Apple posted record sales of its latest iPhone 5, selling over five million units in the first three days since its availability in stores. But analysts claimed that what seemed to be blockbuster sales for the tech firm was instead a lower-than-expected figure that sent the company's shares tumbling.
The Cupertino firm on Monday reported that the initial sales of the sixth-generation device surpassed the record set by its predecessor. Apple sold four million iPhone 4S units in its first weekend last year.
Prior to the iPhone 5 release in retail stores on Sept 21, analysts predicted that the company will sell as many as ten million units during its debut weekend. The actual sales is touted as a result of the company's failure to address the supply and demand challenges of the iPhone 5, causing the company shares to go down 1.3 percent to $690.79 on Monday.
Hours into the iPhone 5 sales on Friday, several Apple stores fell short of the device, with demand strongly exceeding its supply limit. Even pre-orders for the device topped two million in just 24 hours into its launch date.
"We believe that sales could have potentially been much higher if not for supply constraints," William Power, an analyst with Baird Equity Research, wrote in a note according to Reuters.
With supply constraints causing much-delayed shipments, Apple is presently trying to put as many units in the pipeline. The company said on Monday that "while the majority of pre-orders have been shipped to customers, many are scheduled to be shipped in October."
According to a Bloomberg report, Piper Jaffray analyst Gene Munster, who predicted Apple to sell six to ten million devices for the weekend, said that "if supply were not a constrained and Apple included all pre-orders, the launch weekend number would have been closer to 7-8 million, assuming ~1 million October pre-order sales and an additional 1-2 million units at retail."
Brian White, an analyst at Topeka Capital Market who estimated iPhone 5 sales of six million to eight million units, said that Apple's accounting excludes phones that are yet to be delivered or shipped. He estimated millions of iPhone 5 units that are currently in transit.
Adding fuel to the company's woes is the recent riot that broke out among 2,000 workers at the Foxconn factory in Taiyuan, northern China, on Sunday. Foxconn Technology, a key manufacturer of Apple devices, immediately called for a shutdown of the plant where iPhone 5 units are believed to be assembled.
With iPhone generating almost half of Apple's sales revenue, the halt in production is a major concern for the company. Also, cash-strapped Sharp Corp, a key screen supplier to Apple, is said to be behind schedule in display production owing to manufacturing troubles.
These disappointments have raised concerns on Apple's current stand in the smartphone market, which is co-dominated by rival Google. The tech giant is also facing a worldwide backlash for its Maps application, which is touted as a disaster among users.
Already available in the US and several other Asian and European countries, iPhone 5 will hit 22 other countries on Sept 28.