Here’s one of those instances that makes you wonder about where investment analysts get their information, and what their agendas might be behind it all. A report yesterday by the investment bank JPMorgan Chase claimed iPad shipments were being cut by Apple (NSDQ: AAPL) by 25 percent, which caused the stock to decline amid questions about demand for the best-selling tablet, before more JPMorgan analysts moved in to issue another note disagreeing with the first.
The first note, written by JPMorgan’s Asian team and reported by Bloomberg, indicated that iPad manufacturers were reporting a 25 percent decline in iPad orders by Apple (so-called “sell-in” orders) for Q4 — the first cut of this kind that the manufacturers had seen.
Although that report noted JPMorgan was still maintaining its target of 10.9 million to 12 million iPad shipments in the third and fourth quarters, the report was thought to contribute to the fact that Apple’s stock declined by 3.3 percent on Monday.
(The reports of Amazon’s new tablet, thought to be called the “Fire”, may have also contributed to this. Amazon (NSDQ: AMZN) is making an announcement tomorrow, Wednesday, and many believe it will be used to launch the tablet. Some believe the device might prove to a credible competitor to the iPad, which has up to now dominated the tablet market.)
It’s not clear whether Apple or Apple shareholders closed ranks and leaned on JPMorgan, or whether JPMorgan’s U.S. analysts were simply alarmed at how strongly the first report was resonating. But at the end of the day, the investment bank had issued a second iPad report (Bloomberg), this one written by the U.S. team, which reiterated its shipment targets — 10.9 million to 12 million — and noted, “Apple is fine.”
So what exactly was behind the report of reduced shipments? Embarrassing backtracking aside, if the first report was indeed accurate, it could indeed point to reduced demand from consumers. Or it could be cutting back to prepare for production of a new device. But iPad sales in the last quarter — its strongest yet with 9.25 million sold into channels — doesn’t suggest a sudden drop-off in demand — a trend that seems to only be continuing: just last week, IDC reported that tablet shipments were exceeding its earlier forecasts and that Apple was still very much leadng the pack.
And as for a new device, BGR points out the iPad will likely only be updated come next spring.
BGR, and some analysts like Gene Munster, have also pointed out that it could be to do with Apple shifting some production to a Foxconn factory in Brazil.
We won’t know for sure what was behind the first report, if anything, until Apple reports the actual figures in its earnings (and/or releases a new device) but there have been more recent signs that indicate that demand for a single iOS device can plateau when consumers are being presented with so many new models all the time from the likes of Android.
Figures yesterday from Nielsen, covering smartphone purchases in the U.S., showed that 28 percent bought an iOS device in the last three months, while 56 percent bought an Android device in that period. Comparing that to all current smartphone owners — 28 percent own an iOS device, while 43 percent own an Android device — that would indicate that Android is continuing to grow, while iOS ownership is holding steady, possibly only until something new comes along.