JMP Securities analyst downgrades Apple on Japanese supplier slowdown

“JMP Securities analyst Alex Guana on Wednesday downgraded his rating on Apple Inc. stock because of a slowdown at its primary manufacturer in Japan,” Silicon Valley / San Jose Business Journal reports.

“‘We don’t know the cause of the Hon Hai deceleration, but possible causes could include simply in-line iPhone sales due to more significant Android competition, weakness in computing products as tablet demand grows, and/or product risk around the iPad 2,’ Gauna said,” Silicon Valley / San Jose Business Journal reports. “Not many analysts apparently share Gauna’s concerns so far. Factset shows that of the 54 ratings on Apple, 93 percent of analysts rate it at ‘buy’ or ‘overweight.'”

Full article here.

Tiernan Ray reports for Barron’s, “Gauna’s note is not really about last week’s earthquake very much at all, but rather about a possible disappointment in Apple’s March-quarter report that was building for some months. In any event, ‘After a five-year track record of beat and raise an average of 23% [at Apple], we should take note of the deceleration,’ says Gauna.”

Read more in the full article here.

[Thanks to MacDailyNews Reader “Brawndo Drinker” for the heads up.]

44 Comments

  1. Interesting action. I never heard of Alex Gauna, the “analist” at JMP but as of 1/10/11, Sam Wilson had upgraded Apple’s price target to $400 with an Outperform rating. Prior to that he’d upgraded to $335 on 9/28/10 with an outperform rating.

    I’m certain Mr. Gauna has done copious research to come to his conclusion today. What a joke.

    1. …especially curious since yesterday Deutsch Bank reiterated their Buy rating and $440 target, and J. P. Morgan has an Overweight rating and $450 target. The median target is still somewhere around $420, I think.

    1. YES!!! It is a “slowdown” with the crap that people no longer want. Who would want a crappy Windows Netbook when they could get an iPad2?

      Idiots. Soon, if they were not making something with an Apple logo on it, they would be laying of people every day!

    2. If these assemblers are not making that Windows crap, they can focus on making stuff for Apple! The only reason Apple could not sell more iPads in the past was because they could not get them made fast enough. PROBLEM SOLVED!

  2. LOL! Honhai is a Taiwanese manufacturing giant operating largely in China! It has nothing to do with Japan at all. Either Gauna is an idiot or the article misrepresented him. Either way, ridiculous FUD.

    1. Not so fast. Many components (e.g. Li-Ion batteries, NAND flash memory) and manufacturing materials (e.g. lubricants, solvents) are made in Japan and imported unto China. The effects of the quake/tsunami, nuclear power plants shutdown (affecting up to 30% of the country’s electricity supply) is still not entirely known.

      Just-In-Time Logistics is practiced by nearly all manufacturers, so there us some validity to the analyst’s caution. But I do agree that it’s largely due to the supply not keeping up with demand. Now more so than ever.

        1. Yup. My WiFi iPad2 16G just showed up at the front door. Ordered Friday 3:00am CST delivered Wednesday 11:30 am CST. A day early. I feel sorry for those folks who are going to have to wait weeks. I think Apple jumped the gun on this one. In the future you can bet that they will rethink their product launches. And that’s not factoring in the disaster in Japan which is in some way going to affect product manufacturing for Apple. It simply has to. Maybe greatly or moderately but it will be a factor. And in reality my iPad isn’t that important. The people in Japan are important. We should always keep things in perspective. They need our support.

      1. But just look at the article. He’s talking up a supposed slow down in Honhai even before the tsunami and presenting the company as Japanese, which is absurd. By the same token what about downgrading Honhai’s other partners, such as HP? And totally missing is a discussion of Honahai’s massive new plant construction inland in China, in Henan and Sichuan provinces. Hardly the act of a company whose growth is slackening.

      2. Some suppliers to Apple, reportedly Sony Chemical among them, have plants in areas affected by the triple carastrophe. The report I read didn’t say if the plants were damaged or just shut down due to so much generating capacity being off line.

        You cannot run a factory if you cannot ship your product, your workers cannot come in and are experiencing rolling blackouts-especially with the just in time
        inventory system. The same thing that keeps it lean makes it vulnerable to disruption.

  3. LOL! Honhai has nothing to do with Japan. It’s a Taiwan company operating largely in China. Either Guana is a clueless idiot or the article betrays sloppy journalism. Either way, a silly downgrade.

    1. Just manip0ulation, making an opportunity for buyers and themselves. Just like before the release of th iPad2, two unkown analysts from two unknown taiwanese companies, “advised” the market that the ipad2 was facing major delays. Result, share price came down sharply and those guys make a lot of money when the official anouncemnt came out. Pay no attention to analysts!!!

  4. mission accomplished for guano. The cornhuskers can now unload their shorts of the long derivatives. Tomorrow the MM will pull this up. New weeklies will be priced. Shyters will short the long derivatives. Next Wednesday, another guano comrade will issue another ridiculous research. The cornhuskers cleanup again.

    Hon hai does not have apple as it’s sole customer. Hon hai slowed down because of NOKIA, Dell, hpq. Not apple. LOL, the supply of iPad 2s cannot even keep up. Guano is shameless. Ifvhe mentioned the other customers of hon hai, then I might have some respect for him. This definitely was unethical.

  5. The new MO of hedge funds and money “managers” is to rbi g the stock down with FUD up till two minutes before earnings. That’s when they get in for the spike and then they sell when the tide turns.

    There’s got to be a way to burn the bastards, other than Apple continuing to leave everyone in the dust.

    What are they gonna say when iPad is as ubiquitous as TV…?

  6. “Rather interesting supply chain related news came from Apple, Inc. circles this week. According to the Wall Street Journal, (paid subscription may be required) Apple plans to begin producing a CDMA version of its widely popular iPhone later this year. This move would allow other carriers such as Verizon Wireless or Sprint Nextel Corp. to offer iPhones to their subscribers. Currently, Apple offers only a GSM version with an exclusive distribution arrangement with AT&T.
    According to this article, Apple is about to embark on a dual contract manufacturing strategy for the iPhone. Sources close to Apple are indicating that production of the newer CDMA version will be sourced to Pegatron Technology Corp., the contract manufacturing arm of Taiwan based ASUTeK Computer Inc. Apple also plans to upgrade the current GSM version being produced by contract manufacturer Hon Hai Precision Industry Co. The Journal notes that sources that one person familiar with the situation indicates that Pegatron is scheduled to start volume production in September, but the schedule could change. As is the usual practice, representatives from both contract manufacturers have declined to comment.”

    The above from an article of April 2010 would explain slowdown in growth of Hon Hai. Decline likely associated with PCs/Net books for other companies.

    Interestingly Cramer on CNBC in response to a caller re APPLe yesterday made a comment that he expected a downgrade “tomorrow”.

    Word was out ahead of time, likely explaining the weakness in Apple near market close.

  7. One more thing:
    With all the gloom predicted, if there’s one market that will thrive, it will be the mobile communications market that is essentially the live wire and lifeline that keeps the world connected.
    There’s no doubt that iPhones, iPads, and all FaceTime capable devices rule that space and demand for these will only grow and be more appropriate with time. Apple has multiple sources for all components and manufacturing in place already and is better positioned than anyone to muster any economic and supply chain downturns. At the end of the day Apple will thrive through thick or thin.

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