Apple Shares Tumble Along With iPhone Suppliers As Sales Dry Up
Premium prices and average technology are coming back to haunt Apple and their suppliers who are now facing falling share values, closed production lines and a grim future if Apple iPhone sales don’t pick up.
Reprsenting 60% of Apple’s revenues the latest iPhones are not selling at the same volume levels as in the past with suppliers now panicking as Companies such as Lumentum Holdings witnessing a 30% drop in share value due to cancelled orders.
Overnight Apple iPhone suppliers like Cirrus Logic Inc. dropped 10 percent, Skyworks who also make the Harvey Norman Toshiba TV’s dropped 3%, Broadcom 5.3% Finisar 4.7%.
Apple shares fell as much as 5.2 overnight after Lumentum cut its outlook, citing a reduced shipment request from Apple.
The company creates components for the front-facing camera of Apple’s newer iPhones that enable FaceID and augmented reality.
The report builds speculation around the success of Apple’s latest iPhones with Foxconn the Company that assembles the devices cut back production lines from six to two.
“We think investors should consider Lumentum’s updated guide as reflecting as much as a 30% cut in Apple orders,” Wells Fargo analyst Aaron Rakers said in a note to clients.
Lumentum’s outlook comes a week after Nikkei reported that Apple was cancelling a production boost for its iPhone XR line, and less than two weeks after Apple’s fourth-quarter results showed tepid unit sales growth. The company also said it would stop providing unit sales for iPhones, iPads, and Macs in fiscal 2019, a step Nomura Instinet said raised “the spectre of a sustained iPhone downturn.”
A recent report noted that Apple’s directive to suppliers translates to about 100,000 fewer iPhone XRs being made each day.
Apple’s iPhone XR, which boasts the iPhone X’s edge-to-edge display, is based on older LCD pixels instead of the X’s high-resolution OLED screen.
Apple was punting on this product to drive new sales.
The Nikkei report came days after Apple warned in its quarterly earnings report that sales for the crucial holiday quarter would likely miss Wall Street expectations.
Apple also stoked worries about iPhone sales earlier this month when it said that beginning this quarter, it will no longer break down unit sales for iPhones, iPads and Macs.
Apple shares were trading down 4.2 percent early Monday afternoon, at $195.90, wiping close to $40 billion off the company’s market cap.