Today: Apple (AAPL) stock falls again amid concerns about delays in iPhone 5 production, dragging the overall market down with it. Also: Yahoo (YHOO) CEO Marissa Mayer appoints a new CFO and outlines plans for future, but stock falls.
Apple's stock losses continue amid concerns about iPhone 5 production
Apple shares took a late plunge Tuesday as investors continued to show concern that production delays could drag down or delay sales of the newest iteration of the company's popular smartphone.
After falling 1.3 percent Monday despite the announcement of a record-breaking debut weekend for the iPhone 5, Apple's share price took a steep plunge in the last hour and a half of Tuesday's session, ending with a daily decline of 2.5 percent at $673.54. The two days of declines are a marked contrast from last week, when Apple broke
Apple sold out of the much-hyped product on launch day, after delaying delivery of pre-orders almost immediately after the device went on sale online. Analysts who predicted 6 million or more sales on the opening weekend were disappointed by record sales of "only" 5 million devices, and they blamed Apple's inability to build and deliver enough iPhones for the shortfall.
A Barclays analyst was more specific in his discussion of the production delays, citing the iPhone 5's groundbreaking screen as the major source of headaches for Apple. The iPhone 5 introduced "in-cell touch sensing," which combined the touchscreen and display into one pane, which allowed Apple to produce the thinnest, lightest and largest iPhone to date.
While research firm DisplayMate called the screen on the iPhone 5 "the best smartphone display we have seen," the new technology has proved difficult to produce. According to reports, Sharp was not able to begin producing the displays in time for the iPhone 5 launch, and Apple's other suppliers -- LG and Japan Display -- have not been able to produce enough to sate demand for the product.
"Apple is facing significant production constraints due to a move toward in-cell display technology," Barclays analyst Ben Reitzes wrote in a research note. "Apple is struggling to keep up with demand."
Bloomberg News reported Tuesday that Apple could be facing shortages of the chips needed to connect the iPhone 5 to 4G, or LTE, cellular networks, a major selling point for the new device; also, manufacturing partners in China are likely to face difficulty constructing the devices quickly enough to meet demand. The issues could endanger Apple's aggressive launch schedule for the iPhone 5 -- last Friday in nine countries, moving to 22 more this Friday, and selling in 100 countries by the end of the year -- which was a big reaqson for Apple's stock rise.
"Ramping up to build another million phones isn't an easy prospect," Kyle Wiens, CEO of IFixit, told Bloomberg.
The one bright spot for Apple is its suppliers' desires to meet its demands, as Apple's smartphone crown gives its requests for more and faster production additional weight.
"Even if you are going to run in to some areas where there are supply shortages, Apple is going to get a disproportionate amount of the available supply -- they are your best customer," IHS iSuppli senior principal analyst Tom Dinges told Bloomberg.
Stock market undergoes large sell-off after Fed official's comments
Apple's plunge took markets down as well: All three major U.S. indexes declined Tuesday, with the two that include Apple -- the tech-heavy Nasdaq and broad-based Standard & Poor's 500 -- declining the most, at 1.4 percent and 1.1 percent respectively. The Dow Jones industrial average also declined, by 0.8 percent, as positive economic news couldn't overcome a Federal Reserve official's comment that the central bank's latest round of action is unlikely to work.
While consumer confidence hit a seven-month high and home prices continued to rise, the head of the Philadelphia Fed told an audience, "I opposed the Committee's actions in September because I believe that increasing monetary policy accommodation is neither appropriate nor likely to be effective in the current environment."
While certainly not revolutionary, the comments by Charles Plosser spooked some investors, who went on their biggest sell-off in months.
"So many investors have bought into the illusion," Jack Ablin, chief investment officer for Harris Private Bank, told The Associated Press. "And it was like Plosser pulled up the curtain on the Wizard of Oz."
Silicon Valley tech stocks were a big part of Tuesday's declines, as the SV150 index of the region's largest tech companies slid 1.9 percent Tuesday. Tesla dropped 9.8 percent after announcing it was trimming its revenue forecast due to slow production of the Model S electric sedan, a quiet announcement that appeared after the company's bold unveiling of its new superchargers.
Facebook continued its decline after Monday's large plunge, losing 2.5 percent while fellow social-networking stocks Zynga (down 4.1 percent), Yelp (down 0.7 percent) and LinkedIn (down 2.3 percent) also fell. Cisco (CSCO) nudged down 0.7 percent after CEO John Chambers openly discussed his retirement and possible successors, while Advanced Micro Devices took a dive of 5.2 percent after another analyst downgrade.
Even Silicon Valley's one positive bit of stock news on the day ended poorly: Google (GOOG) hit all-time highs for the second straight day after Chairman Eric Schmidt said the company wasn't pushing for a Google Maps app on iOS, but shares slid to a slight drop by the end of the session.
Yahoo CEO Marissa Mayer explains her vision, hires new CFO
Yahoo slid 2 percent in regular trading Tuesday, but regained about half of those losses in after-hours trading, when the company officially announced a new chief financial officer and blogs began to publish leaked information about CEO Marissa Mayer's plans for the future.
Reports leading up to Tuesday said that Mayer would announce her vision for the Sunnyvale company's future in an all-hands meeting Tuesday, and anonymous workers told AllThingsD and Business Insider on Tuesday afternoon that the former Google executive focused on personalization, mobile and increasing the company's engineering talent through "acqui-hires."
While Yahoo would not say anything publicly about Mayer's speech or plans -- a Yahoo spokeswoman told the Mercury News in an email "We will have more to share about our approach to building Yahoo's future at our next earnings call, which is in mid-October" -- it did announce a new chief financial officer. Ken Goldman, formerly CFO of Sunnyvale-based Fortinet and pre-Oracle (ORCL)-acquisition Siebel, will take over for Tim Morse, who served as interim CEO between the reigns of Carol Bartz and Scott Thompson.
"Ken is one of the most accomplished and respected financial executives in the technology industry," Mayer said in Tuesday's news release.
Silicon Valley tech stocks
Up: Splunk, Gilead
Down: Tesla, AMD, Electronic Arts (ERTS), Netflix (NFLX), Zynga, Jive, SunPower (SPWRA), Hewlett-Packard (HPQ), Oracle, NetApp, eBay (EBAY), Apple, Facebook, LinkedIn, Juniper, Yahoo, Nvidia, Applied Materials, Adobe
The tech-heavy Nasdaq composite index: Down 43.05, or 1.36 percent, to 3,117.73
The blue chip Dow Jones industrial average: Down 101.37, or 0.75 percent, to 13,457.55
And the widely watched Standard & Poor's 500 index: Down 15.30, or 1.05 percent, to 1,441.59
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.