iPhone 5

Apple Inc. (NASDAQ:AAPL) shares are down almost 4 percent in early morning trades on reports that demand for the iPhone 5 is weaker than expected. Today they dropped below $500 to $497 per share for a few moments after the opening bell, but then rose back to around $503 per share. The stock hasn’t traded for that little since February 2012. Apple shares have been performing so poorly since August that Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) shares have actually beat them by 157 percent.

Within the past six months, we have seen shares of Apple Inc. (NASDAQ:AAPL) peak around $700 per share in September and then fall steadily, losing about $200 per share in about four months. Shares are trading as low as they are today because Apple Inc. (NASDAQ:AAPL) has cut component orders for the iPhone 5 in half due to the weaker-than-expected demand. The company reportedly told the suppliers last month that it would be cutting component orders.

Shares of Apple Inc. (NASDAQ:AAPL) have performed so poorly in today’s early morning trades that they pulled the Down Jones Industrial Average futures by 18 points to 13415 about an hour before the markets opened. The stock also dragged down the Nasdaq 100 futures by 13 points, bringing them to 2731.

Analysts from several investment firms have been warning that Apple could be cutting component orders soon. Analysts at Citi said it looked like inventory for the iPhone 5 would be bloated in January because too many iPhones were built last month. UBS analyst Steven Milunovich also reduced his estimates for iPhone sales by 5 million handsets for 2013.

The news of Apple’s cut in component orders comes on the same day as rival Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) announced that it sold more than 100 million of its Galaxy S smartphones as of yesterday. That number includes sales starting with the company’s first Galaxy S model, which went on sale for the first time in June 2010, all the way through the current model of that phone, the Galaxy S III.

Rumors about what Apple Inc. (NASDAQ:AAPL) is up to now have been swirling through the financial world. The company quashed rumors that it would make a less expensive iPhone in order to expand its market share during CEO Tim Cook’s visit to China last week. But then Reuters, which cited a report in the Shanghai Evening News quoting Schiller as saying they would never make a cheap iPhone, retracted its story, saying that the report in the Shanghai Evening News had changed substantially. Reuters did not issue a replacement report, which could indicate that the company is indeed working on a cheaper iPhone.