Apple investors brush off impact of China iPad 2 plant explosion

“Shares of Apple Inc. regrouped on Monday after Wall Street brushed off the impact of an explosion last week that shut a Foxconn factory in China producing its popular iPad,” Poornima Gupta and Clare Jim report for Reuters.

“Production at the plant in the southwestern city of Chengdu was suspended by Foxconn Technology Group, Apple’s biggest manufacturing partner, after three workers died in a Friday blast blamed on combustible dust in a duct,” Gupta and Jim report. “The incident stoked fears that production of the seminal tablet — already constrained by shortages of components and rabid demand — would again be disrupted. But the impact should be minimal because of Foxconn’s ability to rapidly shift output elsewhere in its sprawling network, coupled with Apple’s relying mainly on other locations, investors and analysts said.”

Gupta and Jim report, “While the impact on Apple is deemed minimal, investors in Hon Hai were worried about the fallout of the blast on the electronics supplier… A potential loss of orders from Apple could amp up the pressure on Hon Hai, which is already facing rising costs. Shares of Hon Hai in Taipei closed nearly 3 percent lower on fears Apple may shift orders to its rivals. They had dived as much as 5.2 percent following the news of the blast, to their lowest since late August.”

Read more in the full article here.

Related articles:
Inside Foxconn’s Chengdu Apple iPad 2 factory – May 21, 2011
Apple investigating to find cause of Foxconn factory explosion in China – May 20, 2011
‘Super-light dust’ blamed for explosion at Foxconn iPad 2 factory in Chengdu – May 20, 2011
Explosion rocks Foxconn iPad factory in Chengdu, China; 2 dead, 16 injured – May 20, 2011

8 Comments

  1. Uh, my brokerage shows that there was no regrouping for Apple. It lost again today as it has steadily since early february. For a company with a PE around 15 you got to wonder why it is declining in value. Amazon has a PE around 70 and has beaten AAPL for 4 straight months. Got to be the Steve on leave factor.

    1. While you are technically correct, I think you are missing something from today’s market. The broader indexes are off anywhere from 1 to 3% depending on which index you look at (most being around 1.5%). For AAPL to only drop 0.24%, is a fairly positive sign that investors are worried about the Foxconn explosion.

        1. Please, stop trying to see how a percentage change shows how much are people worried about a factory explosion, stop trying to explain economically the happiness or the sadness about an incident, this a cliché that must be stopped.

          1. I totally understand where you are coming from. And I agree that it is sad that the market reacts the way it does based on human factors. Nevertheless, this is the reality of the market in which we participate… at least the one that I participate in.

  2. It doesn’t matter at all if the shares of Apple or Foxconn drop, or if some kid or business wait more to acquire their lifeless material. The good thing about these products is that they represent the human effort that was put on them, and without the people to design them and the people to build them, nothing matters because those who buy them wouldn’t know about the existence of either of them. So don’t worry more about the kid or the business, worry about the two people who died and will never see the light again. Sorry.

  3. finely divided particles (dust) is often explosive even if the material is not normally particularly flammable. the mid west has silo explosions from wheat dust all the time. a static spark is all thats needed. there’s a reason they are called accidents loannis of course it’s tragic but not necessarily evil on the part of the company or apple. preventative measures will be taken and things will be humming along soon
    take some flour warm it in your oven to dry it load some into a straw and blow it into a candle (watch your eyebrows)

    1. Thank you for this possible misunderstanding, I never thought that anyone was evil, I strongly believe that many employees, investors and 3rd parties like me are sad about this, I just don’t like the economic discussion about accidents that were for some people much much more than money loss, and I think there shouldn’t be any economic conversation related to accidents even if they don’t involve the death of people.

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