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Analysts See No Signs Of iPhone Sales Slowdown

"Given the stock outages at U.S. Apple stores nearly one month after the launch, we believe it is unlikely that Apple would cut production, when it clearly cannot build iPhones fast enough to meet demand," said Piper Jaffray analysts Gene Munster and Andrew Murphy.

Digitimes reported Wednesday that Apple is likely to reduce its supply-chain orders for the components it uses to manufacture the latest versions of the iPhone and iPad . However, many industry observers have raised doubts about the accuracy of the report from the Taiwan-based electronics industry newspaper.
Citing a report from the Chinese language Commercial Times, Digitimes said Apple may reduce component shipments by 10 percent to 15 percent in the current quarter because iPhone 4S sales have not met Apple's expectations. Sources at companies participating in Apple's supply chain also reportedly told Digitimes that the components-order slowdown was due in part to a shortage of key parts for the devices.

The Digitimes article caused Apple's stock price to fall sharply on Wall Street after the opening bell on Wednesday, but some financial analysts called the unconfirmed rumors a "total joke."

"We believe recent chatter around iPhone 4S production cuts is off base," said Piper Jaffray analysts Gene Munster and Andrew Murphy.

Production Cut Unlikely

Last month, Apple CEO Tim Cook told investors that the iconic device  maker expects the iPhone 4S to set an "all-time record" for handset unit sales in the fourth quarter of 2011. Industry analysts have generally agreed by forecasting iPhone 4S unit sales in the 26 million to 29.4 million range for the final three months of this year.

Piper Jaffray's confidence in Apple's iPhone 4S stems in part from a recent telephone survey conducted by the firm. The availability of the iPhone 4S remains limited, the investment firm's analysts said after contacting 30 Apple retail stores in the United States on Monday.

Munster and Murphy report that Apple's iPhone 4S was completely sold out at 57 percent of the retail outlets contacted by the investment firm. Moreover, of the 43 percent that did have some stock left, none were able to offer customers the entire range of available iPhone 4S models.

"Given the stock outages at U.S. Apple stores nearly one month after the launch, we believe it is unlikely that Apple would cut production, when it clearly cannot build iPhones fast enough to meet demand," Munster and Murphy wrote in an investor note.

Demand for Apple's latest iconic handset model also remains brisk online. "The iPhone 4S lead times at the Apple Store Online (U.S.) indicate limited supply with one to two week shipping delays," Munster and Murphy said.

A Record

RBC Capital said the new Digitimes report "is at odds" with continuing robust sales of the iPhone 4S by carriers around the world, including recent stockouts in some countries. Last Friday in Hong Kong, for example, iPhone units available for pre-order reportedly sold out in 10 minutes. So consumer demand for the new iPhone 4S continues to appear to be robust.

Piper Jaffray also investigated the reports out of Taiwan concerning possible shortages of key components for Apple's latest iPhone and iPad models. After contacting several component makers participating in Apple's iPhone supply chain, the investment firm concluded that the concern expressed in the Digitimes report about a potential shortage of key components had been overblown.

"Based on our conversations with component suppliers, we believe orders from Apple remain on track to meet or slightly exceed our 26 million iPhone unit estimate for the December 2011 quarter and our 112.5 million iPhone unit estimate for calendar year 2012," said Munster and Murphy.

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