Thursday, November 10, 2011

Second Day of "Slowdown" News for Apple (AAPL) - Stock Taking Some Hits

Apple (AAPL) is one of the downside anomalies in this generally upward session - this is the second day in a row of reports of slowdowns seen in the Apple food chain.  Normally a teflon stock, Apple is taking a bit of damage here.

Today's news is from firm Ticonderoga, where analyst Brian White says his "Apple Barometer," which tracks the sales data of the company's contract manufacturers, turned up weak readings for September and October.  Via Barron's:

  • The barometer, which White created to track Apple’s progress indirectly, is a collection of sales data that come from companies that contract to Apple, mostly out of Asia-Pacific, including Hon Hai Precision , the Taiwan-based firm whose Foxconn division assembles some of Apple’s product, though it also builds stuff for innumerable other companies as well.
  • White, who rates Apple shares a Buy, writes that October sales for this basket of suppliers dropped to just 16% year-over-year growth in October, a marked deceleration from their collective sales growth in September of 62%.
  • September was likely inflated by the prep for the introduction of Apple’s iPhone 4S in October, he muses.

That said, when we tally up the combined September and October sales versus historical averages, the Apple Barometer still fell well short (~12% below) of what has been reported in the past. Although it is difficult for us to get our head around this weakness given what seems to have been a well received iPhone 4S launch so far and our expectations for a robust holiday season for Apple with the iPad 2 and MacBook Air, this report is too negative to ignore and we must carefully monitor the Apple supply chain over the next few weeks.


This follows yesterday's report from Digitimes saying Apple is slashing parts and component orders for the fourth quarter... hmmmm.

  • Apple has informed upstream suppliers of parts and components for iPhone 4S to delay part of their shipments for the fourth quarter of 2011 to the first quarter of 2012 as sales of the iPhone 4S have not been as strong as those concluded in the pre-sales period and also due to shortages in the supply of some key components, according to sources at the iPhone 4 supply chain.
  • According to a Chinese-language Commercial Times report, Apple is likely to adjust downward its shipments of iPhones and iPads from related suppliers by 10-15% in the fourth quarter.
  • Related iPhone 4S suppliers including cases and camera lens makers as well as ODM assemblers have received notice from Apple to reduce their shipments for the fourth quarter, but none of them has confirmed the report, the paper said.
  • Some international IC players have also indicated that their revenues are likely to slide by 10-15% in the fourth quarter due to the shipment adjustments for iPhone 4S.
  • Additionally, October revenues of some Taiwan-based parts and components makers in the iPhone 4S supply chain were lower than those posted in September, indicating the growing effect of reduced shipments from Apple, the sources revealed.

No position

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