Cupertino-based Apple tumbled on Tuesday after an unsettling report from Wall Street analyst Credit Suisse that suggested sales of tech giant s iPhone 6 devices may be struggling.
Apple has lowered its component orders by as much as 10 percent, according to our teams in Asia, a team led by Credit Suisse analyst Kulbinder Garcha wrote in a research note on Tuesday. The cuts seem to be driven by weak demand for the new iPhone 6s.
Overall builds for the iPhone 6 are now estimated to be below 80 million units for the three months that will end in December and between 45 million to 50 million units for the quarter that will end in March 2016.
In addition, the analysts lowered their projections for calendar 2016 unit builds for the iPhone 6 to 222 million units, down from the prior estimate of 242 million units. That would be 8.3 percent below the original estimate for 2016.
Credit Suisse also estimated that 2017 will bring iPhone build to 235 million units, which would be 6 percent higher than the new 2016 prediction.
In our view, the continued weak supply chain news could weigh on Apple shares for the next few weeks or quarters, Credit Suisse stated in the note.
For all of calendar 2016, Apple should earn about $9.81 a share, which is about 6 percent below the prior estimate of $10.40, the analysts predicted.
The investment firm maintained an out-perform rating on Apple, despite the concerns raised by the potential slowdown in iPhone sales.
Among the reasons for future growth: Credit Suisse believes the installed base for the iPhone will swell to 615 million over time, driven by its recent expansion, which currently is growing by 24 percent a year. Plus, recently launched installment plans to pay for the iPhone will drive unit sales long term, the analysts stated.
It is tempting to argue that this is now the beginning of the end of the iPhone business growth phase run. Indeed, with revenues now at around $155 billion, it has clearly been a successful run. Despite this, we believe there is more to come, Credit Suisse wrote in the note.
Photo caption: Apple CEO Tim Cook holds an iPhone during an event at DeAnza College in Cupertino
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