Analyst: Apple’s iPad Supply Chain is Just Fine

| Apple Stock Watch

AAPLFollowing a report that Apple has apparently cut back its iPad parts orders by 25 percent, UBS analyst Maynard Um is saying not to worry. Demand for the iPad isn’t dropping, and in fact is remaining high.

JP Morgan analyst Mark Moskowitz told investors this week that Apple trimmed back its iPad parts orders for the fourth quarter by 25 percent, raising concerns that consumers were losing interest in the multimedia tablet. Despite the cuts, he still expected Apple to ship up to 12 million iPads in both the third and fourth quarters.

“We received many questions regarding the iPad production cut of 25 percent quarter over quarter in Q411,” Mr. Um said. “Our extensive checks among the global tech team suggest this is limited to components that could have yield and production issues.”

He added that there could be some confusion over component forecasts versus actual divice production plans. “As for the adjustment, we think it is likely because Apple over-ordered certain iPad 2 components,” he said.

Mr. Um expects Apple will report building between 14 million and 15 million iPads each in the third and fourth quarters quarters of 2011. He also expects Apple’s third quarter iPhone units to hit 23 million, and 28 million for its first quarter of 2012.

Mr. Um is maintaining his “Buy” rating and US$510 target price for Apple’s stock. Apple is currently trading at $402.40, down .077 (-0.19%).

Comments

Lancashire-Witch

“He added that there could be some confusion over component forecasts…”

Anyone who knows anything about supply chain management knows component requirements aren’t forecasted - they’re calculated.

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