Global makers of products from motorcycles to mobile phones are finding it harder to get the parts they need after Japan's earthquake and tsunami wrecked supply chains, and investors worry that the worst is yet to come for earnings.
Motorcycle maker Harley-Davidson Inc
Toyota Motor Co <7203.T> said it would cut U.S. vehicle production and might have to lower its full-year U.S. sales targets if parts shortages extend into the summer.
It's cross-sector. Electronics are used in so many areas, said Bryan Keane, equity analyst for the Alpine Mutual Funds. It has the potential to be very wide-ranging. To some extent, it's going to affect everyone. Even if your direct supplier isn't impacted, your supplier could get their materials from someone in Japan.
Japan accounts for one-fifth of the world's semiconductors, which have found their way into a host of everyday products and industrial components. The uncertainty now is how long the disruptions will last as the country recovers from the March 11 disaster.
The big issue is that even if everything now is under control in Japan, they've lost a big portion of their power, said Keane. Even if they get the big factories up and running, how often are they going to be able to run them?
The first major batch of earnings reports to hit Wall Street this week highlighted the problems plaguing global companies across a range of industries, from cars to semiconductors.
Iconic motorcycle maker Harley-Davidson said it was closely watching the situation in Japan, and expected only a modest level of supply chain interruption, but it still cut the low end of its shipment guidance. Its shares fell more than 5 percent.
Cellphone joint venture Sony Ericsson met analysts' profit forecast, but its revenue missed in what its CEO called a challenging quarter because of Japan-related disruptions. Shares of Sony's venture partner Ericsson fell almost 1 percent.
General Motors Co's
Chip maker Texas Instruments Inc
That followed a quake-related profit warning from Japanese electronics manufacturer Toshiba Corp <6502.T>.
But the chief financial officer of rival chipmaker Intel Corp
Alpine's Keane said problems could extend into the second and third quarters, although inventories, which had been running high, may provide some comfort.
There is room, there is a cushion, he said. The question is, how long before everyone can get back up to 100 percent?
(Writing by Bill Rigby; Editing by Edwin Chan, Matthew Lewis and Tim Dobbyn)