Wells Fargo analyst Maynard Um has said the idea that Apple (NASDAQ:AAPL) placed an iPhone 5 display order for 65 million units was “unrealistic” and, therefore, the reported cuts in the figure did not make sense.
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The Nikkei newswire reported on Monday that Apple had cut orders for components meant for the iPhone 5 due to weak demand this quarter. According to the report, the iPhone maker asked suppliers Japan Display, Sharp,and LG Display (NYSE:LPL) to halve supplies of LCD panels from an initial plan of about 65 million screens.
Um said investors should not put too much merit in the 65 million estimate because order cuts were not fresh news and the “likelihood that Apple would have shipped 65 million iPhone 5 units for the March quarter would have been miniscule, in our opinion, given the large implied sequential ramp into what is typically a seasonally slower quarter (and with less new carrier launches given the acceleration in the December quarter).”
Um, who has an Outperform rating and a $710 to $730 “valuation range” for Apple, is predicting iPhone unit sales of 43 million this quarter.
“What we believe is lost in the all the news flow is that Apple is set to deliver a record iPhone quarter — one in which we estimate units will be up more than 70 percent sequentially and nearly 25 percent year-over-year,” he wrote. “While near-term sentiment remains challenged, we expect supply chain news to improve into the June and September quarters into the new product cycle, which we see as a catalyst.”
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