Apple Inc. shares dropped below $500 for the first time sinceFebruary after Citigroup Inc. reduced its rating for the stock onconcern that demand for the iPhone 5 is slowing.

Apple fell to $499 at 6:55 a.m. New York time in premarkettrading after declining 3.8 percent to $509.79 in Nasdaq StockMarket trading on Dec. 14. The Cupertino, California-basedcompany's stock has lost 27 percent from a closing peak of $702.10on Sept. 19.

The company's Asian suppliers have been reporting cuts inorders, which raises questions about the iPhone 5's strength,Citigroup said in a note. The bank reduced Apple to neutral frombuy and cut its price target to $575 from $675. Apple's shares areheading toward their third monthly drop as the company facescompetition from Samsung Electronics Co. and Nokia Oyj and hadtrouble meeting initial demand for the iPhone 5.

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