Wednesday, January 6, 2016

Apple Has 20% Downside (AAPL)

First up, Slope of Hope, Dec. 29 at $107.50:

Apple Headed to the 80s in 2016

And from yesterday's Wall Street Journal:

Apple Scales Back Orders for Its iPhones
BEIJING— Apple Inc. is scaling back orders for its iPhones, sending ripples throughout the multibillion-dollar industry that supplies and builds the company’s phones.

A Chinese provincial capital promised Foxconn Technology Group —which assembles iPhones—more than $12 million in subsidies to minimize layoffs at its operations there, according to a government document. The subsidies came after Foxconn began dismissing some workers there earlier than usual for the Chinese Lunar New Year break, according to people familiar with the manufacturer.

Component suppliers that rode the iPhone’s boom are now bracing for lower sales. Apple has cut its order forecasts to iPhone suppliers in the past several months, according to three people familiar with the company’s supply chain.

Apple provides suppliers with projections on possible orders months in advance and makes adjustments over time, based on demand and inventory, according to suppliers.

Apple launched the iPhone 6S and 6S Plus in September. Coming off a booming year of iPhone sales with new models that offered few noticeable changes, analysts warned that Apple would struggle to grow demand of its flagship product. In October, Apple Chief Executive Tim Cook said it expected iPhone sales to increase in its fiscal first quarter ended in December from the same period a year earlier, but declined to make projections further out into the future.

But Chinese iPhone factories had some idle capacity in the final two months of the calendar year, when they would typically be racing to chongliang, or “rush quantity,” for Apple, in factory-speak. Some workers at Foxconn’s Zhengzhou factory in inland China were let go on early holiday last month, one of the people involved in the supply said, although the typical new-year holiday season doesn’t start until February.

An Apple spokeswoman said the company never discusses sales forecasts and referred layoff questions to its contract manufacturer Foxconn, officially known as Hon Hai Precision Industry Co. Foxconn declined to say if changes in iPhone demand were a factor in the subsidies it received from the city of Zhengzhou, home of a plant that employs at least 200,000 workers and that analysts say primarily makes the iPhone....MORE
$101.36 last, off $1.35.

Possibly related (your Climateer early warning system):

Aug. 20, 2015
Peak Smartphone: "Smartphone Sales Declined for the First Time in China"
June 2015