“Dead wrong” analyst sees 40% cut in iPhone output

 

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Posted on 4 Nov 2008 at 12:44

Apple may cut iPhone production by more than 40% as consumer demand slows in the fourth quarter of 2008, according to FBR Capital Markets analyst Craig Berger. But his findings were immediately called into question.

Berger told investors that his recent checks suggested iPhone production would fall by more than the previously anticipated 10%, calling his findings a “good proxy for broader consumer demand.”

Apple recently reported a stronger-than-expected 26% rise in quarterly profit, spurred by 6.89 million iPhone sales.

Apple declined to comment on Berger’s report, but NPD Group analyst Ross Rubin said that if he was correct, a 40% drop in iPhone production would be dramatic. He noted that in the midst of a weak economy, consumers may be reluctant to buy the iPhone because they don’t want to pay for data service charges when using it.

Dramatic it may be, but Berger’s track record on Apple’s predictions tends more to the disastrous. In February, for example, he warned of a 50% cut in MacBook production during the first three months of 2008, only for Apple to announce a 7% rise in quarterly sales.

“This wouldn't be the first time that Craig Berger has commented on Apple's production rates and it certainly wouldn't be the first time he was dead wrong,” notes Bullish Cross, a blog that closely monitors Apple’s financial situation. “As a matter of fact, saying that Craig Berger has been ‘dead wrong’ in his forecasts with Apple would be a gross understatement.”

Fortune agreed and questioned Berger’s reliability as a commentator on Apple.

“It should be noted that Berger specialises in chips, not computers or smartphones,” Fortune’s Apple 2.0 blog says. “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 dialling into Apple’s quarterly earnings calls.”

Author: Simon Aughton