Apple Shares Hit on Guidance - TheStreet

Updated from Oct. 16

Despite posting a fourth quarter profit above expectations,

Apple

(AAPL) - Get Report

is getting spanked in early trading, down $1.75, or 7% to $23.07.

Many major players in the personal computer sector also are down as investors seem wary of driving prices any higher despite

Intel's

(INTC) - Get Report

positive results and outlook earlier in the week.

IBM

(IBM) - Get Report

is down more than 4%, while

Hewlett-Packard

(HPQ) - Get Report

,

Dell

(DELL) - Get Report

and

Microsoft

(MSFT) - Get Report

also are lagging.

It seems that investors were disappointed in Apple's fourth-quarter guidance in which management predicted only 10% sequential growth. After a nine-month run in which the stock is up more than 30%, investors were expecting enthusiastic guidance in the 20%-25% range, based on a variety of trends that the company has been touting all year.

The fourth quarter will be the first full quarter with the new G5 model on the market, and management has led investors to expect that its installed base will move to the new, more powerful machine. By giving what is seen is relatively muted guidance, investors are left to wonder which of the company's high-profile products like iPod may not be performing as robustly as recent stock prices suggest.

The computer company earned $44 million, or 12 cents a share, in its quarter ended Sept. 27. That compared with the year-ago quarter, when the company lost $45 million, or 13 cents a share.

The company's sales jumped 18.9% from the fourth quarter last year to $1.72 billion.

In addition to the revenue increase, Apple's bottom line benefited from several one-time gains, including an accounting change and an investment gain. Without those, Apple would have earned $29 million or 8 cents a share.

That was still better than Wall Street was expecting and Apple had projected. Analysts surveyed by Thomson First Call projected that Apple would earn 7 cents a share on $1.67 billion in sales in the quarter.

Meanwhile, Apple said at the end of the last quarter that it expected its earnings to "slightly increase" over the $19 million, or 5 cents a share, it earned in its third quarter.

For its current quarter, Apple is projecting a "slight" increase in earnings over its fourth quarter on sales of about $1.9 billion.

Before its report, Apple's stock closed up 27 cents, or 1.1%, to $24.82. In after-hours trading, the company's stock fell 9.8 cents, or 0.4%, to $24.722.