Does Apple's rotten Q2 spell value?

This time last year, China passed the US to become Apple's largest customer. The American tech giant sold $16.8 billion (£11.5 billion) of kit there in its second quarter 2015, up 70%, and Apple shares quickly raced to a record high.

Scroll forward 12 months and the shares are 27% lower, and sales are falling much faster than expected.

That Apple suffered its first decline in quarterly revenue in over a decade was no surprise. That it fell by nearly $7.5 billion was. Revenue slumped by 13% to $50.6 billion in the three months to March 2016, about $1.5 billion more than Wall Street anticipated. A 26% plunge in Greater China is a real worry. It's why the shares fell 8% on these figures.

Earnings per share (EPS) of $1.90 also missed estimates of $2, and Apple's own forecasts for the third quarter is for revenue to fall far more than traders feared. Look for $41-$43 billion, it warns rather than the $47 billion pencilled in by analysts.

Apple is currently worth $200 billion less than it was a year ago. And the price/earnings multiple, based on EPS forecasts of $8.92 for the year to September 2016, is a modest 11 times, dropping to single digits in 2017.

That said, the market is unlikely to ascribe a more aggressive rating until it's confident Apple can avoid more nasty surprises like this. Technical support stretching back to 2013 is currently being put to the test.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.