Shares of Apple fell five percent in trading Monday after a key supplier of iPhone technology cut its financial outlook, exacerbating concerns on Wall Street about sagging demand for the smartphone.
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Lumentum Holdings, which is a major supplier of facial recognition technology used in the newest versions of the iPhone, slashed its revenue expectations by $70 million after noting that a major customer had reduced parts shipments. While the company did not mention Apple by name, the tech giant was responsible for 30 percent of its overall revenue in fiscal 2018.
“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,” Lumentum CEO Alan Lowe said in a statement.
| Ticker | Security | Last | Change | %Chg |
|---|---|---|---|---|
| AAPL | APPLE INC. | 194.17 | -10.30 | -5.04% |
Wells Fargo said in a research note that Lumentum’s chance in guidance suggested “as much as a 30 percent cut in Apple orders.” Elazar Capital also identified Apple as Lumentum’s client, Reuters reported.
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The drop in Apple shares, now trading below the $200 level, fueled a broader market sell-off on Monday. The Dow Jones Industrial Average sank by more than 600 points, while the S&P 500 lost more than 50 points and the tech-heavy Nasdaq Composite over 206 points. Lumentum shares fell more than 30 percent.
Apple executives announced earlier this month that the company would stop reporting how many iPhones it sells each quarter. While Wall Street analysts have long relied on iPhone unit sales as a bellwether for the overall health of Apple’s business, the company argued that the measure is no longer an accurate representation due to the introduction of new products and services.
