Analysts Dispute Supply Chain Conclusions of iPad Production Cuts

[MacRumors]

Earlier today, a report from JPMorgan analysts made headlines for its claim that Apple has slashed its fourth quarter iPad production plans by 25%, sparking speculation and rumors that Apple may be planning a price cut amid weakening demand.

The Wall Street Journal notes, however, that several analysts have already spoken out against the conclusion, arguing that a single supply chain data point is insufficient to warrant such drastic production cut predictions. From Piper Jaffray analyst Gene Munster:

We also note that previous calls based on sell-in or supply chain data have, for the most part, proven to have very little correlation with Apple's results vs. consensus dating back to early iPod shipments (2003). We believe Apple purposely maintains enough suppliers and manufacturing partners to make any one supply-side data point inconclusive.

Analysts also note that Apple appears to have actually accelerated production and bumped up third quarter orders to stockpile iPads heading into the holiday shopping season. Sources also indicate that Apple is likely to begin production of the iPad 3 at the end of the fourth quarter or early in 2012 and may be accelerating production now in order to ease that transition.

Apple struggled with the transition from iPad to iPad 2 production earlier this year, with weak sales coming in the first quarter of this year as Apple scaled down production of the original iPad and was unable to meet heavy initial demand for the iPad 2. From Susquehanna analyst Chris Caso:

We believe chatter regarding iPad production cuts are misleading - we have seen pull-ins, not cuts. We have noted recent comments by competitors discussing iPad production cuts for 4Q. Our recently published AAPL supply-chain checks noted a sequential decline in 4Q iPad builds from 17 mln-19 mln units in 3Q to 11 mln-13 mln units in 4Q. However, the 4Q sequential decline was accompanied by an increase in 3Q builds, leading us to conclude that production was likely pulled-in from 4Q to 3Q.

Some have suggested that the fourth quarter production cuts may be due to Apple shifting some production to Brazil by the end of the year, although most of Apple's Asian component suppliers would be expected to be serving that production channel in addition to the existing Chinese channel.

Apple's stock dropped as much 3% earlier today as the initial report circulated, but has since rebounded and is currently down only about 1.25%.

Article Link: Analysts Dispute Supply Chain Conclusions of iPad Production Cuts

 

[mouthbreather]

The sky is falling! The sky is falling!

 

[Serelus]

There isn't going to be a new iPad this year it seems O:!

Damnit that wasn't going to be my first first post

 

[Daremo]

What don't they dispute...

 

[rdowns]

These analysts are no different in their predictions than the kiddies in the iPhone forum. Wondering why MR and others publish obviously market manipulation stories.

 

[Rodimus Prime]

Come on a single data point is never enough to draw a conclusion.
All it is good for is to raise a flag to see if something is worth tracking and to dig deeper to see if it is a fluke or a pattern.

 

[acidfast7]

I told you there was no way that Apple was sell 50M iPads this year due to market saturation.

 

[Mattsasa]

in other news: Apple is wiping iCloud data as we speak!

and invitations should go out tomorrow, and stock will go back up

 

[*LTD*]

It's haters en masse claiming the end times for Apple and the collapse of Apple's "fads", whenever there's an unusual blip on the radar.

This is the funniest part of all:

Apple may be planning a price cut amid weakening demand.

I had to re-read that because I couldn't stop laughing. The tears blurred the letters.

Apple sells a record number of iPads last quarter, and then a mere two months later into the next quarter demand drops??? Uh-huh.

I told you there was no way that Apple was sell 50M iPads this year due to market saturation.

They're actually on track to sell more, because if you want a tablet the iPad is really the only viable choice.

 

[hcho3]

Oh stupid analysts...

Apple sales are not slowing down anytime soon. No one knows how many iPad 2s apple placed for Q4 2011.

Next 3 months, we have Black Friday and Christmas Shopping. So, somehow apple sales will go down. Okay...

 

[igazza]

somebody tell me why i should upgrade from ipad 1 ?

 

[aristokrat]

Called it. As I said in the last thread, this was professional and bald-faced market manipulation. What all the other analysts are saying about one data point being too little to base a predication on, that's exactly the point: this analyst can back up his ridiculous claims based on "real" evidence, right after he dumped some stock and then picked it up again 3% cheaper. The SEC should pay this guy a visit.

 

[Consultant]

It could also be:

Brazil iPad production
Switching some capacity to make new iPhone

 

[transmaster]

And Other "Experts"

Are saying Apple is nervous about the "Amazon Kindle" due to be released very soon. Which will have the same form factor as the Kindle ebook reader, with an Amazon custom version of Andriod, and will access Amazon, like the iPad does iTunes. The "Amazon Kindle" is supposed to sell for $250 dollars.

 

[igazza]

It could also be:

Brazil iPad production
Switching some capacity to make new iPhone

Or all those rumors of ipad 3 coming this year.

 

[mattwolfmatt]

I know my desire to buy an iPad 2 decreases with each day, because each new day brings us closer to the inevitable ipad 3, whenever that may be. I've waited this long, I can wait another ___ months.

 

[nanotlj]

It is just crazy to see all the stocks go unusually high under such a depressing economic conditions. Is wall street creating another bubble?

 

[FunkyChicken]

Oh come on...

....when was the last time Apple offered a price cut??

 

[*LTD*]

Are saying Apple is nervous about the "Amazon Kindle" due to be released very soon.

I'd be nervous too about the possibility of another late entrant into the tablet market messing with my IP.

It might be time for Apple's legal team to pre-book a few court dates.

 

[wowotoe]

So why is this not consider stock price manipulation when coming from a big firm JPMorgan? SEC should really look into how they benefited from spreading rumors.

 

[dewski]

somebody tell me why i should upgrade from ipad 1 ?

i saw no reason to upgrade but we did anyway. the speed and responsiveness is the biggest upgrade for me. i think the iPad 1 was easier to hold, but the iPad 2 is lighter so it makes up for it. i wouldn't have bought an ipad2 outright, but we sold the 1st one for 500

 

[Claefer]

It's haters en masse claiming the end times for Apple and the collapse of Apple's "fads", whenever there's an unusual blip on the radar.

Apple sells a record number of iPads last quarter, and then a mere two months later into the next quarter demand drops??? Uh-huh.

This is the Windows 8 effect. You think it's a coincidence that demand for the iPad 2 has dropped a staggering 25 percent after Microsoft released the Windows 8 preview?

 

[Resident Guru]

We sell the iPads at my store. They do not fly off the shelves as they used to. They kinda sit there. They do sell, just quite slowly.

 

[alent1234]

This is the Windows 8 effect. You think it's a coincidence that demand for the iPad 2 has dropped a staggering 25 percent after Microsoft released the Windows 8 preview?

nope, my father in law who can barely get to google by himself on his laptop is downloading it as i type this to install on his laptop

 

[GQB]

Flat out market manipulation.
Not much to be done except to play the game.
Sell enough on spikes to be able to buy when crap like this happens.
Still, its annoying.