​Apple Shares Fall After Holiday Profits Warning

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October 27, 2012
Also: Apple, Apple Shares, iMac, iPad, iPad Mini, iPhone

Apple shares have fallen as low as $591 during last week’s session but recovered some losses to close at $604. It marks the first time Apple’s stock has fell below $600 after it warned that costs of making new products will cut into profits in the holiday quarter. The company’s earnings for the latest quarter also missed expectations.

Late Thursday, the technology giant said profits for the rest of the year would fall from last year because it’s launching so many new products. It’s expecting mammoth sales, but new products are more expensive to make than older ones.

Apple launched the iPhone 5 a month ago and announced two new iPads and three Macs this week. In addition, it’s shipping new iPods.

Wall Street analysts took the adjustment in stride, knowing that Apple nearly always lowballs its estimates, but several cut their earnings estimates for the fiscal year that started this month. Stuart Jeffrey noted that Apple’s profit margins should be back to normal in the quarter that starts in April, but that will be too late to fully make up for the earnings hit in the holiday quarter. He cut his earnings estimate for the year by 10 percent and his price target on the shares from $710 to $660.

Shares of Apple have now lost more than $100 from their all-time peak of $705.07, hit on Sept. 21, the day the latest iPhone went on sale in the U.S. and eight other countries. That’s a total loss to investors of $106 billion. Apple remains the most valuable public company in the world, by a wide margin, with a total market capitalization of $556 billion.

Apple’s stock last fell below $600 following an earnings report. It missed expectations in the previous quarter, too, something rare for Apple.

Apple started taking orders for the iPad Mini on Friday. The smaller version of the iPad tablet starts at $329. Initial shipments of the white model quickly sold out on Apple’s site; buyers will now have to wait two weeks for delivery. The black model was still available Friday afternoon for a one-week delivery.