Apple Inc (AAPL) Shares Plunge on iPhone 3G Price Concerns

Shares of Apple Inc fell for the third day in a row, possibly reflecting shareholder concerns about the shift in its iPhone strategy, although analysts continue to think the company will thrive. Behind the excitement of Chief Executive Steve Jobs’ announcement on Monday of new iPhones next month was news that Apple would forsake the percentage of recurring monthly service revenue it got from wireless carrier AT&T Inc’s iPhone users.

Apple is expected to see its earnings dip about 3 cents a share this year, according to some estimates.

“There was a piece of negative news out of this - that they had to subsidize for growth,” said Hudson Square Research analyst Daniel Ernst. “You could take a bearish look at that. They had to subsidize in order to keep growing it.” Instead of paying Apple a portion of service fees each month as it did with the last iPhone, AT&T will shoulder part of the price of Apple’s latest model to the tune of $200 to $500 per phone, according to analysts’ estimates.

Still, Ernst said he anticipated that Apple would have to make such a shift to continue iPhone growth and remains positive about long term outlook in the long term, echoing sentiment from several other analysts.

“My view is that that is the way the cell phone industry works - it’s not their fault,” he added.

Apple shares were down $3.13 or 1.8 percent to $170.13 in early afternoon trade on Friday on Nasdaq, after hitting a daily low of $165.31 in early trade. The stock is down nearly 9 percent since the close of trade on Monday.