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Rumors of reduced iPhone 5 orders briefly send Apple shares below $500

post #1 of 75
Thread Starter 
Shares of Apple stock dipped below $500 in early trading Monday morning, as investors reacted to new reports claiming the company had made significant cuts to iPhone 5 orders.

iPhone 5


AAPL shares were down nearly 4 percent before the market opened, a hit that came after both The Wall Street Journal and Nikkei issued reports claiming that Apple had slashed iPhone 5 component orders due to weak demand. The company is said to have cut "roughly half" of its orders for the 4-inch display on its latest smartphone, and also initiated a drawdown on other components in the current quarter, which concludes in March.

The news comes just over a week before Apple is set to announce earnings for its recently concluded December quarter. Apple's sales during the holiday season are expected to be record setting, particularly for the iPhone, which some believe may have reached sales of 50 million.

Uncertainty about Apple's future growth has made next Wednesday's earnings report conference call that much more important for the company. Last week, before rumors about iPhone 5 orders surfaced, one prominent analyst had already declared that the Jan. 23 call would be Apple's most important in a decade.

Even before reports claimed iPhone 5 component orders were halved, Apple stock had tumbled nearly 17 percent over the last three months. It's been said that investors are concerned about Apple's gross margins in 2013, in addition to the company's growth potential.

The last time Apple stock went below $500 was last February. The company's high came in mid-September, when it was briefly priced at more than $700 per share.

Riding the hype of the iPhone 5 launch, some analysts predicted that AAPL stock was headed for $1,000 per share, and Brian White of Topeka Capital Markets has maintained his price target of $1,111. But in premarket trading on Monday, Apple had become worth less than half of those targets.
post #2 of 75

I hope someone investigates this so called "analysts", "WSJ sources", etc.

It's disgusting and only someone retarded cannot see what's going on.

 

Even if this story is half-true, it's obvious the reason isn't weak demand. Bunch of ignorant people.

post #3 of 75

Someone made $$$$$.
 

Social Capitalist, dreamer and wise enough to know I'm never going to grow up anyway... so not trying anymore.

 

http://m.ign.com/articles/2014/07/16/7-high-school-girls-are-kickstarting-their-awa...

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Social Capitalist, dreamer and wise enough to know I'm never going to grow up anyway... so not trying anymore.

 

http://m.ign.com/articles/2014/07/16/7-high-school-girls-are-kickstarting-their-awa...

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post #4 of 75
Quote:
Originally Posted by lightknight View Post

Someone made $$$$$.
 


Yes. Timed perfectly for calls that expire this week.

post #5 of 75
Stock has come back a bit now, Wonder if the Apple bulls like Gene Munster will be on the airwaves trying to undo the damage. CNBC's Jon Fortt tweetd thwt he's skeptical about the WSJ story because he doesn't think they have enough inside knowledge on Apple's supply chain.
post #6 of 75
Sounds like BS to me. Already, the iPhone 5 represents 10% of mobile web views in the US. It ishas outpaced web traffic of the Galaxy S III, Galaxy Note II and Galaxy S II combined in the EU. This is just 3 months time and does not sound like poor demand to me.

This is like poor demand in China and whoops. Record sells. Sounds like stock manipulation to me.
Edited by Steven N. - 1/14/13 at 7:39am
post #7 of 75
Quote:
Originally Posted by TeeJay2012 View Post


Yes. Timed perfectly for calls that expire this week.

I think this is exactly what this is. Mega hedge funds, banks and others have a lot of exposure to these calls and they want to limit what they have to pay out. I think this year's chart for the first few months will look very similar to this period of time last year.
post #8 of 75
The WSJ reporter, Juro Osawa, expanded on the article he wrote in this WSJ live interview. Unfortunate his story didn't include the observations that any change in component orders might be due to other factors, nor that the order reductions took place last month (this is old news, not sure why the WSJ is working the angle today).

http://live.wsj.com/#!3030E9E5-F37D-48AB-B925-B454F4942A62
post #9 of 75
Quote:
Originally Posted by missouricatman View Post

The WSJ reporter, Juro Osawa, expanded on the article he wrote in this WSJ live interview. Unfortunate his story didn't include the observations that any change in component orders might be due to other factors, nor that the order reductions took place last month (this is old news, not sure why the WSJ is working the angle today).

http://live.wsj.com/#!3030E9E5-F37D-48AB-B925-B454F4942A62

I have to laugh:
On one hand, they're saying orders for iPhone 5 components are down. On the other hand, they're saying that Apple is replacing the iPhone 5 with a new model in a couple of months. Yet no mention of the second rumor in explaining the first one. So I guess their point is that they don't believe their own BS.

Not to mention, of course, that sales always drop off significantly after Christmas.
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post #10 of 75
Quote:
Originally Posted by jragosta View Post


I have to laugh:
On one hand, they're saying orders for iPhone 5 components are down. On the other hand, they're saying that Apple is replacing the iPhone 5 with a new model in a couple of months. Yet no mention of the second rumor in explaining the first one. So I guess their point is that they don't believe their own BS.

Not to mention, of course, that sales always drop off significantly after Christmas.

That's not true, not the quarter after christmas.

post #11 of 75
Quote:
Originally Posted by pedromartins View Post

That's not true, not the quarter after christmas.

Last year Apple signed up second Chinese carrier though.
post #12 of 75
Quote:
Originally Posted by matrix07 View Post

Last year Apple signed up second Chinese carrier though.

Not only that, but the iPhone 4S did not release at all in greater China until 2012. This year's release of the iPhone 5 started a month earlier, and went into more countries quicker.
post #13 of 75
Quote:
Originally Posted by MacCentric View Post


Not only that, but the iPhone 4S did not release at all in greater China until 2012. This year's release of the iPhone 5 started a month earlier, and went into more countries quicker.

And Apple could only catch up with demand a few weeks ago.

post #14 of 75

Oh, come on you guys.

 

We all know that nobody can manipulate the stock market.

 

cough bullshit cough

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post #15 of 75
Until Cook proves he has what it takes to keep Apple at the top of the innovation ladder these fears will remain. It's only natural. The "news media" needing crap to print keep making it worse and playing off these fears.
post #16 of 75

Not that I give a crap about the stock market... but you'd think investors wouldn't be so reactionary to these "reports"? Honestly, what is it, every two weeks there's a new report about how horrible Apple's sales are? Then the following week, that report is mysteriously claimed to be false.

 

Would be great if Apple didn't deliver the numbers Wall Street is expecting next week and the stock completely tanks. Then Apple buys back as much as they can until they can take the company private again. Then all these dumb reports about stock price and manipulation can go away.

 

Then IDC and Gartner would be forced to guesstimate how many units Apple sold as they do with most of their Android figures.

Disclaimer: The things I say are merely my own personal opinion and may or may not be based on facts. At certain points in any discussion, sarcasm may ensue.
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Disclaimer: The things I say are merely my own personal opinion and may or may not be based on facts. At certain points in any discussion, sarcasm may ensue.
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post #17 of 75

Now I don't purport to represent the majority of people in any shape or form but I wonder if people like me might begin to be a drag on Apples sales...

 

You see I am the proud owner of an 32Gb iPhone 3GS purchased within 2 weeks of its release in 2009, coming up to 4 years ago.

 

I had the battery replaced once at the beginning of this year (by Apple for $89AUD) but to this day feel no huge need to upgrade. This in not a criticism of the iPhone 4 or 5 (although I didn't like the 4's feel in my hand) but more of an indication of how happy I am with the 3GS.

 

It still runs the latest iOS software, I have loads of applications for it and it does what I want - sure I wouldn't mind a front facing camera for Skype but hey - I have my iPad and Macbook Air for that... It's because I am so happy with my existing iPhone that I feel no pressure to upgrade and hence I am missing from Apples iPhone sales figures for the last 3.5 years despite being a very satisfied Apple customer.

 

Sure maybe if Apple's new phone was free on a monthly account or around half the price I would have upgraded so pricing is a factor in my decision but really if the price was lower I would actually only be purchasing out of whim rather than a real need.

 

To me that is the beauty of Apple products.. before I discovered them I averaged a new phone every 12 months (Nokia 8210, 8250, 8310, 6610, various Windows mobiles, Motorola Razor, various Sony Ericssons, Panasonic etc) and would purchase a new computer every 24 months. Now I grab a new Apple laptop every 4 years and I guess have headed into the same territory with my phone purchasing habits.

 

Apple products just are really well designed and built, are generally satisfying to use (so you don't generate as much desire to replace them) and last so damn long.

 

As long as they keep making them in such a way I will keep buying - just don't expect me to show up in the yearly sales figures (surprisingly unusual for a 32 year old tech-head but there you go - the money I save gets spent on various other adventures!).


Edited by lghulm - 1/14/13 at 6:52am
post #18 of 75
Quote:
Originally Posted by Captain J View Post

Until Cook proves he has what it takes to keep Apple at the top of the innovation ladder these fears will remain. It's only natural. The "news media" needing crap to print keep making it worse and playing off these fears.

This isn't "natural", it already happened even with Steve.

 

This is CORRUPTION.

post #19 of 75

Soo tired of the shorting of Apple stock.  Didn't Apple make more profit than Google and Samsung combined last quarter.  I don't see their tock price being pummelled.

post #20 of 75
Quote:
Originally Posted by pedromartins View Post

That's not true, not the quarter after christmas.

That's nonsense. Apple sales ALWAYS drop after Christmas - just like everyone else in the world who sells consumer goods.
http://us.123rf.com/400wm/400/400/cphoto/cphoto0804/cphoto080400031/2898875-road-sign--curves-ahead-warning.jpg
In most years, the drop is at least 15% - with 2011 being the sole exception due to new product introductions.

Oh, and btw, this source confirms my explanation:
http://www.thestreet.com/story/11811629/1/if-ithe-wsji-is-wrong-about-weak-iphone-5-demand-will-it-apologize-to-apple.html

I just checked their latest numbers. Share price is $501, but they have $31 in cash per share, so cash-adjusted price is $470. That gives them an adjusted P/E ratio of 10.7 - which is ridiculously low by any standards.
Edited by jragosta - 1/14/13 at 7:07am
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post #21 of 75
"The news comes just over a week before Apple is set to announce earnings..." NEWS???, Oh, Please! This is rumor. It is far from "news". And it has one purpose and one purpose only: To sabotage Apple stock just before earnings. It's the worst kind of yellow journalism, and those practicing it are guilty of swindling.
post #22 of 75
Quote:
Originally Posted by Sacto Joe View Post

"The news comes just over a week before Apple is set to announce earnings..." NEWS???, Oh, Please! This is rumor. It is far from "news". And it has one purpose and one purpose only: To sabotage Apple stock just before earnings. It's the worst kind of yellow journalism, and those practicing it are guilty of swindling.

I'd really like to see the SEC get involved.
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post #23 of 75
The same bullshit happened last year about iPhone 4S weak demand and Apple cut the parts order .
post #24 of 75
Quote:
Originally Posted by crazy_mac_lover View Post

The same bullshit happened last year about iPhone 4S weak demand and Apple cut the parts order .

 

And this was after Tim Cook had already forecast a record holiday quarter when the numbers were released in October.

 

After the report that you mention came out the stock went from a high of $422 in October to a low of $363 in November... and then, of course, it quickly rose to $633 in early April due to the, as promised, record numbers announced in January.

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post #25 of 75
@ jrafosta: Try $131/share in cash and you'd be much closer to the mark. True, it's largely in foreign accounts and won't be returned without a big tax hit, but it's still something like a fourth of the total worth of the stock at this price.
post #26 of 75

I had to laugh at the Register headline:

 

 

Quote:

Apple 'slashes iPhone 5 screen orders', tight-fisted fanbois blamed

 

They say that the Japanese Nikkei news service is reporting the same thing as the WSJ.  Wonder if they are just quoting the WSJ or have their own sources.

 

Quote:
Overall, iOS-powered phones led in the US in terms of market share but were behind Android mobes in the UK and elsewhere in 2012.

But sales of the iPhone 5 reached 5 million in the first weekend when it first hit the shelves in nine countries. As of the end of last year, it is now on sale in more than a hundred countries - more than any previous iPhone.

http://www.theregister.co.uk/2013/01/14/iphone_5_screen_order_halved/

 

The Nikkei article has some stuff that might be affecting the share price:

 

Quote:

Samsung has overtaken Apple, helped in part by the popularity of its Galaxy Note II phone-cum-tablet, reinforcing the benefits of offering a wider range of handheld devices at most price points, while Apple rolled out just a single new smartphone last year globally, analysts have said.

Samsung is expected to increase its smartphone sales by more than a third this year, and widen its lead over Apple, according to researcher Strategy Analytics, which has forecast Samsung will sell 290 million smartphones in 2013 versus iPhone sales of 180 million.

Kim Sung-in, an analyst at Kiwoom Securities in Seoul, sees Samsung shipping 320 million smartphones this year and doubling sales of its tablets to 32 million.

Japan Display's plant in Nomi, southwest Japan, where Apple has invested heavily, is expected to temporarily reduce output by up to 80 percent from October-December levels, the Nikkei reported, while Sharp's dedicated facility for iPhone 5 LCD panels will trim production in January-February by about 40 percent.

http://uk.reuters.com/article/2013/01/14/us-apple-iphone-demand-idUKBRE90D04B20130114

 

Personally I think that the tough economic climate in Europe and the US is finally having an impact.  People are simply happy to keep their current phone rather than just upgrading for the sake of it.  On a recent trip I saw lots of people with iPhone 4s and no iPhone 5s.


Edited by cnocbui - 1/14/13 at 7:42am
post #27 of 75
Quote:
Originally Posted by Sacto Joe View Post

@ jrafosta: Try $131/share in cash and you'd be much closer to the mark. True, it's largely in foreign accounts and won't be returned without a big tax hit, but it's still something like a fourth of the total worth of the stock at this price.

 

jragosta is actually correct even though total cash has been announced as being well over $100 billion... but a better financial mind than mine will have to explain net cash - liquid cash - levered cash - etc. because I don't have a clue.

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post #28 of 75

In late 2011, it was reported Apple reduced component order for iPad and send stock below $400.  We all know now Apple was planing for iPad 3 for 2012

 

http://www.bloomberg.com/news/2011-09-26/apple-cuts-ipad-supply-chain-orders-jpmorgan.html

post #29 of 75
Quote:
Originally Posted by cnocbui View Post

I had to laugh at the Register headline:

 

 

 

They say that the Japanese Nikkei news service is reporting the same thing as the WSJ.  Wonder if they are just quoting the WSJ or have their own sources.

 

http://www.theregister.co.uk/2013/01/14/iphone_5_screen_order_halved/

 

The Nikkei article has some stuff that might be affecting the share price:

 

http://uk.reuters.com/article/2013/01/14/us-apple-iphone-demand-idUKBRE90D04B20130114

 

Personally I think that the tough economic climate in Europe and the US is finally having an impact.  People are simply happy to keep their current phone rather than just upgrading for the sake of it.  On a recent trip I saw lots of people with iPhone 4s and no iPhone 5s.

 

Most people upgrade every 2 years, not every year, and the phones are added onto the bill, not paid outright. So I don't agree without economic judgement there, in this regard. The story is a steaming pile.

Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #30 of 75
Quote:
Originally Posted by island hermit View Post

jragosta is actually correct even though total cash has been announced as being well over $100 billion... but a better financial mind than mine will have to explain net cash - liquid cash - levered cash - etc. because I don't have a clue.

My figure came from Yahoo:
http://finance.yahoo.com/q/ks?s=AAPL
http://investing.businessweek.com/research/stocks/financials/drawFiling.asp?docKey=136-000119312512444068-6HD3C4H6F5DAU9NM7K4F505QMV&docFormat=HTM&formType=10-K#D411355D10K_HTM_TX411355_2

Frankly, I agree that their cash number looks too low - even after a couple of dividends. However, I think I have the answer. From Apple's 10K, the $31 per share in cash looks about right. However, they have $92 B in long term securities, so they've apparently converted some of the cash to longer term investments If you include that, the adjusted price per share is just over $400 - or a P/E ratio of around 9. (BTW, that change was long overdue. Apple was earning less than 1% on its cash in the past which is absurd. Presumably, they'll now show a more reasonable return on the cash).

More interesting is the FORWARD P/E which currently stands at 8.8. After adjusting for cash and long term investments, that's around 7.2. Even if Apple were not going to grow at all and had that profit level for years, that number's far too low. For it to make any sense, the investors would have to be projecting Apple's profit to actually drop by around 50% in the next couple of years - which I don't think ANYONE would expect.

Again, by any standard, Apple's numbers are unrealistically low. Since such a large percentage of Apple's stock is controlled by institutions (68%, compared to about 12% for all stocks), it is subject to manipulation to help protect institutions against loss from margin trading. That alone is sufficient reason for Apple to consider splitting the stock. Like it or not, individuals are far more likely to trade in a $50 stock than a $500 one.
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post #31 of 75

deleted


Edited by MacRulez - 5/16/13 at 12:24pm
post #32 of 75
Quote:
Originally Posted by cnocbui View Post

Personally I think that the tough economic climate in Europe and the US is finally having an impact.  People are simply happy to keep their current phone rather than just upgrading for the sake of it.  On a recent trip I saw lots of people with iPhone 4s and no iPhone 5s.

I think it's a combination of factors:

1. The economy. While there appears to be some improvement in the economy, it's very slow and a lot of people may be settling in for an extended period of stagnation.

2. Product performance. At some point, a product becomes "good enough" and there's less driving force for upgrades. For example, I believe that this is the biggest thing affecting the PC market. In the 90s, everyone was eagerly awaiting more speed gains because their computer was often the bottleneck - and things like bit rot made things worse. Today, there's little reason why the average user (on either platform) can't get by with a 4 or 5 year old computer.

3. Gain of discount mobile providers (at least in the US). I used to use AT&T and upgraded every 2 years - whether I really needed to or not. For $100-200, it was worth it since my monthly payment didn't change whether I upgraded or not. Now that I'm using Straight Talk, buying a new phone will cost me $700 or so and I'm not quite so eager to do so. I'll probably hold off until at least the next revision.
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post #33 of 75
Quote:
Originally Posted by GadgetCanada View Post

If Apple changed their minds to now go bi-annual with iPhone updates, wouldn't the cut in orders make sense?

Problem is biannual updates for iPhones makes no sense. Contracts are two years. How many people are going to buy on an off contract schedule?
post #34 of 75
Quote:
Originally Posted by missouricatman View Post

The WSJ reporter, Juro Osawa, expanded on the article he wrote in this WSJ live interview. Unfortunate his story didn't include the observations that any change in component orders might be due to other factors, nor that the order reductions took place last month (this is old news, not sure why the WSJ is working the angle today).

http://live.wsj.com/#!3030E9E5-F37D-48AB-B925-B454F4942A62

If you watch this video, you can see what the WSJ has become under Murdoch, and how shabby "journalism" has become in the Internet age. Lunatic amateurs are in charge, and it's all for adverising—when it isn't for stock manipulation.
post #35 of 75
Originally Posted by jragosta View Post
I'd really like to see the SEC get involved.

 

What would they do?

 

This is an actual representation of the true value of Apple at any one time¡ There's nothing going on here except standard trading¡

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post #36 of 75
Awesome, something else to rape the stock, as expected. Amazing how Apple's stock is the only one that is negatively impacted by even rumored and unconfirmed 'bad' news, while the stock of other tech companies seem unaffected by confirmed horrible news/dismal sales.
post #37 of 75

Well here, willfully spreading false news about  securities on the open market is considered the same as insider trading and punishable by either 1.5 M€ or 10x the amount of potentially illegal gains done on the security (basically 10x the variation of stock times number of shares exchanged) and up to 2 years of jail time.

 

Is there anything like this in the USA ?

 

Because this rumor is so unrealistic that i dont see how it could be unintentional !

post #38 of 75
These analysts amaze me. What do they expect to happen after a quarter with unprecedented demand of the iPhone 5? There are 2 reasons why the demand grew exponentially.

1. The recent launch of the iPhone 5

2. The holiday season.

A self imposed reduction with then ramping up production if needed is much better than having a overload of iPhones 5 in stock. It would be much fairer to compare this quarter with the same quarter last year instead of the previous one.
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post #39 of 75

Apple's decided to copy the successful GalaxySIII; so they needed a lower resolution screen that weighed more....lol.gif

post #40 of 75
Quote:
Originally Posted by jragosta View Post

I think it's a combination of factors:

1. The economy. While there appears to be some improvement in the economy, it's very slow and a lot of people may be settling in for an extended period of stagnation.

2. Product performance. At some point, a product becomes "good enough" and there's less driving force for upgrades. For example, I believe that this is the biggest thing affecting the PC market. In the 90s, everyone was eagerly awaiting more speed gains because their computer was often the bottleneck - and things like bit rot made things worse. Today, there's little reason why the average user (on either platform) can't get by with a 4 or 5 year old computer.

3. Gain of discount mobile providers (at least in the US). I used to use AT&T and upgraded every 2 years - whether I really needed to or not. For $100-200, it was worth it since my monthly payment didn't change whether I upgraded or not. Now that I'm using Straight Talk, buying a new phone will cost me $700 or so and I'm not quite so eager to do so. I'll probably hold off until at least the next revision.

More carriers are looking into stopping the subsidy. It'll definitely curtail the current levels of smartphones being purchased.
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