Apple shares dip on report it has cut iPhone production


SAN FRANCISCO, CA - SEPTEMBER 12: Apple Senior Vice President of Worldwide product marketing Phil Schiller announces the new iPhone 5 during an Apple special event at the Yerba Buena Center for the Arts on September 12, 2012 in San Francisco, California. Apple announced the iPhone 5, the latest version of the popular smart phone. (Photo by Justin Sullivan/Getty Images) (Justin Sullivan/GETTY IMAGES)

Apple shares took a dip in early trading Tuesday, after an analyst report claimed that the firm is planning to cut production of the iPhone by 20 percent in the second half of the year.

As CNBC reported, analyst Brian Blair of Wedge Partners said in a note that the firm has cut smartphone production by a fifth — planning to make between 90 million and 100 million rather than an original projected range between 115 million to 120 million. The cuts, the report said, include production for the iPhone 4S, iPhone 5 and as-yet unreleased (and unconfirmed) next generation of the iPhone.

Apple shares, which opened at $413.60 per share, dipped as low as $410 .38 within a half-hour of the market open, though the stock recovered as was trading at around $419.20 in early afternoon trading Friday.

Blair said the lower production is a reaction to the overall slowdown of the premium smartphone market. Apple’s perceived slowdowns tend to face closer scrutiny than those of other firms — particularly amid lingering questions about its ability innovate since the 2010 death of co-founder Steve Jobs — but news of a slowing phone sales should sound familiar to anyone paying attention to earnings from Samsung and HTC last week.

Both smartphone firms projected lower-than-expected sales that escalated worries that the high end of the smartphone market has reached a peak. A majority of Americans now own smartphones and there has been considerable grumbling that the last couple of models from manufacturers such as Samsung or Apple have been more evolutionary than revolutionary.

With growth poised to jump most in emerging smartphone markets such as China, Latin America and Eastern Europe, analysts say that there will be more demand among these first-time smartphone owners for cheaper phones, rather than top-of-the-line models.

That projected lull is spooking investors across the industry and has hit not only manufacturers such as Samsung and Apple, but also chip makers such as Qualcomm, which also saw its shares slide early last month when analysts first began projecting that Samsung earnings could disappoint.

Related stories:

It’s not just Apple: HTC, Samsung suffer from high expectations, slower sales

Apple gets boost from T-Mobile iPhone against Android, in U.S.

AP: Apple hires Yves Saint Laurent CEO Paul Deneve for ‘special projects’ reporting to Tim Cook

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Hayley Tsukayama covers consumer technology for The Washington Post.
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