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Apple's Volatile Ride Continues Amid Reports Of Production Cuts For New iPhone Models

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Apple's Volatile Ride Continues Amid Reports Of Production Cuts For New iPhone Models
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The recovery seen in Apple Inc. (NASDAQ: AAPL)'s shares in the past two sessions is facing the risk of reversal, as the stock was moving lower Monday. 

What Happened

A Wall Street Journal report portended further troubles ahead. Apple reduced its production orders for all three of its newest iPhone models in recent weeks, WSJ said, citing people familiar with the situation.

"Lower-than-expected demand for Apple's new iPhones and the company's decision to offer more models have created turmoil along its supply chain and made it harder to predict the number of components and handsets it needs, the report said. 

The hardest-hit model is reportedly the iPhone XR, the budget model among the X iteration, as the company cut its original production estimate of 70 million units for the period between September and February by one-third.

Why It's Important

The latest update on iPhone production should worry investors as well as suppliers, as the pullbacks were previously said to be primarily in the XR model. 

Shares of suppliers that draw one-third to half of their revenue from Apple have taken a hit in recent times, including companies like Qorvo Inc (NASDAQ: QRVO), Lumentum Holdings Inc (NASDAQ: LITE) and Skyworks Solutions Inc (NASDAQ: SWKS).

What's Next

With analysts and investors questioning the company's logic of releasing more than two iPhone models at higher price points of $749 to $1,000 — while also keeping some of its old models active — it remains to be seen how Apple carries forward its strategy for its core product in the coming years.

Apple shares were down 2.33 percent at $189.01 at the time of publication Monday. 

Earlier last week, the stock dipped into bear market territory before staging a recovery.

Related Links:

Time For Apple's Stock To Enter A 'Period Of Digestion,' Guggenheim Says

Morgan Stanley: Buy The Dip In Apple

Photo courtesy of Apple. 

Posted-In: Apple Suppliers iPhone iPhone suppliers Wall Street JournalNews Media Trading Ideas Best of Benzinga

 

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