Sunday , July 25 2021

Apple's stock sinks as it worries about lowering the iPhone's demand

The actions of Apple Inc. They took a dive on Monday for a minimum of 3 1/2 months, since the warning of earnings and revenues from a supplier of optical equipment suggested that the investor fears that the iPhone's demand is weakened.

Apple shares

AAPL, -4.26%

It fell 4.2% in the noon trade, starting its lowest cost since July 31. The stock fell 15.6% from its October record of about $ 232.07.

In the meantime, they share Lumentum Holdings Inc.

LITE, -30.34%

It fell 29% in a minimum of 21 months, after the company said before Monday that "recently received a request from one of the largest industrial and consumer clients for laser diodes for 3D detection to materially reduce shipments" during its Second fiscal quarter, which ends in December.

As a result, Lumentum reduced its earnings orientation range by share for the quarter to $ 1.15 to $ 1.34 from $ 1.60 to $ 1.75 and its income prospects to $ 335 million at 355 million dollars from 405 to 430 million dollars. The previous guidance was provided less than two weeks ago, when the company reported the results of the first quarter before it opened on November 1.

Apple shares fell 0.9% in the pre-commercial market before the announcement of Lumentum, then decreased more than 2% just after the announcement, before extending the declines after opening.

FactSet, MarketWatch

The reason for the sudden selloff of the stock? Lumentum released in August in its annual report of 10 K that it presented with the Securities and Exchange Commission that Apple was its largest customer, 30% of the total income of the fiscal 2018 that ended on June 30, after representing less than 10 % of revenues in 2017. and 2016.

In its quarterly Q-10 presentation earlier this month, Lumentum said that "Customer A" accounted for 30.5% of its total income.

Lumentum included Huawei Technologies and Ciena Corp based in China.

CIEN, -2.29%

Like its other larger clients, with both companies 11% of the total revenue. Ciena's shares fell 1.7% on Monday.

Wells Fargo analyst Aaron Rakers suggested that Apple was the reason for the reduced perspective of Lumentum. "We think that investors might consider the updated Lumentum guide as reflecting as much as a 30% cut in Apple's orders," Rakers wrote in a note to customers.

D.A. Mark Kellerher of Davidson said that "we believe that Apple" was the customer who requested reduced shipments. He said that there are a number of reasons for the detection deficit of 3D detection in its largest customer, such as over inventory, loss of market share or simply lower demand for iPhones. But given the sudden nature of changing the guidance provided just 12 days earlier, "we believe the slower user demand for iPhones is the most likely explanation," wrote Kellerher.

Lumentum told MarketWatch that he had "no comment" beyond what was said in his press release. Apple did not respond to a comment request.

Concern about the slowdown in demand for the iPhone was impregnated after Apple's fourth quarter fiscal report was released after November 1, when the company provided a decline in the first quarter and said it would no longer provide unitary sales figures for iPhones.

Do not miss: When the attack is difficult, Apple hides its numbers.

Then reports came from Apple to suspend plans for production lines for iPhone XR and Skyworks Solutions Inc. chip maker.

SWKS, -4.62%

blaming "the unitary declines in premium smartphones and the global softness of China" by a decline in profit and sales prospects.

On Monday, the analyst of J.P. Morgan, Samik Chatterjee has cut its price target for Apple's stock to $ 266 from $ 270, citing reduced forecasts for iPhone shipments for this year and for the next.

Apple stock fell 5.7% in the last three months, while the Nasdaq 100 high-tech index

NDX, -2.67%

lost 7.3% to Dow Jones industrial media

DJIA, -1.82%

won 0.9%.

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