If you want to gauge future auto output, you could check how many cars are coming off Detroit’s production lines. A similar check has prompted one analyst firm to reduce its revenue estimates for Apple. A “notable” drop in production at iPhone manufacturer Foxconn could result in fewer products available to consumers.
After hitting 84 percent year-over-year growth in December, the manufacturer grew just 37 percent in January and 26 percent in February, according to JMP Securities. Growth is “tracking well below” 70 percent sales growth for the March quarter, and 50 percent in June, analyst Alex Guana told investors Wednesday.
Possible causes for the growth slowdown “could include simply in-line iPhone sales due to more significant Android competition, weakness in computing products as tablet demand grows and/or product transition risk around iPad 2,” the analyst announced. As a result, the analyst scaled-back his estimates for second-quarter revenue to $22 billion, down from $23 billion. Wall Street forecasts Apple will announce $23.1 billion revenue. Apple’s guidance is for $22 billion.
Guana also noted what he called investor “complacency,” despite Apple’s long-running habit of beating earnings expectations by an average of 23 percent. “Recent Street commentary appears biased towards the momentum continuing, with most numbers moving higher around the CDMA iPhone and iPad 2 launches where clear demand trends have yet to emerge,” the analyst said.
The analyst comments come amid growing reports Apple is having trouble supplying inventory to meet demand. Online orders reportedly now come with a waiting period spanning four to five weeks. Another issue is the impact the tragedy in Japan may have on tech companies, such as Apple. The Cupertino, Calif. firm gets 6 percent of its product sales from the island nation, as well as parts such as NAND flash and hard disk drives.
Ed Sutherland is a veteran technology journalist who first heard of Apple when they grew on trees, Yahoo was run out of a Stanford dorm and Google was an unknown upstart. Since then, Sutherland has covered the whole technology landscape, concentrating on tracking the trends and figuring out the finances of large (and small) technology companies.
10 responses to “Foxconn ‘Slowdown’ May Mean iPad Supply Headaches are Ahead”
http://www.zdnet.com/blog/appl…
“As one of the world’s biggest customers for the technology, it will get its supply before the smaller buyers — even if those “smaller” companies are Hewlett Packard, Motorola and even Samsung. In the manufacturing business, Japanese manufacturing giants and the arms of Korean chaebol conglomerates can’t play in-house favorites. The biggest customer gets first choice.
That means that everyone else, big and small will feel the pinch more than Apple. Way more.”
Move the manufacturing back to the US. More and more businesses are finding that it was false economy to move in the first place.
Unfortunately, they will just find another country who will do it cheaper than China with similar results later down the line.
This analyst is full of it. Foxconn has many huge clients besides Apple. As for Apple products alone they were having to retool for the Verizon iPhone, the iPad2 and MacBooks.
Could the slowdown be attributed to the fact that a new iphone will be unveiled in about 12 weeks?
I have a really reliable source that says that Apple has been about 20% of Foxconn’s business before now and still is.
And the drop in growth is from the other customers who are not ordering as much as they used to.
Customers like HP with their whopping 9k tablets, Microsoft with their delayed yet again tablet, Samsung with their ‘2 million shipped, 100k sold, 60k returned by the customers’ Tab and so on