Apple Shares Dip Below $500 on Reports of Weak iPhone 5 Demand

With little more than a week to go before Apple posts first-quarter results, the company took a nasty beating on Wall Street early Monday morning, following reports that it has reduced iPhone 5 component orders because of weaker-than-forecast demand.

Apple shares slipped below $500 in early morning trading for the first time in nearly a year, after the Nikkei said Japan Display and Sharp have begun reducing production of the liquid-crystal-display panels used in the iPhone 5 amid slower-than-anticipated global sales of the handset. Apple had reportedly planned to order enough LCD panels to build 65 million iPhone 5s this quarter (aside: that is a fantastically large number that should be viewed with at least a modicum of skepticism). But sources told the Nikkei that the company has essentially halved that order (aside: some skepticism merited here as well, perhaps). The Wall Street Journal subsequently issued a similar report.

As of this writing, Apple shares had fallen more than 3 percent to $504.25, having earlier touched $498.51. The decline extends a slide that has dragged Apple’s stock price down almost 30 percent since last fall, when anticipation for the iPhone 5 had pushed it above $700.

It’s worth noting that analysts don’t seem all that concerned by the reports that are freaking investors out today. Consensus among the few I’ve spoken to seems to be that 65 million iPhone 5s in a quarter was unrealistic to begin with, and component-order cuts like this are typical following a big holiday season ramp. As Wells Fargo analyst Maynard Um said, “We believe investors should not put too much merit in the 65 million estimate as (1) order cuts are not new news and (2) the likelihood that Apple would have shipped 65 million iPhone 5’s for the March quarter would have been miniscule, in our opinion, given the large implied sequential ramp into what is typically a seasonally slower quarter.”