Apple To Slash iPhone Production As Smartphone Sales Slow

Written by David Richards     10/07/2013 | 08:11 | Category: INDUSTRY

Apple shares have slumped further overnight on news that production of their iPhone has been scaled back by 20 percent. What is not known is whether this means a new iPhone is imminent - or the market for smartphones is collapsing.

Apple To Slash iPhone Production As Smartphone Sales Slow
Apple's shares are currently trading at $415.05, down $2.37 from the close of trade on Monday. 

Brian Blair, an analyst at Wedge Partners, said in a note that Apple has cut production of its iconic smartphone by a fifth for the second half of the year, as it responds to an ongoing slowdown in growth.

He said the cut in orders, which applies to all iPhone models, was likely to be a reaction to flagging demand "globally". Apple is now set to produce 90m to 100m handsets in the second half of the year, down from earlier estimates of 115 to 120m units.

He says that selling that many phones would still put Apple on course for a 26 percent increase in sales in the second half of the year, but a long way short of analysts' one-time expectations for the company, which until recently ranked as the biggest listed business in the world.

The cuts are scheduled to impact the June to December period, which is a peak buying period in Australia for new smartphones. Recently, Telstra moved the iPhone from the front of shop display to one right at the back of its North Sydney store.

If the claims are accurate, it appears to be indicative of tougher-than-expected market conditions for high-end smartphones, a situation that could impact Telstra, Vodafone and Optus sales. 

Earlier this week, shares in Samsung and HTC shares took a pummelling after profit and sales estimates for the quarter came in lower than analyst expectations.