Here’s why AAPL hit 10-month low today

By , Dec 14, 2012

China’s influence over Apple’s financial health is growing. In fiscal 2011, the country accounted for sixteen percent of Apple’s revenues. But is Apple’s growth in China sustainable?

Friday, two analyst reduce forecasts amid what one described as a ‘muted’ response to today’s iPhone 5 release in the world’s largest market. As a result, Apple shares fell 3.9 percent to a ten-month low.

The decline also hurt a number of Apple’s suppliers as the firm is thought to be cutting orders in order “to balance excess inventory”. For example, Broadcom is down 3.13 percent and Qualcomm dropped 4.7 percent.

As a result, Jefferies analyst Peter Misek cut his iPhone shipment estimate for the first three months of 2013 to 48 million, down from 52 million. He also trimmed Apple’s expected gross profit margin to 40 percent, down two percentage points…

According to Reuters, Misek said Apple “had started cutting orders to suppliers to balance excess inventory”. The news gathering organization reports the analyst told clients that yesterday’s iPhone 5 launch in China “has been surprisingly muted”.

He was unsure how much heavy snow in the north may have affected the limited purchases. Another possible damper on sales: Apple’s requirement that customer pre-order devices, a procedure put in place to avoid earlier riots.

Whatever the cause, UBS analyst Steven Milunovich said Friday the iPhone 5 may not beat previous iPhones sold in China.

“Some of our Chinese sources do not expect the iPhone 5 to do as well as the iPhone 4S”, the analyst told clients. Since the iPhone 4S hit China a year ago, a number of popular local brands like the Coolpad as well as a plethora inexpensive Android devices were released in the 1.33 billion people market, pushing Apple out of China’s top 5 list.

UBS reduced its price target on Apple stock to $700, down from $780 based on concern of lower iPhone and iPad shipments. As a result of the worries, Apple suppliers, including Qualcomm, Cirrus Logic and Jabil Circuit, also saw their shares fall in value during early morning trading.

Ironically, many believed the iPhone 5 would be warmly received by Chinese consumers.

The iPad mini hit China last Friday and is said to have prompted “nearly nonexistent” crowds. Today’s start of iPhone 5 sales in China was seen as the real test of the new Apple products.

In another twist of fate, analysts are using sales of the iPhone 4S as the yardstick to judge demand in China for the iPhone 5.

It was that introduction – along with the iPad 2 and the resulting riots which temporarily halted sales – that prompted the additional pre-ordering requirement. That requirement is now being given as a possible reason for lower-than-expected iPhone 5 sale in China.

Is Apple hobbling demand by requiring Chinese consumers register before purchasing its products?

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  • http://www.facebook.com/joe.jonsen Joe Jonsen

    Greed

  • http://www.facebook.com/Jhonny1x Jonathan Jaimes

    Apple is falling down, while google stocks are staying at 700 range.

    • AdamChew

      For a one trick pony – ads, it is similar to the Amazon story – Perception.

      Duckduckgo.com is getting to be very popular for search and do not collect personal data so it may be a matter of time before google is doomed as the dodo.

  • chjode

    These same analysts are deliberately tanking Apple stock so they can buy into it in prep for when Apple announces huge sales over the holidays.

    Apple profits up only 40%? Stock price drops.
    Amazon loses 240 million? Stock price rises.

    • http://www.facebook.com/Tommyg80 Tommy Gumbs

      Blogs and Analysts don’t care about Apple or any other firm. They only care about page views or followers. Well, actually both. The only people who know how well Apple did in China is Apple. In a nut shell, I agree with you! You see, Apple’s rise was a worthy story to be reported about. It generated excitement, which generated page views, which then generated profit for these blogs. Now, Apple is old news. So, now we patiently wait for the next big thing. The fall of Apple.

      As for Apple stock, it has always had a turbulent history. Its really not new “news.” But then again, a majority of the news we read really isn’t new’s is it?

  • http://twitter.com/IbrahimRIAlBora Ibrahim R.I.AlBoraey

    I live in China, and this is how is my own opinion:
    1. The iPhone 5s is maybe 2 steps away, it launches too late,
    2. No Jailbreak is there yet,
    3. The iPhone 5 got very bad look in the people’s eyes!!
    4. Too much expensive compared to locked iPhone under AT&T contract, or Unlocked iPhone contract free
    5. It’s not the holidays season yet, you must wait till the Chinese New Year in the end of January.
    however, Apple Products are an awesome Luxury that people would like to have even if they don’t know how to use all it’s options, or at least to get something looks exactly like it”A Copy”

    • Tardroid

      What a fucking idiot.

      • http://twitter.com/IbrahimRIAlBora Ibrahim R.I.AlBoraey

        I’m telling what I saw from the buyers behavior at this moment. you can come and see it,

    • http://www.facebook.com/xxLIUZHENYUxx Liu Zhenyu

      Lol iPhone 5 looks ugly, you must love a brick.

      • http://twitter.com/IbrahimRIAlBora Ibrahim R.I.AlBoraey

        I think I wrote it right ”
        3. The iPhone 5 got very bad look in the people’s eyes!!” and yes, the iPhone 5 doesn’t look good with that back, and looks nothing better than the worst rumored iPhone 5 rushed the web with the liquid-metal back,

      • http://www.facebook.com/xxLIUZHENYUxx Liu Zhenyu

        Lol, the back looks bad.. Looks like its just the minority, including you.

      • http://twitter.com/IbrahimRIAlBora Ibrahim R.I.AlBoraey

        OK my friend, you can go Case-Less if you like it so much, and enjoy it!!

      • http://www.facebook.com/xxLIUZHENYUxx Liu Zhenyu

        I go caseless, I use Clear Skins and Glas.t screen protectors, never got a scratch since I bought the phone.

  • http://www.facebook.com/Tommyg80 Tommy Gumbs

    Looks like they sold 2 million phones. Nuff said.