Apple tumbles most since June after downgrade tied to Foxconn sales growth

Bloomberg | March 16, 2011 | Adam Satariano
Apple Inc. (AAPL), the world’s most valuable technology company, fell the most since June on the Nasdaq after an analyst downgraded the stock, citing risks related to manufacturing partner Foxconn Technology Corp.
Alex Gauna, an analyst at JMP Securities LLC, said slower sales growth at Foxconn’s Hon Hai Precision Industry Co., whose Chinese factories make Apple devices, may signal lower-than- expected revenue for Apple. Sales growth at both companies was tightly coupled last year, Gauna said in a research note today in which he lowered his rating on Apple shares to “market perform” from “market outperform.”
The downgrade is the first for Apple since October, when Gus Papageorgiou at Scotia Capital and Jens Hasselmeier at Independent Research GmbH reduced their ratings. Of the 55 analysts covering Apple tracked by Bloomberg, 50 recommend buying the shares while five rate it a “hold.” Gauna cut his second-quarter sales target for Apple to $22 billion from $23 billion, and his profit estimate to $5.10 a share from $5.49.
“My sense in talking to investors was that they were not paying attention to this deceleration,” Gauna said in an interview. “We’ve seen estimates going uniformly in one direction, and that strikes me as dangerous.”