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Analyst: Apple cutting Q1 production of iPods, iPhones

Report suggests the company is cutting iPod and iPhone production in the first quarter beyond its original plan to combat the usual seasonal slowdown coming off the holidays.

Tom Krazit Former Staff writer, CNET News
Tom Krazit writes about the ever-expanding world of Google, as the most prominent company on the Internet defends its search juggernaut while expanding into nearly anything it thinks possible. He has previously written about Apple, the traditional PC industry, and chip companies. E-mail Tom.
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Tom Krazit
2 min read

Apple does not appear to be very bullish about its business in the first quarter, according to a financial analyst.

Craig Berger of FBR Research tracks chip companies like Broadcom and Marvell that supply chips for Apple's iPods and iPhones, among other things. AppleInsider spotted a report issued by Berger saying that Apple is reducing the number of iPods, iPhones, and Macbooks it plans to build in the first quarter.

Is Apple really cutting production of the iPod Touch, just after releasing a new model? CNET Networks

Consumer electronics and PC companies know the first quarter is always a downer compared with the fourth quarter, which is chock full of holiday shopping goodness. Berger is saying, however, that Apple now plans to cut production by an even larger amount than originally planned. Based on "channel checks," Berger says, Apple is cutting iPod and iPhone production by 60 percent compared with the fourth quarter, when it had originally planned to cut production by 50 percent compared with the fourth quarter.

He says this is "likely reflecting less-than-expected sell-through in 4Q, or thus far in 1Q." (Come on, Craig, this is America, it's Q1). The questions about iPhone sell-through in the fourth quarter have come up before, but iPod Touch sales appeared to be strong during Apple's most recent financial quarter.

One factor could be the launch of the new 32GB iPod Touch, which could have caused Apple to reduce production of older models of the iPod Touch in anticipation of demand for the higher-capacity model. The report was issued at almost the exact same time that Apple announced the new iPods, and it's not clear whether or not the channel checks include production of the 32GB version.

An Apple representative declined to comment on the report, which also suggested that the company is planning to reduce production of Macbooks while increasing production of iMacs. Banc of America issued a similar report regarding iPods last week, but said iPhone production is up after cuts in December and January.

If the economy really is headed south, it's going to affect us all; Apple won't be immune. Apple's stock fell another 5.69 percent Wednesday, or $7.36, to close at $122. It's down 37 percent so far in 2008, while the Nasdaq as a whole is down about 9 percent.