Amidst growing concerns that Foxconn’s factories won’t be able to keep up with demand, Apple’s stock is dropping rapidly.
A slowdown in Foxconn’s manufacturing may have a negative impact on its future supply of Apple products. According to JMP Securities, “(Foxconn) growth decelerated from 84% (year over year) in the month of December to 37% in January and then again to 26% in February.”
The reasons for this deceleration are not known, but the slowdown is concerning enough that JMP has downgraded its outlook on Apple from “Market Outperform” to “Market Perform.” This unfavorable assessment is not based on the quality of Apple’s products, but on Foxconn’s ability to deliver Apple products in a timely manner.
This comes in the midst of a practically complete and total sellout of Apple’s new iPad 2, which is a follow-up to the most quickly-adopted consumer device ever made, and Barrons’ recent price target update of $450.00.
BTIG Research analyst Walter Piecyk today raised his price target on shares ofApple (AAPL) to $450 from $375, concluding that the iPad will probably generate $24 billion in revenue this calendar year, which is $4 billion more than he’d originally expected, and which, as he puts it, “would represent more than 20% of revenue for a product that is less than two years old.”
I am amazed that the stock is taking a hit amidst the Foxconn news, but I can see why it’s important for the business to actually put product in the hands of folks who want it. For anyone who’s still on the fence, it’s probably a good time to start. After all, if you’d have gotten into the game back in 1997, you’d be able to buy lots and lots of iPads. (via)