The Wall Street Journal is also reporting that Apple suppliers are cutting back production of parts for iPhone X, with claims that Apple has significantly lowered orders for the January – March quarter. Echoing numbers from KGI and Nikkei, the report says Apple will make about 20 million iPhone X units this quarter down from an initial target of 40 million.
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Apple’s earnings call is set for Thursday, February 1. This earnings release will focus on Apple’s holiday quarter sales from October to December (fiscal Q1), with the company releasing official numbers for revenue, income and unit sales of iPhones, iPads and Macs.
The recent flurry of weak iPhone X demand reports focus on production in the current calendar quarter. Therefore, investors will be looking at Apple’s forward-looking revenue guidance (part of the earnings release) to see if these fears are reflected in the company’s predicted financials.
The Wall Street Journal says some component orders have been cut by as much as 60%. iPhone X appeared to be a hit when it launched but ongoing sales appear to be slow, according to recent analyst findings.
If the reports are true, it does not necessarily mean Apple’s fiscal Q2 (calendar Q1) earnings will be poor. Whilst Apple makes most of its money from the sale of iPhones, Apple relies on more than a single model for sales. Sales performance of iPhone 8 and iPhone 8 Plus appears inline with estimates, and it seems like discounted older models (like the iPhone 7 and iPhone 7 Plus) are still selling well.
It’s also worth noting that even if iPhone unit sales are flat year-over-year, total revenue will likely still spike as iPhone X pushed the lineup to a new price ceiling, with the most expensive iPhone now costing $1149.
Apple reports earnings on Thursday; stay tuned to 9to5Mac for full coverage. The holiday quarter is expected to be Apple’s biggest ever, with revenue in excess of $85 billion and more than 80 million iPhones sold. Apple Watch, iPad and Mac sales are also expected to be strong.