iPhone activations bite into Apple's stock

Shares slumped after AT&T reported just 146,000 activations, but analysts believe shares will bounce back.

By Keisha Lamothe, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Apple's stock sank more than 6 percent Tuesday after AT&T reported that it activated 146,000 iPhones during the first two days the device was available, far fewer than analysts had anticipated.

The number of activations reported by Apple's sole wireless provider surprised many because analysts had forecast actual sales of the touchscreen phone to be around 500,000 to 700,000 during the first weekend of its release.

Analysts expect Apple to report figures for the first week of iPhone sales tomorrow when the company reports third quarter earnings.

Shares of Apple (Charts, Fortune 500) tumbled 6.1 percent in late session trading on Nasdaq.

But Shebly Seyrafi, an analyst with Caris & Company, thinks the sell-off will be short-lived.

"If anything, the most current reports have been suggesting that people are even more delighted by the iPhone than they anticipated," Seyrafi said.

He said that although iPhone figures were less than what investors had hoped for, U.S. stocks markets also took a hit Tuesday and there was some profit taking occurring.

Shaw Wu, an analyst with American Technology Research, also agreed that Apple's stock was being hurt by the market sell-off.

"There was some disappointment today with the activation numbers, but we thought they were in line with what they should have been," Wu said.

"You also have to take into account that the activations did not go smoothly and not everyone activates their phone right away," he said.

AT&T's (Charts, Fortune 500) activation figures covered June 29 and June 30, but many new customers had to wait until Sunday, July 1 to get service because the wireless provider had difficulties connecting users.

Even with Apple's performance today, the stock is still up about 40 percent since the last time the company reported earnings.

Apple is due to report third-quarter earnings Wednesday.

"When [Apple] reports tomorrow, more questions will be answered and unrealistic expectations will be out the door," Wu said. "Sometimes it's healthy to see these corrections." Top of page