Apple fell to the lowest level since 17 February during trading on Friday, closing at $509.79.
Various reports are suggesting a number of reasons for the fall, including the 'lack-luster' launch of the iPhone 5 in China; declining orders experienced by Apple's supply chain; and lower than anticipated iPhone 5 demand. However, it may well be the case that investors are cashing in their shares in anticipation of the fiscal cliff and associated tax increases, expected to hit in January. Due to capital gains tax increases, investors are thought to be reviewing the portfolios that have seen the most gains.
1) Muted iPhone 5 launch in China
The iPhone 5 launched in China last Friday and Apple announced that it sold more than two million iPhone 5 smartphones in China in the first three days. However, despite this news, reports suggested that interest in the iPhone 5 launch in the World's largest market was muted.
For example, only two people queued up outside one of Apple's stores in Beijing before the store opened its doors at 8am. This is a contrast to the launch of the iPhone 4S in China 11 months ago when a massive crowd of hundreds had gathered outside the same store. However, that launch resulted in rioting, and as a result, Apple switched to a reservation system to sell its iPhone 5.
There was also heavy snow in the north of China, which is likely to have dissuaded people from queuing.
In addition, many earlier adopters in China will already own an iPhone 5, bought from the country's gray market vendors, notes Canalys analyst Jingwen Wang.
Apple currently ranks below the top five smartphone vendors in China, Samsung is the number one, followed by Lenovo, Coolpad, ZTE and Huawei (all Chinese companies).
UBS analyst Steve Milunovich says his "Chinese sources do not expect the iPhone 5 to do as well as the iPhone 4S," as a result he has trimmed his iPhone forecast by 5 million for each of the next three quarters and reduced his iPad outlook by 2 million for those same quarters, reports Forbes.
However, Milunovich adds: "We expect that China Mobile may start to sell iPhones in the December quarter, so a summer 5S with TD-SCDMA and fingerprint recognition is possible."
Apple revealed that China accounted for sixteen percent of Apple's revenues, in its fiscal 2011, there are concerns that the company will not be able to sustain this.
2) Reduced iPhone demand sees Apple cut supply-chain orders
Reports from Apple's supply chain suggest that Apple has cut orders for the iPhone 5. A number of analysts are pointing to this and as a result have reduced their outlook for the company.
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