Bloomberg News reports that Apple Inc. (NASDAQ: AAPL) reported a 57% profit rise this afternoon. But Apple's EPS of $1.76 fell short of the highest estimate -- $1.77 (and 'whisper numbers' were as high as $2). The result? Apple's stock is down 12% in after-hours trading. At $138.10, the stock is down 32% from its all-time high of $202.96 set last month.
Last month I discussed Apple's valuation with Erin Burnett on CNBC and concluded that it was a bit steep. The problem with companies like Apple -- that investors recognize as exceptional product developers -- is that their Price/Earnings ratios rise so high that it is very difficult for them to keep exceeding ever higher expectations.
In Apple's case, the problem today was that Apple's earnings failed to top the most optimistic of analysts' estimates and sales of iPod media players trailed projections. Steve Jobs's forecast also heightened concern that a slowing U.S. economy will cause consumers to cut back on purchases of Macintosh personal computers and iPhones.
Does the 32% drop in Apple's price make you want to buy more or get out?