Upgrades Fail to Lift Apple

Updated from 7:35 a.m. EST

Apple (AAPL Quote) shares slumped early Thursday despite a raft of Wall Street upgrades prompted by Wednesday evening's first-quarter earnings blowout.

The Cupertino, Calif., tech titan blew away revenue and earnings estimates, boosted by a surge in iPod sales over the holiday quarter. But Apple shares, after soaring to an all-time high in the runup to the earnings report, dropped $3.41 early Thursday to $91.54.

The maker of Mac computers and the iPod portable music player put up a profit of $1 billion, or $1.14 a share, in its first fiscal quarter, compared with $565 million, or 65 cents a share, in the same period last year.

Sales totaled $7.1 billion, rising from $5.7 billion in same quarter a year ago.

Thomson First Call analysts had expected the company to make 78 cents a share on sales of $6.42 billion for the first quarter.

On Wall Street Thursday morning, at least five big banks boosted their price targets. Bear Stearns upped its target to $130 from $125, UBS raised its target to $124 from $118, Piper Jaffray boosted its to $124 from $99, Goldman ratcheted its up to $110 from $102 and Prudential inched its target up to $100 from $90.

But J.P. Morgan downgraded Apple to neutral from overweight, citing soft Macintosh shipments and ever-increasing expectations.

Apple said it shipped more than 21 million iPods, ramping 50% over the same quarter last year. Analysts had forecast iPod sales of 16 million to 17 million of the players.

While it maintained its market-leading position in the U.S. in the face of new competitors like Microsoft's (MSFT Quote) Zune, iPod shipments grew even faster overseas, particularly in Europe, the company said.

Meanwhile, 1.6 million Macs shipped during the three-month period, growing 28% year over year, and in the ballpark of what many expected. Still, it was flat sequentially, and some had hoped for more upside after such a surprise gain last quarter.