Apple Inc. shares sank as much as 4.5% Monday following a report that the tech giant has scaled back production orders for its new entry-level iPhone XR model.
The company's stock (AAPL) drop — pushing Apple's market cap below $1 trillion — comes after shares closed down 6.6% last Friday, to $207.48 per share, as investors reacted to the September quarter earnings results with lower iPhone unit sales and weaker-than-expected December quarter revenue guidance. At 11 a.m. ET, Apple's stock price (AAPL) was down 3.0%, to $201.33 per share.
According to a report Monday by Japan's Nikkei, Apple "signaled disappointing demand" for the iPhone XR by informing manufacturing partners Foxconn and Pegatron to halt plans for additional production lines of the smartphone targeted at price-conscious consumers. That suggested a 20%-25% reduced forecast in unit sales, per the Nikkei report, which cited anonymous sources.
The drop in Apple's shares since last Thursday has cut its market cap by more than $100 billion. Even so, the company still has the biggest market valuation of any company in the world.
The iPhone XR — priced starting at $749 — is meant to replace the iPhone 8 introduced a year ago. The XR model borrows its looks from the iPhone X and features an all-screen glass and aluminum design with a 6.1-inch Liquid Retina LCD display.
The XR model went on sale on Friday, Oct. 26, after Apple unveiled the new model along with the pricier iPhone XS and XS Max in September. It's available in six different colors: white, black, blue, coral, yellow, and red.
Apple had also asked smaller iPhone assembler Wistron to stand by for rush orders, but the company will receive no orders for the iPhone XR this season, the report said, citing supply chain sources.
"For the Foxconn side, it first prepared nearly 60 assembly lines for Apple's XR model, but recently uses only around 45 production lines as its top customer said it does not need to manufacture that many by now," the Nikkei quoted a source as saying.
At its iPhone launch event in September, Apple introduced the lower-cost iPhone XR, made of aluminum, along with two other models, the XS and XS Max.
Five years ago, Apple cut production orders for its plastic-backed iPhone 5C a month after its launch, fueling speculation of weak demand for the model.
The Cupertino, California-based company warned last week that sales for the crucial holiday quarter would likely miss Wall Street expectations.
Apple (AAPL) did not immediately respond to Reuters' request for comment.
Foxconn and Pegatron each said they would not comment on specific customers or products.
© 2024 Thomson/Reuters. All rights reserved.