Apple has taken a fresh bruising after a gloomy forecast accompanying its record quarterly profits prompted pessimism over the tech giant's slowing growth trajectory.
Apple shares slid 9.9 per cent to US$462.96 in early trade on Thursday, extending the decline from record highs above US$700 last year.
"We don't think the Apple growth story is over but shares will likely languish until confidence is restored," said Sterne Agee analyst Shaw Wu.
Apple said on Wednesday it made a profit of US$13.1 billion on revenue of US$54.5 billion in the fiscal quarter that ended on December 29 as sales of iPhones and iPads set quarterly highs.
The California-based company reported it had sold 47.8 million iPhones and 22.9 million iPad tablet computers in the closing months of 2012.
Despite the figures, investors soured on Apple after it forecast that its revenue for the current quarter would range from US$41 to US$43 billion and it would have a gross margin of 37.5 to 39.5 per cent.
Apple has been long known for a high margin, the difference between what it charges for products and the cost to make them.
"Apple's profit did go up; it just didn't go up that much," said analyst Rob Enderle of Enderle Group in Silicon Valley.
"They had a really high increase in sales, but their high margin is coming apart at the edges ... They are making less per gadget."
Walter Piecyk at BTIG Research said Apple's outlook implies a contraction in earnings per share of as much as 25 per cent.
Apple's results "were not terrible, although they were below our estimates", Piecyk said.
"We believe Apple could have sold more than 50 million phones had operators in the United States not tightened their upgrade policies."
But he noted that a bigger worry for Apple is sales outside the United States, "likely a reflection of Apple's phones being too expensive for what is predominantly a non-subsidised, pre-paid market globally".
The analyst said Apple, which has been a pioneer in smartphones and tablets, now needs to consider competition from lower-cost rivals.
"Apple needs a cheaper phone. Period," he said in a note to clients.
Others remained upbeat about Apple's prospects, saying the company is still innovating and remains the standard for the high end of the market.
"We are buyers of Apple on the pullback," said Gene Muster at Piper Jaffray, arguing that "investors will return to the stock once the potential of new products comes into focus over the next three to six months."
But Munster nonetheless scaled back his expectations for Apple shares, saying profit margins will be squeezed as consumers shift to lower-cost devices.
However, he added he expects Apple to release a television in 2013, which should add about five per cent to revenues and "give a product for investors to anticipate".