Shares of Apple Inc. have plunged about 14% over the last month amid several reports that iPhone part makers and assemblers are bracing for slowdown in work.
Apple isn’t commenting on iPhone sales, but financial analysts said the company is trimming orders to its Asian suppliers, which suggests the iPhone 6S hasn’t sold as well as expected. With inventory building, Apple “needs to clear the decks into the spring” and focus on ramping up iPhone 7 production later in the year, said Daniel Ives of FBR Capital Markets.
Wall Street “was bracing for a cut but the magnitude here is a bit more worrisome and speaks to a soft March quarter on the horizon,” he said in an email.
“I think it's going to be a little bit rough here for next one to two quarters,” UBS analyst Steven Milunovich recently said on CNBC.
Several media agencies, including Nikkei in Japan, reported Tuesday that primary iPhone assembly giant Foxconn Technology Group plans to dial back work in China during next month’s Lunar New Year celebration. The Wall Street Journal reported that Foxconn sent some workers home on vacation early, unusual compared to recent years.
Foxconn denied the assertion, saying vacation “did not begin in December 2015 for our employees” and that it was still “in the midst of planning operational schedules for the Lunar New Year holiday.”
Apple’s battering began in mid-December, when companies that produce casings and internal components for iPhones, including Jabil Circuit and Dialog Semiconductor, reported lower-than-expected revenue forecasts. In recent days, iPhone concerns seem to have weighed on investors as they pulled out of other companies in Apple’s supply chain.
Early Wednesday, shares of Apple itself were outperforming stock market indexes, but were down about 1% or just over $1 to $101.55. Apple shares traded at above $119 just over a month ago.
Apple reports holiday-quarter earnings Jan. 26, though it offered a tease Wednesday. Apple announced a record $1.1 billion in sales of App Store apps and in-app data in the two weeks ending Jan. 3. It included the biggest day of sales since the store launched in 2008, with $144 million of app-related purchases on New Year’s Day. Apple used different measurements in announcing similar milestones a year ago, making comparison difficult.
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