Merchant Innovation

Apple May Cut iPhone Orders

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The latest iPhone model may experience production cuts in the coming months, according to Nikkei Asian Review.

The business daily said inventories of Apple’s iPhone 6s and 6s Plus have swelled since the phones were released last September, and production may be reduced by as much as 30 percent until dealers are able to go through their current stock.

“This is an eye-opening production cut, which speaks to the softer demand that Apple has seen with 6s out of the gates,” FBR Capital Markets Analyst Daniel Ives told Reuters. “The Street was bracing for a cut, but the magnitude here is a bit more worrisome.”

As Reuters reported on Tuesday (Jan. 5), Apple’s stock fell following the report, as did the shares of its suppliers, Skyworks Solutions, Qorvo and Cirrus Logic, among others.

But this isn’t the first time reports have shown trouble in the water for Apple’s newest mobile device.

Just a few days before Christmas, UBS Analyst Steven Milunovich saw some strong headwinds in the firm’s future.

“I think it’s going to be a little bit rough here for [the] next one to two quarters. We’re looking for pretty flat to down in the March quarter shipments,” he told CNBC’s “Squawk Box” back in December.

The grim prediction comes as Google search traffic for the iPhone is on the decline in the U.S. and even more so in China, with search traffic growth dropping to 15 percent from 80 percent at the same time last year.

The estimate for this calendar year is that Apple’s iPhone sales will dip 2.9 percent to 224,000 units, which is below the early projections by about 33 million for fiscal year 2016 and off by 28 million for calendar year 2016. As a result of the shifting tide for what could come for Apple, Morgan Stanley lowered its Apple price target by 12 percent.

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