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Although the next iPhone isn’t expected until the fourth quarter, Apple appears to be “significantly” reducing orders for the current iPhone 4S model by as much as 25 percent, which could see current quarter sales drop below Wall Street expectations.
AppleInsider is reporting that Sterne Agee analyst Shaw Wu has done some poking around Apple’s supply chain and has issued a note to investors on Tuesday that shows the company may be reducing its iPhone orders between 20 and 25 percent. But the move may not be related to lack of demand, but rather the company preparing for the next generation device expected later this year.
"From our understanding, the reason for the reduction is not demand related but rather due to the upcoming sixth generation iPhone refresh likely in the September-October timeframe," Wu explains. "It appears AAPL is opting to be conservative with its suppliers to factor in a potential two-quarter pause ahead of the refresh and also to manage inventory."
Should those numbers hold, Wu expects Apple to ship between 26 million and 28 million iPhones in the current quarter -- a bit below Wall Street estimates of between 30 million and 31 million, and well below the previous quarter’s 35.1 million.
The report notes that Apple recorded then-record sales of 20.34 million iPhones during the same June quarter last year, which far exceeded analysts’ expectations of 15.8 million. But that was then, and analysts are more bullish on the iPhone than ever.
While Wu notes that Wall Street “grossly underestimated the impact of a pause and inventory drawdown ahead of the iPhone 4S” last year, investors should approach with more caution this year -- both with the current June quarter as well as the September quarter that follows.
Follow this article’s author, J.R. Bookwalter on Twitter