High iPhone XR sales in China not enough to stop iPhone production estimate cuts

Posted:
in AAPL Investors
Sales of the iPhone XR picked up in China during the country's "Singles Day" retail event, Jun Zhang from Rosenblatt Securities claims, but the boost isn't enough to prevent the analyst from further reducing its production estimates for iPhones over the next two quarters.

Blue iPhone XR
Blue iPhone XR


Sell-through for the iPhone XR "largely improved" during the "11.11 holiday," a note to investors seen by AppleInsider reads, with the sales increase claimed by Rosenblatt to be due to many online retailers providing a discount of between 10 percent and 15 percent on the device.

The firm's research claims that, after one month of unit sales, the iPhone XR has reached the same level as the iPhone XS Max, and has surpassed the iPhone XS after both devices had two months of sales in China. While the improvement is encouraging, analyst Jun Zhang writes of the possibility the iPhone XR production will see "downside risk" after the holiday season, with the belief current iPhone XR production is still above sell-through rates.

Despite the bright news for the iPhone XR, the investor note continues to advise of reduced production estimates, continuing a trend in notes released over the last month.

In an October 29 note where Rosenblatt highlighted initial sales of the iPhone XR was weak compared to initial iPhone XS and XS Max sales, the firm revised its production estimate for the new iPhone models from 90 to 95 million units down to 88 million units for the current quarter, while production for Q1 2019 was predicted to be around 36 to 37 million units.

Just over a week later on November 7, Rosenblatt advised it thought iPhone XR sales were "weaker than initially expected," suggesting Apple could cut iPhone XR production by an extra 5 million units this quarter. In Wednesday's note, the firm is again lowering its estimates for total iPhone production, down to 74 million units in total for the current quarter, and 39 million for the first quarter of 2019.

If the iPhone XR's unit sales "slightly surpass" total unit sales for the iPhone XS and XS Max, currently speculated to be 18 million units this quarter, Rosenblatt believes Apple might need to only produce between 25 million and 28 million units in the current quarter.

"We believe Apple is targeting production of 32 million iPhone XR units in C4Q, which is why we believe the company might need to cut production again after the holiday season," the note states.

If Apple cuts production after the holiday season, Rosenblatt believes this may "lead to stability within the Apple supply chain in the March quarter due to stabilizing iPhone XR sales." Sell-through rates for the iPhone XS and XS Max will face "normal seasonality" during the first quarter of 2019, "while iPhone X sales might be relatively stable due to the late launch of the model."

Shipment speculation for the cheapest option in Apple's 2018 iPhone range has already caused some issues among investors, with some offloading Apple stock over analyst pessimism.

In China, Rosenblatt suggests Apple is facing increased competition from the local Huawei, which has seen high sales of the Mate 20 and has sold out of the Mate 20 Pro. Despite LG Display panel quality issues, it is estimated the Mate 20 Pro's sales are a 20 to 25-percent year-on-year increase from the Mate 10.

"We believe may high-end consumers switched to Huawei's smartphones over the last two years," Zhang writes, "leading to the company taking share in China not only from Samsung, but Apple as well."

Comments

  • Reply 1 of 18
    radarthekatradarthekat Posts: 2,710moderator
    Lots of hidden numbers, like in a deck of cards, upon which this analyst has attempted to build his house.  
    mdriftmeyern2itivguy
  • Reply 2 of 18
    It's good the news media is pounding on Apple and going to extremes to say Apple is a failing, no growth company. More big investors will continue dumping and Apple will be able to buy back more stock at lower prices. Rumors shouldn't hurt long-term Apple investors, only day-traders or greedy fund managers. I'm willing to bet Buffett is continuing to buy Apple stock at a discount. Apple's P/E is just crazy low and doesn't seem representative of any tech stock. NVidia has slid almost 50% from its highs and still has a P/E of 19. Apple has a lousy P/E of 14 representing the value of a struggling steel mill. Talk about a low-valued stock and that's Apple. Anyway, I don't care as long as I continue to get my dividends. Let the news media have its fun crapping on Apple. I feel Apple will still stay a strong company even if iPhone sales decline.
    lkrupph2pjony0
  • Reply 3 of 18
    The logic behind some of these analysts opinions and predictions is absolutely ridiculous. They have no solid numbers to work with, and even with good news regarding sales of iPhone XR, They still sing the doom and gloom song. Talk about stock manipulation... Such a joke!
    silvergold84watto_cobra
  • Reply 4 of 18
    It's good the news media is pounding on Apple and going to extremes to say Apple is a failing, no growth company. More big investors will continue dumping and Apple will be able to buy back more stock at lower prices. Rumors shouldn't hurt long-term Apple investors, only day-traders or greedy fund managers. I'm willing to bet Buffett is continuing to buy Apple stock at a discount. Apple's P/E is just crazy low and doesn't seem representative of any tech stock. NVidia has slid almost 50% from its highs and still has a P/E of 19. Apple has a lousy P/E of 14 representing the value of a struggling steel mill. Talk about a low-valued stock and that's Apple. Anyway, I don't care as long as I continue to get my dividends. Let the news media have its fun crapping on Apple. I feel Apple will still stay a strong company even if iPhone sales decline.
    Warren added over 500k shares last week.
  • Reply 5 of 18
    lkrupplkrupp Posts: 6,516member
    It's good the news media is pounding on Apple and going to extremes to say Apple is a failing, no growth company. More big investors will continue dumping and Apple will be able to buy back more stock at lower prices. Rumors shouldn't hurt long-term Apple investors, only day-traders or greedy fund managers. I'm willing to bet Buffett is continuing to buy Apple stock at a discount. Apple's P/E is just crazy low and doesn't seem representative of any tech stock. NVidia has slid almost 50% from its highs and still has a P/E of 19. Apple has a lousy P/E of 14 representing the value of a struggling steel mill. Talk about a low-valued stock and that's Apple. Anyway, I don't care as long as I continue to get my dividends. Let the news media have its fun crapping on Apple. I feel Apple will still stay a strong company even if iPhone sales decline.
    Yep. Saw an article to day on Business Insider about analysts debating whether it’s time to start buying AAPL. I guess they think they’ve talked it down far enough. Short sellers have made their pile of money so let’s start buying low again. It’s so wonderful that blatant stock manipulation is perfectly legal in the U.S. If you’ve got some cash laying around now would be good time to buy AAPL.
    edited November 21
  • Reply 6 of 18
    ksecksec Posts: 1,512member
    Has Apple ever offered direct discount on its product? Not via Gift Card or Gift? I am wondering if 11.11 was the first time Apple did this. Also wondering why the discount were so large that any other countries don't get the same benefits. 
    watto_cobra
  • Reply 7 of 18
    It's good the news media is pounding on Apple and going to extremes to say Apple is a failing, no growth company. More big investors will continue dumping and Apple will be able to buy back more stock at lower prices. Rumors shouldn't hurt long-term Apple investors, only day-traders or greedy fund managers. I'm willing to bet Buffett is continuing to buy Apple stock at a discount. Apple's P/E is just crazy low and doesn't seem representative of any tech stock. NVidia has slid almost 50% from its highs and still has a P/E of 19. Apple has a lousy P/E of 14 representing the value of a struggling steel mill. Talk about a low-valued stock and that's Apple. Anyway, I don't care as long as I continue to get my dividends. Let the news media have its fun crapping on Apple. I feel Apple will still stay a strong company even if iPhone sales decline.
    Warren added over 500k shares last week.
    He actually bought them in the third quarter ending Sept. 30. 523.000 to be exact.
  • Reply 8 of 18
    ksec said:
    Has Apple ever offered direct discount on its product? Not via Gift Card or Gift? I am wondering if 11.11 was the first time Apple did this. Also wondering why the discount were so large that any other countries don't get the same benefits. 
    Read the article. It doesn’t say anything about Apple discounting anything. It clearly states that retailers discounted the phones.  
    watto_cobra
  • Reply 9 of 18
    silvergold84silvergold84 Posts: 39unconfirmed, member
    The single day in China did show us like Apple destroyed huawei. All the companies like counterpoint did report the chart of smartphones top seller: not an huawei in the first ten position of most sold model of smartphones. So what this analyst taking about ? 
    watto_cobra
  • Reply 10 of 18
    netroxnetrox Posts: 681member
    Apple needs to make smaller iPhones. I am liking my XS but if Apple releases SE size form, I am going to trade in for it. I am not happy with Apple's increasing size of iPhones, leaving out millions who would rather have a small iphone.
    atomic101watto_cobra
  • Reply 11 of 18
    silvergold84silvergold84 Posts: 39unconfirmed, member
    The logic behind some of these analysts opinions and predictions is absolutely ridiculous. They have no solid numbers to work with, and even with good news regarding sales of iPhone XR, They still sing the doom and gloom song. Talk about stock manipulation... Such a joke!
    Yes but there are companies like counterpoint that have numbers. And they say not an huawei in the ten position of most sold smartphone 
    watto_cobra
  • Reply 12 of 18
    silvergold84silvergold84 Posts: 39unconfirmed, member
    this Chinese analyst is similar at the Indian analyst last year. Do you remember him? He did a catastrophic preview about iPhone X. android marketing.. 
    watto_cobra
  • Reply 13 of 18
    anomeanome Posts: 1,170member

    So, despite setting sales records, the iPhone XR is a failure, and Apple are desperately cutting orders from suppliers?

    Must be November.

    Seriously, don't we get the same garbage every year?

    watto_cobra
  • Reply 14 of 18
    avon b7avon b7 Posts: 2,888member
    The single day in China did show us like Apple destroyed huawei. All the companies like counterpoint did report the chart of smartphones top seller: not an huawei in the first ten position of most sold model of smartphones. So what this analyst taking about ? 
    We shouldn't be making assumptions on success based off of just one day. As far as Huawei being 'destroyed' there is no real evidence of that at all.

    When I last checked there was only ONE site saying Apple was the top seller on Alibaba's Single's day. That site, CNBC, provided No links to ANY information and Alibaba itself hadn't provided any either. Has that changed? Other sites, AI included, simply echoed that CNBC piece.

    Your assumption that Apple 'destroyed' Huawei has no truth in it all.

    We don't even know what CNBC was referencing. Was it revenue or units? We don't know how many units were made available for discounting by the manufacturers or retailers. We don't even know the difference between the top three manufacturers.

    As for models, you are barking up the wrong tree. Huawei has consistently topped Apple in China but never had a model in the top spots.

    How is that possible? Well, Apple released exactly three phones this year and probably won't release any more until very late next year. Huawei has released over thirty. That's why 'model sales' are completely and utterly irrelevant in a wider context. Tally them up though and you get a better idea of the picture.

    That is without taking into account where the actual 'data' comes from in the first place! But seeing how Apple itself often references places like IDC, I suppose we can use that information in a general sense as long as common sense prevails.
    edited November 22 muthuk_vanalingam
  • Reply 15 of 18
    macxpressmacxpress Posts: 4,635member
    anome said:

    So, despite setting sales records, the iPhone XR is a failure, and Apple are desperately cutting orders from suppliers?

    Must be November.

    Seriously, don't we get the same garbage every year?

    Yep and yet some people still believe it every single time. Apple and only Apple knows why it cut orders. I guess some haven't figured out that Apple (Tim) is a supply chain genius. They (Apple) knows exactly what they're doing and why they're doing it. 

    I guess some expect Apple to sell more and more and more iPhones every single quarter. There is a threshold with this. Any company is only going to go so high with sales of their flagship product. 

    But in the end, negative Apple news gets them clicks! 
    edited November 22 watto_cobra
  • Reply 16 of 18
    chasmchasm Posts: 993member
    Reminder: Jun Zhang and Rosenblatt Securities have been outstandingly wrong about all of their predictions about Apple, to the point that this guy is usually the first quoted by DED when he does one of his fact-checks on previous predictions. They have the absolute worst track record of any firm out there. The minute you see that name, stop reading, because it’s BS from there on out,
  • Reply 17 of 18
    chasm said:
    Reminder: Jun Zhang and Rosenblatt Securities have been outstandingly wrong about all of their predictions about Apple, to the point that this guy is usually the first quoted by DED when he does one of his fact-checks on previous predictions. They have the absolute worst track record of any firm out there. The minute you see that name, stop reading, because it’s BS from there on out,
    thanks for posting this reminder..dead on assessment
  • Reply 18 of 18
    Apple iPhones have no differentiator over their android counterparts. I agree the bionic chip is fantastic but your paying for something that in the real world makes no difference to most mum's, dad's and their kids. I bought my son a Brand new Honor 10, 4GB RAM, with 128GB storage for £219 British pounds in the recent sales. It does everything he needs and plenty more, so why would the majority of parents in the world buy an iPhoneXR for their kids at over £715?  It's why android won the war, and why it's too late for apple to gain anything other than a niche following in China and India. Will that trend start in other countries too, will have to wait and see. If prices keep going up, we could even see iPhone sales start to slump in trump land.
    avon b7
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