Originally Posted by island hermit
I see that only one person has tried to decipher Apple's channel inventory for me.
If nobody knows what it means then I'm wondering how relevant that data really is to the masses.
Apple channel inventory is use to buffer any production problem or any anticipated big jump in sales due to promotions or seasonal event like Christmas. If there's a problem with production like yield problem, fire, earthquake, worker strike, etc., Apple would want to have enough inventory in their channel to meet the demand, until the production problem is fixed. Since Christmas is around the quarter, I'm sure Apple would want more inventory in their channel now, to meet the upcoming demand. Apple just can't double production a couple of months before Christmas, when they already at near max. So it's no surprise that Apple has increased their channel inventory before the Christmas quarter.
As far as I know, Apple does not count channel inventory as "sold". That would be pointless because most of Apple inventory is sitting in their Apple stores or in their own warehouses. Apple can't sell it to themselves and report that they sold it. Though they might count third party sellers inventory as sold. But since most third party sellers often run out of inventory, it safe to assume that all their inventory will be eventually be sold sooner than later.
Unlike Samsung, whose inventory channel is nearly all third party. So Samsung counts channel inventory as sold, even though it may be sitting in a Best Buy warehouse and may never be sold. Or at a least sold at any where near their originall retail price. This means that Samsung can increase channel inventory and make it look like they sold a lot more than they actually did. Dell was a master at this. Dell would stuff the inventory before the end of the quarter to make sure they meet their numbers and then offer a rebate the next quarter to get rid of the inventory. And then they don't mail out the rebate until the quarter after that, so all the revenue from the sale shows up in the quarter it's sold. And then they would stuff the channel again. It usually takes a quarter or two, but we eventually we find out how much "channel stuffing" was done when we see a rebates, big reduction in price or buy one get one free deals to get rid of unsold inventory. Or a write down in earnings because they had to buy back any unsold inventory. But sometime all of these events may just mean that the company misjudged demand. Like MS did with their Surface.
It means nothing to the masses. But share holders knows that there are analysis that likes to use or misuse the data to influence AAPL stock.