Katie MarsalShares of Apple Inc. were further battered and bruised on Tuesday evening, shedding over 11 percent of their value after the company guided considerably below Wall Street's expectations for its fiscal second quarter of the year.
The guidance sent shares tumbling to their lowest point in over four months — down $17.35 or some 11.15 percent to $138.29 — as investors feared that even a company with Apple's momentum may have trouble weathering a possible recession and sluggish global economy.
Shares had already closed down $5.72 or 3.54 percent to $155.64 earlier in the day.
During a conference call with analysts and members of the media, Apple chief executive Peter Oppenheimer defended his second-quarter estimates, calling it "very strong" guidance. "We are very confident we will achieve it," he said.
Also weighing on investor sentiment was word that iPod sales remained relatively flat in the US on a yearly basis, suggesting that the digital media player market — which accounts for more than 40 percent of the company's revenues — is quickly approaching its saturation point.
Apple executives immediately discounted the notion, however, noting that iPod revenues grew 17 percent year-over-year, a figure they maintain is "uncharacteristic of a saturated market."
Company officials further countered concerns by explaining that Apple hopes to transition the iPod touch — the primary driver behind the iPod's 17 percent revenue growth — beyond an advanced music player and into the first "mainstream Wi-Fi mobile platform" capable of running "all kinds of mobile applications."
Though executives failed to expand on this vision, the company is known to be working at least two initiatives that will help set it is handheld business apart from the pack even further. The first, due to arrive next month, is a software developers kit (SDK) that will enabled third parties to author a plethora of new applications for both the iPhone and iPod touch.
The second, as AppleInsider reported in September, is a slightly larger and much enhanced iPod touch-like device mostly reminiscent of a modern day incarnation of a Newton MessagePad — the Apple handheld device that gave birth to the PDA market back in the 90's.
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74 Comments
It seems to me that a saturated market would see a big DECREASE in sales, not flat (a.k.a. as strong as ever) sales. Flat sales still means that thousands more people own iPods each month than the month before. The number of iPod users is growing rapidly--about as fast as it ever has--it's just growing at a forever-accelerating rate.
Saturation would mean everyone who wants one already has one (and is not ready to replace it). It would mean sales slowdown, not maintaining the same high sales.
Apple's now down into the 137s in after hours trading. How much Apple market cap got wiped out in the past month? $40 billion?
C'mon Steve-o... 3G iPhone, STAT!!!. And some more aggressive notebook pricing.
The 'Wi-Fi platform' talk for the iPod Touch is encouraging, however. And at least they're doing a 'Take 2' on AppleTV, instead of just throwing a fit and killing it, as has sometimes been Steve's way when things don't sell.
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Too bad we didn't get a new more affordable Newton Pad rather than the MacBook Elite at MacWorld- maybe a broader appealing device would have given more confidence.
This $0.94 per share is an increase of 29% over same time last year. Here's the fun part. The average of what Wall Streets analyst were guessing was $1.09 per share.
So Apple says that they are going to do 29% better than last year yet they get slammed because it doesn't match what so called "analysts" were guessing. This is guessing about the future I might add.
This just fundamentally proves that the stock market is legalized gambling and not investing. How this form of gambling became a hallmark of our nation's financial health is a travesty!edit: I propose new Federal legislation. Market Analysts must advertise themselves as "Handicappers" and Stock Brokers must advertise themselves as "Bookies"!
Customer reaction to the MacBook Air has been great, with "very strong orders" so far.