LOS ANGELES (AP) -- Apple Inc. shares fell for the third day straight Friday after analysts trimmed their estimates for shipments of the iPhone 5 in the first quarter of the new year, saying that checks with suppliers indicated the company had cut back parts orders.
THE SPARK: UBS analyst Steven Milunovich cut his price target on Apple shares to $700 from $780 on Friday, saying that the rate at which Apple is building iPhones will fall in the January-March quarter. Over the next three quarters through September 2013, Milunovich now expects there will be 5 million fewer iPhones built and 2 million fewer iPads than he had expected.
Milunovich still expects the company to sell 45 million iPhones in the three months through December, followed by 41 million in the quarter through March, 36 million in the quarter through June and 33 million in the quarter through September. He also predicted sales of 22 million iPads in the quarter through December, 21.7 million in the quarter through March, 24.5 million in the quarter through June and 20.7 million in the quarter through September.
The analyst maintained his "Buy" rating on the shares.
THE BIG PICTURE: Apple is still the world's most valuable company. But investors are getting more cautious about the future and the company's ability to come up with the next big thing. A long-awaited Apple-made TV was not forthcoming this year. And the launch of the iPhone 5 in China on Friday lacked the riotous crowds that some have come to expect.
THE ANALYSIS: Despite the cut in parts orders, analysts say that Apple could get a lift if China Mobile, the nation's largest cellphone provider, starts selling the iPhone 5 before the end of the year. Analysts are also looking forward to an iPhone 5S in the summer. Some are hoping for new products as well.
"Whether it is an iTV, wearable computers, or another new product category, we have faith that innovation is not dead," Milunovich wrote.
SHARE ACTION: Shares fell $19.71, or 3.7 percent, to $509.98 in midday trading. That's down 28 percent from the record high of $705.07 reached on Sept. 21, the first day the iPhone 5 went on sale.