Apple plunges as supplier slashes profit forecast

Apple shares plummeted more than 5 percent Wednesday after Cirrus Logic, a supplier of Apple components, slashed its own profit guidance, suggesting its Apple business had weakened.

Apple shares were off $22.33, or 5.2 percent, to $404.70 at 1830 GMT after briefly touching below $400 a share earlier in the session.

The drop came after Cirrus, which relies on Apple for a majority of its sales, warned Tuesday that profits for its fiscal fourth-quarter, through March 30, would be lower.

Cirrus reduced its revenue forecast and slashed its gross margin forecast after disclosing that it expects a $23.3 million inventory reserve, of which $20.7 billion is "due to a decreased forecast for a high volume product as the customer migrates to one of Cirrus Logic's newer components."

Analysts at investment bank Jefferies said they believe Cirrus is the main provider of audio IC chips for Apple's iPhones and iPads.

The Jefferies note also cited a trade publication article that suggested Apple's new iPad mini launch would not take place until the third quarter.

The Cirrus profit warning "seems to be related to weaker shipments to Apple for iPhone 5," said Barclays in a research note. The announcement "suggests that iPhone5 production has been cut sharply."

Apple's losses Wednesday come as the tech giant faces tougher competition from Samsung and other rivals in the busy smartphone and tablet technology space.

Shares in Apple are well below their 52-week peak above $700 in September. Some analysts have said the equity, given its heft, should be considered a "value" stock rather than a "growth" stock, as it had been pegged earlier.