Apple iPhone Production Delay Confirmed In 10-Q

Apple iPhone Production Delay Confirmed In 10-Q
ElisaRiva / Pixabay

Apple Inc. (NASDAQ:AAPL)’s latest 10-Q filing with the Securities and Exchange Commission provides a couple of hints regarding the third calendar quarter of this year. According to Morgan Stanley analysts, the filing confirms the previously reported delays in the iPhone production and possibly upside to the company’s gross margin guidance.

Apple iPhone Production Delay Confirmed In 10-Q

Apple reported lower capital expenditures

Like analysts at other firms, Morgan Stanley analysts Katy L. Huberty, Jerry Liu and Scott Schmitz issued a report commenting on Apple Inc. (NASDAQ:AAPL)’s reduced capital expenditures forecast. The company lowered it to $8.5 billion from $10 billion, which would be consistent with its quarterly run-rate so far this year.

Seth Klarman’s 2021 Letter: Baupost’s “Never-Ending” Hunt For Information

Baupost's investment process involves "never-ending" gleaning of facts to help support investment ideas Seth Klarman writes in his end-of-year letter to investors. In the letter, a copy of which ValueWalk has been able to review, the value investor describes the Baupost Group's process to identify ideas and answer the most critical questions about its potential Read More

The analysts note that part of this reduction is in connection with the opening of three fewer Apple stores in the current fiscal year. However, they think most of the reduction is for delayed equipment purchases for new product cycles. In the end though, if Apple Inc. (NASDAQ:AAPL) ends up paying less than expected for supply chain investments, then its margin profile should be higher and consistent with previous iPhone S product cycles.

iPhone production ramping this month

The analysts note that Apple’s component purchases dropped 26 percent during the June quarter and more than 50 percent since December. That’s compared to flat or rising levels during previous product cycles. The analysts said fewer component transfers to manufacturing partners supports a delay in production of the iPhone. However, the unseasonable Apple owned inventory increase suggests a ramp-up in iPhone production this month.

They believe that fewer components purchased in June suggests a July production timeline for the iPhone. The analysts said Apple expects that component costs will be a margin tailwind for its September quarter.

It’s expected by some analysts that the iPhone 5S will be out this year, particularly because of conclusions drawn from the changes in Apple’s capital expenditure expectations.

Apple should hit the middle of guidance in September

The Morgan Stanley analysts also said that Apple Inc. (NASDAQ:AAPL)’s lower off-balance sheet commitments and plans for capital expenditures do still imply that the company’s September quarter revenue will fall toward the middle of its guidance range of $34 billion to  $27 billion.

Updated on

No posts to display