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Apple Cuts Production of Music Players, Personal Computers.

Category: Multimedia

by Anton Shilov

[ 02/07/2008 | 11:30 PM ]

Apple has reportedly reduced production of its various devices more significantly than it planned due to lowering demand towards the company’s iPod portable digital media players and the iPhone.

Friedman Billings Ramsey analyst Craig Berger said in a recent research note that “recent checks show that Apple has cut both its iPod and iPhone build plans for calendar Q1” and that the reduction of orders was not conditioned by weak seasonality, but low demand towards certain products. Apple was previously targeting a roughly 50% sequential decline in units produced, but is now targeting a 60% decline, reports Barrons.

It is not a secret that in the first months of a new year consumers are unwilling to spend a lot on electronics, but Apple usually tries to partially offset the weak seasonality by introducing new products at Macworld expo in January. This year Apple unveiled its Macbook Air notebook as well as several new services, however, it now seems that demand towards such products as iPod touch and iPhone is going down.

“Apple iPod builds have declined by nearly 1 million units in the last 3 weeks driven mostly by declines in iPod Video builds (both iTouch and Classic) leaving iPod builds down roughly 15% year over year. We estimate Apple overbuilt iPods by roughly 2 million units in the [Q4] which may help explain the large year-over-year decline. Finally, iPhone builds appear on track for roughly 1.3 million units, a data point which confirms many of the rumored production cuts floating on Wall Street last week,” analysts from Detwiler, Mitchell, Fenton, & Graves indicated.

Nevertheless, Apple iMac computers tend to be relatively popular. According to analyst Craig Barger, Apple has cut its calendar Q1 build forecast to down 50%, from down 35%, but the company has increased its forecasts for the iMac, going from flat to up 35% quarter over quarter.

“Our latest checks into Apple’s supply chain suggests continued improvements in PC builds offset by erosion in iPods and weakness in iPhone builds. […] The builds indicate that [Q1] should defy normal seasonality for Apple’s PC sales and increase meaningfully following a roughly 2.3 million unit [in Q4], analysts from Detwiler, Mitchell, Fenton, & Graves wrote.

Officials from Apple did not comment on the news-story.