TECH STOCKS: Apple Losses Take Tech's Center Stage

By Rex Crum, MarketWatch

SAN FRANCISCO (MarketWatch) -- Losses from Apple Inc. stood out in the tech sector Wednesday, with the company's shares falling more than 5% as investors reacted to the price of the new iPhone 5C in emerging markets such as China.

Apple (AAPL) shares fell by almost $27, to close at $467.71, and analysts at Bank of America/Merrill Lynch, Credit Suisse and UBS all cut their ratings on the company's stock. The main reason cited was that the iPhone 5C, which will start at $99 in the U.S. with a two-year service contract, will cost the equivalent of $733 in China for an "unsubscribed" phone, meaning the phone doesn't come with a contract from a wireless carrier.

Few mobile-phone consumers in emerging markets such as China use their phones with service contracts, and the non-contract price of the iPhone 5C was slammed by several analysts.

UBS analyst Steven Milunovich, who cut his rating on Apple to neutral from buy, and lowered his price target to $520 a share from $560, said he fears "Apple's pricing strategy will hamper the company's ability to be competitive in key growth areas in the smartphone market, particularly in China."

Companies that have provided chips for the iPhone and other smartphones also retreated, with Qualcomm Inc. (QCOM) down almost 3%, to close at $68.09, and Broadcom Corp. (BRCM) off by 2.5% to end the day at $26.10.

Take-Two Interactive Software Inc. (TTWO) shares ended the day down by 4.6% at $17.30. Pacific Crest analyst Evan Wilson cut his rating on Take-Two's stock to sector perform from outperform in advance of next week's release of "Grand Theft Auto V".

Texas Instruments Inc. (TXN) shares fell by 28 cents, to $40.03. Late Tuesday, TI narrowed its third-quarter outlook to a range of $3.15 billion to $3.29 billion from an earlier estimate of sales between $3.09 billion and $3.35 billion.

Losses also came from Netflix Inc. (NFLX), down by 1.5% at $308.30, Amazon.com Inc. (AMZN), which pared back by 72 cents a share to close at $299.64 and Yahoo Inc. (YHOO), off by 1% to end the day at $29.19.

The Nasdaq Composite Index (RIXF) trimmed its losses, but still gave up 4 points to end the day at 3,725, while the Philadelphia Semiconductor Index (SOX) also closed in the red.

Despite the broad losses, some gainers managed to emerge.

IBM Corp. (IBM) shares rose 2.2%, to $190.70 after selling its customer care outsourcing business for $505 million to Synnex Corp. (SNX) on Tuesday. Synnex's shares rose 20% to $57.59.

Pandora Media Inc. (P) rose 5% to $21.38, eBay Inc. (EBAY) was up by 1.5%, to close at $54.28 and Polycom Inc. (PLCM) shares climbed almost 8% to $10.73.

Polycom got a lift after the video conferencing technology company said its board approved a $400 million stock buyback plan that will be funded by $150 million in cash and $250 million in debt.

Fusion-io Inc. (FIO) shares rose 11.5%, to $14.64, on speculation that Seagate Technology (STX) might be interested in acquiring the flash-memory technology company.

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