Apple shares slid to a five-month low yesterday as investors grew more uncertain about its ability to fend off competition and untangle a snarled iPhone 5 supply chain.
A mainstay of many fund portfolios, Apple lost 20 per cent - $130 billion of its market value - on Wednesday since hitting a record high in September. A 20 per cent slump signals a bear market for a stock to Wall Street.
Fund managers cited fundamental concerns about iPhone 5 supply and intensifying competition from resurgent rivals such as Samsung and Amazon.com, as well as profit-taking after the elections.
It may be up to six months before we kick up in the next major growth cycle.
Global shares fell with investors worried the deep fiscal challenge facing President Barack Obama after his re-election could lead to a new recession.
Apple's share price drop comes on the heels of torrid growth since the introduction of the iPhone in 2007 and the iPad in 2010, which upended the PC industry and carved out a new device segment.
But many investors question whether it can keep innovating and keep ahead of ever-more aggressive competition under new CEO Tim Cook, who took over the company after the death of its chief visionary and co-founder Steve Jobs last year.
Cook last week ousted veteran mobile software chief Scott Forstall - a protege of Jobs' - a move seen as a loss of one of the company's most valuable assets.
"[Apple has] always been able to create new markets none of us realised we needed. It's to be determined if they can continue to do that," said David Readerman, portfolio manager at Forward Management, which has $5.5 billion under management.
"Companies go through growth cycles and we are in a hiatus. It may be three or six months here before we kick up in the next major growth cycle."
In the near term, Apple is having trouble meeting robust demand for the iPhone 5. Chairman Terry Gou of Taiwan's Foxconn Technology Group, Apple's main contract manufacturer, said on Wednesday the company was "falling short of meeting the huge demand" for the phone.
Last month, Apple said it expects its industry-leading margins to shrink this quarter as new products - particularly the iPhone 5 - have become more expensive to build.
"For now, everything has been refreshed and all the new products are out," Tim Ghriskey, chief investment officer of Solaris Asset Management said. "Then there are questions about whether margins have peaked at this company."
