Apple Inc. declined to the lowest share price in 11 months after the Nikkei news wire reported that production of the iPhone was cut on weak demand.
Apple ordered about half the 65 million iPhone 5 displays it originally targeted for this quarter, Nikkei said, citing an unnamed executive at a component maker. Manufacturing curbs have been widely known since December, according to Steven Milunovich and Mark Moskowitz, analysts at UBS AG and JPMorgan Chase & Co., respectively.
Last month, Apple cut production by about 30 percent, which may be the result of inventory rebalancing or lower consumer demand, Mr. Milunovich wrote in a research report Monday. Order cuts also may be due to suppliers becoming more adept at building the latest iPhone, reducing the need for Apple to order excess parts, Mr. Moskowitz wrote in a note to clients Monday. Mr. Moskowitz said his projection for 25 million iPhone 5 units to be sold in the quarters ending in December and in March will be exceeded under the scenario Nikkei reported.
The stock fell 3.57 percent to $501.75, and earlier touched $498.51 for the lowest intraday level since Feb. 16. Through Friday, the stock had lost 26 percent from a record high in September.
Bethan Lloyd, a spokeswoman for Apple in the U.K., didn't return calls seeking comment. Among Apple suppliers in Asia, representatives from Sharp Corp., Japan Display Inc. and Hon Hai Precision Industry Co. declined to comment.
iPhone sales could be slowing because smartphones are already common in developed markets, where Apple is strongest, said James Cordwell, an analyst at Atlantic Equities Service in London.
"We're getting close to saturation," said Mr. Cordwell, who rates Apple shares "overweight" and doesn't own any. "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."
Apple is also facing increasing competition from manufacturers using Google Inc.'s Android software, including Samsung Electronics Co. Android phones are gaining users in emerging markets because they are cheaper than the iPhone.
"The iPhone is no longer unique, fashion fatigue will transpire and the rich price premium will be impossible to sustain," Per Lindberg, an analyst at ABG Sundal Collier in London, wrote in a research report Monday.
Analysts' average second-quarter revenue estimate for Apple may drop by about $4 billion to $5 billion and the earnings-per-share projection may decline by $1 to $1.50, Abhey Lamba, an analyst at Mizuho Securities USA, said in a report.