Apple shares have hit a 16-month low due to concerns that the lower than expected phone and tablet sales may cause the company to miss its revenue targets.
On 17 April, Apple’s share price fell below the $400 mark for the first time since December 2011, before closing at $403, which is well below the peak of around $700 reached last September.
Investors rushed to sell shares after analysts warned that sales of iPhones and iPads would be lower than expected, and a disappointing trading update by Apple supplier Cirrus Logic, the Guardian said.
Texas-based Cirrus Logic, which makes audio chips for Apple's tablets and phones, reported first-quarter revenue of $170m, about $27m less than expected.
Analysts ascribed the chip supplier’s poor performance on an “inventory overbuild for the iPhone 5 relative to Apple's forecast," the paper said.
Some analysts predict Apple will miss its quarterly revenue target of $41bn and $43bn and report a decline in operating income of around 18% to $9.5bn.
Forecasts for iPhone and iPad sales in the first quarter of 2013 were this week revised down by 1 million each by Sanford Bernstein analyst Tony Sacconaghin.
Apple watchers say the company’s share price could fall further, particularly if it does not respond to calls from investors to share more of its cash pile through dividends.
In March, Google ousted Apple as a favourite among investors because of confidence in Google’s ability to capture advertising revenues.
Google’s share price has seen a 35% increase in the past year, compared with a 21% decline in Apple’s share price in the same period.
Apple remains the world’s most valuable company, with its market capitalisation still $100bn higher than Google, but Google’s shares are trading at 25 times profit, compared with a price-to-earnings ratio of less than 10 for Apple, according to Bloomberg.
This is the widest the gap has been since 2005, two years before the competition in mobile devices between the two companies began to intensify.
Analysts say investors are willing to pay more for each dollar of Google’s earnings because of optimism that Google will grow its US online advertising market share further than the 40% it currently enjoys.
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