Apple Fan Boys, You Can Relax Now

After everyone got all up in arms yesterday over a potential cut in iPad shipments from Apple (NASDAQ: AAPL), you can relax now.

Yesterday there was a report from a J.P. Morgan analyst that said, citing suppliers, Apple had cut its shipments for iPad sales. Then another J.P. Morgan analyst, the one who actually covers Apple, refuted the report. He said that the Cupertino-based company was just shifting suppliers, something the tech titan is notorious for doing. It was moving some supplies and operations to Brazil, as opposed to solely being in China.

Today we got confirmation from Sterne Agee, in a report on Apple Insider, that Apple's building plans for its tablet are unchanged, and actually may be better than most on Wall Street think.

Analyst Shaw Wu expects Apple to ship 27 million iPads in the second half of 2011, well ahead of the 24-26 million Wall Street is currently expecting. Wu said he expects 12 million to be sold in the September quarter, and 15 million in the all important holiday shopping quarter.

"The iPad 2 started shipping in March 2011 making the product likely due for an update near its 1-year anniversary," Wu wrote in a note. "We would also like to remind investors that production changes are common throughout a quarter and through the lifecycle of a product. Not all changes have had the benefit (or detriment) of being newsworthy."

"This takes into consideration rush orders, buffer inventory, component lead times, yields, and potential disruptions like the plant explosion back in May," he said. "AAPL is more often than not constrained so it is understandable why it tries to get suppliers to overprovision and go overdrive.

The report from J.P. Morgan caused such a stir yesterday that not only was Twitter, StockTwits, and other social media platforms up in arms about it, it got plenty of play on national media, which very rarely pays attention to Wall Street analyst reports. Apple is one of, if not the, most beloved company this country has. The fanboys, investors, and tech aficionados all feel as if Apple is their own child, and they get very defensive whenever it is negatively mentioned.

These groups can relax now, if they are to believe Sterne Agee's Wu.

Given the fact that Steve Jobs had full confidence in Tim Cook's ability to run the company as he had been doing since Jobs left in early 2011, it does not look like Apple is going to take a bite out itself anytime soon.

ACTION ITEMS:

Bullish:
Traders who believe that the demand for iPads will continue to be exceptionally strong might want to consider the following trades:

• Look at Apple suppliers, as well as Apple. Consider names like Broadcom (NASDAQ: BRCM), Qualcomm (NASDAQ: QCOM) and Nuance Communications (NASDAQ: NUAN).

Bearish:
Traders who believe that the bears are getting more vocal on Apple because they have a reason may consider alternate positions:

• If Apple were to ever miss a quarter, there would be countless people trying to defend it, but it would still be an earnings miss. Consider shorting Apple if you think the bears are getting more vocal with ammo in their pockets.
  
  

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