All is not well in Apple (NASDAQ:AAPL) land. Aside from the dire forecasts with displeased analysts and some investors leading to 16-month low stocks, a report has surfaced that the company may have recently returned 8 million faulty iPhones back to the Hon Hai?s plants in China. Unknown source of the story came from the Foxconn Group (Hon Hai?s name in China) and reported the info to the China Business Journal. The same source claimed that the damage to the Hon Hai Group was between $160 and $260 million due to the return.

Devices were, allegedly at least, malfunctioning or had a flawed appearance. Hon Hai Precision (TPE:2317) has denied this report that also claimed that Futaihua Precision Electronics Co., a Foxconn subsidiary had problems with yield rates at only 95 percent. While first report was completely denied by the Hon Hai spokesperson, he did note that the company will investigate the yield rates noted in the report.

This Tuesday, Apple will post their quarterly results, and have declined to comment any parts of the report. Mass production of the next generation iPhone unit is expected to begin this June, but according to some sources it could slip well beyond the internally set dates due to some technical difficulties regarding new features, namely the coating for the new ?fingerprint sensor?.

Whilst some speculate that Apple era has gone, company?s co-founder Steve Wozniak and some analysts think that Apple may just surprise everyone. ?Apple?s business model tends to be new products, even products that didn?t exist before and doing well out of them and not re-making the same thing, as eventually that just gets a little bit stale. So I would guess that Apple is very well prepared, and working on new things that are going to surprise and shock us all. And I honestly don?t know [what],? Wozniak said at the Login technology conference.

Be it as it may, it is still worth noting that Apple had record 2012 sales and profit. Both may slow down due to the sheer market saturation, and of course, the fierce competition.