Answers to the debate as to what has caused the recent Apple Inc. (NASDAQ:AAPL) stock slump has been varied over the past two months. AAPL has slipped below the $500 mark and is trading at $488.06 for the first time since February at the time of this report, signs as to its further devaluation remain unclear.
Investors seem to be sloughing off shares of AAPL at an astounding rate–treating them as if they were yesterday’s gym shorts. It appears that a single set of articles from The Wall Street Journal and Nikkei is enough to send even the bravest of bear-market champions screaming for the hills, even though the production slowage is December’s news.
But are analysts and investors freaking out over absolutely nothing? Signs really might point to yes. CNET’s Dan Reisinger reported Tuesday morning that all the commotion drummed up pertaining to the slump may, in fact, be wrong. Citing Sterne Agee analyst Shaw Wu, Reisinger notes that demand for the iPhone 5 has remained robust.
Baird analyst William Power agreed with Wu’s position stating that the firm was “actually raising our fourth quarter iPhone forecast slightly,” and that “most demand indicators remain favorable”. It may actually be that declining orders are a byproduct of improved production yields, meaning the profit margin for Apple Inc. (AAPL) is as healthy as ever.
J.P. Morgan’s Mark Moskowitz also believes that the demand rumors are unfounded, calling them “just noise.” He reports that “order cuts are a direct result of manufacturing yields improving following the fast and furious product roll outs of the iPhone 5 as well as new iPads and Macs.”
It also appears that the cuts may not be as deep as the Journal’s sources purport. They’re not “roughly half” unless one is being incredibly liberal with the term. The New York Times has reported that the number was cut from 11 to 14 million from 19 million via NPD Display search analyst Paul Semenza.
Now far be it from me to critique a journalist for his math skills, (It’s not like most journalism programs are all that serious as to imparting them) but last I checked via my cell phone’s calculator, 19 divided by 2 still equals a total of 9.5. 19 less 11 can only equal 8. Is 42 percent of something “roughly half?” Maybe it is to some people. But still seems to me like that’s fuzzy math and very generous rounding.
Apple Inc. (NASDAQ:AAPL) is slated to issue its first-quarter 2013 reports next well—which will contain the first full quarter’s reporting of iPhone 5 sales. An averaging of analyst positions shows that expectations for sales reports for all types of iPhone will be in the “just-under 50 million range” according to CNET’s Josh Lowensohn.
Business is still good. This stock reaction of AAPL is overdone at minimum, and as others have already noted, it may well be that deliberate manipulation of an otherwise solid property may be taking place just before reports can be issued.
Disclosures: None
