Following news that Apple apparently cut its iPhone 5 parts orders by 50 percent from 65 million units for the March quarter, Wells Fargo analyst Maynard Um is advising investors to take a deep breath. He thinks the 65 million unit figure wasn't ever realistic and that Apple's parts orders are now more in line with actual sales expectations.
Analyst: Investors are angry over iPhone numbers that weren't realistic
Mr. Um stated,
We believe investors should not put too much merit in the 65 million estimate as (1) order cuts are not new news and (2) the likelihood that Apple would have shipped 65 million iPhone 5's for the March quarter would have been miniscule, in our opinion, given the large implied sequential ramp into what is typically a seasonally slower quarter (and with less new carrier launches given the acceleration in the December quarter). 65 million would imply a 41 percent sequential increase based on our December forecast of 46 million.
Supply chain sources claimed Apple's iPhone 5 parts orders "dropped to roughly half of what the company had previously planned to order," leading to speculation that the company's combination smartphone and iPod isn't seeing strong demand.
The quarter following the holiday season typically shows lower sales, and Mr. Um expects this year will be no different. He also thinks investors are losing sight of the real news in Apple's iPhone sales.
"What we believe is lost in the all the news flow is that Apple is set to deliver a record iPhone quarter--one in which we estimate units will be up more than 70 percent sequentially and nearly 25 percent year over year," he said.
Apple's first fiscal quarter earnings report is scheduled to start after the market closes on Wednesday, January 23. The Mac Observer will be hosting our usual live event coverage, so be sure to check in for the latest news from Apple.
Mr. Um is maintaining his "Outperform" rating and US$710-$730 target price for Apple's stock. Apple is currently trading at $506.13, down 14.17 (2.72%).