Apple's shares plunge again, spooked by its audio chip supplier

Apple's shares plunge again, spooked by its audio chip supplier

Summary: The price of Apple's shares tumbled to a 52-week low of $400.78 today as the market reacted -- perhaps overreacted -- to the news that its audio chip supplier Cirrus Logic was sitting on unsold inventory.

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TOPICS: Apple
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Apple shares falling on April 17
Apple's shares having a bad day

The price of Apple shares tumbled overnight and hit a new 52-week low of $400.78 during todaqy's trading: the lowest price since December 2011. The shares closed at $426.24 last night, Tuesday April 16, and are 5.31 percent down at the time of writing.

Apple's market capitalisation has fallen from a peak of $658 billion last September, when the shares hit $705.07, to $379 billion today. The loss of $280 billion is roughly equivalent to a dozen Dells or 30 Red Hats.

Analysts were already fretting about Apple's next round of financial results, which are due next week. See yesterday's post by Larry Dignam: Analysts start to sweat Apple's Q2, outlook

The new information that moved the market, according to Bloomberg, came from Apple's audio-chip supplier, Cirrus Logic Inc. Cirrus said its sales would miss earnings, and that it would record a net inventory reserve of $23.3 million. Bloomberg reported that "Most of that -- $20.7 million -- is from a high-volume product from one customer, Cirrus said, without naming the client."

It added: "Apple accounts for more than 90 percent of Cirrus’s revenue, according to supply chain estimates compiled by Bloomberg."

The supposition is that the pile of unsold chips would have gone into iPhones and iPads.

We are also entering the period when some buyers may be expecting Apple to introduce new products, and therefore defer purchases of these inessential items. Some expected a new iPad this month, and a new iPhone 5S could appear in June or possibly September.

Also, as Larry Dignam noted yesterday, if Apple launches a $300 (unsubsidised) iPhone in September, this could hurt sales of more expensive and more profitable products.

Finally, Taiwan's DigiTimes claimed today that "Upstream sources in the iPad mini supply chain expect a 20-30 percent decline in shipments for the [iPad mini] during the second quarter of 2013 due to lacking demand in the market."

Apple_shares_fall-600px
Apple's share price has fallen from a high of $705.07 last September. Image credits: ZDNet screen grabs from Yahoo Finance's interactive chart

Either way, Apple shares have long been a "momentum play", where people buy stock in the expectation that it will keep going up. This is what creates bubbles. Since September, however, the momentum has been in the opposite direction, with the big profits being made by short sellers.

Meanwhile Apple's real business, which nowadays is based on selling truckloads of iPhones and iPads, continues to do well. If not, we'll find out next week.

Previously: What you need to know about Apple's tanking share-price and tumbling market cap

 

Topic: Apple

Jack Schofield

About Jack Schofield

Jack Schofield spent the 1970s editing photography magazines before becoming editor of an early UK computer magazine, Practical Computing. In 1983, he started writing a weekly computer column for the Guardian, and joined the staff to launch the newspaper's weekly computer supplement in 1985. This section launched the Guardian’s first website and, in 2001, its first real blog. When the printed section was dropped after 25 years and a couple of reincarnations, he felt it was a time for a change....

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  • Yeah right...

    "Meanwhile Apple's real business, which nowadays is based on selling truckloads of iPhones and iPads, continues to do well. If not, we'll find out next week."

    - Competitors and selling truck loads of phones, and iPads are thrown out the enterprise for a shiny Surface.
    Owllll1net
    • It's not true

      ... unless you are referring to oil companies.
      Overall the iOS dominates massively the enterprise market. Windows mobile devices do a bit better inside enterprises than with general consumers, but it's nevertheless very small.
      AleMartin
    • surface?

      what's the market share of the surface again?
      Jean-Pierre-
      • 0.1%

        And not increasing.
        itguy10
        • Well

          It's better than chromebooks which are at .023% even after being on the market 2years now.
          blazing_smiley_face
    • OMG. Surface??

      We had executives who really wanted it to work. After a few weeks they ended up on the pile with the crappy micro laptops from a few years ago.
      Johnpford
    • Nope. For now it's still mostly iOS

      Here, have an info-graph.

      http://fortunebrainstormtech.files.wordpress.com/2013/04/screen-shot-2013-04-14-at-6-54-03-am.png

      http://tech.fortune.cnn.com/2013/04/14/apple-enterprise-android-malware/
      icyrock
  • Yeah right...

    "Meanwhile Apple's real business, which nowadays is based on selling truckloads of iPhones and iPads, continues to do well. If not, we'll find out next week."

    - Competitors and selling truck loads of phones, and iPads are thrown out the enterprise for a shiny Surface.
    Owllll1net
  • They had a good run...

    But now it's over. It's time to break them up and sell the parts while they still have some value. Good riddance.
    Buzz88
  • Curious

    Will Apple use the moment to buy back some stock, or they intend to lower the price further?
    danbi