Rod Hall: iPhone 13 lead times down worldwide, steady in China and U.S.

“We suspect this signals solid demand driven by more aggressive promotional activity around Black Friday compared to 2020.”

From a note to Goldman Sachs clients that landed on my desktop Wednesday:

In our weekly update of lead time data for Apple we note steady lead times for China and the US and a dip of ~7days across UK and Europe. We have also included lead times from US telco carrier websites for iPhones to capture impacts from US carrier Black Friday deals.

In the US we see some disparity between our normal panel and carrier specific lead times with carriers having longer lead times. We suspect this signals solid demand driven by more aggressive promotional activity around Black Friday compared to 2020. Globally we see iPhone lead times continuing to shorten which we believe signals supply and demand coming closer to equilibrium.

MacBook lead times are unchanged in China and the US vs. last week but increased by 5 days across Europe and in the UK. Given the uniformity of the UK/Europe increases for Mac we believe supply is more likely to be the driver.

Overall, we see a picture here of shorter lead times for iPhone Pro models than last year and supply rapidly catching up to demand. We also see some evidence that the US is tracking well to this point in the quarter with more attractive US carrier promotions the likely driver.

Maintains Neutral rating and $142 price target.

My take: Unpacking the methodology behind that soggy price target…

Our 12-month price target of $142 is based on 27x our Q5-Q8 EPS forecast. Upside risks include better than expected iPhone demand, services growth, and significantly outsized buybacks. Downside risks include weakening iPhone demand, pressure on gross margins, as well as large and dilutive acquisitions.

See also: How does Goldman Sachs’ Apple analyst still have a job?

24 Comments

  1. Alessandro Luethi said:
    “Upside risks”

    2
    December 2, 2021
  2. Horace Dediu said:
    “Large and dilutive acquisitions” Seriously? SERIOUSLY?

    This should cause anyone to throw out anything this lot says.

    16
    December 2, 2021
    • Gregg Thurman said:
      Forrest Grump got it right when he said: “Stupid is as stupid does”.

      There’s no doubt in my mind that Forrest was referring to Hall.

      0
      December 2, 2021
  3. David Emery said:
    “large and diluted acquisitions”? WTF? Most ANALysts complain that Apple doesn’t spend its money on acquisitions. Here we have a complaint that they spend too much money (without naming any examples…)

    7
    December 2, 2021
  4. Tommo_UK said:
    I was there was LMAOROTFL emoji 😀

    Rod Hall is back! iPhone 13 lead times are down worldwide [ie, the demand is slowly being met by supply again, which must mean demand is bad!]

    iPhone is doomed!

    Oh, wait, that was the headline from epic Apple Blog The Macalope.

    ON THIS DAY, December 2nd, 2015 – that’s 6 years ago for those having a senior moment – Macalope wrote:

    “It’s that time again! Yes, it’s December so it’s time for receiving annual gifts that no one wants: Fruit cakes, holiday sweaters and “news” that Apple has cut iPhone orders.

    Writing for the goblin-infested warren of ancient dwarf mines that hides an unspeakable darkness (not a balrog, but a guy who writes about things like how surprisingly tolerable it is to fly economy class, which is demonstrably worse than a balrog) known as Business Insider, Matt Weinberger details the collapse.

    “CREDIT SUISSE: Apple’s newest iPhone is underperforming, but a mini iPhone could save the day.” (Tip o’ the antlers to @JonyIveParody.)

    Apple is cutting orders for the components to build iPhones because of weak demand for the new iPhone 6s, according to a new report by Credit Suisse.

    Right. OK. Sure.

    Look, this is not exactly the first time this has happened. It happens around this time of year because Apple ramps up orders for launch in the fall and holiday season and then cuts back on orders for the post-holiday quarter. For some reason, this is shocking every year because analysts and Business Insider writers are like babies and do not remember things exist when they do not see them right in front of their eyes. Also, their heads might be soft. The Macalope has no direct knowledge of that but it seems likely.”

    My take: Macalope rules.

    10
    December 2, 2021
  5. Analysts & B’burg overshot the real story. Yesterday, Federal judge Edward Chen in No. Calif. dismissed the claims that Apple’s app store is a monopoly. While not Epic’s case, this decision undermines Tim Sweeney’s dreams of installing swinging doors on the App Store.

    8
    December 2, 2021
  6. Tommo_UK said:
    By the way furthermore, lead times in the UK for carriers have INCREASED not decreased. The iPhone 13 Pro Max on EE (Apple’s largest UK carrier partner) is around 6-8 weeks, which is longer than last year for the iPhone 12.

    I doubt the UK is the exception to the rule. Apple keep vast amounts of stock to themselves and put carriers behind them, but as outside of the US, the iPhone subscription model is a small not a huge part of iPhone sales, more emphasis should be placed on carrier sell-through and not local Apple Store availability to get an indication of lead times.

    I call bullshit on this.

    3
    December 2, 2021
  7. Jeff Galanti said:
    It feels like this guy is on Impractical Jokers and has people in the background feeding him things to see how much they can get his audience to cringe. There are just no other options for how to be this wrong all the time.

    1
    December 2, 2021
  8. Jerry Doyle said:
    Lordy, Lordy, Lordy! I just had my first morning humongous chuckle 🙂

    After that sour morning market opening for Apple along comes brother Rod Hall to brighten my day with his comic antics 🙂 Rod is a good ole boy. He is ascending right up there with Toni.

    I just luv it! Geaux Rod! Geaux Toni! Welcome Brian Kelly. I feel your pain Notre Dame fans.

    2
    December 2, 2021
  9. Tommo_UK said:
    OK .. the supply chain angst is out there. The Q2 slashed production is out there. We’re just missing “supply chain shortages now.”
    The commentary about the AR headset and Apple Car is out there. The worry about Apple’s investments (or lack of acquisitions) are out there. There are a pile of TP raises, and the stock still didn’t take out $155 on the downtick.

    I couldn’t resist and took a Christmas punt @ 159 with a stop just under $155.

    1
    December 2, 2021
  10. Jerry Doyle said:
    Apple will be in the green before the trading day ends. Geaux 

    0
    December 2, 2021
  11. Robert Paul Leitao said:
    Mr. Hall’s price target is silly. You may quote me on that.

    7
    December 2, 2021
  12. Tommo_UK said:
    “Mr Hall’s price target is silly.” Done.

    9
    December 2, 2021
  13. Bart Yee said:
    We could really use some insight from Bas on how sales are and inventory levels or delivery times are in his country or the EU.

    0
    December 2, 2021
  14. Gregg Thurman said:
    We could really use some insight from Bas on how sales are

    I enjoy Bas’ insights immensely, but do we really need someone to tell us what we already know from years of following Apple bs rumors and Apple’s resultant performance?

    0
    December 2, 2021
  15. Bart Yee said:
    Breaking news: dateline Cupertino and Burbank, California.

    “Unnamed sources somewhat familiar with the discussions but not authorized to comment because they were listening through doors and air vents stated that Apple and Disney will merge as a “combination of massive unequals” but with “huge upsides for both companies.”

    In a stock swap deal backed by large Disney shareholders with ties to Apple, Disney shareholders will receive 1.2 AAPL shares for every DIS share which values the merger at $356B or $196/Disney share, a 33% premium to Disney’s current market cap and 18.7% premium to its enterprise value. With Disney down -4.1% over the past year and a shocking -18.7% YTD, DIS shareholders will now have much better prospects with AAPL shares instead. Indeed, if AAPL hits a newly minted Ives $200 price target, the merger would exceed $437B for Disney shareholders.

    Said an unnamed CFO office gofer “look, the synergies are just too good to pass this up. We considered doing an all cash deal and get to cash neutral in one fell swoop, or maybe another two years tops if we borrow a couple hundred billion, but a stock swap deal makes a lot of sense, it only adds 12% to our float. DIS shareholders get a great premium for their shares. In exchange, and we’re still working out the details, AAPL shareholders of record by Feb. 8, 2022 would receive 4 variable length annual passes based on their oldest AAPL holdings – 1 year for <1 yr AAPL positions, 2 yr for 1-4 yr, 3 yr. for 5-8 yr, and 5 yr for 9-12 yr. 10 year passes are being discussed for anyone holding AAPL 13 yrs or older or prior to the iPhone introduction end of June 2007. Commensurate discounts for Disney Hotel, cruises, concessions and retail merchandise for all AAPL shareholders and Apple Pay users are being negotiated. As we see it, what better way to reinvigorate Disney theme park and travel business than to leverage Apple’s loyal and affluent user base?”

    2
    December 2, 2021
    • Robert Paul Leitao said:
      Bart: Thank you for that! Skillfully written. Disney’s HQ is not far from my office. Bob Iger has said if Steve Jobs had lived, there would have been serious discussions to combine the two companies. Under the merger scenario you outline, I would have 10 years of free passes and lots of other goodies. I’m sure I would have liked your deal terms better!

      1
      December 3, 2021
  16. Bart Yee said:
    According to unnamed retail and IT heads in both companies, all Disney retail operations move to full iMac point-of-sale systems and of course be completely Apple Pay compliant.

    Disney and Pixar animation will transition to Apple M1 Pro Max iMic computing systems over the next 12 months and will help launch Mac and Mic Pro M2 Max models by 2023. “We anticipate hundreds of thousands of work hours saved with M2 Pro Max silicon for film and animation productions and special effects rendering.”

    An anonymous secondhand spokesperson for Apple’s secretive Vehicle development project said off the record “this merger really provides us with rapid real world testing of our automotive systems. All the Disney Autopias worldwide will be expanded to closed loop multilane highways about 3 miles long filled with AppleCar Minis with partial and full assist driving. Random areas will present obstacles like cross traffic, animatronic pedestrians, character cyclists and occasional sigalerts. We anticipate 1-3 million passenger miles of testing annually with and without drivers or passengers. Our MagSafe RapidFlash charging allows for minimal downtime between 12-18 hour use cycles. All guest parking trams will be converted to closed loop and road “Autonomouse” operation using massive Electric tractor vehicles.

    0
    December 2, 2021
  17. Bart Yee said:
    According to deeply embedded sources at Apple, there has been consideration of adding new Disney themed AR areas and holding Silicon Valley Disney / Marvel / Pixar movie premieres at the Steve Jobs theatre. However, Apple management has nixed promoting Mickey Mouse and Scrooge McDuck as spokesreps saying there’s enough of them in the analyst community.

    Apple will access Disney+ content in Apple TV+ bundles, but all new content like Marvel And Pixar Films will be dual premiered at similar costs. Said the unseen studio heads “we see tremendous opportunity to leverage both Disney and Apple brands as leading quality entertainment creators, each focused on family, children and contemporary adult themes.” The general structures of Disney will remain intact – “we see no reason to change a very successful operation. We aim to provide more opportunities for creativity and growth while offering premium content to our faithful Apple users and others around the world.”

    Inside tea leaf readers channeled their respective CEO’s by stating “Here’s how we see it, this Apple-Disney combination is going to be a magical, amazing, and astonishing experience for both companies and all our valued guests and customers. We can’t wait to get to work .”

    DIS was up $5 today and AAPL recovered to just $1 and change down while investors digested the news.

    0
    December 2, 2021
  18. Bart Yee said:
    Short Analyst comments:
    Huberty, Morgan Stanley – “positive for both companies, especially post Covid. But it will take 18-24 months to truly take off.”
    Buy, Increase price target to $180 for 2022 and $210 for 2023. See chart 16 of 28 below.

    Mohan, BofA Merrill – “a daring stroke but will it work?, cultures will be hard to mesh. Devil’s in the details”.
    Neutral, price target $168.

    Sacchonaghi Bernstein – “I don’t see how this is going to work at all”. Lowered to Neutral, price target raised $3 to $135

    Hall, Goldman Sachs – “I don’t get it.”
    Neutral, maintain $142

    Ives, Wedbush – “Cook does it again!”
    Buy, price target to $225.

    1
    December 3, 2021

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