Submitted by Jon Reed on
The price of Apple Inc. (NASDAQ: AAPL) shares slid nearly two percent Wednesday morning due, most likely, to two disappointing developments in China. For the last month rumors have been swirling that China Mobile would announce the availability of the iPhone 5s and iPhone 5c on its network, which it did not do; and Jabil Circuit, a parts provider for Apple, issued earnings guidance that fell far short of expectations.
Investors and enthusiasts alike were expecting China Mobile, the world's largest wireless carrier, to announce that it would begin selling Apple's iPhones on December 18th, despite the fact that neither Apple nor China Mobile ever officially confirmed today as the launch date. The speculation was bolstered by China Mobile's December 18th launch date of its 4G network, which it did in fact carry out. Despite the lack of an announcement, analysts do not appear alarmed. In a note to
investors today, Wells Fargo's analyst Maynard Um wrote: "While the missing announcement may be perceived negatively, we see this as a non-issue and believe this is more of an issue of timing and ultimately expect an agreement to be reached." A reasonable stance since, according to The Wall Street Journal, "China Mobile executives have said iPhone subscriptions likely would come only after the company introduces its 4G platform." China Mobile says it is still in talks with Apple.
The second piece of less-than-stellar news involves Jabil Circuit, a contract manufacturer that provides moldings and metal for Apple's iPhones. The company's disappointing earnings outlook for Q2 caused its stock to plummet 21%. This comes just weeks after Q1 earnings per share (EPS) missed expectations. Jabil indicated that its weaker than expected guidance is a result of a "shift in demand" of its diversified manufacturing unit. Apple is responsible for 50% of the revenue of said unit. This prompted Citigroup analyst Glen Yeung to suggest that Apple is cutting iPhone production for the March quarter.
After hitting a low of $539, share prices rebounded a bit toward the end of the day, finishing at $550.77.