Apple has supposedly cut orders for iPhone 5 components, including screens by roughly half. This according to two people familiar with the matter, one of whom also said other component orders had also been cut. Apple apparently notified the suppliers last month, (both?) of the people said. Juro Osawa of the Wall Street Journal claims that it's because people aren't buying enough iPhones.
The move indicates that sales of the new iPhone haven't been as strong as previously anticipated and demand may be waning. It comes as the company has been facing greater challenges from Samsung Electronics Co. and other makers of smartphones powered by Google Inc.'s Android operating system.
The rest of the article races through Apple vs. Android market share numbers, and careers around any profit share mention, before heaping more praise on Samsung, mentioning the realities of the panel market, and then slamming strait into a reminder that Apple will report earnings later this month.
Apple no-commented, of course.
The Wall Street Journal generally has a good track record when it comes to Apple rumors. However, rumors of Apple cutting orders, both true and fabricated, come along every year. Sometimes people want to manipulate stock. Sometimes companies want to leak bad news to soften its impact. Sometimes deals fall through or business realities change. Sometimes new products are coming that cause a down-shift in old ones. And sometimes good data gets interpreted wrong. What if half their orders are still more than 2012 levels? Does the context change then? Without numbers, real numbers, it's flying blind.
Wall Street (the actual financial district, not the Journal) is wacky when it comes to Apple, punishing them for among the highest profits in the world, while rewarding companies that have barely if ever turned a profit. In the meantime we have AT&T and Verizon in the U.S. pre-announcing record smartphone sales, and Verizon reporting a higher iPhone mix than ever before.
Apple will report their earnings at the end of January, and they may or may not exceed Apple's own forecasts and/or the Street's forecasts, but the guidance the guidance they give for Q2 2013 will be telling, and the conference call that follows will almost certainly have Apple's CEO and CFO, Tim Cook and Peter Oppenheimer, there to answer questions.
Until then we have a person and a half of unknown affiliation telling the Wall Street Journal that the iPhone 5 isn't as in demand as Apple thought it would be, and that's about it.
Update: Reuters, in a Nikkei-based article echoing the WSJ, pegs the change as down from 65 million iPhones. Apple sold 35 million in Q2 2012, and 18.65 million in Q2 2011. Given the maturity and competition in the market, it's tough to see how, absent a major new deal, Apple could expect to once again double their orders in the post-holiday quarter. Makes the kind of sense that doesn't.
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