By Muvija M
(Reuters) - Apple Inc <AAPL.O> will halve its iPhone X production target for the first three months of the year to around 20 million units, Nikkei reported on Monday, sending its shares down more than 2 percent in early trading.
The report added to growing concerns around weak sales of the $999 phone, making investors jittery about the company's financial outlook when it reports first-quarter results on Thursday.
Apple shares fell to their lowest level in 2018 on Monday, knocking off $14 billion from the company's market value.
- PHOTOS: New art and old relics at Mickey Mouse's NYC gallery 25 Pictures
- PHOTOS: See Yes on 3 supporters react to historic transgender rights Question 3 win 11 Pictures
- PHOTOS: A look back at Queen performing in the 1970s and 1980s 22 Pictures
- All of these celebrities have had their nudes leaked 35 Pictures
- PHOTOS: A look at Idris Elba's style through the years 20 Pictures
- PHOTOS: Heidi Klum's annual Halloween party and other amazing celebrity costumes 17 Pictures
- These are the spookiest cities per capita in the U.S. 5 Pictures
- Food Network star talks pumpkin carving 1 Pictures
- Who is Alexander Edwards, Amber Rose's new boyfriend? 9 Pictures
- Is Cardi B pregnant again? This tweet has people guessing 6 Pictures
- Natural Museum's best wildlife photos of the year 5 Pictures
"Apple earnings should handily beat December quarter expectations, but March guidance could moderately disappoint," UBS analysts said.
The production cut was prompted by slower-than-expected sales in the holiday shopping season in Europe, the United States and China, the Japanese newspaper reported, without citing a source. (http://s.nikkei.com/2BASQZU)
IPhone X was the first phone to sport a new design since the launch of iPhone 6 in 2015 and many expected it to lead to blockbuster sales, dubbed by Wall Street analysts as "supercycle".
"This was supposed to be the supercycle year and if Apple hasn't been able to drive substantial unit growth this year, then that makes you little cautious on future iPhone cycles," Atlantic Equities analyst James Cordwell said.
Several analysts have lowered their estimates for iPhone X shipments in the past few weeks, citing high price of the device among other factors, with at least three downgrading their rating on the stock.
Adding to the concerns, Verizon Communications Inc <VZ.N> said last week their postpaid device activations were lower than last year as people were keeping phones longer.
A survey of people planning to buy the iPhone showed that the percentage of them looking to buy the iPhone X has dropped to 37 percent from 43 percent in an earlier survey, UBS analysts wrote in a note on Monday.
The iPhone X, which features an edge-to-edge display and facial recognition technology to unlock the phone, went on sale in November in the United States.
Asian supply chain checks suggest that iPhone X orders have been weakening recently, with first-quarter production likely to be about 20 million units, JP Morgan analyst wrote in a note dated Jan. 24.
Quite a few of Apple's iPhone parts suppliers are based in Asia. Shares of Foxconn, one of Apple's main suppliers and formally known as Hon Hai Precision Industry Co Ltd <2317.TW>, fell 0.7 percent on Monday.
Canaccord Genuity analysts have lowered their second-quarter iPhone shipment estimates to 59.9 million units from 66 million units, citing their own survey.
"Our survey work indicates iPhone X sales were strong during the December quarter but sales appear slower in January, more in line with normal seasonal trends," they wrote in a note.
Apple was not immediately available for comment.
Shares of U.S.-listed Apple suppliers such as Micron Technology Inc <MU.O> edged lower following the report.
(Reporting by Muvija M in Bengaluru; Editing by Saumyadeb Chakrabarty)