Japanese newspaper Nikkei and The Wall Street Journal said the company has slashed its orders for iPhone 5 parts because the device isn't selling as well as hoped. Both publications cited unidentified people familiar with the situation.
Sterne Agee analyst Shaw Wu believes the press reports are misleading. IPhone 5 demand, he says, remains robust. He attributes the reports of lower orders to shifts to other suppliers and an improvement in production, which means fewer components are wasted while building the complicated phone.
Apple usually reports the number of iPhones it sells each quarter, so Wednesday's financial update should give investors some indication of where the company is heading. Analysts on average expect the company to show sales of 48 million iPhones, which compares with the 37 million it sold in the same period a year prior.
The wrinkle is that Apple doesn't break out how many iPhones it sells of each type - it has kept selling the cheaper, two-year-old iPhone 4 and last year's 4S alongside the flagship 5.
A key tenet among investors who remain optimistic about Apple: Although the iPhone 5 is too expensive, buyers will shift their attention to the older Apple phones, which they find "good enough.''
Analyst Andy Hargreaves at Pacific Crest Securities says demand for new iPhone models is going to falter. Last week, he downgraded Apple's stock from "Outperform'' to "Sector Perform'' because he believes consumers aren't going to clamor for new hardware features anymore. They'll hang on to older phones longer, and when they buy, they'll buy cheaper models, he says.
This means the total dollar value of the iPhones sold in the quarter may be more indicative than the number of phones sold. Analysts expect the sales were worth $30.8 billion in the quarter, or 56 percent of Apple's overall revenue. Deviations from this figure could cause big movements in the stock price.
There is renewed speculation that Apple could make a cheaper iPhone for the developing world, but most analysts believe the company will stick to its practice of keeping older iPhones in production and cutting their prices as new models come out. The problem