Apple’s shares are hovering at around $98 a share this morning, well down from the 52 week high of $134.54. With so much positive news, record earnings on record sales, what is causing this drop?

Part of the drop is concern over the drop in the Chinese stock market, part of the concern is currency fluctuations (which make the iPhone more expensive in certain markets) and part of the concern has to do with inventory. From Nikkei Asian Review:

Apple is expected to reduce output of its latest iPhone models by around 30% in the January-March quarter compared with its original plans, according to several parts suppliers. The measure will deal a blow to Japanese and South Korean parts companies.

The U.S. company had initially told parts makers to keep production of the iPhone 6s and 6s Plus for the quarter at the same level as with their predecessors — the iPhone 6 and 6 Plus — a year earlier. But inventories of the two models launched last September have piled up at retailers in markets ranging from China and Japan to Europe and the U.S. amid lackluster sales. Customers saw little improvement in performance over the previous generation, while dollar appreciation led to sharp price hikes in emerging markets.

Output will be scaled back to let dealers go through their current stock. Production is expected to return to normal in the April-June quarter, once inventory adjustment is complete. Apple’s products and brand have not lost their appeal, and older models have continued to sell.

I’m certainly no expert at this sort of thing, but of all the articles I’ve read about Apple’s stock price drop (editorial pronouncements aside), this seems the closest to the heart of the matter.