Apple growth fears knock value by $14bn
A rare Wall Street downgrade has stoked fears that Apple’s growth is slowing.
Its shares slid for the second straight day, posting its largest single-day loss in almost nine months, as nervous investors pondered the impact of the Japanese crisis on the tech industry.
The world’s largest technology company lost about $14 billion in value in one day after JMP Securities’ Alex Gauna downgraded the stock, pointing to a sharp pullback in sales growth at Apple’s largest Asian contract manufacturer as a sign that business was slowing at the iPhone and iPad maker.
“There’s a risk of complacency. The sell-side has gotten itself into a game of one-upmanship,” Gauna said. Investors “should make sure that they’re comfortable with the situation … especially since there’s just so much uncertainty right now.”
“We know that Japan as a supplier matters,” Guana added
We know that Japan as a supplier matters
While it accounts for 6% of Apple’s sales and is a major source of components for its screens, many analysts said Apple wielded sufficient clout and a good-enough track record to secure critical components – for now, at least.
Apple shares ended down 4.5% at $330.01 in heavy volume. The company, which last week launched its iPad 2 tablet to crowds of fans outside its stores, has lost close to $22 billion in value over two days.
Gauna downgraded Apple to “market perform” from “market outperform,” based on signs of a severe slowdown in sales growth at Hon Hai Precision Industry, a contract manufacturer and subsidiary of Foxconn that is heavily reliant on Apple’s business.
BTIG analyst Walter Piecyk, however, said demand for the iPad 2 has been strong enough – so far – to sustain the sort of rip-roaring growth Apple is known for.
“The past weekend showed once again why Apple is putting up more than 50% growth. Lines for the iPad 2 extended longer than even for the iPhone 4,” he said.