Apple shares slide in wake of iPad launch

Apple shares were down 4 percent at $199.62 on Thursday afternoon on the Nasdaq. The company's stock often sells off following major product announcements. Separately, Nokia Oyj said it gained share in the smartphone market, while analysts said Apple's iPhone lost some ground against its competitors. The iPad is a thin and light, 9.7-inch touchscreen device good for Web browsing, video, games and electronic books. Chief Executive Steve Jobs formally introduced the product at a high-profile media event on Wednesday after months of rumors that helped propel Apple's shares to an all-time high earlier in January. The device will start at $499, a price point much lower than expected and which was well-received by analysts. But Apple is positioning the iPad as a "third category" device -- somewhere between laptops and smartphones -- and demand is still uncertain. "On balance, we view the iPad as a modest disappointment relative to expectations/rumors around features, although the relatively low entry level price was an upside surprise," Sanford Bernstein analyst Toni Sacconaghi wrote in a research note. He said Apple could sell 5 million units in the first year, with a potential earnings-per-share contribution of 28 cents. He said the device will be most attractive to consumers interested in netbooks and electronic readers, and does not expect it to cannibalize Apple's Macbook laptops. Analysts also pointed out that the iPad does not support Adobe Systems Inc's widely used Flash format, so there may be compatibility issues with certain websites, and that it does not have a camera. Barclays Capital analyst Ben Reitzes said Apple's product announcement came in largely as expected. "However, the pricing is much more attractive than expected and clearly shows that Apple desires mass market appeal," he wrote in a note. Reitzes estimated Apple will ship 2.9 million units in fiscal 2010 and 7.3 million in fiscal 2011. He raised his price target to $285 from $265. Oppenheimer & Co analyst Yair Reiner issued a more modest sales forecast of 1.1 million units in fiscal 2010 and 4 million in 2011. Reiner also took his price target to $265 from $255. "It won't happen overnight, but in time, we believe that what looks today like a big iPhone or an amputated netbook or a souped-up photo frame will be revealed as a revolutionary new media device," Reiner wrote.