Apple Inc. (AAPL) Investors: $50 Billion Vanishes in 2 Hours

Apple Inc. (NASDAQ:AAPL) had some positive momentum during Wednesday’s trading day in anticipation of the company’s quarterly earnings report. But once the market closed and the report was released, the momentum went went 180 degrees in reverse – and in an accelerated fashion. During the day, Apple Inc. (NASDAQ:AAPL) rose nearly 2 percent to close at $514.01 per share. But after the report did nothing for analysts, after-hours trading has been a disaster.

As of 6 p.m. ET – two hours after the close of market trading – the stock plummeted 10.7 percent to $458.78 per share. What in the world happened?

Apple Inc. (NASDAQ:AAPL) announced that the company posted a record quarter in terms of sales, but profits got pinched due to heavy sales of lower-priced devices, as well as increased production costs. The company reported selling 47.8 million iPhones in the quarter, which matched analysts’ estimates. And another piece of good news – after several warnings that suggested that Apple Inc. (NASDAQ:AAPL) would suffer a drop in profits for the first time 10 years – the company did report that it posted a profit gain of $14 million over the same quarter a year earlier.

Overall, Apple Inc. (NASDAQ:AAPL) reported profits of $13.1 billion or $13.81 per share (the EPS missing last year’s number by 6 cents). This marks the second time in the last 40 quarters that Apple failed to record year-over-year growth of at least 10 percent. However, sales rose more than 17 percent to $54.5 billion.

So why the drop? Well, first, Apple Inc. (NASDAQ:AAPL) announced its profit margin dropped to 38.6 percent, which is an amazing drop of more than 6 percentage points from the same period in 2011. And on the earnings call, Apple estimated profit margin for the current quarter would be even lower – between 37.5 and 38.5 percent – with sales between $41 billion to $43 billion. Those numbers are both well short of Wall Street estimates.

Just usual Apple conservatism, or something more?