Apple shares plunge to below $100 for the first time in six months
Shares in Apple plunged to just under $100 on Wednesday following reports that the smartphone maker may be trimming orders for the iPhone 6S and 6S Plus.
Investors are beginning to express concern that the California-based tech giant won’t be able to keep up with last year’s robust pace of sales.
There are reports that Foxconn will be cutting back on the number of working hours during the Lunar New Year Holiday.
Foxconn is a Taiwanese multinational electronics contract manufacturing company that manufactures Apple’s iPads and iPhones.
The Wall Street Journal said in a report citing someone familiar with matter that Foxconn will be sending some of its employees home on ‘early holiday’ before the upcoming Chinese New Year in February.
Experts believe that this indication of a cutback in production may be a sign of dwindling demand for Apple’s iPhones.
The Apple iPhone 6S.
Apple’s smartphone business accounts for nearly two-thirds of the company’s revenue. If its iPhone sales drop, the company will take a huge hit.
The latest iPhone models introduced last autumn are not considered to be a dramatic upgrade from the company’s previous generation of smartphones and may not have had enough pull to generate the same level of consumer demand compared to when the company launched the iPhone 6 and 6 Plus.
In addition, the smartphone market is not growing at the same pace it was a few years ago – mainly because most consumers now own one.
Apple Stock price over the past month:
According to Thomson Reuters, many analysts have trimmed their estimates on Apple, expecting the company to increase revenue this year by just under 4 percent – compared to a 28 percent jump in the previous financial year.
Analyst Nehal Chokshi from Maxim Group, a brokerage firm, was quoted by Reuters as saying:
“We can see per survey data that this decline in units is not a result of iPhone users switching away from the iPhone, but is simply due to the tough compare of the iPhone 6,”
“There is really no way that they could have produced the number of incremental users that they did on the iPhone 6 cycle with the iPhone 6S cycle,” Chokshi added.
Some analysts still have faith in Apple this year though.
Daniel Ives of FBR Capital Markets said that the reports coming from China indicating a cutback in production are indeed ‘worrisome’, however, he pointed out that the new iPhone versions, expected to release later this year, are set to offer significant improvements and may very well cause another surge in sales.
For another mega sales cycle of the iPhone to occur Apple will really have to step up its game and deliver a product that consumers feel will justify replacing their existing device.