Apple Cuts iPhone 5 Production Ahead of ’5S’ Says Jefferies
Apple (AAPL) shares today are up $1.83, or 0.4%, at $469.75 despite a warning this morning from Jefferies & Co.’s Peter Misek, who believes the company is cutting production again for its iPhone, after rumors of production cuts that dominated headlines the prior two months, and that a larger-screen version of the phone may not arrive till next year.
Misek, who has a Hold rating on the stock, and a $500 price target, writes that sales of the iPhone 5 seem to be dropping off and that the company is preparing for an iPhone 5S, perhaps going on sale in June, possibly at China Mobile (CHL) and that a cheaper iPhone seems to be on the way as well:
Phone 5 sales are decelerating faster than expected and builds have been cut again from 40M to 30M. Admittedly, suppliers seem to be prepping for iPhone 5S builds to start in March. iPad 4 builds continue to fall (7-10M to 3-5M) and mini builds continue to rise (10M to 11-13M). While we believe the GM is similar, the actual gross profit dollars are lower on the mini […] We see them as on track for a targeted June launch. There could be risk of a delay until July, but we see that as unlikely at this point due to few changes for the iPhone 5S vs. the iPhone 5 and that builds are scheduled to commence in March. We expect launches at China Mobile (~700M subscribers; 85M 3G) and DoCoMo (60M) in June/July. We think the China Mobile launch will be focused on the low-cost iPhone while the DoCoMo launch will be focused on the 5S.