Apple Inc. AAPL is ending 2017 on somewhat of a concerning note amid reports that the demand for its high-end iPhone X may not be as strong as expected.
The Analyst
Former Wall Street research analyst Gene Munster, now the managing partner at Loup Ventures.
The Thesis
A report from Taiwan's Economic Daily News said Apple is likely in a position where it will need to cut its March 2018 quarter-ending iPhone shipments.
Munster "disagrees" with the report based on the "current strength" of the iPhone X. Logic dictates that if the iPhone X is selling well, then other iPhone models will "likely be stable," he said.
The Economic Daily News report suggested Apple would lower its March-ending iPhone shipments from 50 million to 30 million. The Street's current estimate for the quarter stands at 62 million units, so a 20-million unit reduction would bring the Street's estimate to 42 million unit, "which we see as highly unlikely," Munster said.
The outlook from public companies within the Apple supply chain "remains upbeat," with the best read-through coming from Lumentum Holdings Inc LITE, a supplier of around 90 percent of Apple's vertical-cavity surface-emitting lasers, Munster said.
"We think the best read is coming from Lumentum," he said.
Lumentum said during its most recent earnings conference call Nov. 1 that it generated more revenue in the month of October than it did for the entire September-ending quarter, Munster said. The supplier was expecting monthly shipments to increase in November and December at the time of its report, and said the momentum could continue at similar rates into the beginning of 2018.
Price Action
Shares of Apple were trading lower by 0.82 percent Friday morning.
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Photo courtesy of Apple.
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