APPLE VIOLATES $400, NO SILVER LINING FROM OVERCAST CIRRUS OUTLOOK $AAPL $CRUS

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Until yesterday Apple AAPL  had been holding strong after testing its support around $419 multiple times.  Today that support has decisively broken with shares plunging more than 6% and briefly below $400 to as low as $398.11 this afternoon.

The reason for the crushing action lower in Apple shares is what can be inferred from negative talk out of a major supplier of iPhone audio components, Cirrus Logic CRUS .  Cirrus said that it expects revenues and earnings when it reports quarterly results next week to be significantly below analysts’ forecasts.  Cirrus also projected horrific revenues going forward.  The implication is that Apple has slowed the building of iPhone 5s and that is the reason why Cirrus is not able to sell components to Apple at the same rate as it had been.

Cirrus is highly dependent upon Apple as its sales of audio components outside Apple are not material.  Of course, one likely reason Apple would slow the building of iPhones is if the phones are not selling. There is an alternative explanation.  It is conceivable that Cirrus sales are no longer a good indicator of iPhone sales because Apple has found other suppliers.  Apple is a highly secretive company and there is no way to know for sure.  However, the stock market so far seems oblivious to this alternate explanation.

Cirrus reported preliminary net revenue of $206.9 million versus consensus forecasts calling for $210.9 million.  Whisper numbers were much higher.  More important is the revenue projection…Read more at Forbes

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