Katy Huberty of Morgan Stanley cited channel checks and a customer intent survey as the basis for predicting the potential for iPhone sales to fall by as much as 2.9 percent over the next year, reaching a total for 2016 as low as 224 million in a “worst case scenario.”
In other words, the iPhone will reach its peak in 2016. How does an analyst arrive at such a conclusion? Research. Specifically, research into Apple’s so-called supply chain. Is there precedent for such predictions?
In 2012, Citi analysts Glen Yeung, Walter Pritchard and Jim Suva issued a pessimistic report on iPhone 5 demand based on “near-term supply chain orders.”
Not only was that information subsequently found to have been inappropriately leaked to hedge fund SAC Capital, allowing that firm advanced opportunity to profit from the stock selloff Citi’s predictions triggered, but the information itself was not correct. Apple’s iPhone 5 remained the world’s top selling smartphone and continued to enjoy rapid sales even as investors began dumping Apple’s stock on the “news” that the phone wasn’t selling well.
Such “supply chain orders” weren’t just scandalously used to fuel insider trading (Citi was subsequently slapped with a $30 million fine for this), but they were false information that had a very material, negative impact on Apple’s business.
The data may have been real, but the conclusions were false, but it’s the ‘real data’ which was used to enrich certain investors.