JPMorgan Analysts Issue Differing Apple Reports

By Adam Satariano - Sep 27, 2011 8:05 AM GMT+0700
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An Apple Inc. employee, left, gestures towards an iPad 2 during the opening of the company's new store in Le Chesnay, near Paris, France, on Saturday, Sept. 24, 2011. Apple Inc. is cutting orders to vendors in the supply chain for its iPad tablet computer, a move that may result in slower sales for companies including Hon Hai Precision Industry Co., JPMorgan Chase & Co. said in a report. Photographer: Fabrice Dimier/Bloomberg

JPMorgan Chase & Co. (JPM) analyst Mark Moskowitz said research from his colleagues in Asia about a cut in Apple Inc. (AAPL) iPad orders doesn’t represent the views of the securities firm’s U.S. team.

“Apple is fine,” Moskowitz wrote.

Apple is cutting orders to vendors in the supply chain for its iPad tablet computer, a move that may mean slower sales for companies including Hon Hai Precision Industry Co., according to the earlier report by JPMorgan analyst Gokul Hariharan.

Analysts at other firms also issued research aimed at quelling speculation that demand for iPads had diminished -- a concern that dragged down Apple’s stock as much as 3.2 percent in Nasdaq Stock Market trading yesterday. Chris Caso, an analyst at Susquehanna International Group, said the resulting “chatter” was “misleading” and Gene Munster, at Piper Jaffray Cos., said changes in orders may be the result of Apple moving some iPad manufacturing out of Asia to Brazil.

The earlier report “has the equity markets worried about Apple,” Moskowitz wrote yesterday. “Mr. Hariharan’s report focuses on how Hon Hai could be impacted by potential iPad sell- in order cuts. This alert is not the view of the U.S. IT Hardware team.”

Moskowitz maintained his projection that Apple will sell 10.9 million to 12 million iPads in the fiscal fourth quarter.

Apple fell $1.13 to $403.17 yesterday in Nasdaq Stock Market trading after earlier declining to $391.30. The shares had gained 25 percent this year before today.

‘Troublesome’ Reports

The later note may have been prompted by complaints from Apple or large shareholders, said Bruce Foerster, president of South Beach Capital Markets in Miami.

“If nothing else this should be troublesome and at the end of the day you have to come down on the side of independent research,” said Foerster, a former managing director at securities firms including Lehman Brothers Holdings Inc. “That has to trump all, every time. Otherwise what are you selling?”

Moskowitz and Hariharan declined to comment beyond their respective reports. Steve Dowling, a spokesman for Cupertino, California-based Apple, declined to comment. Jennifer Zuccarelli, a spokeswoman for New York-based JPMorgan, didn’t immediately respond to a call and e-mail for comment after regular business hours.

Hariharan’s report, dated Sept. 25, said multiple supply- chain vendors indicated a 25 percent reduction in so-called sell-in orders in the past two weeks, the first such cut that analysts at JPMorgan’s electronic manufacturing services team in Hong Kong said they have seen. Sell-in orders are those made by a company -- in this case, Apple -- to a supplier.

‘Not a Good Proxy’

“We disagree with any talk of a shipment slowdown,” analysts at Barclays Capital wrote in a report. “The numbers being circulated Monday might be related to components and not to actual iPad 2 shipments, in our view. Components checks (are) not a good proxy for actual iPad product shipments.”

Edmund Ding, spokesman for Hon Hai, didn’t respond to an e- mail or answer calls to his Taiwan and China mobile phones.

Apple’s iPad may account for 73 percent of tablet sales this year, according to research firm Gartner Inc. Products that run on Google Inc. (GOOG)’s Android operating system, including Samsung Electronics Co.’s Galaxy tablets, will probably have about 17 percent of the market, Gartner said on Sept. 22.

Amazon.com Inc. (AMZN) may release a product later this year that could become the No. 2 tablet in the market behind the iPad, Moskowitz wrote in a report earlier this month.

To contact the reporter on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net