Apple iPod Supply Below Wall Street Shipping Estimates?

[MacRumors]

http://www.macrumors.com/images/macrumorsthreadlogo.gif (http://www.macrumors.com)

Mac News Network's ipodnn.com reports (http://www.ipodnn.com/news/05/11/28/ipod.supply.constraint/) that investment research firm PiperJaffray (http://www.piperjaffray.com/) issued a report today casting doubt on Apple's ability to reach Wall Street estimates of holiday season iPod shipments.

Reportedly, the iPod nano is in the shortest supply at third-party retailers and Apple is apparently holding inventory for its own stores at the expense of other retailers.

Based on its own models, PiperJaffray estimates 9.0 million iPod shipments in the December quarter, lower than other Wall Street estimates. PiperJaffray's research apparently included a survey of 10 Apple stores and 11 third-party retailers. Eight of the 10 had "full availability of all iPods".

While we do believe slight upside to our estimate is achievable, we do not expect Apple will be able to ship the number of units that are already anticipated in some Street models.

[stridey]

It's impressive to me that after all these years, and a lot of naysaying about how iPods are "on their way out", they're still selling so fast that Apple can't keep up. :cool:

[zigziggityzoo]

I'm not surprised. These things have been selling like water in the middle of the desert.

[redAPPLE]

cool for the people who already bought their iPods. god bless those who still don't have them.

[Quartz Extreme]

Hey, it's a good problem to have!

[Josh396]

Well my local Apple store had a full supply of iPods when I was just there. Maybe that's not the case now though. Although they may fall short of the predictions, it's still very impressive that they may sell 9 million in just December. It will be interesting to see if that increases if they can increase supply.

[alms]

The interesting thing to me was that the stock price was initially up 2% on this news. I mean, it's great that the iPods are selling so well, but saying that Apple won't be able to manufacture enough to hit Wall Street targets doesn't seem like good news to me.

[LimeiBook86]

Don't forget not everyone has bought their iPods yet. A lot of shoppers will probably wait until the last minute to run to the Apple store and pick one up...that is if the Apple store has any left in stock. I think Apple should be ok though, I bet these things are selling like hot cakes and they probably have a factory working 24/7 that's producing more as we speak. :p

[kidA]

Hey, it's a good problem to have!
only insofar as it means that apple is selling a lot of ipods. but it is a pretty bad problem to have if it means that you might not meet your wall street estimates, which is what piper is saying. because that means your stock will fall. and that means your shareholders aren't as happy.

[rockthecasbah]

thats rediculous, Apple shouldn't be saving the supplies for their stores, most people would rather go to a big chain like a circuit city or whatever and would rather settle for another mp3 player if it meant going for a 2nd trip...bad move.

[Lacero]

I would classify this as good news. :D Next quarter, probably 15 million iPods will be sold.

Here's to the Crazy Ones http://forums.macrumors.com/attachment.php?attachmentid=35452 (http://www.uriah.com/apple-qt/movies/think-different.mov)

[kidA]

The interesting thing to me was that the stock price was initially up 2% on this news. I mean, it's great that the iPods are selling so well, but saying that Apple won't be able to manufacture enough to hit Wall Street targets doesn't seem like good news to me.

this is interesting because it's definitely somewhat counterintuitive. the long term effect of this news on the stock price is what's more important though. and if this news really turns out to be true as we get deeper into the holiday season, i would expect the stock to slip a bit.

[Doctor Q]

PiperJaffray remains positive on Apple, as reported by imacnn:

The firm also said it feels Apple will see a continuation of strong demand for both iPod and Mac products during the holiday shopping season. Moreover, analyst Gene Munster said 2006 is likely to be a more "robust" year for Apple. "The incorporation of Intel and introduction of new form factors will both likely lead to the launch of several new/updated Macs in 2006, more changes to the Mac lineup than were seen in 2005."

[ibook30]

"Apple is apparently holding inventory for its own stores at the expense of other retailers."

So I am guessing Apple makes more by selling ipods at Apple stores,,,,, and of course people are drawn into Apple Stores by the ipods siren song, and are crushed on the rocks of the Macintosh computers beautiful design and brillaint OS... so Apple will let folks go to a store and be disapointed (when tehy are out of ipods) but lets hope those folks go to the APple store to be seduced by the beauty and ease of use with the Mac line...

Just thinking aloud here.

[Seasought]

Apple is apparently holding inventory for its own stores at the expense of other retailers.

Thus encouraging consumers to visit their stores (online and offline) possibly leading to more expensive purchases.

Makes sense to me.

[Magicite]

It'd be interesting to find out when they did their research.

:: reads article ::

OK, we know that most people buy stuff on the weekend . . . and they checked at the end of the weekend. Of course most stores don't have stock on, say, Sunday.

If every store had reported having stock, this article would instead say that iPods aren't selling very well.

[~Shard~]

This is one of those situations where Apple just can't win in the eyes of some of the media - if they can't meet demand, it's bad because they have supply issues, but if they have a lot of inventory, then iPod interest and popularity must be waning and this is also bad. ;)

I think this is a good problem to have, and I think Apple will do everything in its power to address these issues and get as many iPods out there as possible (while still maintaining quality control... :eek: ;))

[runninmac]

Well they could have bigger "problems"... look at creative;)

[VanMac]

I agree that this is good news.

Anything else, and they would be calling the ipod a flop (again).

[barneygumble]

I haven't been able to find a nano in oz for the last 2 weeks, evern the vidpods are in short supply and god help you if you want a black one;)

Do i think it is fair to hold stock for yourself NO

[PDubNYC]

it's still very impressive that they may sell 9 million in just December.


It says December Quarter, not just the month of December. Strange way of wording it, but still I take it to mean a 3-month period. Lot of iPods nonetheless.

[Sayer]

Welcome to the world of self-fulfilling prophecies.

The "street" claims their model predicts a certain level of iPod sales, based on completely unknown data/metrics/analysis to us mere mortals. And when these numbers either fall short or surpass them the "street" pooh-poohs the results either way e.g. "Apple wont be able to sustain their previous growth rates, as witnessed by X quarter's results thus we downgrade the stock to Neutral or Sell or Hold or whatever nonsense."

[dontmatter]

Much as it's nice to hear that demand for ipods is enormous, this is bad news.

If wall street predicted the number of ipod sales to some number, and that number is accurate, than apple should be able to make that number. But instead, they underpredicted, and can't keep up.

If this ammount of demand hadn't been predicted, it would be good news-apples' got a hit on it's hands. But as it stands, apple could have known there would be a hit, and capitilized on it. Instead, they are leaving money sitting on the table.

Hopefully in apple's major purchase of flash memory they got a deal to shore up supply for the holiday demand, but of course they should not be doing so at the expense of getting a good deal in the long run.

[WildCowboy]

This is one of those situations where Apple just can't win in the eyes of some of the media - if they can't meet demand, it's bad because they have supply issues, but if they have a lot of inventory, then iPod interest and popularity must be waning and this is also bad. ;)

Generally, I would agree. But Piper Jaffray has been one of the most optimistic in recent years when it comes to Apple's prospects. It worries me that they're the ones throwing up the warning flag. Quarter after quarter, they'd have the highest predicted iPod sales of any analyst, and Apple would meet that number. Now they're at the low end of estimates already and now have some concerns on top of that. It says nothing about the actual performance of Apple and its iPod sales (which are still doing fantastically), but it does appear that the hype surrounding Apple's stock may be surpassing reality.

[SiliconAddict]

Hey, it's a good problem to have!

Umm no not really. You guys understand that Apple isn't meeting demand and to a certain extent there are going to be some shoppers out there who will shrug and go get some other MP3 player.
This is actually pretty messed up, not unexpected considering the supply shortage of chips for the Nano, but messed up nonetheless. I would rather see supply on the shelves while meeting the street's expectations.

[WildCowboy]

It says December Quarter, not just the month of December. Strange way of wording it, but still I take it to mean a 3-month period. Lot of iPods nonetheless.

Yes, it's standard terminology in the financial world to use the end month of the quarter. Because companies often run on fiscal years different from the calendar year, a statement such as Q3 2005 can be misinterpreted. You'd think it would mean July-September 2005, but if the company's fiscal year starts on July 1, it could mean January-March 2006.

[~Shard~]

If wall street predicted the number of ipod sales to some number, and that number is accurate, than apple should be able to make that number. But instead, they underpredicted, and can't keep up.

If this ammount of demand hadn't been predicted, it would be good news-apples' got a hit on it's hands. But as it stands, apple could have known there would be a hit, and capitilized on it. Instead, they are leaving money sitting on the table.

If you think that Wall Street predictions are supposed to somehow be magically accurate, you're in for a shock - the "oracles" of Wall Street aren't as all-knowing as you might think. Apple would be foolhardy to try and match whatever numbers come out of Wall Street, "just because they say so". As Sayer said, welcome to the world of self-fulfilling prophecies... ;)

[~Shard~]

Generally, I would agree. But Piper Jaffray has been one of the most optimistic in recent years when it comes to Apple's prospects. It worries me that they're the ones throwing up the warning flag. Quarter after quarter, they'd have the highest predicted iPod sales of any analyst, and Apple would meet that number. Now they're at the low end of estimates already and now have some concerns on top of that. It says nothing about the actual performance of Apple and its iPod sales (which are still doing fantastically), but it does appear that the hype surrounding Apple's stock may be surpassing reality.

Quite true, good point. Let's hope Apple takes this matter seriously and doesn't just shrug it off.

[nagromme]

Shortages would be no shock at all. (And either way, it's still a highly successful product line, to say the least.)

Do these Wall Street "models" take into account ONLY demand, and not supply? That seems absurd. Or are they completely guessing about component availability?

Sounds like some of these predictions ought to be taken with salt. And many are MEANT to be taken that way, not treated as certainty.

[maya]

The interesting thing to me was that the stock price was initially up 2% on this news. I mean, it's great that the iPods are selling so well, but saying that Apple won't be able to manufacture enough to hit Wall Street targets doesn't seem like good news to me.

Think Different, is the only thing that comes to mind. ;) :)

[WildCowboy]

For a better understanding of why the stock was still up even with this news, read this (http://www.thestreet.com/_yahoo/stocks/troywolverton/10254658.html) article. Piper Jaffray's news wasn't the only thing out today. Deutsche Bank is optimistic and raised both iPod sales targets and target price. And Piper Jaffray themselves raised their target price...both now expecting close to $80/share.

[zulgand04]

in my opinion haveing a mini suplly shortage right now is a good thing for apple, when supply is low and then gets in to the media, this gets people to think well if there might be a shortage then i should get it now rather then later. This helps apple by getting consumers interested early in the holiday season insted of the mad rush week before christmas. Although if the supply is too low then there in trouble because they will lose sales by not being able to find them and going to other products.

As long as supply isnt too far below demand their fine. But things like this is what anylists do, and then are wrong half the time lol

my two cents lol

-Neal

[dernhelm]

Just ordered a 2GB engraved nano from the Apple Store. It's shipping already, so I have no complaints here. Of course, I didn't go retail so I can't say as to availabilty anywhere else.

[sjo]

It's impressive to me that after all these years, and a lot of naysaying about how iPods are "on their way out", they're still selling so fast that Apple can't keep up. :cool:

Well if you take look at the sales numbers, the growth has been slowing considerably. If that trend continues this quarter might well be the all time high considering at least sales of the ipod as we know it now. To get past the 9m-10m units/q they'll probly need to develop the ipod into something new. Which of course is possible.

[Norrsund]

PiperJaffray's research apparently included a survey of 10 Apple stores and 11 third-party retailers. Only two of the 10 had "full availability of all iPods".

This should read ALL BUT TWO.... from the article: "We found that throughout the weekend all but 2 stores in our sample of 10 Apple stores had full availability of all iPods. On the other hand, all of the 11 third-party retailers in our survey did not have multiple varieties of iPods in stock by the end of the weekend."

[EricNau]

Glad to hear Apple's iPod is this popular. :)

[winmacguy]

I would classify this as good news. :D Next quarter, probably 15 million iPods will be sold.

Here's to the Crazy Ones http://forums.macrumors.com/attachment.php?attachmentid=35452 (http://www.uriah.com/apple-qt/movies/think-different.mov)
I would say that 15 million iPods for next quarter would be a conservative estimate.:cool:

[thejakill]

do you guys think people are really going to go to a store, see that ipod is sold out, and buy some other brand of mp3 player? this might happen once in a while, but it seems to me that most people are buying an ipod because it's an iPOD. they don't want some cheap imitation. it's not like going to the store to buy cereal. oh, they're out of corn flakes. i'll just buy wheaties.

one thing was clear on friday (besides the lame sale) at the apple store: they had tons and tons of video ipods, ready to sell. there were shelves of them behind the purchase counters. i've never seen them this ready to sell something.

[MacTruck]

Who are these wall street people anyways. 9 million in 1 month, thats INCREDIBLE! Show me a hotter product right now anywhere, besids the xbox 360, and look at that, they can't even make enough for me to buy them ANYWHERE.

Besides I think its bull, every place has them in stock. I even saw a bunch at Target yesterday, video and nano.

[steve_hill4]

As someone currently working in retail, I can't wait for that week before Christmas when people start getting annoyed if we don't have any in. So far the only major problem,s for us have been both 4GB nanos, but as it gets closer, we can expect the range to go the same way. We had about 150 of each colour 2Gb nano a few days to week back, now we are down to no more than about 30 of them it appears. I know other rival stores nearby that have had none for a few months now, so it will only get worse it appears.

[MacSlut]

The good news is that this does *not* appear to be an issue of Apple producing enough iPods to meet demand. The bad news is that of the unsold iPods, they aren't distributed properly through the retail channels such that some stores are selling out.

This *could* be because some stores did not forecast sales properly and stock up. They're now placing orders after selling out over the weekend. However the Street's estimate was based on some of these very same stores orginal forecasts which were *under-estimated*.

Furthermore, since the sell-outs aren't pandemic, consumers will buy online direct from Apple or Amazon, or other retail location...possibly an Apple store where they may buy other Apple products.

It could help Apple if there is a perceived, but not real, scarcity of iPods early on in the shopping season. Heck, many vendors do this itentionally.

[Eniregnat]

I think what is being missed here is that even if Apple could produce more iPods, they wouldn't arrive via ships for months. I wonder what would happen if every iPod owner tried to buy an iPods worth (~$300U.S.) worth of stock. There would be a shortage- and that would drive up the stocks price, until it was considered "over valued". I doubt that iPods would then be radically over valued on eBay, unlike the XBox 360.

Apple really does want to sell iPods to anybody that would have them. Likely, any short fall will help fuel the "need" for the next generation of iPods. If Apple does run out, Does that mean new iPods in January?

[shawnce]

I think what is being missed here is that even if Apple could produce more iPods, they wouldn't arrive via ships for months.

Apple often switches to air freight as needed to shorten shipping times. So I wouldn't worry that much (it cuts into profits but the new iPods are in rather small boxes and very light weight so they can pack a lot in).

...

Just took a quick look at an iPod 60GB box (video) and compared it to my PowerBook 15" box. It looks like over 22 iPods fit in the same space as that 15" book. The PB cost me around 3k and those 22 iPod would come out to over 8.7k worth of product. The margin on the PB is around 30% and lets say 15% on the iPod (likely more)... doing the math Apple would make around 1,300 on those iPods and 900 on the PB.

If Apple was willing to pay for the air freight to speed channel fill for the PowerBook (they have in the past and for various products) then it would give them a better return to do so with the iPod.

[Telomar]

I haven't been able to find a nano in oz for the last 2 weeks, evern the vidpods are in short supply and god help you if you want a black one;)

Do i think it is fair to hold stock for yourself NO
Customs issues had held up Australian orders but try Myer. Over the weekend many stores certainly had stock of black 30GB, and 2GB and 4GB black nanos. It's also worth noting that following initial demand for black it is now starting to taper off with white achieving higher demand.

[Stella]

Plenty of iPods in Toronto on Saturday...

Its all too familiar - Apple can't keep up with demand.

[themacman]

Hey, it's a good problem to have!
only until the demand is so high the supply is so low

[winmacguy]

do you guys think people are really going to go to a store, see that ipod is sold out, and buy some other brand of mp3 player? this might happen once in a while, but it seems to me that most people are buying an ipod because it's an iPOD. they don't want some cheap imitation. it's not like going to the store to buy cereal. oh, they're out of corn flakes. i'll just buy wheaties.

one thing was clear on friday (besides the lame sale) at the apple store: they had tons and tons of video ipods, ready to sell. there were shelves of them behind the purchase counters. i've never seen them this ready to sell something.
Some people might go for an iRiver over an iPod, but I think that with the iPod name being soooo strong and pretty much EVERYbody only wants an iPod for Christmas, that is what they are going to ask for- don't forget that iPod stock is only running low in 3rd party re seller stores;) It you go to an Apple store you should be able to get one without too many problems :D

[Flyinace2000]

I work at a RadioShack and my store barely got any iPods in stock but they were available to order directly from out supplies. Well we were able to order them until about 1m on friday and then they have been OOS since. Hopefully we will be able to order more.

[MacInsight]

From the analysts perspective if Apple is short by even one iPod then they (Apple) will be cast as being unable to properly forcast demand and the company will fail because they have once again let consumers down.

On the other hand if even one iPod shuffle sits alone and forlorn behind a dusty pile of MacAlley keyboards on December 26th then Apple will be accused of stuffing the channel with overly rated products and will fail because they created ill will with their dealers.

Me, I am happy to wait until the beginning of Apple's next quarter and use all of my Apple gift cards then. Either way, in the long run Apple's stock will probably trend up and split as the Intel Macs pave the way for Apple to start licensing OS X to the masses. Remember, all Mac users are really just using Apple hardware with a Mac OS X license. So if we only represent 5-7% of the current world PC market then today's stock price will look cheap after a few years of Apple licensing the OS to the masses.

Just a little MacInsight

[dontmatter]

If you think that Wall Street predictions are supposed to somehow be magically accurate, you're in for a shock - the "oracles" of Wall Street aren't as all-knowing as you might think. Apple would be foolhardy to try and match whatever numbers come out of Wall Street, "just because they say so". As Sayer said, welcome to the world of self-fulfilling prophecies... ;)

Thanks for forcing me to be more exact.

Clearly, wall street has no crystal ball. They've got some tools and some math, and can figure out some things, but at the bottom is people, who just don't conform to numbers much.

Hence, what I was trying to say is-when the majority of wall street predicts it, and it's RIGHT, then it looks like they've got a pretty good system for that particular situation, rather than just dumb luck. If wall street can predict it, then apple had better be able to, because it has more and better data, and it's fortunes depend upon it doing so.

Therefore, I read this to mean that apple failed to predict demand sufficiently, but might have been able to had they been a bit more savvy.

And, as stated the first time, predicting demand poorly is a serious problem for a buisness, so I read this as bad news, because they were able to make a hit darned well, but not able to figure out how much of a hit it would be, and will loose possible money because of it.

That said, they're capitalizing big time by selling in apple stores, where they sell at wholesale instead of retail, get the money off of accessories, and most of all, get to push macs and associate macs with ipods. Which is typical of apple. They like "risky" products but hedge their bets by underproducing and keeping unchanged products around for a long time as a matter of practice (so if something is a bust they still sell what they've made at a profit, just stop making them and take a while to deplete stock). Likewise with things like introducing products before they ship, etc.

[WildCowboy]

Hence, what I was trying to say is-when the majority of wall street predicts it, and it's RIGHT, then it looks like they've got a pretty good system for that particular situation, rather than just dumb luck. If wall street can predict it, then apple had better be able to, because it has more and better data, and it's fortunes depend upon it doing so.

The other interesting dynamic that has fascinated me for some time is that analysts will do everything in their power to make the same statements all of the other analysts are making, regardless of whether they believe it or not. If you're wrong, and everybody else is wrong along with you, it's not much skin off your nose...everybody got fooled. But if you're wrong and you're the only one, you're just a bad analyst and might have to start worrying about your job. So make sure you say whatever everyone else is saying.

It's how the analysts stay in business. They are wrong a remarkable amount of the time (witness the dart-throwing chimp studies). But because they are pretty much all right or all wrong together, it's tough to single any of them out as particularly good or bad. And because people like the idea of being able to hear from someone who "knows" something, they all keep their jobs.

Now, if we could just find that 216-digit number that controls the stock market...

[Doozy]

Apple is smart. They limit the number of ipods they supply to third parties so when the costumers can't get what the want from BestBuy the run over to the Apple Store and while there, also buy a mac mini or an iMac.

I believe they will hit their target sales for the holiday. Here's hoping one of those ipods is under my tree this year. In fact I would rather mine come directly from Apple than those !@#$ guy at BestBuy, or Walmart.

[Tupring]

One of the third-party Apple retailers where I live was robbed for 200 iPods the other night...

[EricNau]

One of the third-party Apple retailers where I live was robbed for 200 iPods the other night...
Thats a shame.

How does I place that had over 200 iPods get robbed anyways, I would expect that large of a store to have better security. :confused:

[Doctor Q]

How does I place that had over 200 iPods get robbed anyways, I would expect that large of a store to have better security. :confused:200 computers would be a large shipment, but 200 iPods isn't very big.

I often see employees with wheeled carts bringing in new shipments of this and that at our local Apple Stores, and there is usually only a single security guard for the whole store, who might not be around the right area if they leave the new equipment unattended.

Then again, the case were talking about here could have been a burglary or a shipment stolen outside the store. Do you mean somebody actually threatened an employee as in a bank robbery, or just that somebody snuck out with some boxes?

[matthewHUB]

Well i just registered so i could reply, but i read this forum a lot.

Amazon are currently out of stock of ipod nanos. I think it's great to stop places like walmart having loads of ipods, so that customers are drawn to the apple store, but i think Amazon should get their fair share as they are a bigger online seller. Too many people rely on internet shopping nowadays, so i believe it very important that both apple store online and amazon have these items.

Amazon are saying: 'Availability: In stock soon. Order now to get in line. First come, first served.'

This surely persuades buyers to get in before the xmas rush. Just a thought

[EricNau]

200 computers would be a large shipment, but 200 iPods isn't very big.

I often see employees with wheeled carts bringing in new shipments of this and that at our local Apple Stores, and there is usually only a single security guard for the whole store, who might not be around the right area if they leave the new equipment unattended.

Then again, the case were talking about here could have been a burglary or a shipment stolen outside the store. Do you mean somebody actually threatened an employee as in a bank robbery, or just that somebody snuck out with some boxes?

Any type of robbery where 200 iPods get stolen surprises me, whether the store was open at the time or not. It just seems most stores that sell iPods are larger resellers (ie: Target, Walmart, Bestbuy, Circuitcity, CompUSA) - all of which would have security gaurds and systems. And in my area it would be hard to get away with that; too many people around.

I've neer seen a store that had 200 iPods on the shelf; so I'm gussing it was at night.