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JPM Takes The Axe To iPhone Sales Estimates, Says Consensus Is 10% Too High
When it comes to the fate of the US stock market (and economy), no company is more important than Apple. As reported previously, the world's most valuable company by market cap not only accounted for 20% of all U.S. margin expansion since 2010, but is among the key drivers behind US retail sales, and thus GDP growth. In short, if AAPL is about to hit a growth wall, then say goodbye to US margin growth and say hello to the service (because manufacturing is already in it) recession.
Unfortunately, this worst case scenario increasingly looks like the most likely one.
Recall that last week, just as the market was about to be sent into junk bond shock, we reported that not one, not two, but three channel checks (from Credit Suisse, from OTR Global, and from Pacific Crest) all hinted that not only is AAPL facing deteriorating iPhone sales, but worse, the risk of a sharp inventory correction is imminent.
Today, JPM joined the chorus of warnings that what has been a clear global slowdown in spending has hit the world's largest smartphone maker.
According to JPM's Narci Chang, "November sales signal signs of early weakness of Phone 6S cycle." As the table below shows, most Apple supply chain names demonstrated significant MoM downtrends in November, while those names which saw a modest MoM increase (GIS, Hon Hai, Radiant, Catcher) did so thanks to support from the iPad Pro and market-share gains.
JPM notes that "the weak November numbers reaffirm our cautious call on the Apple supply chain back to October. Our previous research suggests 75-80mn units for iPhone build plan in 4Q15. Now we believe it is more likely towards the low end of the range (75-77mn).
Bottom line: JPM believes the consensus estimate for iPhone sales (50-55mm) is at least 10% too high from the final print in the 45-50 million range:
1Q16 bears potential downside risks, while 2Q16 Street estimates seem unrealistic: Although the Street has lowered its expectations on the Apple supply chain, we still see downside risk to 1Q16 consensus numbers of 50-55mn units. TSMC saw 10% order cuts in November, which we believe is from Apple business with the impact during the end of 1Q16 or early 2Q. We believe 45-50mn is a more reasonable target. While there is no visibility for 2Q16 right now, we think it is more likely to trend down QoQ and current Street expectations of flat to up QoQ seasonality are too optimistic.
The conclusion: JPM is very cautious on the Apple supply chain; as it expects "to see meaningful stock price corrections for Apple supply chain names in 1Q16 with lowered Street expectations and disappointing Apple sell-through numbers. We expect to see meaningful stock price corrections for Apple supply chain names in 1Q16 with lowered Street expectations and disappointing Apple sell-through numbers. We prefer selected market-share gainers in the Apple supply chain."
And, by implication, if the AAPL supply chain is about to be rocked lower as a result of a substantial repricing of iPhone sales growth expectations, AAPL itself won't be far behind.
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G
Who the fuck needs to fork out for an upgrade at this point? Give me a break already.
You will be surprised how many dumb f's are there who cannot wait to fork out more money.
Apple iMoron saturation has been reached.
indeed, my htc one is over 2 years old, my gosh, and it works fine. Imagine getting more than 2 years out of an electronic product that cost me next to nothing and a bunch of somebodies ate the phone cost in rates. Al I do is put a new screen protector on it every 6 months. I am mostly worried abut the battery.
Now look at ESPN and the problem sits having as when people can ala carte ESPN, they opt to not get it. Think about the reverberatins thru the sports industry including just who will pay the 30 million annual salaries for a ballplayer.
We are now paying for that in cable costs, food cost car costs, whatever ads we see on tv , costs us somehting. The company executives making millions with the pass thru costs.
This is goign to be a house of cards.
This report was out on Friday to the big boys. That is why AAPL and FANG crashed.
Just another case of fairy dust abuse. Another indicator of how warped the market has become......
yeah, all reports go out to internal staff anf friends first.
However, we started hearing about the problem 2-3 months ago with channel checks, and that occurred on Aug 23 or 24, the morning that apple crashed from 108 to 92, before Tim Cook called Cramer. That was 80 days ago.
Yes! That's how you do it. Then when the numbers come in 9% below instead of 10% the stock can "surprise to the upside".
Love,
CNBC ANALysts
im not good at grammar but i think you forgot the 'c'
As the monthly subsidy model ends at the big name carriers, consumers will be less likely to shell out $700 for a phone.
Things will be fine as soon as they announce the iPhone 7 and the iPad Maximus.
Excellent name for the second one!
"Maxi-Pad"
Is that what they mean by "disruptive"? Cuz the way I seez it sumbody's gonna get dirupted here soon......
Chinese industrial production, fixed investment and retail sales were all better than expected on Saturday. Not one peep from ZH. When the site just cherry picks stories to present bad news only, it will lose all credibility. One thing to be bearish. Another thing not to be objective. I understand the ZH readership is overwhelming bearish to the point where it seems that many would take great joy in a global economic collapse (bears lose in that scenario also), but playing solely to the core audience threatens to make this site nothing more than a site for the lunatic fringe.
Even the mainstream doesn't believe China numbers.
except for the chinese gold holdings which appear understated.
ZH one extreme.
MSM on the other extreme.
The middle holds the virtue.
What you could do, is shoot a link to a better site. Just to contribute somewhat.
The middle is a muddle - means nothing for decision making
Youll love the Australia employment numbers - eat them up
the corruption has extended beyond coordinated government policy to even macro statistics
everyone I know looks at the details - discrete data that then used to build a picture
but please continue what you are doing
Subprime has been contained. There is no housing bubble.
Dumb Sheeples , put it on layway and keep the cult and idiocy going. American Inbreeding has reached it peak limit.
Tim Cook will just have to send another shady email to his buddy Jim Cramer.
Just like in August...on another "Black Monday"...
Is anyone else getting a boner waiting for the US futures to start trading..?
Was there ever anyone who bothered point out how illegal that email was?
Cook isn't part of the tribe but he's a member of another protected class
I BTFD this friday. I might not be able to sleep well tonight ---
Should have my $0.55 cent Chinese SIM adapter any day now. Can't wait to get rid of annoying 5S "smart" phone and go back to my old Samsung flip phone.
"Should have my $0.55 cent Chinese SIM adapter any day now. Can't wait to get rid of annoying 5S "smart" phone and go back to my old Samsung flip phone."
They wrote hundreds of pages to out into books to make into guides for the iphone 5 and 6.
You sound like you are from the dark ages.
Bet you are of the right/cuck persuasion when it comes to voting record, eh?
Don't you Dare throw a wrench into my Cupertino Panopticon completion...
Looks like Fred Hickey's call on the Apple Dumplings and ultimately Apple are playing out.