Apple's invincibility fades on iphone miss, global woes

By AGENCIES

APPLE Inc's biggest success has become its biggest risk factor.

The iPhone revolutionized the smartphone industry, driving Apple's expansion into Europe and China and, after just half a decade, yields about half its annual $100 billion revenue haul.

But the world's most valuable technology company -- which throughout the global recession near-unfailingly smashed Wall Street forecasts -- is beginning to lose its aura of invincibility.

The company has missed Wall Street targets twice in under a year. CEO Tim Cook may now have to worry more about economic and product launch cycles, and the whims of fickle consumers.Tuesday's numbers also showed the impact of the economic slowdown in Europe on its sales, something a smaller, less-exposed Apple was able to dodge a few years ago.

"Apple is a little bit more vulnerable," said Giri Cherukuri, head trader at OakBrook Investments. "There are chinks in their armor now."

The reason for its vulnerability: its very success and size.

"When they were small enough, they could power through it," Sterne Agee analyst Shaw Wu said. "Now it's so pervasive that it's a lot harder."

The change in sentiment was evident in Cook's call with investors on Tuesday following a miss in fiscal third quarter earnings numbers.

Cook assessed how the global economy -- particularly in Italy, France, Greece, and China -- impacted iPhone sales. This stood in stark contrast to his comments in 2009, when the world's credit system froze and global economy was grinding to a halt in the aftermath of Lehman Bros' collapse.

"We just spend our time projecting our business and leave the economy forecasting and comments to economists," Cook said during an earnings conference call nearly three years ago -- before the launch of the iPad and when the Mac computer generated more revenue than the iPhone.

On Tuesday, Cook was somewhat more expansive in his assessment of the business environment.

"We are certainly seeing a slowdown in business in that area," Cook said of Western Europe. "Fortunately, the U.S. and China, although I realize it's getting a lot of press, we're not seeing anything there that we would classify as an obvious economic issue."