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Apple shares fall on report iPhone demand may slow

Customers line up outside the Apple Store in Chicago to be among the first to buy an iPhone last month. Chairman Steve Jobs expects the iPhone to become the company's third major business. Customers line up outside the Apple Store in Chicago to be among the first to buy an iPhone last month. Chairman Steve Jobs expects the iPhone to become the company's third major business. (M. Spencer Green/Associated Press/File 2007)

NEW YORK -- Apple Inc. shares fell the most in six months after analysts said demand may be slowing for the iPhone, which chief executive Steve Jobs expects to become the company's third major business.

Piper Jaffray & Co. analyst Gene Munster, whose June 2004 recommendation to buy Apple stock preceded a 761 percent rally in the shares, said iPhone sales may disappoint some. While Apple probably sold about 200,000 iPhones in its first two days, it may have missed some analysts' estimates of up to 500,000, according to Munster, who said Apple sales met his expectations.

Early acceptance of the combination iPod and mobile phone is crucial to Apple's strategy to crack the mobile phone market, which is almost four times larger than the PC market. If demand falters, Jobs may fall short of his goal to make the device a third major business after Macintosh computers and iPods.

AT&T Inc., the largest US phone company and sole service provider for the iPhone, said in a statement yesterday it activated 146,000 of the phones in the first two days of the sales agreement.

Shares of Cupertino, Calif.-based Apple fell $8.81 to $134.89 in Nasdaq Stock Market composite trading, the steepest decline since Jan. 18.

Apple spokesman Steve Dowling said the company has no comment on iPhone shipments until Apple reports earnings today.

UBS AG said iPhone sales for the two-day period were "likely much higher" than the number of activations AT&T reported and that investors should "not overreact."

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