Prior to Q2 2018, the financial market makers and media once again painted a doom-and-gloom picture for Apple. Then, when earnings came out, Apple once again proved them to be wrong. So, what, are they just terrible at their jobs?
Former Apple executive and Be founder, Jean-Louis Gassée, writing for his weekly column, Monday Note:
Apple must be a psychotoxic company, attracting and then unhinging the fragile minds of journalists, bloggers, and analysts. The contingent of bloviators sound like a gaggle of eunuchs circling the king's bed, stomping their feet and bawling in high-pitched voices: 'You're doing it wrong!'. Unconcerned, the monarch continues, enlarging the scope of his dominion.
Great opening. Gassée also gives an example of why, as Tim Cook has previously pointed out, using supplier reports as a way to divine Apple's product orders or production levels isn't possible or wise:
How important is the MPO? Legend has it that the LG phone operation that manufactures handsets once went to their sister division to get displays…only to face a closed door. Why? The entire display production had been bought and paid for by a single client: Apple.
Apple could be reducing orders because they bought more than enough when the price was lower, or because they switched to a different supplier, or for other reasons.
Analysts could have been deceived because Apple purchased components early aggressively and then cut orders abruptly. The evidence is in inventories rising. This may have been strategic: denying competitor access to capacity; or an error.Analysts could have been deceived because Apple purchased components early aggressively and then cut orders abruptly. The evidence is in inventories rising. This may have been strategic: denying competitor access to capacity; or an error.— Horace Dediu (@asymco) May 4, 2018May 4, 2018
I don't entirely buy this rationale, though, and precisely because everyone from Tim Cook to Horace Dediu have explained it — in some cases repeatedly — following previous quarters. If I'm familiar with it, you can bet analysts whose job it is to cover Apple are familiar with it. In other words, they should know those reports are likely meaningless and report them in that historical context. Instead, they report them as disaster.
That's why I have another theory as well.
