Investors dumped shares of Apple on Wednesday on the back of an underwhelming iPhone launch, signalling trouble for Chief Executive Tim Cook as he tries to maintain momentum built by Apple’s late founder Steve Jobs.
Shares in the world’s largest consumer electronics company were down more than 5 per cent in morning trading, wiping away more than $ 20 billion of the firm’s value.
The plunge followed a 2 per cent decline on Tuesday following the announcement of the new top-of-the-line iPhone 5S, and a less expensive line of 5C iPhones meant to help the company compete with cheaper models running Google’s Android operating system.
Analysts at Bank of America, UBS and Credit Suisse all downgraded Apple stock to “neutral” Wednesday morning, citing concerns about the pricing of the iPhone 5C, which retails for just $ 100 less than the iPhone 5S, hampering its ability to compete in key growth markets such as China and India. At the same time, the model could cannibalise sales of the more expensive version.
“For many Chinese users who have been expecting an iPhone at less than 3,000 yuan, the price is very disappointing,” the China Daily newspaper said.
“So much for the low end,” Credit Suisse analyst Kulbinder Garcha wrote to clients on Wednesday, while downgrading the stock to neutral from outperform. “We remain disappointed with Apple’s decision to remain a premium-priced smartphone vendor and this continues to competitively expose the company.” Neither of the new models boasted any revolutionary breakthroughs.
The main selling point of the 5C is the range of colours available for its polycarbonate case, while the 5S boasts a fingerprint recognition security system. Neither of the models features a large screen, which is a key attraction for top-end rival phones from Samsung, HTC and other manufacturers.
Apple has sold more than 380 million iPhones since it redefined the market with the model’s launch in 2007. But, in recent years, it has lost market share to Samsung, which accounted for nearly 32 per cent of worldwide sales in the second quarter, up from about 30 per cent a year earlier, according to industry researcher Gartner.
Apple had 14 per cent of the market, down from nearly 19 per cent a year prior.
Its stock was trading at around $ 467 Wednesday, compared to an all-time high of more than $ 700 last September.