The uncertainty has helped sink Apple's stock price to US$130 a share, down 34% since the beginning of the year. That is far worse than the 13% drop for the tech-heavy Nasdaq index. Apple shares were already under pressure over concerns about how weakening consumer spending would affect the company's shipments of iPod music players and notebook computers. Now the worries about iPhone sales have entered the mix. "In the past week the stock has fallen further because of potentially lower iPhone shipments," says Shebly Seyrafi, an analyst at Caris & Co. A story that recently surfaced in a Chinese newspaper claimed that Apple's iPhone component suppliers are cutting back on production in anticipation of lower US demand.
A January falloff isn't unusual in the cellphone industry; the holidays are typically when sales peak. However, investors who examined the discrepancy between Apple's and AT&T's numbers figured that, with handset sales to European carriers Orange, O2 and T-Mobile Germany just ramping up, many of the missing iPhones may be languishing in inventory. An inventory buildup is always dangerous, particularly amid slowing demand. Toni Sacconaghi, an analyst at Sanford C. Bernstein, figures Apple's first-quarter iPhone sales could be down as much as 30% compared with daily sales rates last year.
So where are the missing phones? Two industry insiders confirm what is only now becoming apparent to analysts: that Apple is selling far more unlocked iPhones than previously expected. Those phones are adapted by the user with unauthorized software and phone cards so they run on nonapproved wireless networks.
