Apple: Downgrade By Analysts On New iPhones

Apple Computer (AAPL) was down sharply in global trading on Tuesday morning as analysts downgraded the company in response to its recent release of a new line of iPhones.

Apple launched its first product in Bejiing yesterday with two new iPhones and, overall, the launch appears to be a dud.

The new phones are supposed to be a lower priced model but now concern is that the new models won’t fly in China.

The new iPhone 5C is higher priced than expected and will go for $700 in China, above what many analysts think the Chinese market will bear.

The company announced that the iPhone5 would become a dinosaur and be replaced by the iPhone 5S.

On Tuesday, Apple fell 2.3% in response to the meeting and the rout appears like it will continue on Wednesday with the stock down 4% in pre-market trade.

The recent action triggered downgrades by many analysts including Bank of America, Credit Suisse and UBS. The company’s stock has been in rally mode since early July, coming off a low in the $390 range to close recently above $500.

The Nasdaq Composite (QQQ) also reacted negatively to the news on Apple (AAPL) since Apple is such a large component of the index. The Nasdaq (QQQ) was down 0.4% in pre-market trade on Wednesday.

The company has a current market cap of more than $440 billion and a P/E ratio just over 12. Options trading in Apple (AAPL) has been heavy this week with an unusually high volume of call options on Monday.

Bottom line: Apple continues to struggle with innovation in the post Steve Jobs era and, as one of the world’s largest companies and a widely held position by major investors, its performance ripples across major U.S. stock indexes and global financial markets.

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