Taiwan vendors resilient in face of Apple's plunge
January 26, 2013, 12:02 am TWN
TAIPEI -- Shares of Apple's Taiwanese suppliers held their own Friday morning despite a dive in the U.S. consumer electronics giant's share price on Wall Street overnight following disappointing quarterly results, dealers said.
“These 'Apple concept stocks' suffered retreats or were in consolidation modes for quite some time because of concerns over Apple's earnings,” Grand Cathay Securities analyst Mars Hsu said. “It seems that the negative leads have pretty much been digested.”
As of 11:31 a.m., shares of Hon Hai Precision Industry Co., which assembles iPads and iPhones for Apple, had risen 0.36 percent to NT$82.80 (US$2.85), with 19.08 million shares changing hands, after a 2.94-percent decline Thursday.
Shares of metal casing supplier Foxconn Technology Co., had added 0.24 to NT$83.90, while shares of Largan Precision Co., a cellphone camera lens maker, had fallen 1.07 percent to NT$742.00.
“These local suppliers seemed calm today, compared with the 12.35-percent plunge encountered by Apple overnight,” Hsu said.
Apple reported its results for the three-month period to December after Wall Street closed Wednesday. The company's net profit rose only 0.1 percent from a year earlier to US$13.08 billion (US$380.6 billion), the slowest pace of earnings growth in 10 years.
The company's sales projection for the quarter to March was in the US$41 billion to US$43 billion range, below an earlier market estimate of US$45.5 billion.
Amid concerns over slower demand for Apple's gadgets, in particular the iPhone, the stock closed Thursday at US$450.40, more than 35 percent off its intraday all-time high of US$705 seen in September.
“It is understandable that Apple gave a cautious outlook for the quarter to March, which is a traditional slow season for the high-tech sector,” Hsu said.
“But investors also have concerns over Apple's strategy on how to take on stiff competition in the global market in the future beyond the current quarter.”
The market has speculated that Apple will enter the low-cost smartphone market in a bid to grasp a larger market share, a strategy could hurt the profit margins of its component suppliers.
Hsu said investors are also watching closely to see whether Apple will unveil hot new smartphones in the first half of this year to boost buying interest.
“After Apple's latest results, the movement in shares of its local suppliers will likely depend on how Apple's shares perform,” Hsu said.
“Unless Apple shares stage a strong rebound as its outlook improves, these local suppliers are unlikely to move out of their current consolidation,” he said.
Barclays Capital advised, however, that investors could look at bargains among Taiwanese suppliers of Apple whose shares have fallen recently, with a particular focus on Hon Hai, Largan and flexible printed circuit board maker Zhen Ding Technology Holding Ltd.