Apple: through a screen darkly Apple has cut first-quarter orders for iPhone 5 screens by half from their original levels, according to "people familiar with the situation." It is nice to know that someone is familiar with the situation. The rest of us are a bit at sea. Rumours about Apple are as ubiquitous as its products. This one, for some reason, sent Apple's shares down 3 per cent on Monday. Are the reports true? Hard to say. Just as important, assuming they are true, do they imply that demand for the iPhone 5 is plummeting? Perhaps Apple had such a strong holiday period it is anticipating a drop-off in demand. Or perhaps it has plans to tweak the screen in a forthcoming model, and wants to keep its inventory of the soon-to-be-obsolete screen under tight control. Or perhaps one supplier, which has not spoken to the press, has received a bigger slice of the orders while its chattier competitors have been given smaller slices. Or perhaps Apple is using its supply-chain power competitively, clogging up manufacturing capacity with outsized orders at key times, then cutting the orders when its own needs are met. Assuming the reports are true and demand-driven, how much does the stock stand to be hit? Part of the pitch on Apple is its astonishingly low valuation: its trailing price/earnings multiple stands at a remarkably cheap 11 times. That may suggest that a sharp slowdown in growth - sales expanded roughly 25 per cent year on year in the past two quarters - is priced in. Analysts are more bullish: they expect 22 and 15 per cent growth in the next two years, without much margin compression. Here is a less comforting thought: Apple is so large, is already such an important part of virtually every equity portfolio, that the usual rules of growth and valuation do not apply. In that case, we really are in unfamiliar territory.