Apple stock falls significantly

Apple's shares (AAPL) have closed significantly lower today at $37.26, a slump of 9.21%. The market reacted very negatively to Apple's Q2 earnings release, although the quarter was first qualified as "excellent". The stock went even lower on after-hours trading to 36.51, another 5.73% slump.

The main reason of this negative reaction is said to be the figures Apple has provided for this quarter's iPod sales. Although Apple has sold about 5.3 million iPods this quarter, which represents a 16% increase over last quarter, iPod's revenues did fall 16% because of Apple's recent price cuts and introduction of an entry level digital music player, the iPod shuffle.

The iPod shuffle, which is priced $99 on its 512MB version and $149 on its 1GB version, is cannibalizing Apple's standard iPod sales according to analysts.

Meanwhile, Apple claims that its new iPod shuffle has already captured 43% of the flash-based digital music players market, bringing Apple's overall market share to 70% in the digital music players market (both hard drive and flash-based).