WSJ: Apple slashed orders for all 3 new iPhones

From Apple Suppliers Suffer as It Struggles to Forecast iPhone Demand ($) in Monday’s Wall Street Journal: 

Lower-than-expected demand for Apple Inc.’s new iPhones and the company’s decision to offer more models have created turmoil along its supply chain and made it harder to predict the number of components and handsets it needs, people familiar with the situation say.

In recent weeks, Apple slashed production orders for all three of the iPhone models that it unveiled in September, these people said, frustrating executives at Apple suppliers as well as workers who assemble the handsets and their components.

Forecasts have been especially problematic in the case of the iPhone XR. Around late October, Apple slashed its production plan by up to a third of the approximately 70 million units it had asked some suppliers to produce between September and February, people familiar with the matter said.

And in the past week, Apple told several suppliers that it cut its production plan again for the iPhone XR, some of the people said Monday, as Apple battles a maturing smartphone market and stiff competition from Chinese producers.

My take: The supply chain gets its revenge. This landed at 5 a.m. Eastern billed as “breaking news,” although most of it is old news. It’s hard to tell how bad this really is for Apple. The stock is down in pre-market trading.

7 Comments

  1. Robert Harris said:

    The stock seems to drop each time a supplier or new organization reports this same news. I imagine now the WSJ has reported it the NYT tomorrow and WAPO Tuesday we can expect a drop each time. Well it’s a benefit to the longs who just hope Apple keeps buying more and more

    2
    November 19, 2018
    • Gianfranco Pedron said:

      As of this writing, and while of little comfort, all the tech sector leaders, save for Alphabet, have taken a proportional hit similar to AAPL.

      In light of this, I’m not sure AAPL’s drop is entirely due to the rumored production cutbacks.

      2
      November 19, 2018
  2. Matt Tanase said:

    This is an odd comment from the article that makes these announcements seem retaliatory:

    “The suppliers’ ability to gauge demand will also be hurt by Apple’s recent decision to stop reporting unit sales, one supplier said.”

    Why would suppliers be interested in unit sales that are reported 120 days after the start of a quarter? I can only think they’d use this data to determine what percentage of a component they are manufacturing for Apple.

    0
    November 19, 2018
  3. Fred Stein said:

    Is any of the above …. new? or accurately predictive of the total supply chain? And does it predict any long term trend?

    The XR seems like a lesser component of the iPhone hw sales, at a time when iPhone hw sales represents a slightly smaller percentage of Apple’s revenue. The XR is the only X-series without telephoto and it competes with new and used iPhones with telephoto at the same or lower price. No surprise if XR sales may be weaker.

    0
    November 19, 2018
  4. Gregg Thurman said:

    What is it the Warren Buffet says, “when investors are running for the exits – buy”.

    I’ve said it before, the most important metric of them all is Maestri’s guidance, and I haven’t seen a single reference to it in the media, or from WS since November 5.

    Currently, WS’s revenue consensus sits right at the mid-point of Maestri’s range implying YoY revenue growth. Production cuts? None that these bozos would understand.

    1
    November 19, 2018

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