Is demand slowing for Apple's (AAPL) red-hot iPhone 3G?
Apple has cut its calendar Q4 iPhone production plans significantly more than originally estimated, according to a report by Friedman Billings Ramsey analyst Craig Berger. Instead of a 10% sequential production drop in Q4, Berger's "recent checks" suggest Apple's iPhone production could fall "more than 40%" from its Q3 levels. Berger thinks a similar cut was made for Q1, but notes that there's still plenty of time to change that.
What does this mean? A significant production cut isn't necessarily a direct reflection of significantly slowing iPhone demand. Specifically, this doesn't mean that Apple's December quarter iPhone shipments will be 40% below last quarter's -- that's not the same metric.
It's also possible that Apple's Q3 production was higher than normal on purpose, so there could be some excess supply. Match that with a souring economy, and it makes sense that Apple doesn't have to build as many units as it initially planned.
But it's not positive news, either. Further, Berger notes that the iPhone cuts are "a negative global demand" signal:
That the firm's iPhone production plans are being revised lower suggests that the global macroecomomic weakness is impacting even high-end consumers, those that are more likely to buy Apple's expensive gadgets, and that no market segment will be spared in this global downturn. This is a negative signal for global demand, in our view.
Apple shipped 6.9 million iPhones in its September quarter, but that included 2 million iPhones in channel inventory in 30,000 distribution points.
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