Apple’s orders for screens for the January-March quarter, for example, have dropped to roughly half of what it had previously planned to order, two of the people said. The U.S. company has also cut orders for components other than screens, according to one of the people.
This is an interesting development which is sure to trigger sells of Apple shares come Monday morning. But this news may not be what you think it is.
First of all, this isn’t the first time news has leaked that Apple has cut orders for parts of a hot device. In September 2011, they apparently trimmed 25% off their iPad parts order according to Bloomberg:
Reduced orders from Apple to iPad suppliers could reflect both weakening demand in Europe due to economic conditions there as well as a strategy by Apple, the world’s biggest company by market value, to operate with reduced inventory, Wanli Wang, a Taipei-based industry analyst at RBS Asia Ltd., said today.
Despite the apparent cuts, Apple sold over 11 million iPads during that quarter, a 166% increase compared to Q4 2010.
I wouldn’t usually link to Business Insider except to mock them, but Jay Yarow has a good point:
First, Apple’s manufacturing of the iPhone could have been better than expected.
Second, and much more importantly, Apple is apparently going to release a new iPhone in the May-June time frame, according to Topeka Capital analyst Brian White. His report is seconded by Peter Misek at Jefferies. (Misek has a June-July timeframe, White has May-June.)
Early refresh rumours notwithstanding, it’s likely that Apple could have simply made enough iPhones to sustain them through a massive first calendar quarter. This is corroborated by a Nikkei report (via The Verge):
According to the report, Apple had planned to source a total of 65 million displays from the two companies during that period, but that number has been reduced “in response to lower than planned global sales of Apple’s iPhone 5.”
We’ll find out for certain a week on Wednesday, but 32.5 million displays for their January through March quarter is nothing to sneeze at.