The iPhone 5 debuted in China over the weekend but customers stayed away in droves. While it is possible that after the upgrade to iOS many iPhone 4s users were forced onto Apple maps and could not find their way to the store, two key analysts cut shipment forecasts.
Jefferies analyst Peter Misek trimmed his iPhone shipment estimates for the Jan-March quarter, claiming Apple had started cutting orders to suppliers to balance excess inventory.
Apple suppliers Jabil Circuit, Qualcomm, Skyworks, TriQuint Semiconductor, Avago and Cirrus Logic fell in early trading.
Shares in Apple have lost a quarter of their value since they hit a life high of $705.07 on 21 September. Shareholders are worried that the shine has gone off Apple as it faces increasing competition from better spec phones running on Android.
Misek cut his first-quarter iPhone sales estimate to 48 million from 52 million and gross margin expectations for the company by two percentage points to 40 percent.
UBS Investment Research cut its price target on Apple stock to $700 from $780 on lower than expected iPhone and iPad shipments for the March quarter.
UBS said Apple’s growth was going to be more conservative. It found all this out looking at the supply chain, which revealed fewer iPhones were being built – as it appears Apple does not believe it will sell as well either.
UBS analyst Steven Milunovich said that the problem for Apple appeared to be in China where inscrutable customers appear less naïve than their western counterparts.
He told Reuters that Chinese sources do not expect the iPhone 5 to do as well as the iPhone 4S.
Apple had been hoping that a sales boost from the iPhone 5 in China would give the company some respite from a recent slide in market share behind the bamboo curtain.
Apple has always found China a difficult market to break into. Initially customers were not interested as the gear cost far too much. But with the release of the iPhone 4 and iPhone4S, business picked up. Unlike in the US, where Apple fans will upgrade from one phone to the next after a year, Chinese customers are more likely to look at competing products or less likely to upgrade if they do not see a clear advantage.