Shares of Apple Inc slid more than 4 percent on Wednesday to a five-month low as investors grew more uncertain about its ability to fend off unprecedented competition and untangle a snarled iPhone 5 supply chain.
Apple's slide was steeper than the S&P 500's drop of about 2 percent the day after the U.S. election, putting the world's most valuable technology company into bearish territory.
Apple, long a mainstay of many fund portfolios, has lost 20 percent -- $130 billion of its market value -- since hitting a record high in September. A 20 percent slump signals a bear market in a stock to Wall Street.
Fund managers cited fundamental concerns about its supply chain and intensifying competition from resurgent rivals such as Samsung Electronics and Amazon.com Inc, as well as profit-taking after the elections.
Global shares fell with investors worried that the deep fiscal challenge facing President Barack Obama after his re-election could lead to a new recession.
Apple's has maintained a torrid pace of growth in recent years thanks to a run of successful iPhones and iPads. But many investors question whether it can keep innovating and keep ahead of ever-more aggressive competition under new management, installed after the death of its chief inspiration Steve Jobs.
"For now, everything has been refreshed and all the new products are out," Tim Ghriskey, Chief Investment Officer of Solaris Asset Management said."Then there are questions about whether margins have peaked at this company."
Last month, Apple said it expects its industry-leading margins to shrink this quarter as new products -- particularly the iPhone 5 that accounts for about half its revenue -- have become more expensive to build.
Chairman Terry Gou of Taiwan's Foxconn Technology Group, Apple's main contract manufacturer, said on Wednesday the company was "falling short of meeting the huge demand" for the phone.
PUTTING SOME THOUGHT INTO IT
Apple shares hit a low of $556.04 on Wednesday, before trading down 3.5 percent at $559.90 in the afternoon.
Analysts said the company remains a solid long-term bet. But near-term uncertainty persists after CEO Tim Cook ousted veteran mobile software chief Scott Forstall -- a protege of Jobs' and one of the company's most valuable assets, and as results in the latest quarter were short of expectations.
Apple faces fiercer competition during the crucial holiday season as rivals such as Samsung, Google and Amazon challenge its supremacy in smartphones and tablets. Microsoft's Surface also marks the first time the software giant is gunning for Apple on hardware, its forte.
Apple's tablet market share slid to 50 percent during the third quarter, while arch-foe Samsung more than doubled its share to 18.4 percent, according to research firm IDC.
This week, a jury asked Apple to pay $368 million to Internet security software maker VirnetX Holding Corp for infringement of patents.
Fund managers say investors may stop using Apple as a safe haven to park cash in a volatile market, lured to a stock that has more than doubled in two years.
The American Funds Growth Fund of America was among the biggest mutual-fund sellers of Apple, dumping 2.74 million shares or 35 percent of its holdings in the third quarter.
However, among the biggest mutual-fund buyers in the third quarter -- when the shares peaked -- ING's Large Cap Growth Portfolio more than doubled its holdings to over 515,000 shares as of Sept 30. The Columbia Value and Restructuring Fund doubled its slice of Apple over the same period to 225,530 shares.
The single biggest mutual-fund-holder of Apple stock as of the end of Sept 2012 was the Fidelity Contrafund with 12.4 million shares, according to Thomson Reuters data.
"There actually has to be some investment thought now, than just putting it (money) in Apple just because you don't know where else to put it," said Michael Yoshikami, founder and CEO of Destination Wealth Management. "Because of the uncertainty, you have to have a reason to own it."
(Editing by Edwin Chan, Bernadette Baum and David Gregorio)