By Dow Jones Business News,
January 28, 2014, 04:42:00 PM EDT
By Rex Crum, MarketWatch
SAN FRANCISCO (MarketWatch) -- Apple Inc. on Tuesday suffered its worst single-day market performance in a year, as
the company's share price fell 8% following a one-two punch combination of disappointing iPhone sales and a weaker-than-
expected revenue forecast.
Apple ( AAPL ) ended the day down by $44 at $506.50 a share, and finished at its lowest close since ending Oct. 17, 2013
at $504.50. And nearly all fingers were pointing at the iPhone and concerns about Apple's ability to grow revenue in
emerging markets at a time when the U.S. market for smartphones may be reaching a saturation point.
Late Monday, Apple said it sold 51 million iPhones in the last three months of 2013, or 7% more than it did in the
same period a year ago. But many industry analysts had forecast the company to sell between 55 million and 56 million
And the concerns about the iPhone were only heightened by a forecast of fiscal second-quarter revenue between $42
billion and $44 billion, which fell short of consensus estimates of $46.12 billion. That outlook was disconcerting as
China Mobile ( CHL ), one of the world's biggest mobile-phone network operators, just began offering the iPhone in
"The company implies [sales of] iPhones may be close to flat year-over-year in March despite the addition of China
Mobile," said Gene Munster, of Piper Jaffray. "We believe a number of factors influenced iPhone [sales] in December and
March including a slowdown in US smartphone growth."
Munster noted there is evidence the smartphone market in the U.S. "is largely saturated and is close to operating on
upgrades as the bulk of product sales," which could imply flat growth for the iPhone and other smartphones going
"There were a lot of reasons to believe iPhone sales would grow [by] double-digits in units in 2014 even as the market
matured," added Tavis McCourt, of Raymond James. "But first-quarter results and the March [guidance] pretty much put
that thesis to rest."
McCourt trimmed his rating on Apple's stock to outperform from strong buy, and shaved his price target to $550 a share
from $700, saying "the clear maturation of the high-end smartphone market limits Apple's growth potential in the near
term, and its valuation."
That valuation seemed enough to spur activist investor Carl Icahn to open up his checkbook. Icahn tweeted that he "
just bought $500 mln" more shares of Apple stock less than a week after revealing another $500 million purchase of
Apple's stock. Icahn has called upon Apple to return more cash to its shareholders either through a larger dividend
payment or stock buybacks.
Still, shares were on track for their biggest drop since Jan. 24, 2013, when shares skidded 12.4%, according to
Also read: Stock could slide 40%, says Dohmen analyst
In addition to Apple, Seagate Technology ( STX ) was also a notable decliner. The hard-disk drive maker's stock fell
more than 11%, to $51.52 after it reported fiscal second-quarter results that missed analysts' earnings and revenue
Printing technology company Lexmark International ( LXK ) was a notable gainer, rising more than 9% to $38.13. Before
the market opened, Lexmark reported fourth-quarter results that exceeded Wall Street analysts' estimates, led by higher
sales of its managed print services and software.
Netflix Inc. ( NFLX ) also had a good day of it, rising 6.7% to an all-time high close of $406.77. The Wall Street
Journal reported that Netflix is in talks about bringing its service to France, Germany and other European countries
The Nasdaq Composite Index (RIXF) rose 14 points to close at 4,097, while the Philadelphia Semiconductor Index (SOX)
managed to end the day with a small gain.
More tech news from MarketWatch:
Apple takes a hit as iPhone disappoints
Apple chip suppliers also take a hit on disappointing report
Perkins's remarks show tech's 1% class has little of it
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