iPad being slowed by display supply, better labor standards

01601updated 11:50 am EDT, Wed April 11, 2012 New suppliers, production lines expected to help

Any problems with iPad shipments at the moment are more attributable to restrictions on display supply, and Apple suppliers conforming to "more sound" labor standards, says Sterne Agee analyst Shaw Wu. "Recently, we have gotten questions from investors whether speculation of iPad production cuts carry any merit. From our supply chain checks, we believe concerns have good intentions but misplaced as it appears that production is limited more by supply of new HD retina displays and conforming to more sound labor practices vs. slowing demand," he writes in a new memo."What we are picking up are strong follow-up demand trends for the new iPad despite a very strong start of 3 million units sold in the first few days," he continues. "We believe this is likely because the new iPad is a significant upgrade with an HD retina display, quad-core graphics, and 4G LTE wireless. In addition, the price cut on the iPad 2 appears to be helping as well."

Wu adds that something that could be "causing concern" is that Foxconn workers have had their personal work hours cut, following a Fair Labor Association report putting pressure on both Apple and Foxconn. Previously, many people on the floor of Foxconn factories were working 60 hours a week or more, mainly to compensate for low wages. "From our understanding, the irony is that many employees prefer to work more overtime," Wu comments.

The analyst is raising his iPad forecasts as well as related financial estimates. March-quarter shipments have been adjusted from 11.5 million to 12.3 million iPads, while the calendar year is expected to see 63 million units instead of 60 million. His stock target has been bumped from $740 to $750; FY2012 revenue and EPS numbers have been adjusted from $160 billion and $43.80 up to $161.2 billion and $44.50. Looking out to FY2013, figures have been increased from $184.4 billion and $50 to $186 billion and $51.

By Electronista Staff

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