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Apple Cuts iPhone 5 Production, Stock Falls: Is the Age of Apple Over?

Daily Ticker

Apple (AAPL) shares were falling Monday morning after The Wall Street Journal reported that the tech giant was slashing orders for iPhone 5 parts by half. Apple notified suppliers last month that it was cutting orders of LCD screens and other components for the current quarter. Weaker-than-expected demand and lackluster sales for the iPhone 5 have been cited as the reasons behind the production changes.

Related: Apple's Cheap iPhone Is A Great Move For The Company

Apple debuted the latest iteration of the iPhone in September to much fanfare, but rivals such as South Korea’s Samsung have been steadily chipping away at Apple’s customer base. Apple’s stock hit an all-time of $705.07 last September but has since fallen more than 25% as concerns grow about the company’s waning dominance in the smartphone market.

Related: Apple Has Lost Its Edge

According to market intelligence firm IDC, Samsung’s Galaxy controlled 31.3% of the smartphone market in the third-quarter of 2012 compared to 14.6% for Apple. There are also reports that social networking Web site Facebook (FB) may announce a new phone at a press event Tuesday.

Brian White, analyst at Topeka Capital Markets and a longtime Apple bull, has a "buy" rating on Apple and a 12-month price target of $1,111. But in a recent client note he lists 10 risks to Apple that could force a downgrade in the firm's price target:

  1. the health of the global economy and consumer spending trends;
  2. the ability of Apple to continue innovating and delivering products that excite consumers;
  3. technology trends and pricing pressure in products areas such as PCs, tablets, smart phones and digital music devices;
  4. Apple’s ability to enter new product areas and markets;
  5. the ability to manage component supply and channel inventory;
  6. executing on new product and service launches;
  7. maintaining key talent at the company;
  8. successfully defending IP claims;
  9. potential anti-trust issues in certain markets;
  10. avoiding major labor disputes at suppliers in China and elsewhere.

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