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Apple Reduced Component Orders by 10%: Credit Suisse

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Credit Suisse lowered 2016 estimates for iPhone sales

On November 10, 2015, Credit Suisse’s (CSGN) Asia team reported that Apple (AAPL) reduced its component order by 10% due to lower iPhone 6s demand. This could also impact the revenues of Apple’s suppliers such as Skyworks (SWKS) and Qorvo (QRVO), which we will examine in the next part of this series.

Credit Suisse revised its iPhone unit sales forecast to 222 million from 242 million in 2016 and expects it to stand at 235 million units in fiscal 2017.

Credit Suisse states that although Apple is experiencing short-term pressures, its installed base is expected to increase to 615 million in the next few years. Apple’s installment plans should also help increase the sales of additional units in the long term.

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Apple performing well in China

Analysts believe that Apple is performing well in China, which is one of the largest markets for the iPhone. Morgan Stanley (MS) analyst Katy Huberty noted that iPhone sales in China rose while they declined in most regions globally. Huberty added that online search trends for the iPhone fell by over 16% YoY (year-over-year) in most countries, excluding China. However, this could be attributed to the tough YoY comparisons faced by Apple.

A major problem that Apple faces is a strong US dollar, making it an expensive and niche product in emerging markets such as India. Apple comprises 6.8% of the iShares S&P 500 Growth ETF (IVW).

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