Apple shares tank on iPhone sales warnings


"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.

Among other Apple suppliers, Cirrus Logic Inc. sank 14 per cent, Qorvo Inc. and Broadcom Inc. each slid 6.4 per cent, ON Semiconductor Corp. fell 5.9 per cent, Skyworks Solutions Inc. fell 5 per cent, and Finisar Corp. dropped 4 per cent. Semiconductor stocks were broadly lower with the Philadelphia Semiconductor Index losing 4.4 per cent.

'For Apple, the iPhone shipment has reached its peak.

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.

Apple has been in a bit of a rough patch lately.

In the fourth quarter, Apple sold 46.9 million iPhones, missing analyst expectations of 47.5 million iPhones, according to FactSet. And on Monday, Apple shares dropped after Lumentum - a supplier of "laser diodes for 3D sensing", such as those used by Apple's Face ID - cut its revenue forecast after "one of our largest Industrial and Consumer customers" significantly reduced orders.

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If demand for newer, pricier iPhones wanes, Apple can cut component orders, or delay shipments, leaving suppliers with more inventory. Analysts said that this could only refer to Apple.

The iPhone XR began shipping on October 25th and, since then, has been mired with speculation of weak sales. Apple said it preferred to focus on its transition to a services company, with regular recurring revenue.

More recently, Apple launched a new version of its operating system, iOS 12, that supports an unprecedented 28 of the company's devices, including models that went on sale in 2013.

"Some people may fear that this now means that the iPhone units are going to start going negative year over year because it's easier to talk about great things and not show the details of things that aren't so great", Citi analyst Jim Suva said during the conference call.

"This year Apple well and truly is the stock market once again", Cinko writes, "and its price action lately has been stirring up troubling signs about what might be next for equities".

"To account for this new information, we are reducing our iPhone XR/XS Max/XS units estimate, while increasing estimates of lower priced iPhone units", the Goldman analysts wrote in a note distributed on Tuesday.