The closely watched PowerShares QQQ (NasdaqGM: QQQ) was lower Wednesday as top holding Apple (NasdaqGS: AAPL) weighed on the exchange traded fund after a rare earnings miss.
The Nasdaq-100 ETF was down 0.7% in premarket trading. Apple, which accounts for 15% of the portfolio, slipped about 5% to under $400 a share. The stock impacts major equity indexes due to its massive market cap.
“Total revenue was $28.4 billion, up 39% year over year. In contrast to revenue growth that averaged more than 70% during the first three quarters of the year, Apple’s sales trajectory clearly decelerated,” said Morningstar analyst Michael Holt.
Still, Wall Street analysts remained upbeat on Apple despite the sequential decline in iPhone sales. “Even mountain climbers need a breather at altitude,” Deutsche Bank said.
Apple shares endured the summer equity sell-off very well, and the stock has spiked back above $400 in October following the death of Steve Jobs.
The company launched the iPhone 4S last week. [Apple Earnings Preview]
Apple’s quarterly results missed on revenue and earnings per share “but guidance was significantly ahead of our and Street expectations,” said Jefferies analysts in a note.
“At first glance, Apple’s fiscal fourth-quarter results lacked the upside surprise to which some investors have become accustomed. It would be a mistake, however, for investors to view the sequential decline in iPhone sales as an inflection point for Apple’s success. In fact, we believe Apple’s December quarter is shaping up to be a blockbuster,” added Mornigstar’s Holt.
“Widespread speculation of a new phone release (which occurred last week) drove delays in purchases, causing the iPhone segment, which represents approximately 40% of total revenue, to grow just 25% year over year. In the short time since its release, however, the iPhone 4S is establishing a record sales pace and continues to exceed expectations despite a launch event that received a lukewarm reception,” he wrote in a report.
The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.