Foxconn Production Slows, Apple's Stock Rating Falls

News about Apple's manufacturing partner, Foxconn, decreasing production has caused some panic for investors who worry that Apple will not exceed sales expectations this quarter.

"(Foxconn) growth decelerated from 84% (year over year) in the month of December to 37% in January and then again to 26% in February, or levels that are tracking well below the (more than) 70% (year over year) sales growth consensus is looking for in the March quarter, and (greater than) 50% in June," wrote Alex Gauna, an analyst at JMP Securities. Gauna also rated Apple stock as "market perform," rather than "outperform."

Gauna said that  there wasn't a clear reason for the production slowdown, but offered his thoughts. "We don’t know the source of the Hon Hai deceleration, but possible causes could include simply in-line iPhone sales due to more significant Android competition, weakness in computing products as tablet demand grows, and/or product transition risk around the iPad 2," he wrote.

So are Apple's market share and sales not as strong as the company leads people to believe? Is Android threatening Apple's niche? Either way, Foxconn's production has been slowing since December.

What's more interesting is that the slowdown occurred before the Japanese earthquake and tsunami, which shows an independent trend rather than production affected by outside pressure. Previously the Foxconn plant was plagued with delays as it prepared Apple's iPad and iPhone 4 for shipment -- perhaps not much has changed since last year.

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