After a series of positive events culminating with an Academy Award for best picture, Apple found concerns rising over a report it's cutting back on production of its popular iPhones.
Real Money Columnist Stephen "Sarge" Guilfoyle looked over the stock to assess what's going on with the world's most valuable company.
Guilfoyle noted that Nikkei Asia reported recently that "Apple will be slashing its iPhone SE output by up to 20% for the next quarter by as much as 20%, lowering the number of phones made to 2 million from 3 million. Apple is also lowering orders for AirPods by over 10 million units for 2022, according to the article. Suppliers have also been asked by Apple to manufacture a "couple million" fewer iPhone 13 units due to 'seasonal demand.'"
Do I sell AAPL on this morning's news?” he wrote in a recent Real Money Pro column. “Maybe if one is a trader. I do not. When it comes to AAPL, I am an investor. Do I add? Probably not up here."
Wedbush analyst Dan Ives reported seeing "stellar" demand for Apple's iPhone 13 globally, Guilfoyle noted, while Cowen analyst Krish Sankar said that sales for iPhone SE were "healthy."
The reports come at a time when Apple may be looking to shift its business model significantly, according to Guilfoyle. The company has reportedly begun exploring a subscription model that would generate more revenue and help consumers own iPhones, Macs and other Apple hardware via an installment plan.
“The idea would be for a greater portion of Apple's hardware driven revenue to be converted to a recurring revenue style that is more reliable, more predictable, and more akin to software and services than it is to hardware,” Guilfoyle wrote. “Recurring revenue is also more highly valued by Wall Street.”
That could be a game changer as the company deals with the consequences of the Russian invasion of Ukraine and the ongoing lockdowns in China due to the spread of the coronavirus there.
“It comes down to this... does the positive impact of making hardware subscribable outweigh the negative impacts of slowed activity in China and war in Europe?” he wrote. “Subscribable hardware will likely result in more hardware and higher end hardware moving more briskly once supplies are not an issue. I would think.”
