Shares of Apple dropped more than 3.5 percent yesterday amid reports the company has cut orders for iPhone 5 parts because demand for the smartphone has not met expectations.
The reports, which claimed that Apple has ordered only about half as many iPhone screens for the first quarter as it had planned, cited unnamed sources -- but were solid enough to spook investors, causing the stock to fall by $18.55 to $501.75. That's far below Apple's peak above $700 a share in September.
The Cupertino, Calif., company did not return a call seeking comment.
But Carl Howe, vice president of Yankee Group's consumer research group, doubted the veracity of the reports.
"There's a lot of money to be made on speculation," Howe said. "Somebody's trying to depress the price (of Apple stock) before the earnings report goes public" on Jan. 23.
In a note to investors last week, Barclays analyst Ben Reitzes called it "prudent to temper ... expectations as Apple readies new products and services to be launched in the spring and through midyear." But he added that iPhone sales can still grow by about 20 percent for a few years.
"One could argue that shares hit an inflection point to the downside when investors realized that the Apple Maps endeavor was a mistake," Reitzes wrote, referring to the map app glitches that led CEO Tim Cook to apologize. "We believe Apple can turn the tide with a real move into (mobile) payments, an integrated iOS-led television service and improvements to iCloud."
In the meantime, any supply chain adjustments supposedly made last month do not necessarily make the case for Apple stock to be bearish, said N. Venkat Venkatraman, a management professor at Boston University. It may be that Apple plans to introduce a new, larger iPhone.
"That could explain the cut in the order quantity for the 4-inch screen," he said, adding that another possibility is that the company may have found another LCD maker for the iPhone.
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