Apple supplier plunged, Apple stocks fell, suppliers lowered performance expectations
Issue Time:2018-11-13
Although Apple has won the best-selling brand of this year's dual 11 Ali mobile phone, both suppliers and analysts have released a signal that the prospects are worse than expected. On the first trading day after the double eleven, Apple's share price plummeted.

On the 12th of the US East, Apple opened lower and opened lower, opening more than 2.6%. It fell below 193.80 US dollars in early trading, hitting a new low since July 31 this year. The daily decline has expanded to more than 5% and eventually fell 5.04%. , closed at 194.17 US dollars, also hit a new low since July 31. Apple's supplier stock price set fell. Lumentum closed down 32.98%, Universal Display closed down 13.07%, Lingyun Semiconductor closed down 13.86%, Synaptics closed down 8.21%, and Qorvo closed down 6.38%.

Apple's plunge, the information technology sector led the decline in the S&P 500 sectors, falling more than 3.5%, the S&P 500 closed down 1.97%, the Dow closed down 602.12 points, down 2.32%, the Nasdaq closed down 206.03 points, the decline 2.78%.

Two Apple suppliers Lumentum and Japan Display cut their respective performance expectations before the market this week. JP Morgan Chase lowered Apple's target price, and Citigroup significantly lowered the target price of an Apple supplier due to the decline in iPhone XR performance.

Technology supplier Lumentum lowered its forecast for the fourth quarter of the Gregorian calendar, and its CEO Alan Lowe said that one of the company's customers has demanded a significant reduction in product shipments.

Although Lowe didn't know which customer it was, the market quickly focused on Apple. Because Lumentum provides face recognition function FaceID and augmented reality front camera production components for the new iPhone. In the 2018 fiscal year report as of the second quarter of the Gregorian calendar, Lumentum listed Apple as the largest customer, and Apple related business accounted for 30% of the company's operating income. Therefore, Lowe’s position was seen by the market as implying that Apple’s performance was poor.

Coincidentally, on Monday, Beijing time, iPhone display supplier and Japanese company Japan Display reported financial results, showing losses for six consecutive quarters, and lowered the full-year performance forecast, the annual sales growth rate from the previous 10% -12% fell to 5%-15%, and the full-year operating profit margin fell from 2%-3% to 1%-2%.

Also on Monday, JP Morgan Chase analyst Samik Chatterjee cut Apple's target price for the second time this month, from $270 to $266, keeping the overweight rating unchanged. On the 2nd of this month, he lowered his target price from $272 to $270, which was due to fears that the appreciation of the dollar would make the iPhone's foreign currency price higher.

On Monday, Chatterjee lowered Apple's earnings forecast, arguing that weak macroeconomic conditions in emerging markets such as China and the strengthening of the US dollar affected iPhone sales. He will reduce the expected sales of the iPhone to 214 million and 218 million respectively this year and next, down 2 million and 10 million, respectively, and reduce the expected Apple earnings per share (EPS) of 2019 and 2020 by 0.1 US dollars.

Earlier Monday, Citi analyst Atif Malik downgraded Apple's semiconductor component supplier Skyworks Solutions to a negative rating, slashing target prices by nearly 27% to $85. Citigroup said that the downgrade of Skyworks Solutions is partly due to the weaker demand for smartphones in the Chinese market. The pre-ordered iPhone XR sales in October are disappointing, which may affect Skyworks Solutions' product sales growth next year.

In addition, institutional research firm Longbow Research also mentioned that the iPhone may not perform well in the Chinese market. It believes that the iPhone faces a potential risk of falling demand in China.

"The iPhone has begun to show some risk signs, iPhone orders have slowed down year-on-year, and Baidu's iPhone search trend has also turned red." Longbow Research analyst Shawn Harrison wrote in the report that Baidu's iPhone search volume "in October. The straight down, showing the potential risk of shrinking Chinese demand."

iPhone sales hit the ceiling, third quarter earnings have been exposed

Wall Street has noticed that on the 5th of this month, Apple's share price fell below $200 for the first time in three months, and the market value fell below the $1 trillion mark. In a previous transaction on the 2nd of Japan, Apple reported that the EPS in the third quarter was better than expected, but the sales of the three major hardwares led by the iPhone were lower than expected. Under the weakening of emerging markets, the fourth quarter revenue guidance was cautious. The market is worried about the performance of the iPhone's sales season.

The declining sales figures have at least indicated that the iPad and Mac customer bases are not yet fully affordable. Moreover, in fact, Apple's mobile phone sales have clearly touched the ceiling in the past few quarters, and the 0.5% increase in the third quarter is basically negligible.

At the same time, what's more interesting is that in this financial report, Apple has not dropped 20% in order to prove the year-on-year growth rate of service revenue, and deleted a one-time profit of 640 million US dollars from similar income in the same period last year. Through "forced", the revenue of the same period last year was pushed to 7.9 billion US dollars (original value of 8.5 billion), which proves that the service income in the past September quarter has increased by 27%.

The Wall Street Journal quoted David Yoffie, a professor at Harvard Business School at Apple, as saying that it may take at least a year for Cook's team to prove that service revenues and more expensive equipment can offset the impact of flat or declining equipment sales.

On the 2nd of this month, Rosenblatt Securities, Bank of America Merrill Lynch and RBC Capital Markets unanimously adjusted Apple's rating or target price. Both Rosenblatt Securities and Bank of America Merrill Lynch downgraded Apple's rating to neutral. Bank of America Merrill Lynch lowered its target price from $235 to $220, and the RBC dropped from $250 to $240. The rating is still outperforming the market.

Tmall double eleven brings good news, but Apple loses the first position.

Apple is not without good news recently. The Tmall Double Eleven Global Carnival has just reached its highest record this year, reaching 213.5 billion yuan. Among the 24-hour Top brands announced by Tmall, Apple ranks first, and Huawei and Xiaomi are second and third. It ranks among the brands with a single-day sales of over 100 million yuan.

Neil Shah, research director at Counterpoint Research, believes that this is a positive sign for Apple because Xiaomi and Huawei have been among the best in the past. This shows that China's smartphone users are rapidly maturing and seeking to buy higher-end phones, which is good news for Apple and other brands.

However, from the specific data point of view, Huawei's mobile phone brand glory should be the biggest winner of this year's double eleven industry.

Some media reports pointed out that in the past, because of the higher unit price of the iPhone, Apple has been holding the position of China's e-commerce promotion to promote the sales of mobile phones. However, last year, glory sales in Jingdong and Tmall double platform reached 4.02 billion yuan, of which sales and sales in Jingdong exceeded Apple. This year, according to the record released by Glory, the sales volume and sales amount of glory surpassed Apple in both Tmall and JD.

Glory Mobile's official Weibo announced that as of 4:00 pm on November 11, glory won the sales of the mobile phone brand of the double eleven-day cat platform, the official flagship store sales and sales of the three-crown brand of mobile phone brands; on the Jingdong platform, November 11 Mobile phone sales & sales, from November 1st to 11th, glory of cumulative sales and sales & Android mobile phone cumulative sales of four crowns. Moreover, whether it is the brand sales of the Tmall platform or the sales and sales of the Jingdong platform, glory surpasses Apple.

Nuowei Consulting CEO Li Rui told the First Financial News that Apple’s lack of innovation in the past two years has also given certain opportunities to other mobile phone giants. The space released by the oligarchs is considerable. In China, Apple is losing its advantage. "The competition among mobile phone giants is also intensifying. The reshuffle of the first round of small and medium-sized brand manufacturers is over, and the shuffling of the head brand has officially begun."


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