AAPL tanks below $500 on ‘weaker than expected’ iPhone 5 demand rumor

By , Jan 14, 2013

Yahoo finance AAPL 20130114

AAPL fell briefly below $500 this morning following The Wall Street Journal and the Nikkei newswire reports of the iPhone 5 part orders halved amid what’s being claimed a ‘weaker-than-expected’ global demand for the handset. Specifically, shares briefly sank to $497 in pre-market trading Monday as investors reacted to the news.

It’s the first time since February 2012 that AAPL tanked below $500 a share. AAPL lost nearly 26 percent since a September 2012 all-time high of $705.07 a share. In the last three months alone, the Apple stock lost seventeen percent of its value. Rival Samsung seized its opportunity, having released this morning official numbers proving flourishing sales of its Galaxy S smartphone series, which surpassed the accumulated sales record of 100 million units (from the supply side) since its launch in May 2010…

According to Nikkei and The Wall Street Journal, Apple has reduced its original target to order 65 million iPhone 5 displays this quarter by about half.

“Apple’s orders for iPhone 5 screens for the January-March quarter, for example, have dropped to roughly half of what the company had previously planned to order”, two of the people told the Journal.

The company is set to announce its fiscal 2013 first-quarter earnings on January 23 and one analyst is expecting the conference call to file as the most important in a decade amid ongoing concerns about Apple’s future prospects.

Barclays Capital’s Ben A. Reitzes wrote in a last week’s note to clients (via AppleInsider):

Momentum can change quickly among the leaders in disruptive mobility — along with sentiment. If Apple can prove yet again it is more than a handset company, then we believe shares can recover.

The iPhone typically accounts for nearly half of all Apple’s revenues and more than half the company’s profits. Analysts are expecting holiday-quarter iPhone sales of up to 50 million units.

 

As StreetInsider.com correctly points out, investors are making decisions based on a month old information. In a December 14 note to clients, Jefferies analyst Peter Misek wrote they have seen large order cuts in Apple’s supply chain for the iPhone because “the assembly bottleneck has not improved as much as hoped”.

 

Other analysts opined at the time that Apple didn’t need as much parts because because its supply chain had caught up with an early shortage of devices. While only one source today said Apple was cutting just display orders in half for the March quarter, another claimed the company did trim component orders beyond just display panels.

These four-inch displays also go into the latest iPod touch so it’s possible that stagnant post-holiday media player sales could be a factor. Additionally, Apple may be re-shuffling its display suppliers and adding new suppliers to the mix.

iPhone 4 Manufacturing

A more plausible explanation: Apple is switching to a mid-cycle iPhone hardware update so it’s expected it would cut iPhone 5 component orders ahead of the iPhone 5S, believe to be arriving in May or June. I’m also thinking that the high-end of the smartphone market is reaching a saturation point, hence all the recent talk of a less-pricey iPhone. One analyst said as much in a Bloomberg article today:

We’re getting close to saturation. The real growth is going to come from emerging markets, and Apple’s share in emerging markets is much lower than it is in other markets at the moment due to such high prices.

In developed markets, about 75 percent of handsets sold already are smartphones, Cordwell said. In emerging markets like China and Brazil, smartphones are about to explode, especially cheaper models. Apple won’t “blindly pursue market share”, says its marketing honcho Phil Schiller.

 

Other publications are also questioning today’s report and more analysts will likely follow suit as the day goes on. Apple rumormongering back in 2010 became the target of a SEC probe into channel checks and the connections between financial analysts and the companies that supply parts for Apple products.

Top chart via Yahoo Finance.

  • Share:
  • Follow:
  • pnh

    Steve Jobs is rolling in his grave = unhappy

    • Tr1pTr0p

      He died more than a year ago, when will you finally let him rest in peace?

      • http://www.facebook.com/joe.jonsen Joe Jonsen

        steve jobs is our jesus we will talk of him for ever..

      • JoshuaHulgan

        well that’s just creepy…

  • http://www.facebook.com/shingo.hoshino Shingo Hoshino

    once it reaches $100 i would be very happy hahahahhahaa

  • pauleebe

    This is total stock manipulation … oh, what a coincidence, release this info right as we speculate Samsung has broken the 1M barrier of Galaxy Devices!

    • Tr1pTr0p

      There is no demand for Apple products, and then their stock value drops. Oh my gosh! What a conspiracy!!!

      • http://www.facebook.com/joe.jonsen Joe Jonsen

        lol demand is very high but not high enough to satiate the greed requirement of stock holders and company executives… everyone who want san iPhone now almost has one and they have so much hype that many folks sit and wait for the next phone instead of ever buying one..lol

  • Africanking

    Apple used to be something I looked forward too but after iPhone 4, it became nothing special. I will keep my iPhone 4s and I don’t even use Siri.

    • http://www.facebook.com/joe.jonsen Joe Jonsen

      i agree with this also… the iPhone 4S was the perfect iphone4… the iphone 5 should have gone in a new refreshing direction but they didn’t d it and instead gave us a slightly taller screen..

      iPhone 5 is one of the oddest updates to a product ever in the history of earth..

      I use my 4S just fine and my iphone 5 sits as and ipod touch until the jailbreak comes out… sad part is ii dont mind not using my iphone 5..

  • Jonathan

    Apple needs a bit of a kick. iOS 7 needs to bring something really new not just small improvements and refinements. They go about how they don’t want to too radically change iOS or the iPhone. But the people who buy the latest model are the people that want the latest and greatest, it’s the people one or two generations behind the latest who like things to stay the way they are. Roughly at least.

    • http://www.facebook.com/joe.jonsen Joe Jonsen

      I AGREE.. but apple has shown that they are unwilling to really improve and innovate anymore .. they are just living off the legacy of past success but as you can see the is slowly dying and in typical capitalist fashion they will wait till its too late and do too little..

    • jilex

      totally agree, i still think the iPhone 4S is the greatest iPhone, cuz with the iPhone 5 they didn’t really innovate, just think about it slowly and not like a fanboy…

      • http://www.facebook.com/joe.jonsen Joe Jonsen

        exactly..

  • 4p0c4lyps3

    This is just what the tech giant needs, a swift kick in their nuts. Then mayb they’ll get off their asses and innovate something.

    • http://www.facebook.com/joe.jonsen Joe Jonsen

      i agree with tis.. but they are sleeping they have been king of the hill for sooooo long that they are fat blind and lazy now… all the execs are over paid and lazy and dont really care.. they need new hungry folks in there who want to keep revolutionizing the industry.. last time apple got like this they brought back Steve jobs and he saved then…

      who will save them this time??

      • 4p0c4lyps3

        Agreed. +1

  • Johnathan Jennings

    One thing will make people love iOS again.. #WeWantAnOpeniOS

    • http://www.facebook.com/joe.jonsen Joe Jonsen

      all apple needs to do is throw u s damn bone and add some new design life to the UI with some cool GUI effects and bells and whistles that leverage all the processing power of the iphone 5.. I really feel like the 4S ran all apples apps perfectly and the speed and power of the 5 is tragically under utilized..

  • https://twitter.com/MrElectrifyer MrElectrifyer

    Hahahahahaha…and so began the end of the suing machine; an era in which choice and innovation overcame greed, and shall forever live among humans.

  • Mohammad Ridwan

    Resting on laurels…