## Apple’s iPhone Sales in Question: Qorvo’s Earnings Report Sends Warning Signal
The days leading up to Apple Inc.’s highly anticipated earnings report have been overshadowed by a warning signal from a lesser-known stock – Qorvo Inc. This critical supplier for iPhones, iPads, and Apple Watches reported lower-than-expected guidance in its recent earnings report, casting a shadow on the iPhone maker’s future performance.
What Does Qorvo Do?
Qorvo plays a pivotal role in the Apple ecosystem, providing essential components like wireless chips, antenna equipment, and ultra-wideband technology. A significant portion of Qorvo’s revenue is directly tied to its partnership with Apple, making its earnings report a closely watched indicator of Apple’s iPhone sales.
Qorvo’s Disappointing Report
While Qorvo exceeded Street estimates on both earnings per share (EPS) and revenue, it was the lower-than-expected guidance that sent the stock tumbling. Qorvo’s CFO, Grant Brown, revealed that the company anticipates lower revenue and gross margin in fiscal year 2025 compared to 2024. Brown attributed this decline to an “unfavorable mix” in the smartphone market, where consumers are increasingly opting for less profitable entry-level smartphones over premium and mid-tier phones.
Market Reactions
The “unfavorable mix” and lower guidance sent Qorvo’s stock plummeting over 20% on Wednesday morning. While Apple’s shares held up relatively well, they still took a hit of less than 1%. This market reaction reflects the importance of Qorvo’s report as a potential barometer for Apple’s overall smartphone performance.
Following the report, Cody Acree, an analyst at Benchmark, downgraded Qorvo from Buy to Hold, highlighting the shift in consumer demand towards less profitable smartphones. Benzinga’s PreMarket Prep, a daily show covering market news, also weighed in on Qorvo’s report. Co-host and trader Dennis Dick pointed out the weakness in other Apple suppliers, such as Skyworks Solutions, Broadcom Inc, and Qualcomm Inc, while highlighting Apple’s resilience despite the seemingly negative headlines.
Corning Inc Offers a Glimmer of Hope
However, not all Apple suppliers are experiencing the same downturn. Corning Inc, the primary glass supplier for iPhones and iPads, reported stronger-than-expected earnings and strong guidance on Tuesday morning. This positive news could potentially explain Apple’s resilience despite the disappointing numbers from Qorvo.
The Qorvo earnings report serves as a significant warning signal for Apple’s iPhone sales, highlighting a shift in consumer demand that could impact the company’s performance. While the overall picture remains unclear, Corning’s positive report offers a glimmer of hope. Investors and analysts will be closely watching Apple’s upcoming earnings report to gain further insight into the true state of the iPhone market.
