Flat earnings take big bite out of Apple

By MAY WONG

Associated Press

SAN JOSE, Calif. – Shares of Apple Computer fell by fully one-half today, following a warning that its earnings for the fourth quarter will fall substantially below expectations.

The company’s shares were down $27.69 at $25.81, a 52 percent loss, in midafternoon trading, a day after investors had bid the stock up 9 percent.

The news helped push the markets lower. In afternoon trading, the Dow Jones industrial average was down 47.29 at 10,776.77, after dipping 130 points earlier in the day. On Thursday, the average had gained nearly 196 points.

Broader indicators were also lower. The Nasdaq composite index fell 64.88 to 3,713.44, and the Standard and Poor’s 500 index dropped 7.69 to 1,450.60.

For the quarter ending Sept. 30, the Cupertino, Calif.-based company said it expects to report revenues between $1.85 billion and $1.90 billion, and earnings between 30 and 33 cents per share, excluding investment gains.

Before the warning, Wall Street analysts surveyed by First Call/Thomson Financial had projected the computer maker’s earnings would be 45 cents per share. Those estimates were based on expected revenues of about $2.05 billion.

In a statement, company officials said sales were lower than expected in September because of a worldwide business slowdown and because of disappointing back-to-school sales. There was also a slower-than-expected start for the company’s new Power Mac G4 Cube computer.

“Though this slowdown is disappointing, we have so many wonderful new products and programs in the pipeline,” said Steve Jobs, Apple’s chief executive officer.

The news comes a week after chipmaking giant Intel Corp. warned of disappointing profits, blaming the performance on a troubled European economy. Intel’s shares were down 3 percent, or $1.38, at $43.06.

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