Apple Share Value Peels Away On Demand Fears

Apple (NasdaqGS: AAPL - news) shares fell below the $400 mark on Wednesday for the first time since December 2011 amid fears about weakening demand for its iPhone and iPads as competition intensifies.

A surprise warning about disappointing revenue at Cirrus Logic (NasdaqGS: CRUS - news) , which makes audio chips for both products, sparked the sell-off.

The US firm's forecast added to market speculation that sales of the iPhone - which make up more than half of Apple's revenue - are slowing more quickly than expected as Samsung and other rivals flood the market with cheaper devices.

It also threw the spotlight on Apple's quarterly earnings announcement due out next week, with some analysts saying the results could miss already reduced estimates.

"This is a tough environment. Apple is in transition between products," said Michael Yoshikami, a portfolio manager at California-based Destination Wealth Management, which owns about 50,000 Apple shares.

Cirrus Logic had warned of a reduced product forecast from one customer - which it did not name - but at least 90% of its business comes from Apple.

Apple shares dipped below $400 on the Nasdaq before closing 5.5% lower at $402.80.

The drop wiped more than $22bn (£14.4bn) off its market value.

Since its September 2012 peak, Apple has lost 40% of its market value - slightly more than Google (NasdaqGS: GOOG - news) 's entire capitalisation.

The drop has been fuelled by worries about the effect on Apple's industry-leading margins if it is forced into faster updates of its products to keep up with rivals.

Some say Apple will not be able to sustain its high gross margins as competition in the tablet and smartphone markets leads to lower prices.

Analysts expect Apple to report a 9% increase in quarterly revenue on April 23, with net profit expected to be down 17%.