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Apple Cuts Component Orders By 10% Due To Weak iPhone 6s Demand: Credit Suisse
One week ago we reported something unpleasant for the world's largest company: China Daily had reported that Apple's key Taiwanese supplier, Pegatron, had halted hiring "due to poor iPhone sales." Today, Credit Suisse confirms much of the cautions laid out previously in a note in which it says "iPhone supply chain orders have weakened recently. In our view, the continued weak supply chain news could weigh on Apple shares for the next few weeks/quarters."
As a result of the change in sales expectations, the Swiss bank is lowering its CY16 EPS estimates by 6%, but since it doesn't want to get on Tim Cook's bad side, says that it continues to "believe that with high retention rates, continued installed base growth, and the optionality of a smaller 4-inch iPhone, Apple remains an Outperform."
In other words, the current weakness, previewed here, is "transitory", or so CS hopes.
Here are the details from Credit Suisse' note on Supply-chain cuts:
Production cuts. Apple has lowered its component orders by as much as 10% according to our teams in Asia. The cuts seem to be driven by weak demand for the new iPhone 6s, as overall builds are now estimated to be below 80mn units for the December quarter and between 55-60mn units for the March quarter. We lower our CY16 units to 222mn from 242mn to reflect this and assume 235mn for 2017 (6% growth y/y).
Downward revisions anticipated, but coming sooner and deeper. The downward revisions came in earlier (November 2015, versus December 2015) and deeper (by 10% versus earlier expectations by 5%) than anticipated. We believe the softer- than-expected demand could be due to (1) currency volatility, (2) the lack of attractive Apps supporting the new force touch function (which has been the key selling point of iPhone 6s), and (3) macro uncertainties.
Data points suggest a weaker 1Q16. Current data points suggest the production cuts are mostly in the December quarter. However, as the new smartphones have only been available in the market for one month, we believe 1Q16 cuts could be potentially more significant. As a result, we now expect the component supply chain to see a single-digit YoY decline in 4Q15, and ~20% YoY decline in 1Q16. The aggregate number of iPhone builds is now expected to be in the range of 55mn to 60mn in production in the first quarter of 2016.
Pegatron sets solid 4Q guidance. For assemblers, 4Q15 earnings appear solid based on guidance, but 1H16 may be at risk due to iPhone. iPhone component cuts could lead to 1H16 risks for assemblers. Apple may shift to greater 6s orders to Pegatron as Hon Hai is exclusive on the new 4" model. We expect Pegatron to ship 22/18mn iPhones in 4Q15/1Q16 and 66mn/70mn in CY15/16.
Is the supply chain a good read? It is worth remembering that Apple's supply chain is vast with an additional complication with the timing between Apple's sell-in and sell-through numbers. Additionally, what is important to note with these estimates is the strong correlation (R = 0.95) between production builds and reported sales, as shown in Exhibit 2 over time.
Specifically, we found that the December quarter builds are being estimated at around 80mn, which would suggest iPhone growth in 4Q15 and indicates our iPhone estimates of 78mn remains intact and conclude the weakness in the supply chain comments is more likely an indicator of iPhone volumes in 1H16. As shown in Exhibit 3, we lower our total iPhone unit estimate by 20mn for CY16 to 222mn.
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If CS is right (in confirming what we previously reported both a week ago and a month ago using channel checks) and if the consumer, both US and Chinese, is tapping out then the recession is surely upon us now that even this company, which until now had shown dramatic resilience to any economic fluctuations, finally feels the sting of the disappearance of the global middle-class.
However, this too will surely be good news for stocks, which will surge on hopes that central banks will be forced to implement even more easing as part of the Fed's 128th mandate: keeping iPhone sales brisk and from the bottom left to the upper right.
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It appears some are agreeing with us and the CS report...
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Can we not have NIRP now to save Apple? You buy an iPhone with borrowed money and it is all paid off in just 3 or 4 years due to the miraculous power of NIRP. The more you borrow, the richer you get.
It will be raining wealth and iPhones - everyone will be rich. Like in Zimbabwe
Allow me to replace the battery without a major phone disassembly and I'd buy one...Oh, and SD card and USB connection too...fuck you Apple...NO THANKS!
I have a Galaxy S3...wonderful phone that can be had, unlocked, for $100 or less.
Ah yes, the Scamsung galaxy, from the world's best cheap plastic electronics manufacturer that logs your every keystroke and sells it to 3rd party advertisers like the farm animal that you are. Featuring the "touch wiz" operating system with more bloatware than a person could ever learn to use in one lifetime. A 5 mpx camera that is garuanteed to capture life's blurriest moments. Scamsung is superior.
Who's talking about "superior"...all the majority really need is "adequate".
A 5mxp camera is more than enough...pay through the nose for a 20mpx camera then take shots of you dog catching a frisbee and such shit...
"Selling keystrokes to 3rd parties", if you're worried about that, then you better revert back to pen and paper.
Had a Samsung Galaxy Nexus...it was great until I got 5 hours of use out of a full charge...which was about 3 months into ownership...
Phones are just the beginning of Apples' problems...SCHOOLS are SWITCHING to CHROMEBOOKS!
Why Chromebooks are schooling iPads in education"The humble Chromebook just seized the iPad’s place as the future of tech in education. U.S. schools are now buying more Chromebooks than iPads. Apple’s iPad also received another black eye this week as a federal grand jury is investigating the Los Angeles Unified School District’s much-touted and now-axed iPad contract. LA is now going with Chromebooks—and some cheap Windows laptops, too."
..and...unbelievable words from my High Schooler...about using Apple for projects..."APPLE SUCKS"...OUCH!...kids and teachers have switched to Google Drive...rave about it too.
http://www.pcworld.com/article/2855768/why-chromebooks-are-schooling-ipa...
My last pay check was $9500 working 12 hours a week online. My sisters friend has been averaging 15k for months now and she works about 20 hours a week. I can't believe how easy it was once I tried it out. This is what I do... www.wallstreet34.com
i can't believe what a douchebag i am
Still have an iShit Tracking device 4S. Have I missed out on something?
The screen is bigger. It really is easier for old man eyes to see... if it doesn't break on you. They're pretty delicate... and mine seems to be possessed and does things on its own. Starts playing rap music in my pocket for no reason. LOL if I have to have a demon possessed phone why couldn't it have good taste in music?
Mrs Water had to have an iPhone 5c.
She dropped it and shattered the screen, had it replaced and the screen fell completely out. So it was replaced again. I've got 3 weeks until something breaks again.
Meanwhile my DroidMaxx has been dropped from 10 feet onto concrete and scuffed the case...
Flimsy and cheap, they absolutely are.
The iPoops are flimsier and trackier, but the average screen-starer considers those good things.
To answer your question in short: no.
@DeadFred: Your final sentence... jajajaja!
i never would have guessed that our econ fate rested on a I-sheeple device
Apple was counting on China to save them. I guess a lot of people in China aren't willing to pay 1 or 2 months wages for an iphone.
But they are willing to sell their kidneys...and there are two for every citizenism.
It's worse than "2 months wages"...how about paying for it with NO wages?
Labor is getting too expensive in China compared to India, Vietnam, etc. Look at the "Made in" mark on the stuff you buy...I'm seeing less and less "China".
"China’s wages are set to increase by 10 percent or more in 2014, driving more low-cost manufacturers out of the country...the nation’s shift away from polluting and capital-intensive manufacturing to a more services-driven economy."
Say Waht!
If they adopt a FIRE economy, where's that leave the USA?
http://www.bloomberg.com/news/articles/2014-01-06/china-wages-seen-jumpi...
I'm not sure that's right. I read where the middle class Chinese spend up to $35,000US on a wedding. That doesn't sound like they would have much trouble affording an iPhone.
That's not exactly "middle class". The middle class in China is $10k to $50k, with most at the lower end of that range. Example, a doctor earns $30k - $40k a year.
To put things into prespective, their top income tax rate of 45%, for highest income earners, begins at equivalent of $12,000US per year.
And Whitney should be blowing up today although maybe he figured the game out and was actually long, not short but just tweeted short .
Could be demand...could be a yield problem slowing down manufacture too.
No fan of Apple but damn the media can't get enough of the negative apple stories.
Meanwhile google is hired to run Obama's 2012 campaign and restaff his administration and no one bats an eye.
Apple products are WAY overpriced and at some point equilibrium will set in. I mean look at the IPad Mini versus the new Kindle Fire. The IPad Mini one version back is $240 versus the Fire which is $50.
The price differential is for the "Smug Fanboy Factor". Most Sheep will pay dearly for that.
"Family of Four"...Sprint...latest iPhone and a family plan...total 2 year cost...$4704 plus taxes and fees which I'm sure push it to the $5000 MARK!...to make calls, text, and surf the web?...out of your fucking mind.
The "new iPhone for life" plan is incredible... Pay $20+/month to get a new iPhone every 9 months...playing off of FOMO for sure...and the lemmings come running.
You forgot about the $70 per month for the "plan".
It's like Izod - a $5 shirt with a $90 alligator sewn on it.
I would agree that the phones are overpriced. But the computers not so much. I have a 2007 Mac pro that's still running strong. I have never had to run antivirus, anti malware or anti adware nor have i had to reinstall the is because it just stopped running because if a corrupt system fild. For what I do I probably would have gone thru 2 or 3 PCs.
Not that I'm an apple fanboi - i work on a pc for my day gig and if I had my druthers I'd probably just build a Linux box. I just moved over to Android because my iPhone 5 was poorly built. Then a gain the galaxy phones are pretty damned expensive too. Actually given theyre all tracking devices the govt should be paying us to have them.
If you pay the same amount for a PC as you do for a Mac, then there's no difference in realiabilty or life. Most people buy a $300 PC laptop and then compare it to a $2,000 Mac, and proclaim that the PC is a piece of junk. Well, a $300 PC IS a pile of junk.
However you mentioned a Mac Pro, which is a desktop. They are WAY overpriced for what you get. I built a top line PC for my daughter for graphics work. The components cost about $1500. A similar Mac Pro was over $4000. I picked top of the line components (not necessairly the fastest) and there's been zero problems for the past 4 or 5 years.
I have a relative that has had nothing but macs for 15 years, and uses them for high end CAD and graphics. Over the years, I've had fewer problems with our high end PCs than he's had with his macs.
Had to trade in our '06 mac because it couldn't be upgraded beyond mountain lion. Not that it was too slow, but because apple decided it was too old and would not allow it to upgrade. Even 10-year old WinXP computers can run Win10 if the user chooses, but that choice isn't available for macs.
With so many choices available on Android platform, there is no need to buy a Samsung phone. Yes, Galaxy flagships are damed expensive, but there are numerous other great phones available at much lower price point. Couple of example would be Alcatel One touch Idol 3 ($150 no contract on cricket wireless), Zenfone 2 ($200). If you are willing order from china etailers, you can also get Xiaomi Redmi Note 2 ($160), Lenovo K3 Note ($160), or Meizu M2 Note ($180), all excellent phones at entry level prices. These are just entry level phoens, and there are also many excellent mid-range phones avilable from Android vendor not named Samsung.
Yes equilibrium is sinking in for Ipad (though Apple brass seems clueless). Ipad going down in absolute units sold for past 7 consecutive quarters. From 60% market domination to sub 20%. What a ride!!!
Sorry ipodskis, I bought new Nexus 5, the two year old version. Runs Marshmellow and works fine. $200.00 unlocked. Using Ptel phone service, cheap and unlimited. Runs on T-mobile backbone. Got rid of LG710, four year old phone.
Ask folks what would make them buy a new phone. Not much as the phones now do everything. It is the app world that is changing things, not the hardware anymore.
Encrypt everything....this was actually typed and encrypted by ten chickens using an old Commodore 64.
Google, Microsoft or Apple. Choose your overlord. I gotta figure out linux...
Linux isnt working out great for me yet because Firefox seems to leak memory all over the place and basically runs crappy. Plus the navigation is awkward. If I could find a decent browser it would be a lot better so I may have to check out chrome for Linux.
Try Opera. Very fast renderer and most of the creature comforts you expect from FF/Chrome/IEx
Entropy is as entropy does.
This is what I call peak phones.
There is only so much phone Technology needed to ruin ones life on Twitter, Facebook and all the other social networking garbage products out there.
I'm sure most think the S is not worth upgrading to from a 6 but it is. Faster, incredible camera, and made in China ! What's not to love?
Sold my old 6 on eBay for 500. Will sell this one for 400-500 in a year too. Costs nothing.
LOL..."Sold it on ebay"...you're nuts...wait until you ship a shiny "1 year old" iphone and then a MONTH later get an "Item Not as Described Case"...
Ebay then FORCES YOU to accept (and pay shipping for) the return...you open the box and find a defective phone...most likely NOT the one you shipped...and ebay gives the buyer A FULL REFUND...and you complain, provide "evidence" and ebay tells you "TOUGH SHIT".
Read your PayPal and eBay user agreements!
Buyers have 180 DAYS to file a "not as described" complaint! Yes, they can use, and maybe break, your phone for 6 months and FORCE you to take it back!
"We’re increasing the time for buyers to file a merchandise dispute (Item Not Received and Significantly Not as Described) from 45 days to 180 days. All references in the User Agreement to “Opening a Dispute within 45 days” have been updated to reflect “Opening a Dispute within 180 days.”"
NEVER sell anything of real value on eBay with PayPal as the payment method...you are taking a great risk and it's only a matter of time before you get screwed!
http://www.consumeraffairs.com/news/paypal-expanding-return-window-to-si...
I sell on ebay all the time and I've sold six iPhones, one for each time I've upgrded, and never had a problem. The sale of the old phone covered the cost of a new phone.
Unless there is someone out there willing to pay more for 2-yr old stuff than new, something is wrong with your statement.
Does that mean your old phone sold for more than the cost of a new one, i.e. iphone 5 sold for more than $650, to cover the cost of the iphone 6?
Or does it really mean your old iphone sold for more than the down payment on a new subsidized iphone, i.e. $200, and you still have to make monthly payments over the next two years?
There are many iphone users who are not technical. For them, spec boost in 6S over 6 is meaningless. So is "3D-touch", just another complication in learning how to use an iphone. Consumer Reports for one, did extensive testing on iphone 6S and gave it same mark as iphone 6, noting marginal improvements. So basically only appeal in 6S for many iphone users is the new pink color. Sure is nice manly color for all the studs out there!
I am sitting here with a new Samsung 6..trying to move my chip from my old Samsung 5 to it..of course they have a new size chip...much smaller....its always something
"nano" is the new standard...I'm sure "pico" is in the works. What amazes me is they include an adapter so you can move the SIM between new and older phones...Apple would never do that...if you don't kill the "old" (but perfectly good) phone, how ya gonna sell the new one's?
Android devices use the cloud, I can change my device in 2 minutes and I don't tranfer chips.
Sure the cloud kills my privacy but I don't put anything on it worth looking at.
Yes, that's the key. Put nothing on the cloud you wouldn't put on Times Square billboards.
There's a nano sim card punch available for less than $10. Most cellphone stores will let you use theirs for free. Or you could just spend a few minutes with an X-acto knife.
An economy built largely on Nikes, iPhones and Advertising. What could possibly go wrong?
Mass consciousness?
That SEO and SEA crap won't save bad sales but yet, a shitload of companies put their last hopes on that crap.
So that's the next bubble and there's way to many people employed in that bizz to go unnoticed because if that bubble pops, you can add another 5% to the unemployment numbers.
And it's killing the graphic and printing bizz. And that was a hughe employment benefactor that has been almost wiped out.
The only leadgen was a edge when almost nobody used it, now you're bombarded with advertisings that people are now becomming blind to.
Just look at yourself, look at how you view a webpage, most people don't see the advertisings anymore unless they look for them. Your brain is blocking those out, most people have developed a reflex in click add popups away without even thinking about it.
Use "Ad Block Plus" and the ads go away. If one still manages to pop up, I do ignore it...I cannot remember EVER clicking on an ad and then actually buying something...unless I'm an anomaly, web advertising is a complete waste of money.
I always looked at sales of iPhones as the high water crest line indicator for consumer purchasing power. Once iPhone purchases start to receed, then I know for sure the consumer is getting squeezed.
It's even worse than you imagine.
The figures for the US itself are WAY down. It's ONLY a 10% worldwide drop, becasue they HAD strong demand from China, making up for very weak US sales, but that demand in China is now dropping.
Because the Chinese, unlike US sheeple, have choices:
http://www.phonearena.com/news/Best-Chinese-Android-smartphones-2014-edi...
.
Not that unpredictable,the lifecylce of the iPhones is getting shorter and shorter as the upgrades become less and less exiting.
If Apple can't find a new innovative product pretty soon, it will go down to bookvalue and shareholders will want a payout reducing that value to the bone.
Nokia also used to be the biggest player on the market for a long time, now it's reduced to nothing. Nobody saw that one comming either.
Apple should spin off a division focusing on high tech sex toys. That stuff always sells.
I would not want to be working the genius bar on that day.
Fuck CrApple and their spyware devices. Tim Cock, that iDiot can't seem to come up with anything new. The visionary of that company is gone, and so is its creativity.
Die Crapple!
Suck and swallow Bills dick, bitchez!
I think the crapple channel stuffing method of choice is getting long winded,
The seabed of the South China is now so deep in 40 ft boxes levered over the side of container ships carrying crapple crap every time there is a shower or a squall that can be passed off as a category 5 typhoon that Chin is considering building new islands with them.
And the insurance companies that paid out expecting to get all back by the boost to the crapple stock price they hold is fizzling like a wet fart now.
And they getting cold feet as people are sniffing ever more into this scam. One that's been going for years .
Now that the news is out that the iPhone iOS has been hacked, it's like walking around with your pants off. This Apple frenzy will end soon, and level out to nothing special. If you told somebody 10 years ago that people would be lined up to buy $850 telephones, they'd think you were nuts, and they'd be right. But there are a LOT of good Chinese phones out there in the $200.00 range, good quality, capable and all. Apple would be screwed if China just made them 100% compatible with the US telecom systems and sold them out of the box in US retail stores contract-free.
dreamer-see all the 'DO NOT BUY WINDOWS 10' articles on the net by the thousands
FUK U, FANBOIZ!!!!!!!!!!!! BASTARDS!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Microsoft laying off 30,000+; Windows 10 is an outright failure (too full of spyware-takes over your PC) Windows phone and Surface/PC sales falling fast! sissyboi!