NEW YORK (AP) -- Shares of Apple Inc. fell under $400 for the first time in two months, as an analyst cut his estimate for iPhone production.
THE SPARK: Jefferies & Co. analyst Peter Misek said Apple is cutting the number of iPhones it plans to build in the next two quarters, even as it launches two new iPhone models.
Misek now expects Apple to build just 25 to 30 million iPhones in the July to September period, down from a previous forecast of 40 million to 45 million. In the same quarter last year, Apple shipped 27 million iPhones.
Misek expects Apple to launch an iPhone 5S and a cheaper iPhone in September, a year after the debut of the iPhone 5. But he doesn't see a big jump in sales compared to last year: his build expectation for the October to December period is 50 to 55 million units, down from a previous forecast of 60 to 65 million. In the same quarter last year, when the iPhone 5 was new, Apple shipped 48 million phones.
The analyst based his estimates on checks indicating that iPhone inventory is building up at cellphone carriers, pointing to slow sales.
Apple does not comment on its build plans or launch dates for new products.
THE ANALYSIS: Misek said he's keeping a cautious stance on Apple until it produces an iPhone with a bigger screen. High-end Android phones have screens that are nearly 5 inches when measured diagonally, while the iPhone 5 measures 4 inches.
He cut his calendar third-quarter earnings forecast to $7.02 from $7.64 per share, and the fourth-quarter forecast to $10.58 from $11.45.
SHARE ACTION: Apple shares were down $8.70. or 2.1 percent, at $404.80 in afternoon trading. The day's low of $398.05 was the lowest since April 24.