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Applevine: iMac Refresh and iPhone Production Rumors

Fresh off recent upgrades to Macbooks last month and with no iTunes chatter to replicate Harmonix’ Beatles’ conquest, the Applevine  (aka Apple Rumors and Speculation) surprisingly came to life to start this week with a couple new speculative suggestions.

On the Mac front: Apple watching website MacNN is reporting their sources say upgrades to the Mac Mini and iMac computers could be announced on November 10th.  

Given the timing would create an opportunity to capitalize on holiday sales, the rumor falls into the category of plausible but clouding the prospect of its accuracy: no product details leaked and MacNN is only citing sources as “anonymous.”   Rumors that turn out to be accurate (or reasonably so) more often draw from “sources familiar” or equivalent and have at least a taste of factual detail.   This one doesn’t.   The general expectation is that Apple won’t make any major new product announcements before their January Macworld event.  A November 10th newsflash could happen but it not the safe bet.

The second Apple rumor buzzing to start this week was a speculative report from  an FBR Capital Markets analyst saying Apple’s iPhone production could drop off as much as 40% sequentially during this quarter.

“Previous checks indicated that iPhone production would fall about 10 percent sequentially in calendar 4Q, (but) our new checks indicate that iPhone production could fall more than 40 percent sequentially in 4Q,” the firm’s research note says.

There’s no question consumer spending is down, apparently falling more heavily since the end of Apple’s last fiscal quarter ended September 30th. But a 40% production pullback?

Is demand for the iPhone slowing to such an extent that Apple can stay ahead of it with the combination of existing inventory and a 40% decrease in production? 

Ultimately, there’s not enough public information on how the forecast was assembled to invalidate (or validate) its projection so it falls squarely into the category of rumor.   Even so, it’s hard to believe. 

Apple finished the last quarter with sales of 6.9m iPhones.  They also had (according to statements made in the earnings conference call) about 2m iPhones in channel inventory around the globe, the equivalent of somewhere between four and six weeks’ worth. That’s not excessive inventory.  In fact, it appears near Apple’s target range.

Calling the number further into question – analysts have generally struggled to succesfully predict iPhone sales so far. As profiled on Fortune’s website, the leading analysts covering Apple significantly underestimated iPhone shipments in the last quarter, and those are analysts that focus explicitly on Apple.  FBR‘s analyst Craig Berger isn’t even one of them.  His niche is chips.   Berger analyzes and discloses on product production (as opposed to product sales/shipment) because he’s looking at how Apple manufacturing choices affect semiconductor suppliers. 

Being out of his realm doesn’t mean he’s wrong but it does raise doubts. Also raising doubts is the analyst’s track record. He’s speculated on Apple in the past, and more than once, he’s widely missed the mark.  This could well be another off-target prediction.

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Prior Metue Coverage of Apple Earnings
Apple Q4 2008 Earnings
Apple Q3 2008 Earnings
Apple Q2 2008 Earnings
Apple Q1 2008 Earnings
Apple Q4 2007 Earnings
Apple Q3 2007 Earnings


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