Apple Inc shares pared some of its losses after it fell over 3 percent in early trading on Monday following an analyst report that said the company was cutting orders from suppliers of parts for its iPad tablet.
JPMorgan Chase said in the research note out of Asia that several suppliers indicated in the past two weeks that Apple lowered fourth-quarter iPad orders 25 percent.
Our understanding is that this is not in preparation for a new model launch, said Gokul Hariharan, JP Morgan's Asia Pacific electronic manufacturing services analyst.
The move could result in slower sales for suppliers such as Hon Hai Precision Industry, the analyst added.
Concerns for a slowdown in iPad tablet sales come as Amazon.com is expected to unveil its own tablet device rival on Wednesday.
Apple shares recovered slightly from earlier losses and were down about $4.70, or 1.16 percent, at $399.60 in late afternoon trading on Nasdaq.
Apple declined to comment on the report.
Hariharan noted that Mark Moskowitz, JP Morgan's U.S.-based Apple analyst, does not expect the supply chain adjustments to result in downside to his estimates for iPad shipments.
Other analysts also said they would not be changing their iPad shipment estimates and that it would be difficult to accurately estimate shipment orders.
The iPhone 5 launch is much more important than the iPad right now, said BGC Partners analyst Colin Gillis. Could the tablet market slow down? Yes absolutely, but data from factories is notoriously unreliable especially since Apple started diversifying their supplier base.
BTIG analyst Walter Piecyk said he would be maintaining his forecasts of Apple selling 13 million iPads in the fourth quarter.
I don't see any reason to change our estimates. We expect that iPad and iPhone production is shifting to Brazil and Apple remains the market leader that it created with the iPad, he said.
Global tablet sales are expected to explode to more than 50 million in 2011. Apple, which sold nearly 29 million iPads so far, is expected to continue to dominate the market in the near term.
Another analyst report out of Asia over the weekend indicated that the retail outlook was that Apple remained positive on the continent with packed Apple stores in several Chinese cities.
We anticipate continued strong earnings growth for Apple due to our checks indicating strong global demand for the iPhone and iPad, analysts at Canaccord Genuity said.
(Reporting by Yinka Adegoke in New York and Poornima Gupta in San Francisco; Editing by Dave Zimmerman an Maureen Bavdek)