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Apple Production May Be Hurt by Earthquake, Analyst Says

Apple Production May Be Hurt by Earthquake
Apple Inc.’s production of iPhones and iPads may be “meaningfully impaired” in the coming months in the aftermath of the earthquake and tsunami in Japan, according to Pacific Crest Securities Inc. Photographer: Chris Ratcliffe/Bloomberg

March 29 (Bloomberg) -- Apple Inc.’s production of iPhones and iPads may be “meaningfully impaired” in the coming months in the aftermath of the earthquake and tsunami in Japan, according to Pacific Crest Securities Inc.

“If Apple is unable to find replacement supply of certain components, then iPhone and iPad production volume could be meaningfully impaired in the second half” of its fiscal third quarter, which ends in June, Andy Hargreaves, an analyst at Pacific Crest in Portland, Oregon, wrote today in a research note.

The earthquake and tsunami earlier this month left Apple with as little as two months of inventory for key components for the iPhone and iPad tablet, Hargreaves said. Japan is a hub for consumer-electronics parts such as flash memory, which stores songs and photos in portable devices; batteries and touch-screen overlay glass that’s used in Apple products, IHS ISuppli said this month.

Steve Dowling, a spokesman for Apple, wasn’t immediately available to comment.

The supply problems might lead Apple to be more conservative in the financial guidance it gives investors when it reports second-quarter results next month. Hargreaves, who rates Apple shares “outperform,” estimates the company will post second-quarter sales of about $23.1 billion and profit of more than $5.30 a share.

In the third quarter, Apple is likely to generate profit of $5.31 a share on sales of $23.7 billion, based on the average of analysts’ estimates compiled by Bloomberg.

Apple, based in Cupertino, California, fell $1.81 to $348.63 at 1:38 p.m. New York time in Nasdaq Stock Market trading. The shares had risen 8.6 percent this year before today.

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net Adam Satariano in San Francisco at asatariano1@bloomberg.net

To contact the editor responsible for this story: Thomas Giles at tgiles5@bloomberg.net

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