AppleIts (AAPL) chief manufacturing partner, Foxconn, warned that electronics sales could decline in the current quarter due to a cooling demand for smartphones and supply chain challenges in China. Shares of Apple fell on the news Thursday.
Taiwan-based Foxconn, formally called Hon Hai Precision Industry, cautiously commented on the June quarter after reporting its March quarter results. Foxconn is Apple’s primary iPhone assembler.
In the first quarter, Foxconn’s total revenue grew 4% and net profit rose 5%, Reuters reported. But it sees flat sales for the current quarter and full year.
Foxconn blamed the economic impact of Covid lockdowns in China, high inflation and the fallout from the war between Russia and Ukraine as factors in slowing consumer demand for electronics, including smartphones.
Apple shares fall after Foxconn report
“There are a lot of uncertainties in the market right now,” Foxconn chairman Young Liu said during a post-income call. He mentioned the pandemic, geopolitical risks and inflation.
“They pose quite a few supply and demand challenges,” Liu said.
Foxconn also makes products for Dell Technologies (DELL), HP (HPQ), Sony (SONY) and Alphabet‘s (GOOGL) Google, among others.
During afternoon trading in the stock market today, Apple stock fell 4.2% to 140.29.
On April 28, when Apple reported its results for the March quarter, it said Covid-related shutdowns in China will negatively impact June-quarter performance. Chip shortages and Covid outages could cut revenue by $4 billion to $8 billion in the current quarter.
Apple stock in correction
“Foxconn expects a slight year-over-year revenue decline in the June quarter, which we believe is consistent with Apple messaging,” Evercore ISI analyst Amit Daryanani said in a note to customers. He reiterated his outperform rating for Apple stocks with a price target of 210.
“Apple has not provided formal revenue guidance, but we think their comment implies revenue will fall by low single digits – it’s worth noting that Foxconn commentary is related to hardware (especially iPhones), services growth here could be partial.” compensation,” Daryanani said.
Since the recent high of 179.61 on March 30, Apple stock is down 21%.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories about consumer technology, software, and semiconductor stocks.
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