Survey: New iPhone sales 'declining meaningfully'

Published Tue, Nov 3 20153:09 PM ESTUpdated Wed, Nov 4 201511:16 AM EST

One of the biggest mysteries in the market is whether the weakness in Apple suppliers is indicative of iPhone 6S sales or if Apple's positive guidance comments are accurate. Shares of companies that make chips for Apple fell Tuesday on a report from Pacific Crest citing weak iPhone sales, according to a carrier survey by the firm. Avago Technology , Skyworks Solutions and Cirrus Logic dropped 1 percent midday versus an up market and Apple shares up 2 percent. Here are the details on what Pacific Crest said... "Our carrier survey for October indicates iPhone 6S sell-through fell short of expectations and continued to decline meaningfully on a year-over-year basis. Accordingly, inventory levels have increased sharply since the launch on Sept. 25," Pacific Crest's John Vinh wrote in a note to clients Monday evening. He added, "Conversations with supply-chain partners indicate a reduction to fourth-quarter component orders for some suppliers." The carriers also indicated that one month after the new iPhones went on sale there was more than two days of inventory at retail locations. This pales in comparison to the last iPhone, which was such a hot item that one month after sales began there was close to zero inventory available. Read More Santoli: For CEOs and bankers, it's now or never Vinh noted how four out of six key Apple suppliers missed Wall Street expectations. The four include Dialog Semiconductor , Knowles , NXP and Synaptics . Moreover the two that beat numbers included Cirrus Logic, which increased chip market share in the iPhone 6S by over 100 percent, according to the analyst. Vinh stated that the supply chain companies most at risk to miss numbers include Avago Technology and Skyworks Solutions. However, the iPhone sales channel checks and the numbers coming out of the chip suppliers diverges markedly from the commentary that Apple's CEO Tim Cook gave on the earnings conference call on Oct. 27. "I do believe we'll grow this (December) quarter, as we put in our guidance. That when you start with a number in the low 30s in terms of percentage of the install base that's upgraded that had the phone pre the iPhone 6 and 6 Plus, that number is still likely to leave a lot of headroom beyond December," Cook said, according to a FactSet transcript of the call. As a result of Cook's optimism on the growth of the iPhone 6S product cycle, Apple shares rallied 7 percent since the earnings report last Tuesday. Not all analysts were convinced Cook's comments meant sustainable growth for the iPhone 6S. Read More Give thanks for these perennial year-end winners "The trajectory of growth (or lack of it) remains unclear in fiscal year 2016 with the potential for March/June quarter iPhone units to be down year over year," Bank of America Merrill Lynch's Wamsi Mohan wrote on Oct. 28 in a note to clients. The dichotomy of iPhone supplier shares underperforming on weak iPhone sales data points and Apple shares rallying can't continue forever, time will tell which indicator is correct.

Microprocessors sit on a circuit board displayed on the NXP Semiconductors NV pavilion at the Mobile World Congress in Barcelona, Spain, on Monday, March 2, 2015.

Simon Dawson | Bloomberg | Getty Images

One of the biggest mysteries in the market is whether the weakness in Apple suppliers is indicative of iPhone 6S sales or if Apple's positive guidance comments are accurate.

Shares of companies that make chips for Apple fell Tuesday on a report from Pacific Crest citing weak iPhone sales, according to a carrier survey by the firm.

Avago Technology, Skyworks Solutions and Cirrus Logic dropped 1 percent midday versus an up market and Apple shares up 2 percent.

Here are the details on what Pacific Crest said...