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Potential 'iPhone 5' supply constraints seen as positive for Apple stock

post #1 of 13
Thread Starter 
Rumored supply issues may limit availability of the new iPhone at launch, but a new analysis has found that severe constraints have actually been a boon to Apple's stock price.

Analyst Rob Cihra with Evercore Partners found that over the last three years, AAPL stock has performed 2.2 times better in a quarter after the company noted that iPhone supply was constrained. The stock also performed 1.2 times better in a quarter after management noted supply of the iPad was constrained.

And in the June 2010 quarter where both the iPhone and iPad were noted as constrained by Apple executives, the company's stock price grew 26 percent over the following three months.

In contrast, in October of 2011, Apple did not report that either the iPhone or iPad were constrained, and the stock saw 0 percent appreciation over the next three months.

Cihra speculated that AAPL stock has performed better when products are constrained because investors recognize customers will wait for a unique Apple product rather than simply buying a competitor's alternative. He also said if supply exceeds demand, it enables investors to imagine what numbers could have been if Apple had been able to meet supply.

Evercore


Cihra has forecast sales of 24 million iPhones in the September quarter, which would represent 39 percent year over year growth. He sees potential for a few million units on the upside, but is looking forward to a blockbuster quarter to follow in December.

For the holiday quarter, Cihra has forecast sales of 49 million iPhones, which would be a new record for the company. Even with that many sold, he still believes demand will far outstrip early supply.

Specifically, he believes Apple's anticipated migration to new in-cell touch panels for the next iPhone could limit supply. And supply is also expected to lag demand for 28-nanometer basebands from Qualcomm until at least December.

Evercore Partners has increased its price target for AAPL stock to $800, up from its previous forecast of $750. It has maintained its "overweight" rating for the company.
post #2 of 13

"Same thing that happens every year to happen again. Apple is doomed. And simultaneously saved."

Originally Posted by asdasd

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Originally Posted by asdasd

This is Appleinsider. It's all there for you but we can't do it for you.
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post #3 of 13
Quote:
Originally Posted by Tallest Skil View Post

"Same thing that happens every year to happen again. Apple is doomed. And simultaneously saved."

Every launch they say it and, at least with its devices, it's constrained at like only 10 million and more are out within days.

The only issue Apple has is with model distribution. They figure, for example, based on last year that the 16gb will be the big draw at a store and send more of that, but everyone wants a 32gb. In fact I wouldn't be shocked if they do preorder only for the first couple of weeks both to control lines and get the right models to the store.
post #4 of 13

The implication that Apple either WANTS to be constrained or is responsible for artificial supply issues is insane. No other company on the planet is able to produce/move as many phones/tablets  at launch than Apple. We're talking about pushing the absolute limits of logistics and whats possible. And when demand is so astronomically high, supply issues will be there. 

post #5 of 13

Does anyone know the official definition of "balanced"? When shipping delay < 2 weeks?

post #6 of 13

I think Apple cares more about their net income than about their stock price.

 
post #7 of 13
The problem here is that there is a massive difference between a run away success and a screw up where you can't manufacture your product.
post #8 of 13

This is a bit misleading.

 

The implication here is that it is the supply constraints that boost the stock price. It's not. It's the fact that despite all of Apples efforts to provide enough supply to meet demand, demand is still higher. The stock price bump is a reflection of demand for Apple's stock given the demand for new Apple products. The supply constraints may have exposed this, but they are not the cause per se.

 

Now one could argue that Apple does this deliberately (constrain supply to make it look like there is excessive demand even there isn't any or as much.) But this game would have been exposed pretty early when the demand didn't actually show up.

The state is nothing more than a criminal gang writ large.

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The state is nothing more than a criminal gang writ large.

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post #9 of 13
Quote:
Originally Posted by AppleInsider View Post

He also said if supply exceeds demand, it enables investors to imagine what numbers could have been if Apple had been able to meet supply.

 

umm... other way around. "if demand exceeds supply, it enables investors to ..."

post #10 of 13

I wonder if constraints have anything to do with Samsung not providing enough parts they can't source elsewhere. Hmmm.


Apple always plans announcements of products and some products are released either when they have plenty of stock on hand or because they don't want to release everything at once.

 

There is always a spike as soon as a product is announced.  Don't you think it odd that they make major announcements and product releases are the mid point of the last month of a quarter?  This is the last month of this quarter just in time for the Christmas season, which sometimes starts a little early.

post #11 of 13
Quote:
Originally Posted by MJ1970 View Post

This is a bit misleading.

 

The implication here is that it is the supply constraints that boost the stock price. It's not. It's the fact that despite all of Apples efforts to provide enough supply to meet demand, demand is still higher. The stock price bump is a reflection of demand for Apple's stock given the demand for new Apple products. The supply constraints may have exposed this, but they are not the cause per se.

 

Now one could argue that Apple does this deliberately (constrain supply to make it look like there is excessive demand even there isn't any or as much.) But this game would have been exposed pretty early when the demand didn't actually show up.

These people in the media try to fuel attention by these product releases.  They say a month or two before a product release all of the doom and gloom to get attention, and then when the product is released they make another story about the success of the product.  Last year they did the same thing because they always blow out of proportion the market share numbers.  Before the iPhone 4S announcement they were talking about the rise in Android market share, and then after the iPhone 4S announcement iOS market share started rising and Android sales started falling reaching almost the same market share.  Go look at the market share charts over the past 3 or 4 years.

 

Personally, with the impending push for AirPlay technology as the winner, Apple is going to have a strong play.  Android doesn't have anything else to push.  Stereo equipment and video equipment is going to be AirPlay enabled as Apple has been getting LOTS of companies to license the technology.  There are already lots of products on the market and I'm sure the upcoming CES next year will have a LOT more as it becomes a major standard in the industry.  yeah, like Apple doesn't invent anything.

post #12 of 13
Quote:
Originally Posted by markvdrheijden View Post

I think Apple cares more about their net income than about their stock price.

 


Good. That's the way it should be. But, in reality, that's not entirely true. Tim Cook has taken the standard boring  and short-term steps of dividends and stock buyback.

post #13 of 13
This analysis is worthless. It only focuses on US launch dates. In most cases, even when new product availability eases up in the US, it is still constrained (or even not-yet-available) elsewhere in the rest of the world.

Since almost two thirds of Apple's revenue comes from international markets, a US-focused analysis is completely bogus.
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