Apple forecast below Wall Street targets

Apple CEO Steve Jobs introduces the MacBook Air during the Macworld Convention and Expo in San Francisco January 15, 2008. Computer and iPod maker Apple Inc on Tuesday forecast fiscal second-quarter earnings far below Wall Street expectations, sending its shares down about 10 percent.

SAN FRANCISCO (Reuters) - Apple Inc on Tuesday forecast a quarterly profit far below analysts' expectations and posted disappointing holiday-season iPod shipments, sending its shares down 12 percent on fears the weak economy would hurt the Macintosh maker.

Stock market futures and shares of technology giants including Google Inc and Microsoft Corp fell on the news, after a frenzied day which saw the Dow Jones Industrial Average fall 1 percent and Nasdaq drop 2 percent.

"As Apple goes, so goes the Nasdaq," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey, who called it a bellwether for the tech and retail industries.

Apple's holiday-quarter shipments of iPod music and video players were 22.1 million, while forecasts from three analysts tracked by Reuters ranged from 22.4 million to 25 million.

"Investors are nervous about strength in consumer and even though Mac shipments were quite strong, iPods were light versus expectations," said Shannon Cross of Cross Research.

Net profit for the first quarter ended December 29 was $1.58 billion, or $1.76 per share, compared with $1 billion, or $1.14 per share, a year earlier. Revenue was $9.6 billion, up 35 percent from $7.12 billion a year earlier.

That handily topped the average Wall Street profit target of $1.61 while revenue was about $100 million above the average forecast, according to Reuters Estimates.

But the outlook fell short of expectations. Apple forecast earnings of 94 cents per share versus the average analyst target of $1.08, and revenue of $6.8 billion, versus Wall Street's $7.0 billion target.

Shares of Apple fell to $137 in after-hours trading from a close of $155.64 on Nasdaq. Shares of Blackberry maker Research in Motion fell 5.5 percent to $85.15 in extended trading. Google fell 2.3 percent to $571.00 and Microsoft fell 1.1 percent to $31.64.

(Reporting by Duncan Martell in San Francisco and Chris Sanders in New York; Editing by Braden Reddall)