Apple slump rattles tech sector

The Cube: sales disappointing

Confidence in US technology firms took another battering as Apple became the second IT giant in a week to announce a profits warning, and Microsoft lost one of its founders.

Apple expects fourth quarter revenue of $1.85-1.90, "substantially below expectations", the firm said in a statement on Thursday.

The firm blamed the figures, which are about one third less than analysts' predictions, on a "business slowdown" worldwide in September.

"We've clearly hit a speedbump," Steve Jobs, Apple's chief executive, said on Thursday.

In afterhours trading, Apple's share price dropped by 50%.

Tech share trouble

The announcement was made after the close of US stock markets, which are still digesting last week's profits warning by Intel, the world's largest chip manufacturer.

Steve Jobs: "We've clearly hit a speedbump"

And it came shortly before Paul Allen, who co-founded Microsoft with Bill Gates, announced he will be one of two directors stepping down from the firm's board next month.

Apple, while one of the pioneers of the home computer, suffered a decline in the mid-1990s such that by 1997 its share of its home US market had fallen to 4.3%.

But investor confidence returned after the firm launched a series of cutting edge products, including the iMac, which heralded a revolution in hardware design.

Cube struggles

Apple in July unveiled the Cube, a single processor computer housed in an 8-inch box.

But sales of the machine "had got off to a slower than expected start", Apple's chief finance officer Fred Anderson said.

Sales of education products, which normally peak in September, were also lower than predicted, he said.

Billionaire leaves

Paul Allen, the US's third richest man with a fortune estimated by Forbes magazine at $28bn, will remain a "senior strategy advisor" to Microsoft, the firm said on Thursday.

Paul Allen: worth about $28bn

"This [resignation] will relieve him of some of his time demands," a spokeswoman for Microsoft said.

He previously left the company in the early 1980s to battle Hodgkins Disease.

Earlier this year he sold about $3bn of his Microsoft, but has invested in cable companies, including Oprah Winfrey's Oxygen Media.

Double resignation

Microsoft also announced the resignation of director Richard Hackborn after six years on the board since Mr Hackborn recently resigned as chairman at Hewlett-Packard.

Apple shares closed up $4-9/16 at £53-1/2 on Thursday, ahead of the profits warning.

Intel's profits warning, which sent its shares down 21% last Friday, depressed stock markets worldwide.