Reports: Apple slashes iPhone component orders

While some experts take the news with some salt, others explain the downturn by citing rocketing sales of Samsung's Galaxy S III

Apple has slashed orders for iPhone screens in the first quarter by half, according to Monday reports out of both Japan and the U.S.

Earlier today, Japan's Nikkei and the U.S.-based Wall Street Journal (subscription required), both citing unnamed sources, claimed that iPhone display orders had dropped to about half what Apple had previously planned for the quarter ending March 31.

Suppliers were notified of the cuts last month, according to the Wall Street Journal, and the scale-backs involved other components beside screens.

Investors interpreted the reports as bad news -- that Apple expects iPhone sales will dramatically slow -- and pushed the company's stock price down 3.4%, or nearly $18, to $502.50, by 1:30 p.m. ET.

Some analysts were skeptical of the reports, considering other evidence -- including an iPhone sales record by AT&T in the fourth quarter -- that pointed to the contrary.

"Anything is possible, but [the reports] are not consistent with other evidence coming in," said Ezra Gottheil, an analyst with Technology Business Research.

Even so, Gottheil offered explanations for the cutbacks, assuming they have occurred. "Other smartphone companies have caught up [to the iPhone] in performance and design in their new devices," Gottheil said. "Competing products are relatively stronger than they were two years ago."

Darren Hayes, an assistant professor at Pace University's Seidenberg School of Computer Science and Information Systems in New York, put more credence in the reports, and echoed Gottheil's rationale for the falling orders.

"Given the recent numbers of the Galaxy S III, Samsung is a serious competitor, so I'm not surprised that some of the initial hype over the iPhone 5 has dissipated," said Hayes in a Monday interview. "The Galaxy is a trendy phone for young people, and I see lots of students buying these."

Today, Samsung announced that it had sold 40 million Galaxy S III smartphones since the device's May 2012 launch, and more than 100 million Galaxy S-series handsets since 2010.

Hayes also ticked off some of the familiar knocks against Apple's business model, ranging from its intransigence over high carrier subsidies and the Maps debacle to its habit of upgrading the iPhone annually, saying that those decisions have come home to roost.

1 2 Page 1
Page 1 of 2
7 inconvenient truths about the hybrid work trend
Shop Tech Products at Amazon