The Apple analyst who couldn’t shoot straight
What is it with Craig Berger and Apple?
The FBR Capital Markets analyst made headlines Monday with a report that Apple had slashed iPhone production for this quarter — down as much as 40% from the September quarter (fiscal Q4) in which Apple racked up record sales of 6.9 million units. (See here.)
Berger bases this gloomy forecast, he says, on “recent checks” with unnamed sources, and goes on to draw some macro-scale conclusions:
“That the firm’s iPhone production plans are being revised lower suggests that the global macroeconomic weakness is impacting even high-end consumers, those that are more likely to buy Apple’s expensive gadgets, and that no market segment will be spared in this global downturn. This is a negative signal for global demand, in our view.” (link)
Sounds pretty scary. But perhaps best taken with a grain of salt, given Berger’s track record with Apple. To wit:
- In February 2008, Berger wrote that “recent checks” showed that Apple had cut its build plans for iPods and iPhones, from an anticipated 50% decline between fiscal Q1 and Q2 to a 60% decline. He also reported that Apple had cut its build forecast for MacBooks for the same period, from down 35% to down 50%. (link)
- In April, Apple reported its fiscal Q2 earnings. iPhone sales were indeed off after the Christmas quarter, but only by 26%. And MacBook sales, rather than falling 50%, actually rose — up nearly 7%, from 1.3 million in fiscal Q1 to more than 1.4 million in Q2. (link)
- In May 2008, Berger checked again with his contacts in Apple’s supply chain and reported another round of bad news: his sources were telling him that orders for iPhones for fiscal Q3 had been cut 25%. (link)
- A month later, Berger went back to those sources and came back with a very different story: 2008 iPhone build volumes, he said, had been “revised significantly higher” — with more than 15 million 3G iPhones plus two million old 2G iPhones forecast for 2008. Apple’s notebook and desktop build volumes were also revised up — by 10% and 20%, respectively. “The firm,” he wrote, “continues to knock the cover off the ball in terms of product innovation, sleek designs, attractive price points, and effective global deployment plans.” (link)
- On Monday Berger was back to singing the blues. Despite predictions from other analysts that iPhone sales might grow 40% or more this quarter, Berger writes that Apple had been expecting to cut iPhone production 10% and was now looking to cut it four times more. This 40% cut, he says, “could end up painting an ugly picture.” (link)
Berger could not reached for comment.
It should be noted that Berger specializes in chips, not computers or smartphones. He is not on StarMine’s list of analysts who spend a significant amount of their time covering Apple. Nor does he appear on the list of analysts participating in Apple’s quarterly earnings calls.
Apple (AAPL) closed down .59% for the day. FBR Capital Markets ((FBCM) closed up 4.17%.
Only Eric Savitz would quote this marginal ‘analyst’. That’s why Barron’s suffers a credibility problem.
What a kook.
If Apple is cutting production, that can only mean a new model is coming out for MacWorld. Look, they update iPods nearly this fast, why not update the iPhone? Any relatively small improvement, such as bluetooth (maybe, just as an illustration) would mean increased sales. What about a slightly larger model? Possibilities are virtually endless.
this ‘analyst’ doesn’t know an iphone from an earphone
he needs to go back to walmart where he stocked shoes
It should be noted that Berger specializes in chips…
as in Burger King and McDonalds.
Hi again PED. Still didn’t get a correction on the issue of Apple quarters vs. calendar quarters, which seems to be in error in at least one place in the article.
Also, it may be helpful for readers to know that FBR is currently trading at penny stock level and is in the process of declaring bankruptcy. Despite the fact that FBR trades for 65 cents per share, they manage the mind-bending feat of losing 4 times that, or $2.76, per share. That’s would be like Apple trading at $100 per share and losing $400 per share. Based upon that performance, how can anyone from this company give analysis to another company?
Even a dead clock is right 2 times a day.
That’s how analysts work.
Everyone, JD is correct and unfortunately most of your comments regarding these Apple supply chain notes are not correct. First of all as JD points out, FBR is talking about production, not sales. Second, Apple even said on their conference call there is 2 million units of channel iPhone inventory. Could this not ship for sales volumes in 4Q? Given that you people largely don’t know what you’re talking about, maybe you should give it a rest.
I kept wonder who are selling and buying AAPL based on one of these propaganda articles. But I believe most authors writing about Apple get paid to help others to achieve their own objectives. Small and smart investors should let the big players (who paid for these posts) to outsmart each other (and we out-smart them all).
Remember, if it goes down from here, buy. If it goes up enough (my own guess is that it will be $125-$130 by Christmas), sell. And you don’t lose until you sell.
Agree?
ex ped: I guess I didn’t get the memo. I certainly didn’t get the check!
Craig Berger may be moron, but the guy posting this article is also confusing a few things. The “build-rate” of iPhones in a given quarter (as someone like this analyst can check with a Taiwanese ODM manufacturer) is a COMPLETELY different thing than SALES of iPhones reported by Apple for the same quarter. It’s an apples-to-oranges comparison (lol).
If a phone is phone is built in Q3, it could be sold in Q3, more likely Q4 or even Q1.
Remember there were reports that the Taiwanese ODMs actually built 10 million iPhones in Q3, Apple reported sales of 6.9m but clearly they saved some to sell in the December (holiday) quarter.
If there was a cut in build rate in Q4 that would possibly reflected in sales figures over the next 6 months.
Maybe Craig should do some analysis of his own company, who recently claimed that they are exploring the sale or possibly bankruptcy. He is just a fly by night attention seeker who is probably desperately trying to get his name out before he sits on the unemployment line with those 200 thousand other wall street crooks. Hopefully the next time you here from him, he’ll be asking you, “Would you like fries with that?”
For those interesed read the book “Full of Bull” by Stephen T. McClellan.
From one comment on the book:
“Steve McClellan’s Full of Bull provides a long overdue insight into the confusing maze of Wall Street analysis and stock recommendations. This book exposes The Street’s “insider code” and provides both a cautionary tale and an indispensable guide into the Byzantine world of investment analysis.”
—Thomas M. Siebel, Founder, Siebel Systems, Chairman, First Virtual Group
While I can appreciate the fact that Berger could not reached for comment, I wonder what FBR Capital Markets Mgt view is. Are they trying to manipulate APPLE or are they interested making sure that their staffs represent their company well. To the Management of FBR have you or are you checking on the integrity of your analysts?????
cry a river if you’re listening to analysts then you’re a moron and you deserve to be broke.
seriously they are clowns, you take financial advice from a circus clown?
all of them, not just this guy.
so shut up and stop crying and do your own work.
Are analyst given the same protection as press journalists?
If a stock manipulator claims ‘un-named sources’ he should be immediatly jailed.
Perhaps it’s time for the SEC to start examining if FBR is gaming the stock. Either playing the options or equities market to the down side.
Wow, are you related to Andy Zacky of Bullish Cross?
Nice to see someone who actually does some research rather than just repeat what some analysts says.
As an Apple shareholder I appreciate that you are questioning the analysts, especially those who are often wrong and who seem to go unnoticed as such.
In April, wouldn’t Apple have been reporting calendar Q1 (their fiscal year Q2) results? Also, Berger’s report of Apple’s increased anticipated decline would have been between calendar Q4 and Q1, or Apple’s fiscal Q1 to Q2.
ex ped: I think I have it right now.
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Silicon Valley veterans like to joke that Steve Jobs must be surrounded by a reality distortion field; if you get too close to him, you start to believe what he's saying. Thanks to the success of the iPod, the launch of the iPhone and the renewed interest in the Mac, Apple has made believers out of millions of customers - and made a lot of investors rich. But Philip Elmer-DeWitt believes that an ounce of skepticism never hurts when writing about the company. He should know. He's been covering Apple - and watching Steve Jobs operate - since 1982, first for Time Magazine, then for Business 2.0, and now for Fortune.
For those of you who actually know anything about the capital markets would actually know that FBR, the investment bank, is not ticker FBR and therefore is not a penny stock. They are also not declaring nor have they ever said they were declaring bankruptcy. FBR, the investment bank, is ticker FBCM, a different company. Not saying this analyst hit the nail on the head but I can give you one estimate that is accurate. Approximately 50% of the people on this fourum are ignorant and need to go back to capital markets 101 before being allowed to post on these topics.