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Old 01-15-2013, 11:07 PM   #31
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Originally Posted by fjtorres View Post
Apparently what is going on is that Apple, like most companies, pre-orders more components than they expect to need to keep spares on hand in case of a surge in demand and to replace the components that fail QA before assembly. When they got less defectives, the on-hand supply ballooned so they cut back on orders to draw down the excess. So apparently, yes, demand has been somewhat less than the maximum they prepared for. That, however, is a bit different from saying the iPhone sales are less than expected. Or that sales are declining.
So, are you saying that Apple routinely orders 30-60% more component parts than they really need to account for defects? And that all of a sudden last quarter they suddenly experienced roughly 5-8 million fewer defective screens than anticipated so they canceled the following quarter's overages by that amount?

Isn't such a defect rate a tad high?

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Old 01-16-2013, 12:20 AM   #32
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So, are you saying that Apple routinely orders 30-60% more component parts than they really need to account for defects? And that all of a sudden last quarter they suddenly experienced roughly 5-8 million fewer defective screens than anticipated so they canceled the following quarter's overages by that amount?

Isn't such a defect rate a tad high?

--Pat
Read again: I'm quoting.
(With a bit of snark, too.)

Plus the oversupply isn't just for QA replacements but also for meeting any surge in holiday demand.
And finally, the report say the cut backs were not that big a deal. The quoted number weren't thepercent of *apple's* orders but of the specific supplier. So if the supplier got cut by 50% but they only provide 30% of the screens, then Apple cut back by at most 15%. Its not as if the rumor said the cut-back with *all* screen providers. Nor did it said if they were increasing elsewhere. Maybe one of the screen makers gave Apple an extra discount to switch orders to them.

The problem with relying on rumors, or "wise men" for that matter, is that they never come right out with the whole story; it's just innuendo, inferences, and tea leaf reading.

That's why I said that is the story--for now.
The objective is to generate traffic and ad revenue and if it takes a tempest in a teapot...
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Old 01-16-2013, 05:37 AM   #33
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But fjtorres, they did quote specific numbers for both original and amended order quantities, so the percentages can be derived from that. From the CNET article you linked to:

Quote:
According to the New York Times, which spoke with NPD DisplaySearch analyst Paul Semenza, Apple had expected to order 19 million displays for its iPhone 5 in January, but cut it to between 11 million and 14 million.
From that bit of information, it means orders fell between 26% (using the 14 million number) and 42% (using the 11 million number).

That's still pretty high, even if you discount the original 50% drop estimate.

In sheer numbers they dropped from between 5 to 8 million or from 26-42% of original orders.

Let's split the difference for the sake of this discussion and say the orders dropped by 6.5 million, which sounds like a fair estimate based on the CNET information. That's a 34% drop.

I have no experience in manufacturing, but don't you think it's fair to say that defective screens would run no more than about 3% (or 570,000 screens out of a 19 million order)? Even that seems high to me, but let's assume that is the number.

So then if you subtract that 3% rate for the previous quarter's "improved yields" from the 34% overall drop, then you're left with a 31% drop in orders due to decreased demand.

So maybe the 50% drop as initially reported was inaccurate. But a 31% drop due to revised sales projections still seems pretty high to me.

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Old 01-16-2013, 06:17 AM   #34
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From that bit of information, it means orders fell between 26% (using the 14 million number) and 42% (using the 11 million number).
You are basing an awful lot of precise calculations on a report that has 3 million margin of error (27%) in their guess for what the new orders are.
How reliable do you think they are?
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Old 01-16-2013, 06:28 AM   #35
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How reliable do you think they are?
Exactly.
The whole point is nobody *knows* a darn thing.
Its all guesses and innuendo and justifying.
Maybe Apple went off a cliff or maybe they're soaring; either way, massive amounts of money are moving in the stock market based solely on guesses and suppositions. Planted guesses.

And nobody sees anything odd that there's two camps feeding "news" to the market: one to drive the stock down and one to prop it up. To me, that is the real news. Though not much of it.
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Old 01-16-2013, 06:36 AM   #36
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You are basing an awful lot of precise calculations on a report that has 3 million margin of error (27%) in their guess for what the new orders are.
How reliable do you think they are?
They obviously have incomplete information, which is why they are saying the low end of the estimate of the decrease is about 5 million screens (or 26%) and the high end is about 8 million (or 42%).

I am pretty confident -- as confident as anyone can be using media reports -- that the information is reliable. The media outlets reporting this are fairly reputable. So no matter what end of the spectrum you want to look at (26% or 42%) the decrease due to lowered demand seems fairly significant.

This all assumes defect rates of no more than about 2-3%; I think that assumption would be more than fair. And, of course, the numbers could change at any time -- either upward or downward -- based on any new report that comes out.

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Old 01-16-2013, 06:43 AM   #37
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Exactly.
The whole point is nobody *knows* a darn thing.
Its all guesses and innuendo and justifying.
Maybe Apple went off a cliff or maybe they're soaring; either way, massive amounts of money are moving in the stock market based solely on guesses and suppositions. Planted guesses.

And nobody sees anything odd that there's two camps feeding "news" to the market: one to drive the stock down and one to prop it up. To me, that is the real news. Though not much of it.
Well, it's not "guesses and innuendo and justifying." These are hard numbers. Being 5-8 million out of an original order total of 19 million.

At times, analysts do guess. But then they are clear about that, using words like "estimates" or "projections." These are not estimates or projections. (The range itself is an estimate, but not the underlying data that went into the equation.)

Of course, it could be all a plain fabrication. A source or sources could have purposely lied and misled one of the media outlets. But it's not guesses, innuendo and justifying, which is a different matter.

--Pat

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Old 01-16-2013, 07:09 AM   #38
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Exactly.
The whole point is nobody *knows* a darn thing.
Its all guesses and innuendo and justifying.
Maybe Apple went off a cliff or maybe they're soaring; either way, massive amounts of money are moving in the stock market based solely on guesses and suppositions. Planted guesses.

And nobody sees anything odd that there's two camps feeding "news" to the market: one to drive the stock down and one to prop it up. To me, that is the real news. Though not much of it.
If it were just stock manipulation, then why hasn't Apple come out publicly to counter any misinformation? The information has been brewing for a couple of days already. And not a peep out of Apple so far. Depending on the media outlet, they've cut first quarter orders of iP5 screens by anywhere from 24 to 50%.

An Apple press release could go a long way toward settling their stock price, as well as their customers, if they countered the information. And contrary to some reports, there is no SEC prohibition on companies commenting about such information.

--Pat
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Old 01-16-2013, 07:22 AM   #39
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Well, it's not "guesses and innuendo and justifying." These are hard numbers.
They aren't hard numbers.
They are guesses based on speaking to 'sources in the supply chain'.
They could be right. They could be completely wrong.
They could be from all three suppliers, they could be from only one.
For that matter, "Apple had expected to order 19 million displays". How does he know how many displays Apple had expected to order?
There is a huge margin of error on every one of the numbers.
They are as hard as jelly.
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Old 01-16-2013, 07:31 AM   #40
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They aren't hard numbers.
They are guesses based on speaking to 'sources in the supply chain'.
They could be right. They could be completely wrong.
They could be from all three suppliers, they could be from only one.
No. The underlying data is not a guess or an estimate (though it could be misinformation). The range reported in the NYTs is an estimate based on incomplete data, some of it hard numbers. I know this is being picky with semantics, but it's an important distinction. It's not just some analyst sitting in his office doing "projections" or "estimates" based on non-specific information, trends, and old sales data.

But here's the telling fact. Apple has been silent on this. Don't you think they owe it to their stockholders and customers to dispel any misinformation? Do they really want to see their stock prices taken for a wild ride, with many of their stockholders potentially losing a lot of money? In this sense, it's a matter or corporate responsibility.

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Old 01-16-2013, 07:33 AM   #41
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They report earnings next week. Tick, tick, tick.
But what can we do until then other than speculate?


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You are basing an awful lot of precise calculations on a report that has 3 million margin of error (27%) in their guess for what the new orders are.
How reliable do you think they are?
If you want to express the margin of error, you say 12.5 ± 1.5 million, so the margin of error is 12%.
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Old 01-16-2013, 07:39 AM   #42
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But here's the telling fact. Apple has been silent on this. Don't you think they owe it to their stockholders and customers to dispel any misinformation? Do they really want to see their stock prices taken for a wild ride, with many of their stockholders potentially losing a lot of money? In this sense, it's a matter or corporate responsibility.
Apple has been silent because they will make the announcement next week. What do you want them to do? Give the information today and cancel the announcement next week?
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Old 01-16-2013, 07:58 AM   #43
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Apple has been silent because they will make the announcement next week. What do you want them to do? Give the information today and cancel the announcement next week?

No, they needn't give out sales figures. This isn't even about past sales figures. It's about a possible drop in future demand and how to allay the fears of shareholders. How about a short press release? Something as simple as this:

Recent media reports have indicated a large drop in Apple's first quarter orders for iPhone 5 LCD displays. These media reports are incorrect and misleading, and orders for these components are proceeding as originally planned. We expect first quarter demand of our flagship phone to be as strong as they were the previous quarter and the corresponding first quarter of 2012.

Apple will be releasing its quarterly earnings report next week, and the numbers will show continued strong growth in both revenues and profits for all areas of our operations.


It is fair to put shareholders through more days of potentially wild stock fluctuations if the information is in fact false?

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Old 01-16-2013, 08:02 AM   #44
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No. The underlying data is not a guess or an estimate (though it could be misinformation). The range reported in the NYTs is an estimate based on incomplete data, some of it hard numbers. I know this is being picky with semantics, but it's an important distinction. It's not just some analyst sitting in his office doing "projections" or "estimates" based on non-specific information, trends, and old sales data.
But it is an analyst reporting information from unnamed sources with no verification.
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Old 01-16-2013, 08:11 AM   #45
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But it is an analyst reporting information from unnamed sources with no verification.

Actually, you don't know that the information hasn't been verified. It may very well have been. The person talking to the sources may have used multiple sources to confirm the same bit of info. And the point is, the analyst isn't making projections or estimates himself.

But let me ask you this, murray: Why wouldn't Apple come out and refute the information if it were false and save its stockholders from potentially vast losses? Why not?

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