Bloomberg's iPhone 14 report: What the Apple analysts are saying

Excerpts from the notes I've seen. More as they come in.

Neil Cybart, Above Avalon: What’s Going On With Bloomberg? We can add in questionable reports about AirPods sales and production from a few years ago as additional evidence of something not being right with Bloomberg’s tech news department. Either their reporting from Apple’s supply chain isn’t good, the way information from sources is being framed by Bloomberg reporters is off, or Bloomberg editorial is up to something. One item that has been difficult to miss is Bloomberg making sure to point out in its articles how they are apparently responsible for a company’s stock price change. Stories from Mark Gurman are notorious for including such language... Is Bloomberg editorial striving to impact stock prices so that they can say they are all about breaking market-moving news? It’s not hard to see how Bloomberg may use that as a way of selling subscriptions to its pricey market data service. In such a dynamic, accuracy may not be a priority.

Samik Chatterjee, J.P. Morgan: Production Cuts Reflect Change in Mix with Premiumization of iPhone & Watch Driving Resilience of Estimates. In our first cut in modeling the iPhone 14 series volume and pricing based on the latest feedback from the supply chain, we find our volume expectations relatively unchanged compared to our prior estimates, albeit with a better mix benefiting pricing. Investor sentiment on the other hand appears to have done a full round trip, with a more optimistic volume outlook following Apple’s disclosure of flat iPhone pricing (in USD) at the product announcement now being moderated by a more tepid consumer response to the iPhone 14 / 14 Plus following the launch, which in our view has only returned investor volume outlook to in line with sell-side consensus and expectations heading into the product announcement. It is undeniable that the macro is having an impact on the product cycle as we believe it is currently driving consumers to opt for value by either choosing higher-featured models, like the 14 Pro / Pro Max, or choosing lower priced models, like the iPhone 13, over the less feature rich 14 / 14 Plus. Overweight. $200.

Erik Woodring, Morgan Stanley: Initial iPhone Production Headlines More Bark Than Bite. As we noted in our Monthly Data Tracker published prior to this report from Bloomberg, iPhone 14 Pro Max and Pro lead times in the US remain extended at 4-5 weeks, 2nd and 3rd longest of any model launched in the last 6 years, respectively. However, iPhone 14 and 14 Plus lead times are minimal at 2 days and 0 days, respectively, and this evening's reporting from Bloomberg suggests that the upside from better-than-expected iPhone 14 Pro/Pro Max demand is likely being offset by weaker initial iPhone 14/14 Plus demand. Overweight. $180.

Sharon Shih, Morgan Stanley: Initial Read-Through to the Apple Supply Chain. The news report is consistent with our estimates that total iPhone 14 builds will be at around 90mn units in 2H22 with 14 Pro/Pro Max % trending up to 57%, vs. consensus at 90-95mn units. Our latest checks suggest a few million component order increase for 14 Pro/Pro Max of late, but the final assembly orders remain unchanged at this point. We expect 4Q22 build plan at assemblers to be finalized in the coming two weeks. Key changes to monitor include: 1) the magnitude of iPhone 14 Pro/Pro Max order increase; 2) whether iPhone 14/14 Plus orders get revised downward; and 3) whether legacy iPhone 13 Pro/Pro Max orders will be increased, given a more attractive cost performance offering comparing to two basic iPhone 14 models. So far, iPhone 14 Pro/Pro Max supply chain appears to be major beneficiaries, including Hon Hai, Foxconn Industrial Internet and LandMark.

Amit Daryanani, Evercore: iPhone Production Cuts – Fake News? Multiple news outlets, including Bloomberg, have reported that AAPL has told suppliers to curtail efforts to increase production of the iPhone 14 by as many as 6M units. The implication is now that AAPL will aim to produce ~90M units of the iPhone 14 through H2:22, largely in-line with expectations from a few months back. While we would always take supply chain articles around AAPL with a grain of salt, our key points here would be: 1) We think units are stable, but it’s the mix that is skewing dramatically higher i.e., demand for the higher-end Pro/ Pro Max models is far greater than demand for the Plus/14 models. 2) We suspect, and there is supply chain data here, that AAPL is trying to shift the production/mix towards higher-end models given demand is stronger for those units. Outperform. $190

Daniel Ives, Wedbush: Thoughts on iPhone 14 Production Reports; Focus on Pro Strength Despite Worries. Our positive thesis on Apple remains unchanged and we are not wavering in our view the iPhone 14 Pro demand is robust and this will enable Apple to power through near-term macro headwinds much better than feared by the Street. The softness on the base iPhone model is a clear sign that in this weaker macro consumers are not paying up for a smartphone that is pricey with minimal enhancements from iPhone 13 with the Pro model a complete other story seeing positive demand. Outperform. $220.

See also: Bloomberg report clobbered Apple and its suppliers overnight Wednesday

9 Comments

  1. What was today’s trading in Apple about, a big oops? Was diving to $144.84 on a rumor really necessary? Are AI trading robots that easy to fool? Trading volume was massive, hope buybacks got in.
    I cannot envision shelves full of unsold iPhone 14 models, anywhere except in-transit to some distro center. There will be no sale pricing, until we get close to the iPhone 15 release.
    In a peculiar note, Ma Bell is offering ‘free’ iPhone 14 Pro models to those willing to switch carriers for a business account.
    Large carriers always set aside a stash of the very best models for VIP, government and business account purposes. A particular model & pricing can seal the deal to poach a 2,000 line business account from the competition.

    4
    September 28, 2022
  2. John Konopka said:
    Volume closing in on double the normal level. I checked a few other tech stocks and they had ~normal volumes.

    1
    September 28, 2022
  3. David Emery said:
    The general conclusion is that many investors and speculators are unwilling to believe that Apple will continue its unprecedented amazing performance. It’s “too good to be true.” But that fear is not based on analysis but on “FUD” and emotion.

    6
    September 28, 2022
  4. Gregg Thurman said:
    Incomplete knowledge by those that have no understanding why they bought in the first place.

    This class of investor has existed forever, and will exist forever.

    Todays volume may be high compared to historic levels, but in relation to total shares is a pittance.

    Who’s to say historic volume isn’t abnormally low because the overwhelming percentage of investor has no intent to sell for a very long time, and today’s volume isn’t net buying? From an Opening low of $144.84 to a near Close of $150 looks like buying to me.

    Shake any tree hard enough and some leaves will fall off.

    4
    September 28, 2022
  5. Aaron Belich said:
    Neil Cybart’s $$$ analysis was a good reminder that Bloomberg sells services too, and my analysis is that Bloomberg, as a whole, is shady AF.

    I’ll let PED repost if Neil allows it.

    6
    September 28, 2022
  6. John Konopka said:
    Cramer at about 4PM PDT hinted around that Bloomberg was full of it and told people to hold on to their AAPL stock, don’t sell it.

    Apple announced that the quarterly earnings will be released 10/27.

    4
    September 28, 2022
  7. Dave Calderon said:
    Lets not forget about the article from about 5 years ago. The Big Hack. Accusing Apple of using chips infected with China spyware. That article had 17 unnamed sources. It was a complete work of fiction.

    4
    September 29, 2022
    • Steven Philips said:
      And they never admitted or apologized! All the thoughts noted above apply here as well. I hoped someone would bring this up. Thanks, Dave.

      1
      September 29, 2022

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