Apple cuts orders for iPhone 5 parts on weak demand | Hacker News Reader

Apple cuts orders for iPhone 5 parts on weak demand

nbcnews.com

31 pointsdataminer22 comments

There's a comment by matrix07 on AppleInsider I think may be worth a read:

Look at the number here http://www.reuters.com/article/2013/01/14/us-apple-iphone-de...

Apple was expected to order 65 million screens?

Considering the best iPhone quarter is only 37 mil., and that's Christmas quarter. WTH Apple to order this much in a quarter AFTER Christmas?

Makes no sense.

[Edit: link to comment http://forums.appleinsider.com/t/155446/wsj-apple-cuts-iphon...]

BGR also notes that the same screen is used for both the iPhone 5 and the iPod Touch. It can't simply be assumed that the iPhone demand has lessened because Apple orders less of one component used in multiple lines of products.

http://bgr.com/2013/01/14/iphone-5-analysis-component-cuts-2...

Now that's interesting. Did iPad Mini kill iPod Touch sales? $299 and $399 vs $329 iPad Mini. Hm.

I suspect this type of information is pushed to manipulate the market and provide flip opportunities for hedge funds. Apple is down 5%. Imagine if you knew on Friday this story was going to be published.

Given Apple's forward looking cash position, the stock is extremely underpriced, even if sales were to decline significantly.

> Given Apple's forward looking cash position, the stock is extremely underpriced.

The market seems to believe that the level of sales and/or profits per sale are unsustainable in the medium term.

Stocks the size of Apple are never "extremely" under/over priced.

> Stocks the size of Apple are never "extremely" under/over priced.

Size has nothing to do with whether a stock is over or underpriced. Apple could rather conservatively be valued at $600 or even $700 per share. I'd say that's an extreme underpricing, particularly given the difference in market cap that would make.

> The market seems to believe that the level of sales and/or profits per sale are unsustainable in the medium term.

There are other reasons for a stock to be depressed that may in fact have to do with the size of Apple. For sure they are in a fickle market and there is risk.

> Size has nothing to do with whether a stock is over or underpriced.

The reason why size does matter is that there are thousands of analysts constantly monitoring the stock, and companies are constantly trading based on their informed opinion of the value of the stock.

A small, relatively infrequently traded, stock is far more likely to get out of line with fundamentals.

You could also make an argument that a large stock like Apple gets out of line with fundamentals because it represents such a large portion of pretty much every institutional portfolio that could own the stock, so movements are often due to portfolio rebalancing than fundamentals. This seems likely to be the case with Apple right now.

Then you would be making an argument that flies in the face of every investment textbook Ive ever read.

Significant demand in a large cap stock mostly comes from large institutional investors. Large institutional investors are finite, and those investors must limit how much any stock represents in their portfolio. Regardless of what your textbooks say, it is true situation.

It only takes a few hedge funds and a couple of Goldman Sachs to balance out any of those effects. I'm sorry, but you clearly have no idea what you are talking about.

Because hedge funds will bid up a stock that no one else is allowed to buy? I thought they like to make money.

Markets are often undervalued due to restrictions on buyers. The bull case for the stock is that AAPL will make itself the buyer of last resort, as I expect them to do this earnings announcement. Knowing that the stock is undervalued and that any price increase due to their purchases will be maintained by the market, they can confidently buy the stock back.

Dividends can have a similar effect to a buyback, and also expose the stock to dividend focused funds.

Large cap companies often must resort to these tactics to increase the number of available buyers when their stock is widely owned.

Whether or not a stock is over or underpriced at a particular point in time can only ever be determined with hindsight and relative to other investment opportunities.

My own view at this point is that there is a rotation going on. Growth investors are leaving Apple because it's too big to continue to grow at the rate it used to, and value investors are still cautious, waiting for a bottom.

I was going to say, "Well when has Apple been this low before", expecting the answer to be something like "Before the iPhone 4"...but it was only back in Feb 2012 that the stock was at ~$500

http://www.google.com/finance?q=NASDAQ:AAPL

I don't know what to think from that, other than there was a huge frenzy that seems to be settling down? But are Apple's chances of dominance as great as they were 11 months ago? Android seems to be gaining fast on the phone and tablet front. And Google Glasses is the hot new thing on the horizon...

I think you are correct. AAPL is ripe for short term manipulation.

There are a hundreds of thousands of call options expiring on January 19 with a strike range of $550-$800. Expect AAPL to run after then.

Here's more info:

http://seekingalpha.com/article/1002601-buy-apple-on-january...

Aside: I, for one, am extremely disappointed in the iPhone5. Its WiFi sucks ass, to put it delicately. I just got back from traveling abroad, and when I'm there, I rely heavily on WiFi. My 3GS had no issues; it use to work like a champ. But the iPhone5? Lord! It couldn't hold the signal; it wouldn't log in to the (WPA2) network even though it would see it; etc. etc.

Apple's response so far? Try disable WPA2 and remove all authentication. Really?!?!

And the problem got worse after iOS 6.0.2

After seeing my issues, several friends of mine have decided to hold off upgrading till they're sure the issues are worked out (in iOS 6.1.0?). At least 1 person I know picked the Samsung instead.

Sorry to threadjack.

That's the first time I'm hearing anyone complain about wifi issues. Everyone I know that have an iPhone5 have had no such complaints.

checkout this thread on the Apple discussion forums: https://discussions.apple.com/thread/4322714 (it's already at 219 pages and counting).

There are many such threads in that forum.

These reports based on reduced orders to suppliers are pretty routine, either in the post-holiday period or a few months before the roll-out of a new model. Without actual info on sales numbers, it's just hearsay.

Typical "analyst" bullshit.

Even if the story were true, alternate explanations seem more likely. E.g. Apple is moving to a 6-month tempo for updates, which would affect component ordering about now. Or, it could just be that Apple is moving more of its component orders from one manufacturer to another--many iPhone components are multiply-sourced.

When there is no news, they make up some news, see a similar story from 2011:

http://news.cnet.com/8301-13506_3-57321362-17/slower-iphone-...

Long or Short, would you put your money on your prognostications?

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