CONFIRMED: Apple (AAPL) Is Making iPad Order Cuts, But...
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Up: 14 | Down: 11 | New: 17
Rating Summary:
45 Buy, 29 Hold, 7 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 14 | Down: 11 | New: 17
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Checks from analysts at Goldman Sachs confirmed Monday's hoopla that there have been orders cuts in Apple's (Nasdaq: AAPL) iPad supply chain. However the firm said the cuts do not signal a demand problem.
Goldman's display analyst Liang-chun Lin noted iPad 2 order cuts from Apple, specifically for the fourth quarter. Checks from another Goldman analysts with others in the supply chain were consistent, also pointing to order cuts for the iPad 2 and adding that yields on some component supply may cap the ramp-up on the iPhone 5. "Overall, the data points suggest some slack iPad supply, at both the production and component level."
Specifically, the firm sees calendar third quarter shipments of 15-16 million units, which is well above their consensus of 13.1 million units. For the calendar fourth quarter, the firm sees iPad shipments of 13-14 million units, which is below their 15.4 million unit estimate. Total 2nd-half shipments are expected to be 28-30 million units, which is in-line with the 28.5 million shipments Goldman has modeled for.
While the data points to a potential deterioration in end demand, Goldman Sachs' Bill Shope believe "this is a premature and likely incorrect conclusion."
The firm said the explanation for the order cuts could be that the company decided to overprovision capacity as it approached the holidays; and now the company is normalizing its order patterns. Apple may also be tightly managing fourth quarter inventories ahead of an early 2012 iPad 3 launch. There are countless other explanation also, but he said its "just too early to tell."
Shope notes Apple production data "can often be misleading as a read on Apple's reported shipment levels." Past supply chain concerns represented ideal buying opportunities for the stock and they believes this is the case again.
"We believe a demand-centric bear case on Apple's stock will quickly disintegrate in the face of multiple October product catalysts (next gen iPhone, iOS5, and iCloud), remarkably strong September quarter results, and what we expect to be solid iPad, Mac and iPhone momentum in the December quarter."
The firm reiterated their $520 price target and Conviction Buy List rating on Apple.
For more ratings news on Apple click here and for the rating history of Apple click here.
Goldman's display analyst Liang-chun Lin noted iPad 2 order cuts from Apple, specifically for the fourth quarter. Checks from another Goldman analysts with others in the supply chain were consistent, also pointing to order cuts for the iPad 2 and adding that yields on some component supply may cap the ramp-up on the iPhone 5. "Overall, the data points suggest some slack iPad supply, at both the production and component level."
Specifically, the firm sees calendar third quarter shipments of 15-16 million units, which is well above their consensus of 13.1 million units. For the calendar fourth quarter, the firm sees iPad shipments of 13-14 million units, which is below their 15.4 million unit estimate. Total 2nd-half shipments are expected to be 28-30 million units, which is in-line with the 28.5 million shipments Goldman has modeled for.
While the data points to a potential deterioration in end demand, Goldman Sachs' Bill Shope believe "this is a premature and likely incorrect conclusion."
The firm said the explanation for the order cuts could be that the company decided to overprovision capacity as it approached the holidays; and now the company is normalizing its order patterns. Apple may also be tightly managing fourth quarter inventories ahead of an early 2012 iPad 3 launch. There are countless other explanation also, but he said its "just too early to tell."
Shope notes Apple production data "can often be misleading as a read on Apple's reported shipment levels." Past supply chain concerns represented ideal buying opportunities for the stock and they believes this is the case again.
"We believe a demand-centric bear case on Apple's stock will quickly disintegrate in the face of multiple October product catalysts (next gen iPhone, iOS5, and iCloud), remarkably strong September quarter results, and what we expect to be solid iPad, Mac and iPhone momentum in the December quarter."
The firm reiterated their $520 price target and Conviction Buy List rating on Apple.
For more ratings news on Apple click here and for the rating history of Apple click here.
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