Here we go again. A prominent analyst this morning lowers the boom on Apple (AAPL) earnings estimates citing checks that show weak supply chain orders for one of Apple's smartphone offerings, the iPhone 6s.
I am always thrilled to see any research department doing real fieldwork on any company, and this Credit Suisse report sure sounds authoritative in its suggestion that earnings estimates could be too high based on the firm's channel checks.
The 6% estimate shave makes sense if the phone is truly not selling as well as people think. A key line in the research piece that says the downward revisions were anticipated but came in "earlier and deeper" makes you feel mighty uncertain if you own Apple. I am sure that many traders and investors will continue to dump the stock on this report because while a slowdown was expected, the Credit Suisse piece makes you feel that other analysts, any minute now, are going to get on board and start slashing numbers.
It's ironic that the report comes out on day when Apple CEO Tim Cook, in a European talk, basically pronounced the PC dead, wondering aloud why anyone would buy a PC anymore. (I don't know, I just bought my daughter a beautiful new Mac to replace her old, heavy one and she loves all of its features and is so comfortable with it. Dropped more than a G on the darned thing. Was that wrong? Hmmm.)
I have said endlessly that people should own, not trade, Apple -- a name that is held in my charitable trust, Action Alerts PLUS. I have said quite frequently that analysts will make calls on weak supply chain data or negative channel checks and they have caused people to dump the stock only to have to buy it back higher when the stories turn out to not be true or the narrative changes and orders come roaring back strong.
I find this particular channel check hard to swallow because we have just heard from three key Apple smartphone suppliers: Cirrus Logic (CRUS), Qorvo (QRVO) and Skyworks (SWKS) and they each indicated that business is very strong. No company is allowed to talk about Apple specifically. Apple forbids suppliers from mentioning Apple's name lest they lose the business. Yet, you know from the body language that these firms are talking about Apple when they cite robust orders.
But, if you put great credence in the Credit Suisse report, you pretty much have to believe that there's been a dramatic decline in orders in the last 10 days since these companies reported. Or that these folks, all three, are dissembling. Call me incredulous, but I just don't think that's the case.
I am unwavering in my view that Apple's stock is worth owning through this Credit Suisse-inspired turbulence. I recognize the power of this fieldwork call; however, I also know that so many of these types of calls have been wrong over time that I am jaded about this.
My conclusion: Sure, go sell Apple on this. But will you be able to buy it back lower if it turns out to be a false read? Why not hold it through this call and recognize how wrong this kind of trading call has been during the greatest stock run in history.