The collapse of Apple’s stock since reaching a high of around $700 last September has been pretty shocking, and today it fell below the $400 per share mark for the first time in 16 months (via MacRumors). It has since rebounded back over $400 dollars, and sits at $401 as of the writing of this article.
The drop is being blamed on reports that audio chip maker Cirrus Logic achieved far lower than expected sales, which analysts assumed was directly related to Apple. GigaOM has a nice take, and explains the situation quite well:
A company you’ve never heard of is being blamed for dragging Apple’s stock down to its lowest point since late 2011, $401.68. Cirrus Logic, which makes audio chips, reported revenues of $170 million for first quarter, missing analysts’ expectations by nearly $30 million. The reason Apple investors reacted the way they did is because Apple is believed to be Cirrus Logic’s biggest client: if its sales are down, it signals Apple’s mobile device sales could be down too.
According to Bloomberg:
Cirrus will record a net inventory reserve of $23.3 million for the fiscal fourth quarter, which ended in March, the Austin, Texas-based company said in a statement yesterday. Most of that — $20.7 million — is from a high-volume product from one customer, Cirrus said, without naming the client.
Bloomberg reports that the unnamed client is Apple, and that 90 percent of Cirrus Logic’s revenues come from selling audio chips that Apple puts inside of iPhones and iPads. If Cirrus Logic has huge amounts of unsold inventory, the thinking is that it’s because Apple had no need for them — that it possibly overestimated the number of iPhones and iPads it was able to sell during the first three months of 2013.
In other words, it amounts to Apple’s stock taking a severe beating based on nothing more than (unjustified) analyst assumptions.
It will be very interesting to hear what Apple says when they announce their second quarter earnings on April 23rd – this stock slide is on every investor’s mind, and they can’t afford to not acknowledge it. Whatever you put this down to, nobody can predict what the future holds for Apple. Will we see more of the same, or a bounce back? I’d like to hope for the later – but in the meantime, we shall have to wait and see.