Apple shares have tumbled 12 percent as investors fret over whether the company could lose its dominance in the smartphone market.
Flat profits and record quarterly revenue of 55,000 million Dollars were not enough to overcome disappointment over sales of the company’s new iPhone 5.
About 50,000 million Dollars were wiped off Apple’s value after the biggest daily drop in the firm’s stock in four years. Analysts said the firm is in danger of becoming a victim of its own success.
Earlier, shares in some of Apple’s key Asian suppliers also fell. For instance LG, which provides displays for Apple products, fell 3.1 percent, and Hon Hai, which assembles iPhones and iPads, dropped 3.2 percent.
Apple was unable to repeat its usual growth in profits, which were unchanged from a year earlier at 13,100 million Dollars. The firm said yesterday it had sold more iPhones (47.8 million) and iPads (22.9 million) in the final three months of last year than in any previous quarter, but investors had expected more.
Shares in the firm have fallen by a third since September over concerns the company may be losing its edge increasingly confident competitors. Shares currently stand at 460 Dollars, down from over 700 Dollars four months ago. Apple still remains the world’s most valuable company, however, just ahead of Exxon Mobil.
This morning, a number of analysts cut sharply their price target for the shares, with Deutsche Bank slashing its forecast from 800 to 575 Dollars.
The iPhone’s once dominant position is being challenged by Samsung and other markers of Android-based devices, which now make up a far greater percentage of overall smartphone sales than the iPhone.
Nokia, once itself the leading mobile phone manufacturer, reported a return to profit in the final quarter of last year, with strong sales of its new Lumia smartphone, its first major product launch since the company teamed up with Microsoft.
With Apple no longer seen as the market leader in innovation, some analysts believe it may now have to rethink its core strategy, which is based on focusing on a handful or premium products.
They said Apple’s modus operandi to date has been to cream the high-end off each market, but as the company’s grown it may now need to target more of the mainstream. They argued that to re-accelerate growth, apple likely needs to launch new products, yet few seem likely before June.
Others, however, argued that investors’ expectations are wholly unrealistic, and the company remains hugely successful.