More negative data points are being cited today for Apple’s (AAPL) sales trends this quarter.
On top of vague rumors of cuts in orders for components pertaining to Apple’s iPad and iPhone, now comes a note from Ticonderoga Securities’s Brian White, who says that his “Apple Barometer” indicates a surprisingly weak order situation in the month of October.
The barometer, which White created to track Apple’s progress indirectly, is a collection of sales data that come from companies that contract to Apple, mostly out of Asia-Pacific.
White does not include in his barometer�Hon Hai Precision (2317TW), the Taiwan-based firm whose Foxconn division assembles some of Apple’s product, because it also builds so much stuff for innumerable other companies.
White, who rates Apple shares a Buy, writes that October sales for this basket of suppliers dropped to just 16% year-over-year growth in October, a marked deceleration from their collective sales growth in September of 62%.
September was likely inflated by the prep for the introduction of Apple’s iPhone 4S in October, he muses.
That said, when we tally up the combined September and October sales versus historical averages, the Apple Barometer still fell well short (~12% below) of what has been reported in the past. Although it is difficult for us to get our head around this weakness given what seems to have been a well received iPhone 4S launch so far and our expectations for a robust holiday season for Apple with the iPad 2 and MacBook Air, this report is too negative to ignore and we must carefully monitor the Apple supply chain over the next few weeks.
As far as Hon Hai, White notes in a separate report today that the company’s revenue in October, which is “theoretically” $295 billion in New Taiwan dollars, was above the six-year average October sales.
However, he also notes that “When taking the average month-over-month sales trends for September and October versus Hon Hai’s actual results, we calculate that sales missed by 5% versus historical trends.” By that, he means the theoretical combined projected sales of $517.3 billion over both September and October was below the average of $547.2 billion for those two months combined.
I would note that one has to consider the partial disruption of the electronics supply chain as a result of flooding in Thailand, which has had a fairly broad impact on the availability of several kinds of components manufactured in that country.
Correction: An earlier version of this report mentioned Hon Hai’s results as part of the Apple barometer, but White clarifies that the barometer data explicitly exclude Hon Hai’s own results.
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