CUPERTINO -- Investors punished Apple (AAPL) stock for a second consecutive day amid reports that the revolutionary new display on the iPhone 5 is the cause of production delays that may have cost the company a million or more sales in the debut weekend for the device.
For the newest iterations of its popular smartphone, Apple developed a display that combines the display and touch screen, creating "in-cell touch sensing," the change that helped make the iPhone 5 the thinnest and lightest phone Apple has produced. Research firm DisplayMate called it "the best smartphone display we have seen to date."
However, Apple suppliers are facing difficulties constructing the new screens -- Reuters and Bloomberg News have reported that Sharp was unable to begin shipping its screens before the phone debuted, and Barclays reports that Apple's other suppliers, LG and Japan Display, are finding it hard to keep up.
"Apple is facing significant production constraints due to a move toward in-cell display technology," Barclays analyst Ben Reitzes wrote. "Apple is struggling to keep up with demand."
Those struggles were apparent almost immediately after the phone went on sale -- only an hour after pre-orders began at midnight on Sept. 14, delivery dates were pushed back from the launch date of Sept.
Along with sellouts at some retail locations on launch day, the difficulties likely affected Apple's debut weekend sales, which still set a record with 5 million iPhone 5 devices sold in the first three days. Apple's sales did not meet analyst expectations, however, as many predicted the Cupertino company would sell at least 6 million devices in the opening weekend.
"We believe this shortfall is largely due to supply availability and the fact that most consumers are opting for the pre-order option," Topeka Capital analyst Brian White, who predicted 6 million iPhone 5 sales in the opening weekend, said Monday.
While Apple also faces a possible shortage in the chips that help the iPhone 5 connect to 4G, or LTE, networks, as well as a possible bottleneck in building the phones, IHS iSuppli senior principal analyst Tom Dinges told Bloomberg News that Apple's pull as the world's largest smartphone manufacturer would come in handy.
"It's a problem that everybody else would love to have," Dinges said. "Even if you are going to run in to some areas where there are supply shortages, Apple is going to get a disproportionate amount of the available supply -- they are your best customer."
Apple CEO Tim Cook asked for patience from customers in Monday's news release announcing record sales.
"Demand for iPhone 5 has been incredible and we are working hard to get an iPhone 5 into the hands of every customer who wants one as quickly as possible," Cook said. "We appreciate everyone's patience."
Apple stock declined 2.5 percent Tuesday, after needing a late rebound to fall only 1.3 percent Monday. Apple shares plunged in the final hour and a half of Tuesday's session: at 11:30 a.m. Pacific time, shares were trading around $685, but the price then plunged to $673.54 by the time markets closed at 1 p.m., for a daily loss of $17.25.
Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.