Tech Stocks Sell-off Pulls Down Major Stock Indexes

1417
stocks sell off

Major U.S. stock indexes were squarely hammered in the regular trading session on Monday. The Dow Jones Industrial Average fell about 200 points with shares in tech companies bearing the brunt of the early damage.

Apple Inc, a component of the Dow tumbled nearly 4% after Lumentum Holdings Inc (one of its primary suppliers) trimmed its fiscal 2019 second-quarter top and bottom line forecast.



Lumentum said that one of its largest customers (most probably Apple) requested it to materially reduce shipments for previously placed orders. The Milpitas, California based laser components maker then went ahead to cut its outlook and now views net revenue in the range of $335 million and $355 million, down from its previous guidance of between $405 million and $430 million, compared with the FactSet consensus of $420.5 million.

The company also sees adjusted earnings of between $1.15 and $1.34 per share, down from its earlier estimate of $1.60 and $1.75 per share. Meanwhile, analysts surveyed by FactSet project adjusted earnings of $1.67 per share.

“We recently received a request from one of our largest Industrial and Consumer customers for laser diodes for 3D sensing to materially reduce shipments to them during our fiscal second quarter for previously placed orders that were originally scheduled for delivery during the quarter. With our proven ability to deliver high volumes, years of experience, hundreds of millions of devices in the field, and new product and customer funnel, we remain confident in our leadership position in the nascent market for laser diodes for 3D sensing,” said Alan Lowe, President and Chief Executive Officer of Lumentum.

Lumentum is a key supplier of technology that powers iPhones’ Face ID feature. As of June 30, 2018, Apple accounted for nearly 30% of Lumentum’s net revenues. IQE Plc, a chipmaker based in Britain also warned that lower orders from its major customer (presumably Apple) would harm its fiscal 2018 results, while Screen maker Japan Display Inc said lower smartphone sales would affect its forecast.

Chaim Siegel, an analyst at Elazar Capital said, “Many suppliers have lowered numbers because of their unnamed ‘largest customer’, which is Apple. Apple got cautious in its guidance and it’s hitting their suppliers.”



Lumentum stock dropped 31.3% with shares of other suppliers of Apple also taking a dip. The Standard & Poor’s 500 technology sector, a major driver of the long bull run in stocks, fell 3 percent. The Dow Jones industrials sank 0.8%, while the tech-dominated Nasdaq lost more than 1.7%.

NO COMMENTS