Analysts Are Mixed on iPhone 5 Demand

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On Monday, Apple investors were sent into a panic after reports from the WSJ and Nikkei disclosed that Apple had cut its orders for iPhone 5 components in half. The cut in orders was seen as a direct link to a declining demand for Apple’s flagship headset, and as a result the company’s stock took a significant dip dropping below $500 at one point on Monday.

However, today analysts are issuing a very different perspective. Analyst Shaw Wu with Sterne Agee has checked with suppliers and remains confident that demand for the iPhone 5 has not waned.  The analyst wrote to Apple Investors on Tuesday explaining that the order cuts have nothing to do with dropping demand but instead are a product of “much improved yields meaning lower component builds and supplier shifts.”

Shaw Wu is not alone in his confidence with the iPhone 5. Mark Moskowitz J.P. Morgan dismissed Monday’s reports declaring they were just “more noise” that will prompt investors to overact. Baird analyst William Power offered a similar viewpoint to investors noting that “most demand indicators remain favorable” for the iPhone 5.

Analysts such as Wu believe that the drop in component orders is a result of Apple simply fine tuning its production of the iPhone 5.  Production problems with the iPhone 5 have been well documented, thus it is possible that Apple has been able to clear these up, which would allow Foxconn to manufacture the same amount of units with far less components.

While some analysts have subscribed to this theory, there still remains a great deal of uncertainty as to the actual demand for the iPhone 5. Despite the the confidence of industry analysts Apple’s stock has continued drop, hitting as low as $488.27 a share, nearing its 52-week low of $419.55.

Analysts, consumers, and investors alike will have a much better idea of what the future holds for the iPhone 5, when Apple releases its latest quarterly report on Wednesday January 23. 

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