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Apple stock slides on claims of slashed iPhone component orders, weak iPhone 6s demand

Apple shares took a small hit on Tuesday after a report claimed the company decreased iPhone parts orders for the coming two quarters, a move that suggests weaker than expected iPhone 6s sales.




In an intra-day note to investors, Credit Suisse analyst Kulbinder Garcha said recent checks with Apple's Asia supply chain revealed weaker iPhone orders than previously forecast, reports Street Insider. Following the note's release, Apple stock prices declined to close at $117.34, down from a $118.73 open.

"In our view, the continued weak supply chain news could weigh on Apple shares for the next few weeks/quarters," Garcha writes, adding that unexpectedly low iPhone 6s demand appears to be driving the cuts.

Credit Suisse issued a nearly identical report three weeks ago, saying Apple cut supply chain orders on weak iPhone 6s demand.

The investment bank's Asia team supposedly confirmed a further decrease in orders for November, informing new build estimates of 70 to 75 million units for the December quarter and 45 to 50 million units for the three months following. As such, Garcha maintains sales estimates of 78 million iPhones for December and 55 million for March, culminating in 222 million units for the 2016 calendar year. While the numbers are lower than Wall Street consensus, the analyst believes Apple will one day expand its iPhone base to 615 million devices.

Interestingly, Garcha included a rumored 4-inch "iPhone 6c" in the March quarter model, estimating that the small format device could account for up to 4 million unit sales.

"[W]e note that Apple's recent capex guidance and purchase obligations suggest our iOS units have 25% upside (providing further evidence that it will launch a 4-inch screen device)," Garcha writes.

Analyst Ming-Chi Kuo was first to speculate that Apple would launch a revamped 4-inch iPhone sometime in 2016 as an entry-level offering. The prediction gained traction as subsequent reports appeared to confirm Kuo's claims.

Despite lowered iPhone estimates, Credit Suisse gave Apple an Outperform rating with a price target of $140.00.