Apple shares fell more than 5% as investors worried that its latest iPhone models may not help it increase its share in emerging markets.
Apple launched two models on Tuesday, the iPhone 5S and a cheaper iPhone 5C.
But the basic 5C model, with 16 gigabytes of storage, has been priced at $740, which analysts said was still expensive for emerging markets.
Apple has found it tough to boost its share those markets against competition from firms such as Samsung and Huawei.
“Investors were put off that Apple’s price point didn’t go low enough to attract a new market,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott.
“It doesn’t have the same range in price that Apple’s competitors have,” he added.
Apple shares fell more than 5 percent as investors worried that its latest iPhone models may not help it increase its share in emerging markets
Apple shares closed at $467.7 on Wednesday, down by 5.4%.
The company has enjoyed tremendous success in developed markets with its iPhone models.
However, Apple has not been able to repeat that in emerging economies such as China and India, not least because its products are relatively more expensive.
One of the key reasons has been that unlike the developed markets, many mobile carriers do not subsidize phones in these countries.
That makes low-cost phones a much more affordable option for consumers. Many had hoped that Apple would launch a low-end phone to try to lure those buyers.
“The pricing on the iPhone 5C is simply not low enough to adequately address the significant global growth opportunity that we believe exists with unsubsidized prepaid customers that have not yet bought a smartphone,” said Walter Piecyk, an analyst with BTIG Research.
“We believe Apple is foregoing a valuable and relatively easy way to return to earnings growth.
“The real question is whether Apple plans to ever go after these markets or rather just remain a high-end phone maker.”
Investors had also been hoping for an announcement of a deal with China Mobile, the world’s biggest phone company with nearly 700 million subscribers – who could be potential customers of Apple’s phones.
Analysts said that the lack of any announcement also hurt investor sentiment.
Apple shares dropped below the $400 mark for the first time since December 2011 amid concerns over slowing sales.
Apple shares fell as low as $398.11 in Wednesday trading, before ending the day down 5.5% at $402.80.
The concerns were triggered after one of its suppliers, Cirrus Logic, which makes sound components for the iPhone and iPad, reported a decline in sales.
With Apple due to release its latest quarterly results next week, some fear the numbers may be underwhelming.
According to various estimates, demand from Apple accounts for nearly 90% of Cirrus’s revenue.
Apple shares dropped below the $400 mark for the first time since December 2011 amid concerns over slowing sales
Michael Yoshikami, a portfolio manager at Destination Wealth Management, said that Cirrus’s warning makes it more likely that “Apple’s not going to surprise on upside”.
Apple, which enjoyed tremendous success in recent years, has been facing increasing pressure lately, both from rivals as well as investors.
While the sales of its popular iPhone and iPad have grown – they have fallen short of market expectations – and its market share has been declining.
At the same time, Apple’s biggest rival Samsung has been steadily increasing its market share, both in the smartphone and tablet PC sectors.
According to research by Gartner, in the final quarter of 2012 Samsung sold 64.5 million smartphones to Apple’s 43.5 million.
Samsung also doubled its share of the tablet PC market to 15.1% in the last three months of 2012, while Apple saw its share slide to 43.6% from 51.7%, despite seeing a jump in sales, data released by IDC earlier this year showed.
At the same time, some analysts have also been disappointed over the delay in launch of new products by the company.
There are rumors that the release of the company’s next iPhone may not be until September, rather than in June as had been earlier expected.
To add to its woes, a brand survey released by consultancy Added Value in March showed that Apple is perceived as less “inspiring” than it was three years ago.
Meanwhile, Samsung is now seen as equally inspiring in the US.
That has led many investors to fear that Apple may be losing its dominance and as a result its revenues and profits may be hurt.
All these concerns have seen investors ditch Apple’s stock. Its shares have fallen more than 40% since hitting their peak in September 2012.
Apple shares have tumbled 10% as investors fret over whether the company could lose its dominance in the smartphone market.
About $50 billion was wiped off Apple’s value after the biggest daily drop in the firm’s stock in four years.
Flat profits and record quarterly revenue of $55 billion were not enough to overcome disappointment over sales of the company’s new iPhone 5.
Analysts said the firm was in danger of becoming a victim of its own success.
Earlier, shares in some of Apple’s key Asian suppliers also fell.
LG, which provides displays for Apple products, fell 3.1%, and Hon Hai, which assembles iPhones and iPads, dropped 3.2%.
Apple was unable to repeat its usual growth in profits, which were unchanged from a year earlier at $13.1 billion.
The firm said late on Wednesday 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.
Apple shares have tumbled 10 percent as investors fret over whether the company could lose its dominance in the smartphone market
Shares in the firm have fallen by a third since September over concerns the company may be losing its edge over increasingly confident competitors.
Shares currently stand at $460, down from over $700 four months ago. Apple still remains the world’s most valuable company, however, just ahead of Exxon Mobil.
On Thursday, a number of brokers cut sharply their price target for the shares, with Deutsche Bank slashing its forecast from $800 to $575.
The iPhone’s once dominant position is being challenged by Samsung and other makers 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 on Thursday 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.
Samsung is due to announce its results on Friday, and investors will be keen to find out how its successful Galaxy smartphones sold in the final quarter.
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 of premium products.
“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,” analysts at Evercore Partners said.
Normura’s Stuart Jeffrey agreed: “To re-accelerate growth, Apple likely needs to launch new products, yet few seem likely before June.”
Others, however, argue that investors’ expectations are wholly unrealistic, and the company remains hugely successful.