Adam Satariano San Francisco

Apple plunged in European trading yesterday after posting the slowest profit growth since 2003 and weakest sales increase in 14 quarters, as higher costs and competition make it harder to sustain revenue expansion.

The group lost 8 percent to e352.34 (R4 190) in Germany after saying profit rose less than 1 percent to $13.1 billion (R117bn), or $13.81 a share, in the quarter to December. Sales rose 18 percent to $54.5bn, falling short of $54.9bn, the average analyst estimate compiled by Bloomberg. Analysts had predicted profit of $13.53 a share.

Apple also fell as much as 11 percent in late New York trading on Wednesday as the results underscored the rising costs of product overhauls amid competition from Samsung Electronics in the saturating smartphone market.

Even as chief executive Tim Cook guided Apple to record revenue and iPad and iPhone sales, investors worry about management’s ability to keep making hit products more than a year after the death of co-founder Steve Jobs.

Apple suppliers also fell in Asia. Assembler Hon Hai Precision Industry shed 2.9 percent in Taiwan and speaker maker AAC Technologies plunged 6 percent in Hong Kong. Samsung, which makes chips for Apple, fell 1.4 percent in Seoul.

Apple introduced the iPhone 5, iPad mini and a restyled Mac to draw customers in time for the first fiscal quarter, typically its most lucrative.

The share price decline has shaved $175bn from Apple’s market capitalisation since a September peak and it may lose its status as the world’s most valuable company to Exxon Mobil. Apple rose 1.8 percent to close at $514.01 in New York on Wednesday, leaving it with a market value of $482.7bn, compared with Exxon’s $413.5bn. The shares then fell in extended trading to as low as $457.30 for a market cap of $429bn.

Apple changed the way it provides financial outlooks to investors, after years of exceeding quarterly profit estimates by an average of 26 percent. Rather than giving “conservative” forecasts, Apple expected to report results within its predicted range, chief financial officer Peter Oppenheimer said.

Competition from smartphones using Google’s Android software, as well as the lack of a breakthrough product since the iPad’s 2010 debut, has led Daniel Morris at Morris Capital Advisors to cut his holdings. “It does raise some red flags,” said Morris, who first bought Apple before the iPhone’s launch.

Cook and Oppenheimer defended the firm’s performance, saying iPhone, iPad mini and iMac sales were held back because the firm could not manufacture enough to meet demand.

Even so, the results indicate that the period of rapid growth that Apple experienced in the six years after Jobs introduced the iPhone may be coming to an end. – Bloomberg