Wall Street's consensus for Apple's (NASDAQ:AAPL) iPhone shipments for the second quarter is too high, according to Sterne Agee analyst Shaw Wu, and he said he thinks he knows why: Apple is already preparing its suppliers to transition to production of the next-generation iPhone.
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In a research note, Wu wrote that he has picked up from supplier checks that Apple's production plans for current iPhones have been "reduced significantly." He wrote that production is down 20 to 25 percent from the 35.1 million units Apple sold in the March quarter. "This means potential shipments of 26-28 million, which is below consensus closer to 30-31 million," he wrote. He said that the reason for the reduction is not related to consumer demand "but rather due to the upcoming 6th generation iPhone refresh likely in the September-October timeframe."
"It appears that AAPL is opting to be conservative with its suppliers to factor in a potential two-quarter pause ahead of the refresh and also to manage inventory," he wrote. "We believe this helps explain why its June quarter guidance was somewhat more conservative. We would also like to note that consensus last year grossly underestimated the impact of a pause and inventory drawdown ahead of the iPhone 4S refresh where estimates were significantly off." However, Wu increased his forecast for quarterly iPad shipments from 14 million to 15 million, and wrote that the addition of another HD screen supplier has helped Apple meet iPad demand.
An Apple spokeswoman did not immediately respond to a request for comment.
During the company's fiscal second-quarter earnings conference call, Apple CEO Tim Cook explained that the company's iPhone 4S enjoyed a "huge January" during the company's second quarter, largely due to the gadget going on sale in locations including China. The company was able to meet much of that demand, Cook said, which means the company now expects slowing iPhones sales in the coming months. One analyst in late April estimated Apple would sell fully 10 million fewer iPhones during its upcoming quarter than it did in its most recent quarter.
For more:
- see this Barron's blog post
- see this Fortune article
- see this CNET article
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