Drop in Apple shares due to weak iPhone X demand drags Wall Street lower

Wall Street's main indexes came under pressure on Tuesday following a 2.8 per cent drop in Apple's shares on a report of weak iPhone X demand.

Apple will slash its sales forecast for its flagship phone in the current quarter to 30 million units, down from what it said was an initial plan of 50 million units, Taiwan's Economic Daily reported, citing unidentified sources.

That, along with some bearish brokerage calls on iPhone X demand, put its shares on track for their worst single-day percentage fall since Aug. 10.

Shares of companies that supply parts to Apple, including Broadcom, Skyworks Solutions, Finisar and Lumentum Holdings, fell between 1.8 per cent and 3.5 per cent.

The S&P technology index fell 0.9 per cent, the only loser among the 11 major S&P 500 sectors.

Most markets around the world, including parts of Europe and Asia, were shut on Tuesday. Trading volumes are also expected to be light in the holiday week.

"It's going to be slow trading for most of the week. A market that's going to stay within a trading range, we could have a plus or a negative day, but nothing exciting," said Peter Cardillo, the chief market economist at First Standard Financial in New York.

At 9:34 a.m. ET (1434 GMT), the Dow Jones Industrial Average was down 8.32 points, or 0.03 per cent, at 24,745.74 and the S&P 500 was down 2.4 points, or 0.09 per cent, at 2,680.94.

The Nasdaq Composite was down 29.11 points, or 0.42 per cent, at 6,930.86.

Sucampo Pharma surged 6 per cent after Mallinckrodt said it would acquire the drugmaker for $1.2 billion, to gain access to its constipation drug Amitiza. Mallinckrodt shares rose 4.3 per cent.
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iPhone X debut: Should Apple worry as model 7 outsells 8 in US?

Apple Inc’s older iPhone 7 models are outselling the recently launched iPhone 8 ahead of the early November debut of the premium iPhone X, broker KeyBanc Capital Markets said, citing carrier store surveys.

Traditionally, new editions of the iPhone have sold quickly as fans queue for the latest upgrade, but early surveys have added to chatter that the iPhone 8 is not proving as popular as its predecessors.

US wireless carrier AT&T said last week its third-quarter postpaid handset upgrades were fewer by nearly 900,000 from a year ago, and brokerage Jefferies attributed it to weak iPhone 8 demand.

“Many respondents indicated that a meaningful portion of customers are buying iPhone 7 in lieu of the new iPhone 8, given the lack of significant enhancements in the new phone,” KeyBanc analyst John Vinh wrote in a client note.

Vinh also said feedback from stores indicated that customers were waiting to purchase the iPhone X or to compare the iPhone X with other models before buying the iPhone 8.

Apple last month introduced the iPhone 8 and iPhone 8 Plus, which resemble the iPhone 7 but have a glass back for wireless charging. While iPhone 8 starts from $699 in the United States, iPhone 7 is retailing from $549 after a price cut.
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Apple beats Sensex in market capitalisation

The recent rally in the share price of Apple Inc has taken the market capitalisation of the technology giant to more than $797 billion at 10 PM IST, making it bigger than the combined market cap of all the 30 Sensex companies put together.

India’s bluechip index closed at a market cap of $784 billion, based on Monday's share prices. Apple, the most valuable company in the world, is the only company to have a higher market cap than that of the Sensex companies together. The Sensex accounts for 40 per cent of India’s total market cap.

Apple is also larger than the market cap of countries like Brazil, Singapore, Spain, and Malaysia.

In the league of companies with the top market cap, Apple is followed by Alphabet Inc and Microsoft, which have a market cap of $651 billion and $530 billion, respectively.

Despite reporting lower than expected earnings, shares of Apple went up by 3.7 per cent last week, pushing its market cap to record highs.

The rally in Apple was triggered by ace investor Warren Buffett’s statement that he had more than doubled his firm Berkshire Hathaway’s stake in Apple. His firm currently owns a 2.5 per cent stake in the technology giant. Expressing his confidence in the company despite softer sales in the recent past, Buffett said consumer loyalty for Apple was huge and hence there was nothing to worry.

Apple has gained 32 per cent year to date.

During the previous quarter, Apple added another $10 billion to its cash reserves, taking them to $256.8 billion, larger than the market capitalisation of General Electric (GE). This is roughly the size of the Indian mid-cap index in terms of market value.
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