A report out of Apple's Asian supply chain may have sent the wrong signal to Wall Street
Apple (AAPL) shares fell sharply in early trading Monday following a widely reported note to clients from J.P. Morgan's Gokul Hariharan to the effect that multiple supply chain vendors in Asia have registered a 25% cut in fourth-quarter iPad 2 orders from Apple -- "the first cut ever we've seen" according to Hariharan. (Business Insider's headline: HOLY CRAP: Apple Just Cut iPad Orders By 25%.)
Given that Hariharan is paid to cover Foxconn (the trademark of Taiwan-based Hon Hai), Apple's major supplier, he was understandably concerned about what such a cut would do to Foxconn's profit margins and the profits of its Asian partners.
What Hariharan -- and the traders who dumped Apple shares on the news -- seem to have missed were the reports out of South American that Foxconn, in partnership with the Brazilian government, has built an iPad plant in Brazil that is ready to start churning out product by December.
The stock recovered somewhat after several analysts stepped forward to pour cold water on the J.P. Morgan report.
"Apple purposely maintains enough suppliers and manufacturing partners to make any one supply-side data point inconclusive," wrote Piper Jaffray's Gene Munster, who mentioned the fact that Apple is transitioning to Brazilian manufacturing.
"We believe the report out of JPM is extraordinarily misleading," echoed Bullish Cross' Andy Zaky, "given that it attempts draw a conclusion regarding Apple's expectations which are simply not founded in evidence."
UPDATE: In a rare eruption of internecine conflict, J.P. Morgan's Mark Moskowitz has formally disavowed his Asian colleague's report, according to Bloomberg. That report "has the equity markets worried about Apple," Moskowitz wrote. It "focuses on how Hon Hai could be impacted by potential iPad sell-in order cuts. This alert is not the view of the U.S. IT hardware team."
A curated selection of the weekend's most newsworthy tech stories from all over the Web. Sign up to get the newsletter delivered to your inbox every morning.Director David Fincher's much-talked about Facebook biopic, The Social Network, failed to win Best Picture or Best Director at this year's Academy Awards, but it did walk away with three statues for Best Film Editing, Best Original Score, and Best Adapted Screenplay. (Also, let's not MORE JP Mangalindan, Writer - Feb 28, 2011 6:00 AM ET
A curated selection of the day's most newsworthy tech stories from all over the Web.
At CES, Microsoft CEO Steve Ballmer revealed the company's plans to expand its motion-based Xbox 360 Kinect controller, which has already sold more than 8 million units, beyond gaming. Users can expect hands-free navigation of Netflix and (finally) Hulu Plus, as well as body motion capture for a new feature called Avatar Kinect, which will map the MOREJP Mangalindan, Writer - Jan 6, 2011 8:45 AM ET
Analyst reduces price target to $566 from $639 on lowered estimates.
JP Morgan's Imran Khan sent a note out ahead of Google's (GOOG) Q2 financials stating that they were dropping their price targets on Google significantly, from $639 to $566. The $73 drop is largely due to changes in international currency rates and the discontinuation of the Nexus One, according to the report.
The US Dollar has been steadily growing stronger for months and Google MORESeth Weintraub - Jul 7, 2010 11:07 AM ET
|America's economic mobility myth|
|Snowden docs had NYTimes exec fearing for his life|
|The economy: The 2014 outlook|
|Where should you put your money now?|
|FHA to pull back on big mortgages|