Apple Slides On Report Of iPhone Order Cuts, Drags Nasdaq Lower

Remember when a few months ago Apple stock slumped amid reports of slumping iPhone 10 demand and a weak orderbook, but investors were quick to forget all about Apple's growing troubles when Tim Cook's record stock buyback announcement and Warren Buffet latest investment quickly sent the stock to all time highs even though the fundamentals didn't justify it? Well, it turns out that despite the generosity of Uncle Warren who is simply chasing after the biggest stock repurchase program he could find, nothing has changed or been fixed at Apple, and this morning Apple's German ADRs and the stocks of Apple's European supplier tumbled after Japan's Nikkei reported that Apple has asked its supply chain to prepare around 20% fewer components for iPhones debuting in the latter half of 2018, "taking a cautious approach toward smartphone shipments compared with last year's orders, industry sources say."

"Apple is quite conservative in terms of placing new orders for upcoming iPhones this year," one of the four sources, who is in the supply chain, told the Nikkei Asian Review. "For the three new models specifically, the total planned capacity could be up to 20% fewer than last year's orders."

The U.S. company last year placed orders to prepare for production of up to 100 million units of the new iPhone 8, iPhone 8 Plus and iPhone X, but this year Apple currently expects total shipments of only 80 million units for new models, two people said.

Nikkei also adds that total iPhone shipments, including new and previous generations, declined 1% on the year in the October-December quarter to 77.31 million, Apple's data showed. The slowdown went beyond Apple, as worldwide smartphone shipments contracted 0.3% to 1.46 billion units in 2017, the first-ever decline in the industry, according to research company IDC.

Some further details:

The Nikkei reported earlier that the U.S. tech titan intends to introduce three new iPhones in 2018. Two will feature the costly organic light-emitting diode screens like the iPhone X, while a cost-effective model keeps the liquid crystal display screen used by the iPhone 8 range. All three models would carry the TrueDepth 3D sensing camera system to activate Face ID similar to the iPhone X model, industry sources say.

Apple's supply chain was told to prepare earlier for the two OLED models, in hopes of avoiding a delay similar to last year's, two industry sources said. The company, celebrating the 10th anniversary of the iPhone launch, introduced the premium iPhone X model last year with a price tag starting at $999. But component shortages as well as production quality issues with the 3D sensing feature kept the iPhone X away from shelves until November, more than one month after it was unveiled, likely harming sales of the gadget.

What the Nikkei really meant, is that demand not only for Apple's high end, high ASP products, but across all Apple products, continues to fade, putting into question just why Apple's stock is valued at almost $1 trillion.

The news sent Apple's German ADR sliding as much as 2.1%, which in turn has dragged Nasdaq futures lower. Apple suppliers were also hit, with AMS AG dropping as much as 6.7%, while other European semiconductor stocks including Dialog Semiconductor, STMicroelectronics and Infineon all slipped.

As Nikkei adds, Foxconn remains the largest iPhone assembler for the upcoming models in 2018, and is thus most vulnerable. The company will handle all of the 5.8-inch OLED smartphones, while also holding shares of 80% to 90% for the 6.5-inch OLED model and a 30% order allocation for the LCD version, according to Yuanta Securities Investment Consulting's supply chain checks. Pegatron, a smaller compatriot to Foxconn, looks to secure 60% of the 6.1-inch LCD offering and 10% to 15% of the 6.5-inch OLED model, while Wistron snares the rest of the orders for this year's new iPhones.

Comments

Singelguy Fri, 06/08/2018 - 06:41 Permalink

Iphones have finally reached the point of price resistance. Sales will only decline from here. What does Apple have in the pipeline? They certainly have the cash to fund the R&D or buy up new tech companies just as the pharma industry. Given the huge share buyback program, I suspect that Apple is virtually bankrupt when it comes to new product ideas. 

Endgame Napoleon Singelguy Fri, 06/08/2018 - 08:02 Permalink

I always buy Apple, and It is not because of some sci-fi wonderment over the constant innovation. In fact, the face ID makes me hesitate to buy another iPhone.

Smartphones already have enough—or too many—surveillance state features. The camera is fabulous for taking pics, storing pics, altering pics and juxtaposing pics, especially for people who do any kind of artwork. I love that part. But I do not want a device storing unintentional pics or other visual data about me or anyone that I am around.

I am sure that all of these so-called working moms love the excellent photography features for taking baby pics to show off as they choose—often during their mostly part-time, taxable work hours—but I am also sure that they want control over any visual data that they create, not a bot (or whatever) identifying their face and the faces of people around them. 

And the eavesdropping features that we are learning about in all of this technology are, likewise, disturbing and freedom-dousing. 

I buy Apple for the aesthetic appeal—the look—and the fact that the products are easy to operate, compared to other tech that I have used to do work that is buggy and tiresome to use. Apple products avoid the chore-like aspect of computing in the ease of use. 

But Apple and many other companies are very concerned with dropping virtue-signaling  messages to a supposedly progressive, preferred customer base of Millennials, and that is another thing that drives some buyers away, especially when some of us never were pleased about the US job loss that has arisen from so many American companies employing primarily cheap, foreign workers. 

If you count not just Apple, but the over 2 million jobs shipped out of the USA to China and Mexico, it is bankrupting the US’ future in many ways, including the SS trust fund. If kept here, all of those jobs in Apple’s foreign factories would have been full-time, breadwinner jobs, with the young, American-citizen job holders paying into the SS fund. 

Americans who have paid into that fund at either 7.65 or 15.3% of every penny earned are now being told that it is broke.

We are told, deceptively, that SS solvency is all about raw birth rates to justify more mass immigration, even though that means more legal / illegal immigrant households with male breadwinners and US-born kids staying under the income limits for multiple welfare programs that cover their rent and groceries and refundable child tax credits up to $6,431 by working part time.

Part-time workers do not contribute as much into the SS fund.

The illegal immigrants often work under the table, not paying into SS at all, or they work part time to stay under the income limits for welfare, only paying a little into SS. The income limits are so low for welfare that NO welfare-fetching immigrant womb producer and no welfare-consuming, womb-productive, single mom is working full time, contributing significantly to SS via full-time wages in the service industries that have replaced the good breadwinner jobs that were shipped out of this country by American companies.

Birth rates, my a**——

In past generations, infant mortality was higher, and the vast majority of girl babies born did NOT grow up to work in the paid workforce. They did not contribute much—if anything—into the SS fund. 

The stay-at-home moms did not contribute to the SS fund, but they did collect SS as designed due to doing the unpaid WORK of raising their own children, rather than putting that work off on unpaid elderly grandparents on SS, $9-per-hour daycare workers or often $9-per-hour babysitters with NannyCams who do not contribute as much to the SS fund when doing that low-wage and often under-the-table  work as full-time factory workers would have if companies had not off-shored so many breadwinner jobs.

The SS fund was plenty solvent in the era when companies did not offshore millions of breadwinner jobs. It was plenty solvent when low-wage immigrants whose major household bills are paid by government were not flooding in here. It was plenty solvent when most women did not work outside of the home.

Those stay-at-home mothers also collected more survivors’ benefits when their breadwinner husbands died earlier, partially due to more physical work, but mostly due to fewer medical advances in that era. 

American companies have abandoned their basic social obligations to the citizens of their own country, while telling us it is all about love for the global people, anti racism, anti sexism, anti xenophobia and the giant putdown that American citizens are just not as skilled and educated as the super-cheap labor market in Third World countries.

A few cheap-labor-made products are excellent—mostly just Apple products—but the non-PC political associations are pretty grating to many smartphone buyers.

In reply to by Singelguy

Last of the Mi… Fri, 06/08/2018 - 06:44 Permalink

Anyone got an idea like combining the PDA and the Cellphone in one instrument that will make trillions and push the company forward for the next 20 years? Ideas? anyone? . . .anyone . .  Bueller?

Therein lies Apple's problem.

Jobs even talked about this at length.

Vuke Fri, 06/08/2018 - 06:45 Permalink

Apple must be running out of people willing to fork out a G note for an updated status symbol. My expensive phone got misplaced so I switched to a $50 Chinese one that has served my needs well for 7 months so far.  It doesn't have 3G or facial recognition but who needs that except for the CIA?  Correct me if I am wrong.

Last of the Mi… Vuke Fri, 06/08/2018 - 06:54 Permalink

Dead on. I reached peak apps a year or so ago and instead of downloading them began to wipe and delete as many as possible as I began to realize what the database boogie was all about. Its about me and as much information about me as possible. 

You have to learn to refuse to play the game. 

I predict fb selling to abc's google who then puts your personal shit on the front page of a search is just the beginning. The only way anyone can have any personal privacy is to walk away from technology. 

In reply to by Vuke

Let it Go Fri, 06/08/2018 - 07:05 Permalink

Both Apple and Amazon share an ugly truth and that is their strong ties to America's government has in many ways allowed them to create a persona or facade that far outshines reality. This allows each company in its own way to exploit us while masking the huge amount of income they pluck from our government on all levels. The article below explores how each of these companies feed at the tit of our government sucking in a slew of American tax dollars while displaying tactics that harm the society they claim to serve.

 http://Apple And Amazon Share A Ugly Truth - They Exploit Us! .html

NoWayJose Fri, 06/08/2018 - 07:32 Permalink

Well how about this reason?

I went to a shopping mall yesterday and parked outside a Field and Stream store.  (Like a Cabelas or Bass Pro with outdoor and fishing gear).  Left my iPhone in the car.  That evening I read ZH and see ads pop up for specialized fishing clothing.  

And Apple thinks I want MOAR of this?

j0nx Fri, 06/08/2018 - 07:56 Permalink

Apple still wants $600 for an iphone 7. That's what a 2 year old phone at least and they are still charging $600 for the lowest end model of that line? Madness. That phone should be $399 by now.

Antifaschistische Justin Case Fri, 06/08/2018 - 08:25 Permalink

their stake is too big to exit...they're part of the ponzi to ratchet the price up.  it works the same in reverse.  I have no evidence...but in my heart I believe these funds and the big Hedge Funds allocate sell opportunities like OPEC controls output.   "Fund A is only allowed to sell x shares this year" and they are probably given a month/day window to start/end their sale.

In reply to by Justin Case

Zepper Fri, 06/08/2018 - 09:03 Permalink

Timmy cant run Apple and never could. Its only a matter of time before he kills the company entirely. He is the funeral director. The BOD should kick his ass to the curb side already and replace the guy with a visionary any visionary. The company has had no innovations since Jobs died. By now Steve would have us integrating electronics into our bodies.

 

Apple SELL SELL SELL since Jobs died.