It was a small change for Apple but a momentous event
for parts supplier Volex.
For its latest iPhone, Apple Inc.(NASDAQ:AAPL) changed
the connector hitting maker of power cords for computers and mobile devices, Volex
PLC(LON:VLX).
The company has been caught on the wrong foot by the
change in the specifications b its largest customer.
Volex issued a profit warning attributing it to “a
delay in product launches and a change in product component strategy by our
largest customer." It did not name Apple however.
The company has “initiated a program of material cost
reductions” and is introducing higher-margin products, it said.
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Analysts estimate that Apple accounts for about a
third of its revenues.
It is not only due to Apple but also the general
economic climate that is affecting the company’s prospects. Volex said that its
full year profits and revenues would be below expectations.
Volex shares fell about 30 percent, its worst fall
since January 2008 and were trading at 184.75 pence after it issued the profit
warning.
Analysts tracking the company said that the impact of
this would be a 30 percent reduction in its earnings for 2013 at 31.8 cents.
“This is the
second time within recent months where Volex has been caught out by scheduling
and production issues at its largest customer,” Michael O’Brien, an analyst at
Canaccord Genuity, said in a note to clients. “For a business where a large
part of the investment case was predicated on improving margins by closer
customer engagement, greater visibility and increased value add,” the news is
disappointing, he said
Some analysts lowered its price target to 240 pence
from 320 pence and downgraded it to Hold from Buy.
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