Apple shares skid off report on iPhone production cuts

Apple

Apple is expected to cut production of its latest iPhone models by about 30 percent quarter. Inventories of the iPhone 6s and 6s Plus have piled up since they were launched. USA TODAY

Shares of Apple tumbled 2.6% in trading Tuesday following a report the tech giant will cut production on its latest iPhone in the January-March quarter.

According to Japan's Nikkei, Apple will slash production of models of its iPhone 6S and 6S Plus by 30% during the second quarter of Apple's fiscal year.

The report says Apple (AAPL) initially told parts makers in Japan and South Korea to maintain production at the same level as last year, when the company launched the iPhone 6 and 6 Plus. However, slower sales prompted Apple to adjust production.

Production is expected to return to normal during Apple's third quarter, between April and June, says the report.

Apple could not be reached for comment.

Company shares declined 2.6%, to $102.71.

“This is an eye-opening production cut which speaks to the softer demand that Apple has seen with 6S out of the gate,” says Daniel Ives, senior analyst at FBR Capital Markets, said in an interview. “The Street was bracing for a cut, but the magnitude is a bit more worrisome and speaks to a soft March quarter on the horizon.”