Apple shares fell briefly below $400 Monday after an analyst said the iconic gadget maker is to slash production of its iPhones. Shares fell as low as $398, before closing at $402.34, a drop of 2.7 percent. Apple has been on a downward trend since last September when shares topped $700. A research note from the brokerage firm Jefferies said Apple is likely to cut production plans for the iPhone to between 25 and 30 million in the third quarter, down from between 40 to 45 million. It went on to predict that Apple would also trim production in the fourth quarter to between 50 and 55 million from 60 to 65 million. \"Our survey of several hundred Orange, Vodafone, and EE stores in the UK indicates that inventories are elevated for iPhones and the Samsung Galaxy 3,\" said Peter Misek at Jefferies. Misek added that \"memory module makers have recently been reallocating orders in the third quarter away from Apple and toward emerging market players.\" The analyst said production of a new iPhone has not commenced yet \"but we believe it is about to begin,\" adding that he expects a new \"iPhone 5S\" updating the current model and a \"low-cost iPhone\" to launch in September. A separate note from Trip Chowdhry at Global Equities Research said the lower share price and eroding market share are creating a vicious circle for Apple, prompting some employees to jump ship. \"Recruiters are seeing more and more employees from Apple applying for jobs at Google, LinkedIn, Facebook and even HP (Hewlett-Packard),\" he said \"Employees are viewing lower Apple Stock price as an indication of a bleak future for Apple.\" Chowdhry said Apple\'s move to pay a dividend with a bond sale, in an effort to boost its share price, appears to have backfired. \"Returning of cash to shareholders, has had no beneficial effect for Apple stockholders and has only reduced the cash on (its) balance Sheet, thereby being net detrimental to share holders,\" he said. Google\'s Android mobile operating system ran on three out of four smartphones sold in the world in the first quarter of 2013, according to recent surveys.