"In recent days, the stock has been under severe pressure as investors react to signs that the supply chain has been adjusting to lower orders from Apple related to iPhone 5," he points out in a note. "Our research indicates that the order cuts could impact the March quarter, but build plans are ever-changing. Either way, we think the order adjustments are explainable but not alarming. We also think that the supply chain adjustments could imply that manufacturing yields on iPhone 5 have improved, which means Apple’s gross margin profile could rebound to 40%, which would be a positive."
He adds that a downshift from "white hot" order levels "does not mean the world is ending."
He thinks that to alleviate supply risk on the iPhone 5 launch, Apple pushed suppliers hard, but that the supply chain has recently seen 20% order cuts related to the iPhone 5.
The analyst is sticking to his sales forecasts of 48 million iPhones in the December quarter and 45 million for the March quarter.
"We are not concerned by indications of recent supply chain adjustments as relates to the iPhone ," Moskowitz writes. "We still think that there is plenty of coverage in the adjusted build activity to meet end demand or any upside potential. We also believe that the adjustments occur as Apple evaluates the initial sell-though activity related to the 100 countries launch of the iPhone 5. Given the order cuts are a statement on the March quarter, we think there is plenty of time for the build activity to be reset higher or lower."
He adds that "the bigger message of the order cuts could be that iPhone 5 manufacturing yields and thereby gross margin are on the rebound."
Apple this morning is off $3.20, or 0.6%, to $530.70.
