Apple missed Wall Street's revenue forecast for the third straight quarter after iPhone sales came in below expectations, fanning fears that its dominance of consumer electronics is slipping.
Shares of the world's largest tech company fell 10 per cent to US$463 in after-hours trade, wiping out some $50 billion of its market value - nearly equivalent to that of Hewlett-Packard and Dell combined.
On Wednesday, Apple said it shipped a record 47.8 million iPhones in the December quarter, up 29 per cent from a year earlier. But that lagged the 50 million that analysts on average had projected.
Expectations heading into the results had been subdued by news of possible production cutbacks by some component suppliers in Asia, triggering fears that demand for the iPhone, which accounts for half of Apple's revenue, and the iPad could be slowing.
But some investors clung to hopes for a repeat of years of historical outperformance, analysts said.
"It's going to call into question Apple's dominance in the space. It's still one of the strong players, the others being Samsung and Google. It's still a two-horse race, but Android continues to grow rapidly," said Sterne Agee analyst Shaw Wu. "If you step back a bit, it's clear they shipped a lot of phones. But the problem is the high expectations that investors have. Apple's conservative guidance highlights the concerns over production cuts coming out of Asia recently."
Apple is forecasting revenue of between $41bn and $43bn in the current, second fiscal quarter, lagging the average Wall Street forecast of more than $45bn.
Fiscal first-quarter revenue rose 18 per cent to $54.5bn, below the average analyst estimate of $54.73bn, though earnings per share of $13.81 beat the Wall Street forecast of $13.47, according to Thomson Reuters.
Apple also undershot revenue targets in the previous two quarters, and these results will prompt more questions on what Apple has in its product pipeline, and what it can do to attract new sales and maintain its growth trajectory, analysts said.
Net income of $13.07bn was virtually flat with $13.06bn a year earlier on higher manufacturing costs. The year-ago quarter also had an extra week compared to this year.
Gross margins consequently slid to 38.6 per cent, from 44.7 per cent previously.