UPDATE 2-Apple forecast below Wall St targets, shares slide

(Adds analyst comment, wider market slide, detail, byline)

By Scott Hillis

SAN FRANCISCO, Jan 22 (Reuters) - Apple Inc (AAPL.O: Quote, Profile, Research, Stock Buzz) 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 (GOOG.O: Quote, Profile, Research, Stock Buzz) and Microsoft Corp (MSFT.O: Quote, Profile, Research, Stock Buzz) 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 Dec. 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 (RIMM.O: Quote, Profile, Research, Stock Buzz)(RIM.TO: Quote, Profile, Research, Stock Buzz) 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)