Apple shares slump 11% in after hours trading

Last night, Apple announced its Q2 results. See Apple sets off a share slide in Businessweek or Apple hit by concerns over margins in the FT.

Basically Apple did thumpingly well in Q2; exceeding all expectations. The problem was that they warned, not on forward sales, but on forward margins. They would fall from 34.5% in Q2 to 30% in 2009. Apple never gives details on future products but gave strong hints that they would reduce prices in order to take advantage of their stellar increase in market share. According to Gartner, Apple now has a 8.5% of the US PC market putting them in the Number 3 position after HP and Dell. Separately I read that sales of laptops would exceed desktop sales for the first time in 2008. So the Apple product to focus on for price cuts is the Macbook.

The other subject which is spooking investors is God Steve Jobs’ health. You may remember that he had pancreatic cancer in 2004 and has been looking pretty pale and gaunt recently. At the moment I can’t think of any major tech company which is so identified with one single person. Microsoft seems pretty successfully to have transitioned away from Bill Gates. Google, IBM and the other majors really don’t have that “this company is dependent on one guy” tag. There is clearly a great team at Apple but it sort of feels like Freddie Mercury and Queen. Whether it’s a Queen concert at Wembley or a new Apple launch, we all know who we are really going to see, who will be the main showman. I hesitate to contemplate what would happen to Apple’s prospects – and its share price – if something serious happened to Steve.