Supplier Woes Hit Apple Shares -- WSJ
13 Novembre 2018 - 9:02AM
Dow Jones News
Two companies cut earnings forecasts, weighing further on tech
giant's stock
By Tripp Mickle
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (November 13, 2018).
Apple Inc. shares sank further on Monday, as investors' worries
deepened about sales of new iPhones after two key suppliers for the
device cut their earnings projections for coming months.
Japan Display Inc., which supplies screens for the iPhone XR,
cut earnings estimates for its fiscal year ending in March. It said
orders for its latest LCD panels would be much lower than its
initial expectations for the three months ending in March.
Similarly, Lumentum Holdings Inc., which makes
facial-recognition components for iPhones, lowered its earnings
forecast by nearly 25% for the three months ending in December,
saying one of its largest customers had materially reduced
shipments for previously placed orders.
While neither supplier mentioned Apple by name, Wall Street
responded by driving shares of the iPhone maker down more than 5%,
as a tech rout led to broad stock market losses. The selloff
extends a decline that began after Apple issued revenue estimates
for the current quarter that disappointed investors and said it
would no longer report unit sales for iPhones, iPads or Macs. Apple
is down nearly 13% since the close of trading Nov. 1 just before it
released earnings.
Apple had no comment but referred to its previous remarks that
its supply chain is complex, and that trying to extrapolate the
performance of any one of its products based on suppliers'
forecasts can create a disconnect between anticipated sales and
actual sales.
The iPhone maker is transitioning from a business driven by the
number of devices it ships into one that leans on pricier products
and more sales of software and services to drive revenue.
Investors are adjusting to that transition, which is
contributing to the stock's decline, said Arif Karim, senior
investment analyst at Ensemble Capital Management. The Burlingame,
Calif., firm, which has $800 million under management, counts Apple
among its top 25 holdings.
"What we're going through now is a series of doubts about the
balance between unit growth -- the number of iPhones sold -- and
the value provided to customers, from higher prices to accessories
like AirPods to services," Mr. Karim said.
JPMorgan Chase & Co. on Monday trimmed its earnings
estimates for Apple by 2 cents a share and forecast a
year-over-year decline in iPhone shipments and lower iPhone sales
in emerging markets because of economic challenges. However,
JPMorgan said it continues to expect Apple's app-store sales and
music-streaming business to deliver strong growth.
Apple's stock performance has long been tied to forecasts from
the company's key suppliers. In 2013, a period when the number of
iPhones sold slowed, shares fell 5.5% after iPhone supplier Cirrus
Logic warned of a large inventory write-down because of lower
demand from an unnamed customer, believed to be Apple. Similar
shares declines occurred in 2016 after The Wall Street Journal
reported Apple reduced its orders from iPhone suppliers. Apple
later reported its first iPhone unit sales decline for its 2016
fiscal year.
Still, Ben Bajarin, a technology analyst with Creative
Strategies, said it is difficult to read too much into forecast
cuts by Apple suppliers like Japan Display and Lumentum because
Apple can reduce or increase orders at any time based on iPhone
demand. "The real question is: What's the full calendar year going
to look like? It's hard to predict that this far out," he said.
Apple released three new iPhones this year: the $999 iPhone XS,
the $1,099 iPhone XS Max and the $749 iPhone XR. Analysts expected
the lower-priced XR, which went on sale Oct. 26, to account for
about half of total new iPhone sales.
When asked during a call with analysts on Nov. 1 about how the
device was doing, Chief Executive Tim Cook said Apple had "very,
very little data" on it. However, he said that the more expensive
XS and XS Max models that launched a month earlier were "off to a
really great start."
Takashi Mochizuki contributed to this article.
Write to Tripp Mickle at Tripp.Mickle@wsj.com
(END) Dow Jones Newswires
November 13, 2018 02:47 ET (07:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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