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Apple suppliers in Asia drop after earnings miss
Shares of major Apple (AAPL) suppliers in Asia mostly fell on Wednesday, after the smartphone maker's quarterly earnings missed analysts' estimates and guidance for the current quarter fell shy of expectations.
Major Taiwanese suppliers and manufacturers of Apple were down, with shares of Catcher Technology (:2474-TW), which provides metal casing for the iPhone, down some 2.54 percent in morning trade. Large-cap Taiwan Semiconductor Manufacturing Co (Taiwan Stock Exchange: 2330-TW) (TSMC), which makes chips for iPhones, was down 0.95 percent.
Hon Hai Precision Industry (Taiwan Stock Exchange: 2317-TW), which assembles a bulk of the iPhones and is also known as Foxconn, saw its shares drop 0.87 percent. Apple lens supplier Largan (:3008-TW) was down 0.67 percent, while Foxconn rival Pegatron (:4938-TW) saw its shares initially drop 1.29 percent before reversing losses to trade up 0.43 percent.
Japanese components suppliers including Alps Electric (Tokyo Stock Exchange: 6770.T-JP), TDK Corporation and Nidec (Tokyo Stock Exchange: 6594.T-JP) were mixed, between down 1.37 percent and up 1 percent. Ceramic capacitor maker Murata Manufacturing (Tokyo Stock Exchange: 6981.T-JP) dropped 4 percent, while shares of Sony (Tokyo Stock Exchange: 6758.T-JP) and Panasonic (Tokyo Stock Exchange: 6752.T-JP) were down 0.46 and 0.82 percent respectively.
In South Korea, LG Display (Korea Stock Exchange: 3422-KR), a key LCD supplier to Apple, saw its shares drop 3.09 percent.
Stateside, shares of Apple suppliers dropped in after-hours trading , with Skyworks Solutions (SWKS) dropping more than 5 percent.
The Cupertino, California-based tech giant reported fiscal second-quarter revenue of $50.56 billion , down 13 percent from the $58.01 billion reported in the comparable year-ago period. Quarterly net income for the period was at $10.5 billion and earnings was at $1.90 per diluted share.
This fell short of Wall Street's expectation of earnings of about $2 a share on $51.97 billion in revenue, according to a consensus estimate from Thomson Reuters.
A key area of decline in Apple's quarterly numbers was from Greater China, where revenue fell by 26 percent on-year.
Apple CEO Tim Cook told analysts in an earnings call that currency headwinds hurt sales in Hong Kong . Cook also admitted in the earnings call the smartphone market was not growing, attributing it to a passing "overhang of the macroeconomic environment in many different places of the world."
Second-quarter iPhone revenue dropped 36.36 percent on-quarter.
Analysts told CNBC on Wednesday the Apple management needs to focus on the services side of the business to counteract the slowdown in the smartphone market.
John Petrides, managing director and portfolio manager at Point View Wealth Management, told CNBC's " Squawk Box " that Apple management "needs to wake up here and stop focusing purely on selling really cool widgets ... [and] focus on the subscription side of the business."
In particular, said Petrides, Apple has to focus on Apple TV and the iTunes platform if it wants to grow. Apple rivals, including Google, Facebook, Netflix and Amazon, are already working to advance their video streaming services, he said.
Others believe iPhone sales will see a short-term uptick once the company releases its expected iPhone 7 model.
Angelo Zino, a senior analyst at S&P Global Market Intelligence, told CNBC's " The Rundown ," for Apple to find an acceleration of growth in the stagnating smartphone market, the iPhone 7 needs to have new, innovative features. Some analysts, however, remain skeptical .
Zino said another possibility the Apple management might have to eventually consider will be M&A to expand into new, addressable markets. "With a cash horde north of $200 billion, that wouldn't necessarily be a bad idea."
- Everett Rosenfeld contributed to this report.
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