True or False: Apple Is Cutting iPhone X Production by 50%?

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Japan’s Nikkei news site reported Monday morning that disappointing sales of the iPhone X has led Apple Inc. (NASDAQ: AAPL) to cut its production target for the next three months by 50%, from 40 million to 20 million units. Nikkei said the cut was due to “slower-than-expected sales in the year-end holiday shopping season in key markets such as Europe, the U.S. and China.”

It’s true that Apple did have some shipping issues in November, but that was cleared up by December, and last week analysts at Canalys estimated Apple’s fourth-quarter iPhone X shipment total at 29 million units. Canalys even cited Wall Street estimates that total fourth-quarter sales of all Apple’s smartphone models would top 80 million units for the first time ever.

Nikkei’s prediction, based on “channel checks” with Apply suppliers, has its detractors, however. Daniel Eran Dilger over at AppleInsider is one skeptic:

The [Nikkei] article actual claimed that iPhone X “has failed to catch on globally,” and then, in a sort of desperate attempt to boldly state the most preposterous horseshit possible, stated “iPhone X features facial recognition and wireless charging, but unlike previous models, is widely regarded as lacking any groundbreaking new technology.”

A similar Nikkei report in 2013, according to Dilger, was equally inaccurate, as was another Nikkei report last on sales of the iPhone 7 models. Dilger cites Apple CEO Tim Cook who said at the time:

I’d also stress that even if a particular data point were factual, it would be impossible to accurately interpret the data point as to what it meant for our overall business, because the supply chain is very complex, and we obviously have multiple sources for things. Yields might vary, supplier performance can vary, the beginning inventory positions can vary, I mean there’s just an inordinately long list of things that would make any single data point not a great proxy for what’s going on.

And the Nikkei report eventually ends up undercutting its entire story about the reason for the production cut:

But Apple likely performed strongly in the October-December quarter, given that the iPhone X did not launch until November. Some even expect the company to have outperformed forecasts.

So, Apple only sold its top-of-the-line phone for two-thirds of the fiscal quarter and even so, “some” expect Apple did better than its forecasts. Yup, that sounds like a struggling company all right.

In the past week, Apple has dropped $45 billion in market value, according to a report at CNBC. That’s about 5%, to which could be added another 1.5% so far in Monday’s session. The site also notes that JPMorgan analyst Narci Chang is cutting her current quarter production run for iPhone X from 30 million to 20 million.

Apple reports fiscal first-quarter results Thursday and analysts are looking for revenues of $86.75 billion and earnings per share of $3.81. That’s a revenue jump of nearly 11% year over year and an earnings boost of about 3.4%. Over the past four quarters, Apple has been earnings per share expectations by no less than 4.0% and an average of nearly 6.5%.

Just after the noon hour, shares traded at $178.79, down about 1.6% for the day, in a 52-week range of $120.62 to $180.10. The 12-month consensus price target is $189.48.