Berger Zing: Home of the Whopper
by John Paczkowski
Posted on November 3, 2008 at 3:48 PM PT
Perhaps the iPhone is not as recession-proof a device as one might think. Perhaps Apple didn’t purposely low-ball its first-quarter outlook so it could wow investors when it next reports earnings. Perhaps lower-income households are not all turning to Apple’s iPhone 3G as a means of saving money.
Perhaps, as Friedman Billings Ramsey analyst Craig Berger claims, Apple’s fiscal first-quarter iPhone production will be more than 40 percent lower than production in its third. “We believe Apple is a good proxy for broader consumer demand given that it has the hottest, sleekest, most desirable products available today,” Berger wrote in a note to clients Monday. “That the firm’s iPhone production plans are being revised lower suggests that the global macroecomomic 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.”
Perhaps the weakening economy will prevent Apple from producing another big quarter.
Or, perhaps, Craig Berger is full of it. Certainly, his track record on Apple production forecasts suggests that might be the case. As Andy Zaky ably points out over at Bullish Cross that Berger isn’t always on-point in these situations (click on chart below).
Earlier this year, for example, Berger claimed Apple had cut its second-quarter iPhone build plans by 60 percent. He also said the company had cut its build forecast for MacBooks by 50 percent. But when Apple reported Q2 earnings, iPhone sales were off by just 26 percent. And MacBook sales hadn’t fallen at all. In fact, they’d risen 6.8 percent.
So what are we to make of Berger’s prediction of a 40 percent production rate cut for the iPhone? Well, if anything it should be taken with a grain of salt, if not an entire salt flat. … As Zaky acerbically notes, “Craig Berger’s rantings on production rates have an almost zero correlation when it comes to actual sales.”
