Last week, the Apple blogosphere was aflutter with a somewhat sketchily sourced rumor in the Wall Street Journal claiming that Apple was scaling back its orders for iPhone 5 displays by 50%. Naturally, shares of Apple took a nosedive as a result, and the usual parade of pundits were out in full force proclaiming that iPhone 5 demand was waning.
Now that Apple has released its earnings, we know that iPhone demand remains strong. Tim Cook noted that supply was constrained throughout the quarter, and through it all, Apple managed to sell 47.8 million iPhones, a nearly 30% jump from the same quarter a year ago.
As for reports that iPhone demand is on a steep decline, it's been speculated that Apple's reduction in display orders (which did transpire, only not at the scale initially reported) was simply the result of improving yields on the tough-to-manufacture displays. In a note to investors, JP Morgan analyst Mark Moskowitz explained, "In our view, the potential order cuts are a direct result of manufacturing yields improving following the fast-and-furious product roll-outs of the iPhone 5 as well as new iPads and Macs."
All that said, Tim Cook during Apple's earnings conference call today was asked flat out about iPhone demand in the next quarter.
Cook then took the opportunity to address, kind of, the aforementioned rumor regarding flat iPhone demand.
If you look at iPhone sales across the quarter, we were constrained for much of the quarter on iPhone 5. As we begin to ship more, sales went up with production. iPhone 4 was in constraint for the whole quarter and sales remained strong.
Months of rumors about order cuts and so forth, so let me take a moment to comment on these. No comment on any particular rumor as I'd spend my life doing that. I suggest its good to question the accuracy of any kind of rumor about build plans. Even if a particular data point were factual, it would be impossible to interpret that data point as to what it meant to our business. The supply chain is very complex and we have multiple sources for things. Yields can vary, supplier performance can vary. There is an inordinate long list of things that can make any single data point not a great proxy for what is going on.
So, basically, if one wants to take an optimistic view of things, we shouldn't get all worked up about a single rumor emanating from the typical unsubstantiated sources. And even if we have a fact - in this case Apple lowering display orders - Cook reminds us that such a shift might be the result of any number of factors. Yields can improve, as Moskowitz wrote last week, and as intimated by Cook, Apple has many suppliers,so it's important to remember that any digestion of "facts" as it applies to issues such as iPhone demand should be looked at with the proper contextual framework - something which analysts often seem to forget.
Lastly, it's easy to get carried away with rumors but let's not forget what really matters - cold hard data.
To that end, Apple sold more iPhones this past quarter than ever before in company history. iPhone sales in China grew by triple digits on a percentage basis. And notably, Cook noted that the proportion of iPhone 5 sales measured against total iPhone sales is about the same as the iPhone 4S during the same quarter a year-ago. Translation? The iPhone 5 seems to be doing just fine.
transcript via Mac Rumors