Back to reality, even at Apple
Apple Inc. is cutting orders to vendors in the supply chain for its iPad tablet computer, a move that may result in slower sales for companies including Hon Hai Precision Industry Co., Bloomberg said, citing a report from JPMorgan Chase & Co.
Several supply-chain vendors indicated in the past two weeks that Apple had lowered fourth-quarter iPad orders 25 percent, the first such cut that analysts at JPMorgan’s electronic manufacturing services team in Hong Kong said they have ever seen.
For a vendor such as Hon Hai, the cut could mean a drop to 13 million units in the fourth quarter from 17 million units in the third quarter, JPMorgan analysts wrote in the report.
Reduced orders from Apple to iPad suppliers could reflect both weakening demand in Europe due to economic conditions there as well as a strategy by Apple, the world’s biggest company by market value, to operate with reduced inventory, said Wanli Wang, an analyst at RBS Asia Ltd.
“It’s back to reality,” Wang said. “Now it seems even for Apple, due to the market situation, we need to be conservative.”
So far there is no confirmation from Apple that it has reduced orders to suppliers, Wang said.
Apple shares had fallen $8.21, or 2 percent, to $396.09 earlier today. The stock had climbed 25 percent this year before today, Bloomberg said.
Apple’s iPad may account for 73 percent of tablet computer sales this year, according to research firm Gartner Inc. Products that run on Google Inc.’s Android operating system, including Samsung Electronics Co.’s Galaxy tablets, will probably have about 17 percent of the market, Gartner said.