Apple shares fall after muted iPhone sales
By Supantha Mukherjee
(Reuters) - Apple Inc needs a cheaper iPhone to keep pace with low-cost rivals, analysts said, after the company's smartphone sales fell short of lofty expectations in the holiday shopping season.
Apple's shares fell as much as 8.8 percent on Tuesday, their steepest decline in a year, a day after the company's weak revenue forecast for the current quarter renewed fears about Chinese smartphone demand and a tepid global market.
The world's most valuable technology company had lost $43 billion of its market capitalization - more than the entire market value of Twitter Inc - at the stock's intra-day low of $502.07.
Activist investor Carl Icahn, who is waging a public campaign to get Apple to return more cash to shareholders, bought up $500 million worth of Apple stock - his third purchase of the same size in less than a week - to boost his total investment in the iPhone maker to more than $4 billion.
At least 14 brokerages lowered their price targets on Apple, reflecting concerns that it was becoming harder to sell high-end phones as markets get saturated.
The record 51 million iPhones sold by Apple in the quarter ended December 28 fell short of the 55 million expected by Wall Street.
Analysts on Tuesday attributed some of this shortfall to the pricing of the iPhone 5C. Apple's low-cost alternative to its iPhone 5S was unable to grab market share from cheaper rivals using Google Inc's Android software, they said.
"We don't think Apple has created a meaningful new product category with the iPhone 5C," BMO Capital Markets analyst Keith Bachman wrote in a report. Continued...