Cirrus Logic’s report indicates that Apple may be struggling to compete with the flood of new smartphone models being released by competitors, said Colin Gillis, an analyst for the BGC Partners. “No longer can you roll out a phone and have it be fresh for a year,” said Gillis. “The space is too competitive.”
Apple’s shares dipped as low as $398.11 after the Cirrus report before recovering in the afternoon to close at $402.80, down nearly 6 percent for the day. The company’s stock has fallen more than 40 percent from its September high, including more than 20 percent so far this year.
Apple’s stock performance weighed on the Nasdaq, which took a deep dive Wednesday, falling 1.8 percent. The Dow Jones industrial average and the S&P 500 were down 1 percent and 1.4 percent respectively.
At its height, Apple was one of the most widely held stocks in the country and a darling of hedge fund managers. But a February report from Goldman Sachs revealed that Apple had fallen to third in the list of most widely held stocks in hedge funds — behind American International Group and fellow tech titan Google.
The firm has been in fierce competition with Android smartphone makers — particularly Samsung. Apple is the leading smartphone maker in the United States, but trails Samsung in the global market.
Analysts attribute Samsung’s success to its strategy of offering smartphone models at different price points that appeal to a wider audience. That is a strategy some analysts have been pressuring Apple to follow by offering a low-cost iPhone.Apple is scheduled to report fourth-quarter earnings Tuesday and analysts have already lowered their revenue expectations. Sales of the iPhone are expected to be relatively flat.
Samsung's newest smartphone, the Galaxy S 4, is expected to provide stiff competition for Apple when it hits store shelves at the end of April. It has features that the iPhone 5 does not, such as larger, 5-inch screen and software that allows users to use cameras on the front and back of the phone at once.
But investors are more concerned about the next few months, Gillis said. Samsung and HTC will release new products during that period, potentially sapping demand for Apple phones. “The question investors need to ask themselves is when is that weak June quarter factored into the stock,” he said.
Apple did not respond to a request for comment.