Reuters: Hot Stocks: UPDATE 1-Apple shares slide after key supplier's weak outlook

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UPDATE 1-Apple shares slide after key supplier's weak outlook Apr 17th 2013, 17:18 Wed Apr 17, 2013 1:18pm EDT * Shares fall through $400 for first time in 16 months * Cirrus Logic may suggest weaker-than-expected Apple demand * Apple reports next Tuesday (Adds details on Apple's forecast, estimates, analyst's comment) By Poornima Gupta and Noel Randewich SAN FRANCISCO, April 17 (Reuters) - Apple Inc's shares fell on Wednesday below $400 for the first time since December 2011, after key supplier Cirrus Logic's disappointing revenue forecast fanned fears that weakening demand for the iPhone and iPad are pressuring margins more than anticipated. Apple, which fell through $400 briefly before bouncing back to stand 5.5 percent lower at about $403, has lost more than 40 percent of its market value since a September 2012 peak, battered by worries about intensifying competition and its effect on the company's industry-leading margins. Cirrus Logic, which makes analog and audio chips for the iPhone and iPad, late on Tuesday forecast revenue of $150 million to $170 million, well below Wall Street's average forecast for above $190 million. The company warned it will record a total net inventory reserve of $23.3 million, most of it due to reduced forecast for one product from one customer. The company did not name the customer. Apple reports quarterly results next Tuesday. Analysts say Cirrus Logic's dimming outlook lends weight to arguments that consumers' love affair with the iPhone is waning as challengers such as Samsung Electronics vie for their attention. One of the "key plank of the bear thesis" is that Apple will not be able to sustain its high gross margins as competition in the tablet and smartphone space leads to lower prices, while shorter product cycles limit its ability to bring down component costs, Bernstein Research analyst Toni Sacconaghi said in a note to clients. Cirrus' weak forecast follows a 19 percent decline in first-quarter sales at Taiwan's Hon Hai Precision Industry Co Ltd, Apple's main contract manufacturer. "It's a reminder of weakening demand, and the challenges around product transitions" for Apple, Cross Research's Shannon Cross said. "There's not a lot of conviction about what the second half is going to look like." (Reporting By Edwin Chan; Editing by Maureen Bavdek and Andrew Hay) Link this Share this Digg this Email Reprints

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