Apple shares flirt with correction territory as report fires concerns about demand for new phones

Apple CEO Tim Cook launching the new iPhone X during a media event at Steve Jobs Theater at Apple Park, Cupertino.
Apple CEO Tim Cook launching the new iPhone X during a media event at Steve Jobs Theater at Apple Park, Cupertino.ST PHOTO: TREVOR TAN

SAN FRANCISCO (REUTERS) - Shares of Apple dipped on Monday (Sept 25) and flirted with correction territory following a report that the company had told suppliers to scale back shipments of parts for its upcoming iPhone X.

Digitimes, citing unnamed sources, reported that Apple suppliers were shipping just 40 per cent of the components originally ordered for the premium phone, which goes on sale in early November.

That added to concerns on Wall Street about demand for Apple's new devices after the launch on Friday of the iPhone 8, a less expensive model than the iPhone X, drew smaller crowds than previous launches.

Apple declined to comment.

Some investors saw the tepid iPhone 8 debut as a sign that customers were holding out for the iPhone X, which boasts an edge-to-edge display and will sell in the United States for US$999.

Amid a broad selloff in technology shares on Monday, Apple's stock finished down 0.9 per cent. It earlier fell as much as 1.8 per cent, bringing its loss since a record high on Sept 1 to 9 per cent.

Many investors define a correction as a 10 per cent decline. A stock in correction may be viewed as either a buying opportunity or as likely to fall further.

"I'd buy Apple in this pullback," said Wedbush trader Joel Kulina. "It's a high-priced product but super high-end."

While the number of people lining up outside Apple stores has dropped over the past several years with many buyers choosing to shop online, the weak turnout for the latest iPhone has partly been due to poor reviews.

Apple's stock recently traded at 13.8 times expected earnings, its lowest valuation since February, according to Thomson Reuters Datastream.

Over the past two years, Apple's average forward price-to-earnings ratio has been 12.6.