Apple plunges as supplier slashes profit forecast

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

Apple shares closed at $402.80, down $23.44 or 5.5 percent, after briefly dipping below $400 earlier in the session.

The decline robbed Apple of its crown as biggest US company by market capitalization. Apple is now worth $378.25 billion, compared with oil giant ExxonMobil's $385.68 billion.

Shares in Apple are well below their 52-week peak above $700 in September as the California tech giant faces tougher competition from South Korea's Samsung and others in the busy smartphone and tablet technology space.

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

Cirrus reduced its revenue forecast and trimmed 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 iPhone 5 production has been cut sharply."

Bernstein Research lowered its quarterly earnings forecast for Apple, trimming revenues by $1.3 billion to $41.1 billion and reducing profit estimates by 50 cents to $10.02 per share.

Bernstein cited lower expected sales of iPhones and iPads in its report.

Apple is due to report fiscal second-quarter earnings on April 23.