Apple Trimming Orders for IPad Parts, JPMorgan Says

[marmar]

(Bloomberg) Apple Inc. is cutting orders to vendors in the supply chain for its iPad tablet computer, a move that may result in slower sales for companies including Hon Hai Precision Industry Co., JPMorgan Chase & Co. said in a report.

Several supply-chain vendors indicated in the past two weeks that Apple lowered fourth-quarter iPad orders 25 percent, the first such cut that analysts at JPMorgan’s electronic manufacturing services team in Hong Kong said they have ever seen. The report didn’t list the affected companies, and Gokul Hariharan, one of the report’s authors, said he couldn’t comment when reached by Bloomberg News today.

For a vendor such as Hon Hai, the cut could mean a drop to 13 million units in the fourth quarter from 17 million units in the third quarter, JPMorgan analysts wrote in the Sept. 25 report. The report said JPMorgan U.S. analyst Mark Moskowitz, who covers Apple, does not expect to lower his projection of 10.9 million to 12 million units of iPad shipments in the third and fourth quarters after the supply chain adjustments.

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. ..........(more)

The complete piece is at: http://www.bloomberg.com/news/2011-09-26/apple-cuts-ipad-supply-chain-orders-jpmorgan.html

[brooklynite]

1. Countervailing opinion from the WSJ

With the fabric of our existence being shaken by the very thought that demand for precious iPads might be slipping, Wall Street analysts are rushing to declare that everything is just fine with the iPad, as far as they can tell.

As we wrote earlier, a J.P. Morgan note suggesting Asian suppliers were seeing cuts in iPad orders has the street fairly well spooked and Apple shares down 1.5% on an otherwise up day in the market. J.P. Morgan is already trying to play down the note’s importance for Apple, CNBC has reported.

Piper Jaffray’s Gene Munster surmises that the J.P. Morgan note might simply be a case of his fellow analyst only having a small piece of the total supplier puzzle:

Following our recent trip to Asia we remain confident in our iPad estimates for the September and December quarters of 10.0m and 12.0m, respectively. While we heard chatter of supply chain order reductions, the absolute sell-in figures for 2H CY11 likely remain well above our estimates. We also note that previous calls based on sell-in or supply chain data have, for the most part, proven to have very little correlation with Apple’s results vs. consensus dating back to early iPod shipments (2003). We believe Apple purposely maintains enough suppliers and manufacturing partners to make any one supply-side data point inconclusive. For example, Apple is currently transitioning to Brazilian iPad manufacturing, which may be impacting Asian manufacturing numbers.

http://blogs.wsj.com/marketbeat/2011/09/26/apple-analysts-rush-to-its-defense/