Shares of Apple slid over 5 percent on Wednesday on reports that the consumer electronic maker was cutting production of its handheld devices and notebook computers.
Friedman Billings Ramsey chip analyst Craig Berger told clients that recent checks show that Apple has cut both its iPod and iPhone build plans for calendar 1Q, the second time in months reflecting less-than-expected sell-through in the fourth [calendar] quarter of 2007.
For both iPods and iPhones, we believe Apple was previously targeting a roughly 50 percent quarter-over-quarter decline for first quarter units, whereas, we now think the firm is targeting a 60 percent quarter-over-quarter unit decline for first quarter units, he wrote.
According to Berger, the iPod Touch has seen the largest cuts when compared to his checks last month, suggesting demand for higher cost players has fallen off from the company's prior expectations.
Shares of the Cupertino Calif.-based firm closed down $7.36, or 5.69 percent to 122.00.
Semiconductor Broadcom and Marvell may also be affected, as they provide the controlling chips behind the touchscreen, and the WiFi respectively.
Both of these chip firms should see slight negative revenue impacts in their March quarter, though we believe the magnitude of this bad news is relatively small, he explained.
Broadcom shed 1.12, or 5.13 percent to $20.70 on the Nasdaq Wednesday evening, while Marvell drop $1.20, or 10.20 percent to $10.57.
With respect to Apple's computer business, the FBR analyst said his checks indicate the company has cut its first quarter MacBook build forecast by about 50 percent compared to the prior quarter, down from 35 percent upon his last check.
Apple's iMacs appear to be fairing better, however, with orders for the desktop systems expected to increases 35 percent sequentially compared to previous checks, which suggested demand for the all-in-one systems would remain relatively flat.