection--nay, addiction--to the feeling of using new technology that is pretty pathetic.

Mon, 01/14/2013 - 15:33 | 3151761 reTARD
reTARD's picture

Agreed. This is Fight Club after all. Consumerism is a vicious cycle which most people are stuck in. You really don’t need IKEA or Apple/Samsung just because everyone else has them. Perhaps it's just a phase one goes through in life, but I've been there and done that. I used to or at least tried to "keep up" with the gadgets back in the day when they were called PDAs. Lesson learned. Is it really worth sacrificing your privacy, security and money/debt for that extra little bit of convenience (real or perceived)? At least for most people, these devices and their apps are really only used for "social media" and gaming. But there’s this really cool app! Exactly how often do you call up that app or remember to do so?

Mon, 01/14/2013 - 21:54 | 3152835 Blue Horshoe Lo...
Blue Horshoe Loves Annacott Steel's picture

What are Palm shares selling for these days?  May have to go long!

Mon, 01/14/2013 - 08:09 | 3150187 kaa1016
kaa1016's picture

Just look at the recent performance of NOK and RIMM. It's been pretty obvious what's been happening. AAPL is done. Good thing I'm long RIMM and NOK calls with AAPL puts.

Mon, 01/14/2013 - 09:09 | 3150262 trav777
trav777's picture

the lumia 920 is a pretty spectacular device...only the S3 is probably more capable.

iPhone's UI is dated at this point and that is all anyone "knows" about their smartphone...well, that and the logo.

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