The content of my last post is that your confidence looks the same this year as last year (and by ‘you’ I mean any one who relies on supply chain analysis to predict bad numbers for APPL). You get down into details about suppliers that I’m skeptical about, but I’m not energetic or motivated enough to study. Tim Cook has told us to ignore the supply chain analysts and he’s the more trustworthy source. You’re too confident in your analysis and predictions. That confidence damages your credibility.
You've clearly not understood anything I've written; you're disputing factual information I've posted that came directly from suppliers, which is not the same as the typical rumors, as I explained, and which I've always been skeptical-to-dismissive of; you've admitted you're too lazy to be bothered with any of it; you've again ignored the doubts I expressed in two separate messages concerning interpretation to again say "I'm too confident", and taken together, all I can say is just "wow." Believe what you want. I don't care. There's no point in continuing to reply to your nonsense; you seem to lack the capacity to discuss any of this.
I believe via Apple's Proxy Statement I read that they're going to post some Stellar Numbers....Like one commented earlier....There's still time to buy buy buy, before Apples Share Price jumps above $110/share....Hurry while there's still a Fire Sale Hahahahahahah....If you think I'm kidding or blowing smoke, don't wait until the 26th to find out BUY....BUY....BUY as Cramer would tell ya
$233B in Sales +38%....$71.2B in income +36%....earnings $9.22/share +43%...I don't know, maybe those who own Apple should Sell....Sell....Sell.... so other more intelligent life forms can Buy....buy....buy....
Compare Cirus logic Sept 2014 quarter revenue vs 2015.....
no. It isnt different this time. Apple simply ordered parts earlier this year.
... For them to miss their own guidance was startling, and as they said, the warning was due to late December developments, and this suggests the miss is due to Apple...
The miss could be due to Apple cutting back orders for parts in late December, but that doesn't mean that sales have been lackluster, or will be lackluster in March. Note Apple's announcement that AppStore downloads broke records at the end of December and on New Year's Day.
I think that what's going on here is that the analysts have forgotten their own earlier held rumors: that Apple was amassing parts for up to 90 million iPhones for the holiday season and expected to need parts for about 60 million more for the March quarter (which would require orders placed during the December quarter, because you need to have parts available and QC'd well before just-in-time). Suppose then that Apple "only" sold 80 million in the December quarter, a disappointment relative to build plans only. That would leave them with an excess of 10 million units worth of iPhone parts. Thus at the end of December Apple would need to "surprisingly" cut their parts orders for March relative to what had been expected. If this thought experiment were all true, then Apple could still end up with sales of 140 million iPhones between the two quarters, which would exceed last year's totals of about 135 million. And this all would fit both the rumors (from summer about the 6S build ramp plans) as well as the news (that suppliers are seeing order reduction in December).
The miss could be due to Apple cutting back orders for parts in late December, but that doesn't mean that sales have been lackluster, or will be lackluster in March. Note Apple's announcement that AppStore downloads broke records at the end of December and on New Year's Day.
I think that what's going on here is that the analysts have forgotten their own earlier held rumors: that Apple was amassing parts for up to 90 million iPhones for the holiday season and expected to need parts for about 60 million more for the March quarter (which would require orders placed during the December quarter, because you need to have parts available and QC'd well before just-in-time). Suppose then that Apple "only" sold 80 million in the December quarter, a disappointment relative to build plans only. That would leave them with an excess of 10 million units worth of iPhone parts. Thus at the end of December Apple would need to "surprisingly" cut their parts orders for March relative to what had been expected. If this thought experiment were all true, then Apple could still end up with sales of 140 million iPhones between the two quarters, which would exceed last year's totals of about 135 million. And this all would fit both the rumors (from summer about the 6S build ramp plans) as well as the news (that suppliers are seeing order reduction in December).
Thompson
Apple has not really been in the business of over-ordering and having to cut back, so there's that. OTOH, the record AppStore performance is the one encouraging factoid wrapped up in that speculation, but then again, that's a very limited range of dates. FWIW, I think consensus is that Q4 will be slightly up YoY, while Q1 will be down, and that seems to fit the facts I'm aware of.
sog35 said: Also do you have proof that Cirrus is the SOLE supplier for iPhone? Could their not be another supplier that Apple could have ordered from? Just way too many questions to make any conclusion that iPhone sales are weak just looking at supply chain chatter.
Again, I've not been talking about "chatter", i.e. rumors from "supply chain sources". I've been talking about quarterly reports and guidance along with warnings from the actual suppliers, multiple suppliers in this case. Do you see the difference? Tim Cook addressed rumors in the context of "single data points". This time, we have facts and multiple data points. As I've written earlier, there's a question as to how much is Apple vs Android, and as I've explained, I think it's unlikely to be all Android, with Apple selling an ever-increasing number of devices into eternity, which is ludicrous. This time, I think it could real. I never really thought that about the rumors.
As for Cirrus being the sole supplier of audio codecs and Dialog being the sole supplier of power management ICs, there has not been an iPhone or iPad teardown that found anything besides their chips since probably 2012 at the least, and Wall Street knows of no other companies that provides these chips. Cirrus is also the sole supplier of amps in the iPhones, and that used to be true for the iPads as well, but Apple has slowly been replacing them with Maxim in the iPads, and now Maxim has all the amps in the current iPad line, from Mini 4 to Air to Pro. It was a big deal when Cirrus lost the amps in the iPad Air in 2013; the company can't name names, but it did talk in its roundabout way about losing this amp slot. The amps are a lower cost part than the codecs, and while losing them in the iPads hurt, the greatest fear of a CRUS investor is that they lose a codec slot, the second greatest that they lose an amp slot in the iPhone. If there were multiple suppliers for these parts, the narrative would have been completely different all these years.
As for the rest of your message I clipped, I've already talked about those things and have nothing more to add.
Again, I've not been talking about "chatter", i.e. rumors from "supply chain sources". I've been talking about quarterly reports and guidance along with warnings from the actual suppliers, multiple suppliers in this case. Do you see the difference?
Yes we know. You’ve told us repeatedly that this year’s info is factual and last year’s was rumor. But I don’t think that’s as important as you apparently do. Last year Cook told us that even when a particular number is factual, that’s still only a small part of the extremely complex supply chain story. Apple doesn’t share the details of its supply chain with anyone, so at best you’re speculating … reading tea leaves. And yes, you’ve also repeatedly told us that this year there are multiple suppliers announcing cuts. Indeed, that’s evidence that bolsters your case, but it’s far from conclusive. You sound like you’re 100% confident that Apple’s March quarter will disappoint. You’d be more persuasive if you showed some uncertainty, like maybe you were only 75% confident.
And no, I’m not sufficiently motivated to study Apple’s supply chain. Tim Cook has discouraged me from doing so, and he’s never led me wrong yet. In a similar fashion, my eyes sometimes glaze over while reading Daniel Eran Dilger’s voluminous details. I’m insufficiently motivated to study that info either, so maybe you’re in good company ;=)
Apple has not really been in the business of over-ordering and having to cut back, so there's that.
How do you know this? Has Apple actually made a statement about this one way or the other? If so, can you share your source? If not then it looks like your argument is based on speculation.
Again, I've not been talking about "chatter", i.e. rumors from "supply chain sources". I've been talking about quarterly reports and guidance along with warnings from the actual suppliers, multiple suppliers in this case. Do you see the difference?
Yes we know. You’ve told us repeatedly that this year’s info is factual and last year’s was rumor. But I don’t think that’s as important as you apparently do. Last year Cook told us that even when a particular number is factual, that’s still only a small part of the extremely complex supply chain story. Apple doesn’t share the details of its supply chain with anyone, so at best you’re speculating … reading tea leaves. And yes, you’ve also repeatedly told us that this year there are multiple suppliers announcing cuts. Indeed, that’s evidence that bolsters your case, but it’s far from conclusive. You sound like you’re 100% confident that Apple’s March quarter will disappoint. You’d be more persuasive if you showed some uncertainty, like maybe you were only 75% confident.
And no, I’m not sufficiently motivated to study Apple’s supply chain. Tim Cook has discouraged me from doing so, and he’s never led me wrong yet. In a similar fashion, my eyes sometimes glaze over while reading Daniel Eran Dilger’s voluminous details. I’m insufficiently motivated to study that info either, so maybe you’re in good company ;=)
There you go again, clipping the part from my post that would have saved you from writing all that, namely, "Tim Cook addressed rumors in the context of "single data points. This time, we have facts and multiple data points," including reports from two sole suppliers. IOW, the current situation is outside the scope of his 2013 statement. Concerning my so-called "100% confidence", I said, "As I've written earlier, there's a question as to how much is Apple vs
Android, and as I've explained, I think it's unlikely to be all Android,
with Apple selling an ever-increasing number of devices into eternity,
which is ludicrous. This time, I think it could real. I never really
thought that about the rumors."
There's no point at all to your post, and it's getting more and more tedious trying to help you improve by explaining this to you.
Apple has not really been in the business of over-ordering and having to cut back, so there's that.
How do you know this? Has Apple actually made a statement about this one way or the other? If so, can you share your source? If not then it looks like your argument is based on speculation.
I was replying to thompr's speculation that Apple over-ordered, and I know from past history that Apple typically doesn't report having to grind through a lot of inventory, as well as suppliers not regularly missing due to order cutbacks but instead exceeding guidance. The implication is that Apple overestimated demand, as they wouldn't have deliberately over-ordered. But that's all stuff you've repeatedly admitted to being too lazy to concern yourself with.
I would just love to see Tim walk into earnings, announce they still beat expectations after all this analyst speculation, drop the mic and walk out.
Even better if he bows after that announcement and then feign walking away, turns around and says "one more thing"..... "you suck"... then walks out ;-).
I was replying to thompr's speculation that Apple over-ordered, and I know from past history that Apple typically doesn't report having to grind through a lot of inventory, as well as suppliers not regularly missing due to order cutbacks but instead exceeding guidance. The implication is that Apple overestimated demand, as they wouldn't have deliberately over-ordered. But that's all stuff you've repeatedly admitted to being too lazy to concern yourself with.
Let's perform a thought experiment for a second, one in which we accept as possible all of the rumors, news, and factoids that we have heard surrounding Apple's iPhone and its supply chain. I know that the long-timers here will scream bloody murder, but hear me out anyway. I think that Tim Cook's point against reading too much into the supply chain data was placed in the context of isolating each data point and not having the big picture. So let's zoom out to the big picture in this thought experiment...
How can we accept and reconcile all of these rumors/facts/whatever:
Positive:
(1) According to supply chain rumors over the summer, Apple was ordering enough parts to produce between 80-90 million iPhones for the December quarter. * Note that there is a big range of 10 million there, and it is also just a rumor (2) According to Apple, first weekend sales of iPhone 6S outperformed its predecessor by 30%. * Note that one can't extrapolate from first weekend sales (3) According to Apple, AppStore sales set records over the holidays, in particular besting the prior year. * One would expect app sales to be roughly proportional to new device sales, but perhaps the proportionality constant should decrease a bit as the installed base grows. (4) According to data out of China, iPhones may have sold up to 30% more units there that last year. * This may have a large margin of error, but 30% is quite amazing. It's likely Apple did excel there Even if that growth is not duplicated worldwide, it's still enough to drive overall growth some (5) According to surveys out of China, purchase intent for iPhones is higher than it has ever been and growing. * Note that "intent to buy" and "bought" are different things in a developing economy. But significant growth in the former probably implies at least some growth in the latter.
Negative:
(1) Supply chain rumors suggested cuts in *expectations* amongst specific Apple suppliers * These were just rumors... but they ultimately became... (2) Supply chain facts pulled from quarterly results show numerous Apple suppliers reducing estimates for the March quarter. * These are verifiable facts, although Tim Cook has warned against drawing too many conclusions from such.
We all know Tim Cook's thought on excess product inventory: it's evil and is to be avoided at all costs. Apple rarely, if ever, ends up building so much product that it ends up sitting on shelves at retail. They are experts at "just in time" production and delivery to homes and/or stores. Note that this speaks to inventory of manufactured product, not inventory of sourced components.
So what is Apple's view on stockpiling components? We could speculate - and I will later - but we don't have to. Apple has a long history of prepaying for components they know they will need in order to (1) secure a better price by buying in bulk, (2) hedge against potential future price increases due to competition, and (3) secure component availability by establishing "first come" rights versus competition.
I also speculate that (1) for a holiday quarter (which may be more difficult to predict 90 days in advance) it is challenging to anticipate what demand will be, and (2) for a newly launched product it is harder to anticipate demand and also predict how smooth the component production will go. It seems like every year for the past 3 years (except this one) rumors of trouble with some new components have surrounded Apple, with the result being constrained supply. There were no such issues talked about this year.
So given that Apple seems to have no issue with stockpiling components that they know they will need at some point in the next 2 quarters, and given that there are all kinds of reasons why their need for components may exceed what they think their sales estimate may actually be, I submit to you that it makes sense that Apple would over order on components to hedge against extreme demand and/or poor parts yield. This way they know they will be able to meet demand and yet still be able to flex the orders down in subsequent quarters if need be.
In my opinion the following explanation is the only one that fits all of the data points and rumors above:
Apple ordered a massive amount of parts starting in August, more than they ultimately needed for December builds. They still sold a hell of a lot of iPhones (with very little inventory of finished product, because they don't do that) more so than they did last year. And they will sell a lot of iPhones in the March quarter too, but in December they were able to cut back on their component orders due to their stockpiling. Hence all of the supplier surprise when the orders were skimpier than they had hoped.
Note that as suppliers have reported their estimate cuts, they are placing it in context of a modification to their previous estimates. This is but a relative measure, devoid of any absolutes. It would be nice if they would at least make it relative to last year, or perhaps even highlight the combined orders of the December and March quarter, but no they aren't going to do that. (Another poster has pointed out that other phone vendors may be mostly responsible to the supplier woes, but my argument doesn't even have to go there.)
So I think that Apple will hit the upper range of their guidance for December (if not exceed it handily) and then guide to a slight YOY increase in the March quarter too. I think this last piece of information will shock Wall Street and drive the price of AAPL up, because Wall Street has priced in a 10 million unit shortfall (about 50 million by many estimates, as opposed to 60 million that would be flat YOY). I think that this conclusion is consistent with all that we have heard in rumors, facts, and Apple's history. And it showcases why Tim Cook says not to use supply chain data as a proxy for the actual company performance.
There you go again, clipping the part from my post that would have saved you from writing all that, namely, "Tim Cook addressed rumors in the context of "single data points. This time, we have facts and multiple data points," including reports from two sole suppliers. IOW, the current situation is outside the scope of his 2013 statement. Concerning my so-called "100% confidence", I said, "As I've written earlier, there's a question as to how much is Apple vs
Android, and as I've explained, I think it's unlikely to be all Android,
with Apple selling an ever-increasing number of devices into eternity,
which is ludicrous. This time, I think it could real. I never really
thought that about the rumors."
There's no point at all to your post, and it's getting more and more tedious trying to help you improve by explaining this to you. I was replying to thompr's speculation that Apple over-ordered, and I know from past history that Apple typically doesn't report having to grind through a lot of inventory, as well as suppliers not regularly missing due to order cutbacks but instead exceeding guidance. The implication is that Apple overestimated demand, as they wouldn't have deliberately over-ordered. But that's all stuff you've repeatedly admitted to being too lazy to concern yourself with.
Sorry honey. You have no idea what you are talking about.
1. Do you know how large Apple's original order was? 90 million? 100 million? 110 million? You don't know. Thus you have no idea what Jan-March orders are since you have no idea what Sept-Dec orders were. If the original orders were massive like 100 million a 30% cut would still be a huge jump up from the previous year.
2. You do not know how much of Sirrus/Avago revenue cut was because of Apple vs Android. You have no idea.
3. You do not know if Sirrus/Avago are the exclusive supplier. You just don't. Its not like either company has a monopoly on what they build.
4. You do not know if Sirrus/Avago got a revenue cut because of lower pricing from Apple. Apple could have demand lower pricing.
Not knowing those 4 points means that Sirrus/Avago revenue cut cannot be proven to be connected to Apple. And even if you could prove that the revenue cut was because of Apple you have no idea if the cut was because of less units or lower price per unit. Also you have no idea how large the original order was so a 30% cut is meaningless. You are 100% guessing at this point.
Are you and that other guy the same poster? You too have posted a pointless message, the answer to which is contained in my previous messages. There's a definite pattern emerging here.
1. I haven't presented any estimates, so nice strawman. I've talked about earnings misses, guidance cuts, and warnings from several suppliers, including two well-known sole suppliers of parts.
2. Stipulated to. "As I've written earlier, there's a question as to how much is Apple vs
Android, and as I've explained, I think it's unlikely to be all Android,"
3. I haven't talked about Avago. I am certain, however, about Cirrus and Dialog as already explained. If you don't believe me, well, you're simply wrong.
4. Already suggested by me, in an earlier reply to you, "That said, it's always possible Apple killed them on ASPs again, but that could only be part of it."
I have no idea from which orifice you pulled your "30% cut" figure. I certainly have not put that forth or any particular percentage. SMH.
You know, you were at least a little amusing when you were cursing Tim Cook all the time and listing all the things you think he should do. Now you're just posting tedious nonsense that doesn't even have any minimal entertainment value. I just feel sorry for you.
Sorry honey. You have no idea what you are talking about.
1. Do you know how large Apple's original order was? 90 million? 100 million? 110 million? You don't know. Thus you have no idea what Jan-March orders are since you have no idea what Sept-Dec orders were. If the original orders were massive like 100 million a 30% cut would still be a huge jump up from the previous year.
2. You do not know how much of Sirrus/Avago revenue cut was because of Apple vs Android. You have no idea.
3. You do not know if Sirrus/Avago are the exclusive supplier. You just don't. Its not like either company has a monopoly on what they build.
4. You do not know if Sirrus/Avago got a revenue cut because of lower pricing from Apple. Apple could have demand lower pricing.
Not knowing those 4 points means that Sirrus/Avago revenue cut cannot be proven to be connected to Apple. And even if you could prove that the revenue cut was because of Apple you have no idea if the cut was because of less units or lower price per unit. Also you have no idea how large the original order was so a 30% cut is meaningless. You are 100% guessing at this point.
Are you and that other guy the same poster? You too have posted a pointless message, the answer to which is contained in my previous messages. There's a definite pattern emerging here.
1. I haven't presented any estimates, so nice strawman. I've talked about earnings misses, guidance cuts, and warnings from several suppliers, including two well-known sole suppliers of parts.
2. Stipulated to. "As I've written earlier, there's a question as to how much is Apple vs
Android, and as I've explained, I think it's unlikely to be all Android,"
3. I haven't talked about Avago. I am certain, however, about Cirrus and Dialog as already explained. If you don't believe me, well, you're simply wrong.
4. Already suggested by me, in an earlier reply to you, "That said, it's always possible Apple killed them on ASPs again, but that could only be part of it."
I have no idea from which orifice you pulled your "30% cut" figure. I certainly have not put that forth or any particular percentage. SMH.
You know, you were at least a little amusing when you were cursing Tim Cook all the time and listing all the things you think he should do. Now you're just posting tedious nonsense that doesn't even have any minimal entertainment value. I just feel sorry for you.
I'm pretty sure that by "the other guy", you didn't mean me. You mean the other "other guy".
For my part, I have accepted your observations as facts and have also accepted all of the other rumors, news, and historical observations as facts. I then presented a scenario under which all can be true even while allowing iPhone to have some growth in this and subsequent quarters, which is contrary to how Wall Street is looking at Apple now.
I welcome you to present any scenario under which Apple declines iPhone sales YOY in either December or March (the latter of which is the common refrain) that is consistent with all of the observations as we know them. China is apparently still growing in its love for iPhone, and the March quarter is their "holiday season". I'm thinking that Apple's guidance for March will exceed the doom & gloom of Wall Street.
(2) According to Apple, first weekend sales of iPhone 6S outperformed its predecessor by 30%. * Note that one can't extrapolate from first weekend sales
Excellent scenario you’ve described. How confident are you that it’s correct? For me, I’m less than 100% confident you nailed it, but more than 50%. Lets say I’m 80% confident. Again, excellent work.
And while I basically agree with everything you say, I will nitpick your 2) note with Asymco analytical work. Horace Dediu looked at the correlation between launch weekend iPhone sales and the subsequent holiday quarter sales, and he thereby implies that we can extrapolate with a fair amount of accuracy. He calculates the coefficient of determination (aka R squared) is 0.94, which is pretty damn good and more confident than me!
(2) According to Apple, first weekend sales of iPhone 6S outperformed its predecessor by 30%. * Note that one can't extrapolate from first weekend sales
Excellent scenario you’ve described. How confident are you that it’s correct? For me, I’m less than 100% confident you nailed it, but more than 50%. Lets say I’m 80% confident. Again, excellent work.
And while I basically agree with everything you say, I will nitpick your 2) note with Asymco analytical work. Horace Dediu looked at the correlation between launch weekend iPhone sales and the subsequent holiday quarter sales, and he thereby implies that we can extrapolate with a fair amount of accuracy. He calculates the coefficient of determination (aka R squared) is 0.94, which is pretty damn good and more confident than me!
I'm not confident enough to start selling stuff in order to buy more Apple shares, probably because I'm already so deeply invested (15,000 shares from a split-adjusted cost of less than $2). But for someone looking for a place to put his/her $$$ that would yield a decent ROI (not a big-multi-bagger anymore) with minimal downside risk, I'd be confident enough to say that now is the time to buy.
This is just the only plausible scenario I could come up with that is consistent with all of the scuttlebutt, rumors, facts, and our understanding of Apple's nature. Note that if a significant fraction of the "positive premises" I started with are either false or not so relevant, then it opens up a possibility that Apple stockpiled just like I said but that demand was still weak enough to drop sales YOY this coming March. The paranoid analysts could end up right even if for the wrong reason. Some day, that will happen. But based on all of the positive points, I don't think the time is nigh.
On your chart above, it may be true that the R^2 coefficient indicates a strong linear correlation, but I would point out that the more recent residuals (which are the differences between the actual data points' y-values and the corresponding y-values of the linear estimate) seem to be at least 5 million units and in one case (see the one just above the 2,000,000) about 10 million units. If this year's actual ends up 10 million below the estimate, that could spell trouble. But the other positive premise points indicate that's not likely.
I'm pretty sure that by "the other guy", you didn't mean me. You mean the other "other guy".
For my part, I have accepted your observations as facts and have also accepted all of the other rumors, news, and historical observations as facts. I then presented a scenario under which all can be true even while allowing iPhone to have some growth in this and subsequent quarters, which is contrary to how Wall Street is looking at Apple now.
I welcome you to present any scenario under which Apple declines iPhone sales YOY in either December or March (the latter of which is the common refrain) that is consistent with all of the observations as we know them. China is apparently still growing in its love for iPhone, and the March quarter is their "holiday season". I'm thinking that Apple's guidance for March will exceed the doom & gloom of Wall Street.
Correct, I was referring to delrey. I just read your recent long post, and I think you need to consider that China was included in first weekend sales this year for the first time ever, and that's certainly a big part of the 30% increase you noted. It's not like demand for iPhones shot up 30% all of a sudden. I'd also reiterate that while the recent data out of China shows 30% YoY growth for Q4, that's against a comp of 200%, and it's a big drop in the growth rate; also, that 30% is just for China, and many are postulating decreasing demand in the Americas and EMEA, so it could be something of a wash. As for your thesis that Apple over-ordered parts and will still achieve YoY growth for Q4 (probably IMO) and also Q1 (less certain IMO), it would be useful to go over the quarterly reports for the major suppliers and see if it fits. I know Cirrus had a big YoY increase, but Wolfson was a big part of that. Cirrus also increased content by adding an additional amp to the iPhones 6s. You'd have to expect a big YoY increase. I also know Skyworks has been posting several quarters of declining growth, still growth, but at lower and lower rates (last three reported quarters at 23%, 38%, and 58% YoY revenue growth), and with the 6s, Skyworks was said to have increased content. I think you would need to see outsized growth across most of the suppliers, but many of the conspicuous ones have warned and/or posted disappointing results and guidance. I'm not going to play the sales estimates game. I do think there is a higher chance of the negative sentiment being correct than in the past based on all of this.
Comments
I think that what's going on here is that the analysts have forgotten their own earlier held rumors: that Apple was amassing parts for up to 90 million iPhones for the holiday season and expected to need parts for about 60 million more for the March quarter (which would require orders placed during the December quarter, because you need to have parts available and QC'd well before just-in-time). Suppose then that Apple "only" sold 80 million in the December quarter, a disappointment relative to build plans only. That would leave them with an excess of 10 million units worth of iPhone parts. Thus at the end of December Apple would need to "surprisingly" cut their parts orders for March relative to what had been expected. If this thought experiment were all true, then Apple could still end up with sales of 140 million iPhones between the two quarters, which would exceed last year's totals of about 135 million. And this all would fit both the rumors (from summer about the 6S build ramp plans) as well as the news (that suppliers are seeing order reduction in December).
Thompson
Again, I've not been talking about "chatter", i.e. rumors from "supply chain sources". I've been talking about quarterly reports and guidance along with warnings from the actual suppliers, multiple suppliers in this case. Do you see the difference? Tim Cook addressed rumors in the context of "single data points". This time, we have facts and multiple data points. As I've written earlier, there's a question as to how much is Apple vs Android, and as I've explained, I think it's unlikely to be all Android, with Apple selling an ever-increasing number of devices into eternity, which is ludicrous. This time, I think it could real. I never really thought that about the rumors.
As for Cirrus being the sole supplier of audio codecs and Dialog being the sole supplier of power management ICs, there has not been an iPhone or iPad teardown that found anything besides their chips since probably 2012 at the least, and Wall Street knows of no other companies that provides these chips. Cirrus is also the sole supplier of amps in the iPhones, and that used to be true for the iPads as well, but Apple has slowly been replacing them with Maxim in the iPads, and now Maxim has all the amps in the current iPad line, from Mini 4 to Air to Pro. It was a big deal when Cirrus lost the amps in the iPad Air in 2013; the company can't name names, but it did talk in its roundabout way about losing this amp slot. The amps are a lower cost part than the codecs, and while losing them in the iPads hurt, the greatest fear of a CRUS investor is that they lose a codec slot, the second greatest that they lose an amp slot in the iPhone. If there were multiple suppliers for these parts, the narrative would have been completely different all these years.
As for the rest of your message I clipped, I've already talked about those things and have nothing more to add.
There's no point at all to your post, and it's getting more and more tedious trying to help you improve by explaining this to you.
I was replying to thompr's speculation that Apple over-ordered, and I know from past history that Apple typically doesn't report having to grind through a lot of inventory, as well as suppliers not regularly missing due to order cutbacks but instead exceeding guidance. The implication is that Apple overestimated demand, as they wouldn't have deliberately over-ordered. But that's all stuff you've repeatedly admitted to being too lazy to concern yourself with.
How can we accept and reconcile all of these rumors/facts/whatever:
Positive:
(1) According to supply chain rumors over the summer, Apple was ordering enough parts to produce between 80-90 million iPhones for the December quarter.
* Note that there is a big range of 10 million there, and it is also just a rumor
(2) According to Apple, first weekend sales of iPhone 6S outperformed its predecessor by 30%.
* Note that one can't extrapolate from first weekend sales
(3) According to Apple, AppStore sales set records over the holidays, in particular besting the prior year.
* One would expect app sales to be roughly proportional to new device sales, but perhaps the
proportionality constant should decrease a bit as the installed base grows.
(4) According to data out of China, iPhones may have sold up to 30% more units there that last year.
* This may have a large margin of error, but 30% is quite amazing. It's likely Apple did excel there
Even if that growth is not duplicated worldwide, it's still enough to drive overall growth some
(5) According to surveys out of China, purchase intent for iPhones is higher than it has ever been and growing.
* Note that "intent to buy" and "bought" are different things in a developing economy. But significant
growth in the former probably implies at least some growth in the latter.
Negative:
(1) Supply chain rumors suggested cuts in *expectations* amongst specific Apple suppliers
* These were just rumors... but they ultimately became...
(2) Supply chain facts pulled from quarterly results show numerous Apple suppliers reducing estimates for the March quarter.
* These are verifiable facts, although Tim Cook has warned against drawing too many conclusions from such.
We all know Tim Cook's thought on excess product inventory: it's evil and is to be avoided at all costs. Apple rarely, if ever, ends up building so much product that it ends up sitting on shelves at retail. They are experts at "just in time" production and delivery to homes and/or stores. Note that this speaks to inventory of manufactured product, not inventory of sourced components.
So what is Apple's view on stockpiling components? We could speculate - and I will later - but we don't have to. Apple has a long history of prepaying for components they know they will need in order to (1) secure a better price by buying in bulk, (2) hedge against potential future price increases due to competition, and (3) secure component availability by establishing "first come" rights versus competition.
I also speculate that (1) for a holiday quarter (which may be more difficult to predict 90 days in advance) it is challenging to anticipate what demand will be, and (2) for a newly launched product it is harder to anticipate demand and also predict how smooth the component production will go. It seems like every year for the past 3 years (except this one) rumors of trouble with some new components have surrounded Apple, with the result being constrained supply. There were no such issues talked about this year.
So given that Apple seems to have no issue with stockpiling components that they know they will need at some point in the next 2 quarters, and given that there are all kinds of reasons why their need for components may exceed what they think their sales estimate may actually be, I submit to you that it makes sense that Apple would over order on components to hedge against extreme demand and/or poor parts yield. This way they know they will be able to meet demand and yet still be able to flex the orders down in subsequent quarters if need be.
In my opinion the following explanation is the only one that fits all of the data points and rumors above:
Apple ordered a massive amount of parts starting in August, more than they ultimately needed for December builds. They still sold a hell of a lot of iPhones (with very little inventory of finished product, because they don't do that) more so than they did last year. And they will sell a lot of iPhones in the March quarter too, but in December they were able to cut back on their component orders due to their stockpiling. Hence all of the supplier surprise when the orders were skimpier than they had hoped.
Note that as suppliers have reported their estimate cuts, they are placing it in context of a modification to their previous estimates. This is but a relative measure, devoid of any absolutes. It would be nice if they would at least make it relative to last year, or perhaps even highlight the combined orders of the December and March quarter, but no they aren't going to do that. (Another poster has pointed out that other phone vendors may be mostly responsible to the supplier woes, but my argument doesn't even have to go there.)
So I think that Apple will hit the upper range of their guidance for December (if not exceed it handily) and then guide to a slight YOY increase in the March quarter too. I think this last piece of information will shock Wall Street and drive the price of AAPL up, because Wall Street has priced in a 10 million unit shortfall (about 50 million by many estimates, as opposed to 60 million that would be flat YOY). I think that this conclusion is consistent with all that we have heard in rumors, facts, and Apple's history. And it showcases why Tim Cook says not to use supply chain data as a proxy for the actual company performance.
Thompson
1. I haven't presented any estimates, so nice strawman. I've talked about earnings misses, guidance cuts, and warnings from several suppliers, including two well-known sole suppliers of parts.
2. Stipulated to. "As I've written earlier, there's a question as to how much is Apple vs Android, and as I've explained, I think it's unlikely to be all Android,"
3. I haven't talked about Avago. I am certain, however, about Cirrus and Dialog as already explained. If you don't believe me, well, you're simply wrong.
4. Already suggested by me, in an earlier reply to you, "That said, it's always possible Apple killed them on ASPs again, but that could only be part of it."
I have no idea from which orifice you pulled your "30% cut" figure. I certainly have not put that forth or any particular percentage. SMH.
You know, you were at least a little amusing when you were cursing Tim Cook all the time and listing all the things you think he should do. Now you're just posting tedious nonsense that doesn't even have any minimal entertainment value. I just feel sorry for you.
For my part, I have accepted your observations as facts and have also accepted all of the other rumors, news, and historical observations as facts. I then presented a scenario under which all can be true even while allowing iPhone to have some growth in this and subsequent quarters, which is contrary to how Wall Street is looking at Apple now.
I welcome you to present any scenario under which Apple declines iPhone sales YOY in either December or March (the latter of which is the common refrain) that is consistent with all of the observations as we know them. China is apparently still growing in its love for iPhone, and the March quarter is their "holiday season". I'm thinking that Apple's guidance for March will exceed the doom & gloom of Wall Street.
This is just the only plausible scenario I could come up with that is consistent with all of the scuttlebutt, rumors, facts, and our understanding of Apple's nature. Note that if a significant fraction of the "positive premises" I started with are either false or not so relevant, then it opens up a possibility that Apple stockpiled just like I said but that demand was still weak enough to drop sales YOY this coming March. The paranoid analysts could end up right even if for the wrong reason. Some day, that will happen. But based on all of the positive points, I don't think the time is nigh.
On your chart above, it may be true that the R^2 coefficient indicates a strong linear correlation, but I would point out that the more recent residuals (which are the differences between the actual data points' y-values and the corresponding y-values of the linear estimate) seem to be at least 5 million units and in one case (see the one just above the 2,000,000) about 10 million units. If this year's actual ends up 10 million below the estimate, that could spell trouble. But the other positive premise points indicate that's not likely.
Cheers,
Thompson