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What's the take-away from Apple slashing iPhone production?

According to Friedman Billings Ramsey analyst Craig Berger, Apple has made deep cuts Q4 iPhone production plans by "as much as 40%", far more than originally estimated.
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Written by Adrian Kingsley-Hughes, Contributor on

According to Friedman Billings Ramsey analyst Craig Berger, Apple has made deep cuts Q4 iPhone production plans by "as much as 40%", far more than originally estimated.

Berger believes that this is a sign of "global macroecomomic weakness:"

That the firm's iPhone production plans are being revised lower suggests that the global macroecomomic weakness is impacting even high-end consumers, those that are more likely to buy Apple's expensive gadgets, and that no market segment will be spared in this global downturn. This is a negative signal for global demand, in our view.

Hmmm ... I'm reluctant to make the call that the iPhone is in trouble? Why? Because there could be other factors at play here. For example:

  • Last quarter, Apple had 2 million iPhones in channel inventory - that's a lot of handsets.
  • Apple could be cutting inventory in the hope of picking up components cheaper after the Holiday quarter.
  • Past talk of iPod production cuts have always turned out either to be bogus, or not to have any overall correlation to quarterly sales.
  • This could all be down to Apple curring orders for a particular part, and rather than indicating a cut in production, it could mean that Apple is swapping suppliers.

... or this could be a sign that Apple isn't immune to the negative effects of the choppy financial seas companies are having to sail and is battening down the hatches to weather a coming storm.

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