Apple Stock Tumbles After iPhone Fiasco

Apple stock received a thrashing from Wall Street over the last three days, as investors showed their displeasure with the company's missteps in iPhone pricing by shaving billions of dollars off the company's market cap.

The sell off started Wednesday when Apple chief executive Steve Jobs surprised customers and shareholders with a $200 price cut on the iPhone, which had only been available for two months. Apple typically doesn't reduce prices on products until they're trumped by upgrades.

Unhappy with the impact the cut would have on Apple's bottom line, investors on Wednesday dumped the company's stock, driving its price down 6.1% to $136.76 per share. On Thursday, the sell off started anew when Jobs said the company would offer iPhone buyers who paid the original $599 for the gadget a $100 credit on any Apple product bought through its Web site or retail stores. The credit, triggered by angry protests from early iPhone buyers, led to Apple stock finishing the day down 55 cents to $135.01.

While there were no new announcements on Friday, the stock continued to fall, dropping another 2.4%, or $3.24, to end the day at $131.77 per share. Since Wednesday, when the stock opened at $144.97, the price has fallen $13.20, shaving $11 billion off Apple's market cap, according to analysts with investment firm Barron's.

The iPhone price cut was seen by some experts as an indication that the gadget was priced too high for the market, and Apple had no choice but to lower the cost to broaden the customer base.

Jobs on Thursday acknowledged that the company hoped to make the gadget more affordable. "It benefits both Apple and every iPhone user to get as many new customers as possible in the iPhone tent," Jobs said in an open letter to iPhone customers posted on the company's Web site.

Some experts have also said that Apple wants to be sure to hit Job's goal of shipping 10 million iPhones by June 2008, which will mark the device's one-year anniversary.