Apple last night forecast a quarterly profit below analysts' expectations and posted disappointing holiday-season iPod shipments, sending its shares down 11 per cent in after hours trade on concern consumers were cutting spending.
Stock market futures and shares of technology giants including Google and Microsoft fell in Apple's wake, after a frenzied day that saw the Dow Jones industrial average fall 1 per cent and Nasdaq drop 2 per cent amid mounting fears for the US economy.
"As Apple goes, so goes the Nasdaq," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey, who called it a bellwether for both the technology and retail industries.
Sales of the iPhone hit 2.3 million, in line with most Wall Street estimates.
"Investors are nervous about strength in consumer and even though Mac shipments were quite strong, iPods were light versus expectations," said Shannon Cross of Cross Research.
Apple said iPod revenue rose 17 per cent from a year earlier - the strongest growth in a year, according to executives - as the debut of a $400 model with a touch screen and wireless Internet capability lifted average selling prices.
The company also shipped 2.3 million Mac computers in the quarter, up 44 per cent from a year earlier.
However, some analysts say Apple may be able to weather an economic downturn better than its peers because devices like the iPod and iPhone are so desirable.
"Considering their product offerings, I don't think Apple is damaged in any way. Their products are still selling like gangbusters and even with a slowdown in consumer spending, they will see robust growth," said Ted Parrish, co-manager of the Henssler Equity Fund that holds Apple shares.
Net profit for the first quarter ended December 29th was $1.58 billion, or $1.76 per share, compared with $1 billion, or $1.14 per share, a year earlier. Revenue was $9.6 billion, up 35 percent from $7.12 billion a year earlier.