You say this as if it means Apple has done something wrong, or that they've somehow underperformed. The fact is this: they issued guidance for their profits for this quarter, and beat their own guidance. Third-party analysts issued their own estimates, which were significantly higher, and the market responded to those estimates by overvaluing the stock. When the quarterly results were issued, it turned out that the analysts were wrong, and the market, which had "bought the rumor", promptly corrected to a more realistic valuation. I fail to see how a third party being over-optimistic is Apple's fault.

People tend to assume that when a stock loses a significant amount of value in a short period of time, a company has done something wrong. This is a great example of why this is not the case - speculators wrongly assumed that Apple would be even more ultra-profitable than they actually are, and overvalued the stock. The resulting correction was healthy.

How did they miss their estimates?

"Apple said its earnings per share were $9.32 on revenue of $35 billion. Analysts polled by Thomson One Analytics predicted earnings per share of $10.36 on revenue of $37.19 billion."

Via http://www.mercurynews.com/breaking-news/ci_21147940/apples-...

It doesn't matter how much money you actually make when you are as big as Apple, it matters what you make compared to what people (analysts) think and expect you to make.

Edit: Put wrong quarter numbers, fixed.

You said "their estimates" which I took to mean Apples own estimates. Isn't it tradition for Apple to beat their own estimates, fail to meet analysts estimates, and having their shares drop for a period of time afterwards? I'm not a trader though so correct me if I'm wrong.

They're usually pretty good about their own estimates, but they don't manage "expectations" very well. By way of contrast, Microsoft seems to do this much better, leading to fewer surprises.

These analysts have their heads up their asses, though, as that's the only place you could get numbers like this.

It is a tradition. Manipulation of Apple's stock price by people looking to make a quick buck goes back at least a few years now, with even some big names openly admitting to having done unscrupulous things to make it happen.

The market was trading on a belief that Apple's numbers would be about $2 billion higher than they were. Therefore the stock will fall as people digest the number and re-evaluate where Apple should be trading.

Since they reported numbers that were in the neighborhood of 6% below what was expected, their stock fell about 6%. Which is a pretty large drop.