Report: Apple cuts iPhone 5 component orders on weaker demand
Apple (NASDAQ:AAPL) slashed its orders for components for the iPhone 5 because of weaker-than-expected demand, according to multiple reports, sending Apple's shares down in the process.
Apple's stock has declined since a September high, according to Yahoo Finance.
The reports, first from Japan's Nikkei and then also the Wall Street Journal, said Apple cut its orders for screens for the new gadget from suppliers like Sharp and LG by about half of what it had previously planned for the first quarter of 2013. Nikkei reported that Apple dropped its original target of 65 million screens to about half that, citing an unidentified senior executive at a component maker it didn't name. Meanwhile, the Journal reported, also citing unnamed sources, that Apple has reduced its orders for other components.
Apple's stock fell much as 4.5 percent to $497 per share in early U.S. trading, according to Bloomberg. The shares have lost 26 percent from a September peak.
Apple sold 26.9 million iPhones in its fiscal fourth quarter ahead of the holiday season, but the company is expected to report a blockbuster December quarter when it reports earnings later this month. The prior quarter only represented nine days' worth of sales of the iPhone 5, which went on sale Sept. 21.
The reported cut in components could indicate weakening demand for the iPhone 5 after a rush of orders late last year. It also could point to the effects of Apple's intense competition with Samsung Electronics, which was the world's largest smartphone maker by volume in the third quarter, thanks in large part to its flagship Galaxy S III device. However, the first quarter is typically a weaker quarter seasonally for handset makers than the fourth quarter, and it is unclear how Apple's sales are actually trending in the market so far this quarter.
Earlier this month research firm Strategy Analytics predicted that Samsung would widen tis lead over Apple this year. "We expect Samsung to slightly extend its lead over Apple this year because of its larger multitier product portfolio," Strategy Analytics analyst Neil Mawston told Reuters.
- see this WSJ article (sub. req.)
- see this Bloomberg article
- see Reuters article
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