Apple shares fall on lower iPhone sales than expected

Apple Inc. shares fell to their lowest in more than three months on Monday as three suppliers issued warnings on results that pointed to weakness in iPhone sales.

Apple warned earlier this month that holiday sales would miss Wall Street expectations, blaming the fall on weakness in emerging markets and foreign exchange costs.

The Cupertino, California, company’s signature product has become pricier with every new launch and analysts say that consumers, especially in emerging markets like India, are ditching them for cheaper alternatives.

Lumentum Holdings Inc, the main supplier of the Face ID technology in the latest generation of iPhones, cut $70 million off its forecasts for revenue on Monday, knocking another 5%, or around $50 billion, off Apple’s value in morning trade on Wall Street.

Lumentum blamed the cut in numbers it gave originally just 12 days ago on a client that was “one of our largest...for laser diodes for 3D sensing”, which analysts said could only be Apple.

Screenmaker Japan Display Inc. cited lower smartphone demand in cutting its own outlook, while British chipmaker IQE Plc also said it expects a material reduction in its financial performance in the current year.

Shares in Lumentum fell nearly 31%, dragging down shares of other suppliers and chipmakers.

JP Morgan analysts weighed in by cutting their price target for Apple by $4 to $270 pointing to poor orders for the new iPhone XR.

Three analysts said that Lumentum’s forecast pointed to a reduction of 18 million to 20 million iPhones on earlier estimates, based on average selling prices for 3D sensing parts.

“Apple could have accumulated too much Lumentum inventory, and needs to work it off, in which case the unit shortfall is less, although it is still indicative of weak iPhone sales,”.

In the fourth quarter, Apple sold 46.9 million iPhones, missing analyst expectations of 47.5 million iPhones, according to FactSet.