Is the iPhone XR in trouble? One superstar analyst thinks so

15 November, 2018, 08:24 | Author: Sally Reid
  • Apple Inc. iPhone XR smartphones sit on display at a Soft Bank Group Corp. store in Tokyo Japan on Friday Nov. 2 2018.        , Bloomberg

Shares in Lumentum fell almost 30 percent, dragging down shares of other suppliers and chipmakers. Lumentum, which supplies FaceID components for the iPhone XS, XS Max, and XR, has reduced its profit and revenue forecasts thanks to reduced orders from Apple.

The report noted that Apple's directive translates to about 100,000 fewer iPhone XRs being made each day. "Apple got cautious in their guidance and it's hitting their suppliers", he continued.

Goldman Sachs analysts have slashed their iPhone unit sales estimate by 6% and downgraded their price target after Lumentum, which makes a part needed for Apple's Face ID camera on the new iPhones, said that a major customer, believed to be Apple, had drastically cut its order.

Speculation from news organizations like Reuters are reporting that the company to which Lumentum is referring to is Apple. In its most-recent quarter, Apple reported nearly no increase in the number of iPhones sold, but revenue from that business jumped 29 per cent from a year earlier. On the other hand, Longbow says that Apple is increasing orders for the iPhone 8, iPhone 8 Plus and some other older models.

"We think there is an inventory component that is still negatively affecting the supply chain", UBS said, indicating that Apple may be as many as 10 million units shy of what Wall Street had initially expected. Starting at $750, the iPhone XR is a significantly cheaper alternative to Apple's flagship iPhone Xs and Xs Max but may still be out of many consumers' budgets.

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Loop Capital Markets also said the customer is likely Apple. "The Apple investment paradigm is moving away from a focus on device sales toward a more predictable services-driven business".

More recently, Apple launched a new version of its operating system, iOS 12, that supports an unprecedented 28 of the company's devices, including models that went on sale in 2013. The company also said it would stop providing unit sales for iPhones, iPads, and Macs in fiscal 2019, a step Nomura Instinet said raised "the spectre of a sustained iPhone downturn".

"Some people may fear that this now means that the iPhone units are going to start going negative year over year because it's easier to talk about great things and not show the details of things that aren't so great", Citi analyst Jim Suva said during the conference call.

Apple was punting on this product to drive new sales.

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