Apple Falls on Nikkei Report That Sees iPhone Production Cut 30%by
Manufacturing levels should return to normal in April-June
Analysts began predicting in December a 2016 sales slump
Shares of the world’s most valuable company dropped 2.5 percent to $102.71 at Tuesday’s close in New York. They declined 4.6 percent in 2015.
Apple had initially told parts suppliers to keep production of the iPhone 6s and 6s Plus models for the January-March period at the same level as for their predecessors iPhone 6 and 6 Plus a year earlier, the Nikkei reported. But inventories of the new models, which debuted in September, have piled up at retailers in developed markets like China and Europe amid lackluster sales while an increase in the dollar against emerging markets currencies has made the phone more expensive in those countries, the magazine said.
Production should return to normal in the April-June quarter, Nikkei said, once the inventory adjustment is complete.
Kristin Huguet, a spokeswoman for Cupertino, California-based Apple, declined to comment on the report.
“This is an eye-opening production cut which speaks to the softer demand that Apple has seen with the 6s out of the gates,” said Daniel Ives, managing director at FBR Capital Markets. “The Street was bracing for a cut, but the magnitude here is a bit more worrisome and speaks to a soft March quarter on the horizon for Cook & Co.,” referring to Apple Chief Executive Officer Tim Cook.
“That said, it’s near-term pain for long-term gain as the eye on the prize is around iPhone 7 later this year,” Ives said.
Toward the end of last year, many analysts began predicting that sales of the company’s best-selling product would slump in 2016, based on supply chain issues and on weaker demand especially from saturated, developed markets. Apple’s growth is increasingly dependent on demand for iPhones, while iPad tablet sales decline and adoption of the Apple Watch remains modest. Apple predicted in October that it would have another record holiday quarter.