Apple shares drop on production rumors

SAN FRANCISCO (Reuters) - Apple Inc shares fell nearly 7 percent on Tuesday on rumors including talk of production cuts in iPhones or iPods.

The new iPhone is seen inside the Apple Store in New York, June 29, 2007 file photo. A range of rumors pushed shares in Apple Inc. down more than 3 percent on Tuesday, but there was little consensus about a specific problem for the company, which launched the iPhone last month. REUTERS/Shannon Stapleton

But there was little consensus about whether there was any specific problem at the company, whose shares had risen nearly 60 percent since it announced the iPhone in early January.

Apple spokeswoman Natalie Kerris declined comment.

Analysts who cover the company and options markets said there was speculation Apple was either cutting production of the iPhone or its iPod media player.

“There is unconfirmed chatter that iPod production is reduced. That is why the option volatility in Apple is elevated suggesting this uncertainty,” said Paul Foster, options strategist at Web information site

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Apple’s August option implied volatility -- which measures as a percentage how much the stock will move up or down over a rolling 12-month period -- stood at 43 percent early on Tuesday, above its 26-week average of 37 percent, according to market research firm Track Data.

“There are occasional rumors on Apple, often unconfirmed. A lot of them end up being wrong or short-term,” said Shaw Wu, an analyst with American Technology Research.

He noted Apple confirmed last week it expected to sell more than 700,000 iPhones in its current quarter and 10 million next year. AT&T Inc is the exclusive U.S. carrier for the phone.

“As I understand it, iPhone production actually has been going up, since they obviously are going to ship a lot more than what they did in the first two days,” Wu said.

Apple stock fell $9.67, or 6.8 percent, to close at $131.76 on Nasdaq, its lowest close since July 9.

Reporting by Scott Hillis, additional reporting by Duncan Martell in San Francisco and Doris Frankel in Chicago