Shares in Apple Inc.(NASDAQ:AAPL) fell about 2.5 percent on Tuesday as reports spread that the company would be unable to meet the demand or the iPhone 5 due to supply constraints related to its screens. Shares of the company have fallen 4% from $700 level in the past two trading sessions.
The company had said on Monday that it had run out of its initial supply of iPhones and was struggling to meet demand. It added that many of the orders placed in advance with the company would be delivered only in October.
Chief Executive Tim Cook said that the company was working hard to build enough iPhone5s for everyone."
There has been huge and unprecedented demand for the new iPhones and within 24 hours of Apple accepting advance orders online it had been sold out with orders being placed for about 2 million phones.
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This was 1 million more than what the iPhone 4S had generated.
Analysts who had expected the company to sell as much as 10 million iPhones over the weekend have had to drastically revise their forecasts downward.
They will also have re-rate the company's earnings for the quarter.
An analyst with Baird equity Research told Reuters that the sales would have been higher had the supply constraints not surfaced.
On Tuesday Apple's shares fell $17.25 to close at $673.54. The company has already sold about 5 million iPhones in three days but future sales seem rather muted now.
Apple is slated to launch its iPhone 5 in another 22 countries this Friday, after having launched it in nine countries last week.
One of its key component makers, Japan’s Sharp which makes the phone's LCD screens has been beset by production problems, which has delayed supplies.