If there was an Olympic medal for understatement, Mr Steve Jobs, Apple chief executive, would be in line for gold. "We've clearly hit a speedbump," he said as he announced an earnings warning late last week that halved the value of his company's shares.
Apple's speedbump wiped more than $8.5 billion (€9.7 million) from its market capitalisation as analysts queued up to downgrade the stock. It also revived fears across the personal computer sector, already reeling from Intel's own recent warning.
Among traders and investors, one question dominated: were Apple's woes limited to its own operations or did they point to a wider slowing of demand for PCs?
Mr Don Young of PaineWebber was harsh: "Apple's miss points to one of two things: one, Apple's comeback is over; or, two, there was a worldwide softening in consumer demand in September for all PC vendors."
Mr Young said he was going for the first option. And Apple's own announcement did not point to anything beyond its own product lines. After the market closed last Thursday, the company said its fourth-quarter earnings would come in well below Wall Street expectations. The company blamed slower-than-expected sales in September across all regions.
Mr Fred Anderson, Apple's chief financial officer, said there had been a particular weakness in its sales to the education sector, which normally peak in September. Apple was also disappointed about early sales of its PowerMac G4 Cube, the centrepiece of the group's recent string of product launches.
The numbers left Apple scrambling to recalculate its revenue and earnings forecasts for the coming year. The company said it would lower growth targets for fiscal year 2001 when it released its full-year results on October 18th. For the fourth quarter, it said it expected to earn between 30 and 33 cents a share, against analysts' expectations of 45 cents.
Apple also expects revenues of between $1.85 billion and $1.9billion, below forecasts of $2.06 billion.
If the problems are purely in Apple's camp, the announcement marks a shock reversal in Apple's comeback story. The company's stock has climbed consistently since Mr Jobs returned to head the company in 1997.
The flamboyant chief executive was extolled for turning the group around by launching a line of colourful computers like the iMac that stretched the boundaries of PC design. But the use of design to drive sales might be reaching its limit: one of the most striking announcements last Thursday was the disappointing sales of Apple's innovative Cube.
The Cube appeared to be the ultimate fashion accessory for Apple's style-conscious band of users. But there have also been growing concerns about Cube's casing. Some customers complained that lines left on the cube's surface during the manufacturing process looked like hairline cracks.
Research from International Data Corp also added to the evidence mounting up that Apple's problems were all its own.
September did not appear to be mirrored across the industry.
Another shock came with the fall in education demand. Either schools were buying fewer computers in September, or they were switching more to more standardised Windows and Intel-based machines. Neither is good news for Apple.
Despite all the evidence that Apple was on its own, investors decided to punish the PC sector as a whole. Shares of Gateway, Dell and Hewlett-Packard were all heavily down last week while Compaq and IBM did slightly better, showing losses of just 2 per cent.
Meanwhile, analysts did their best to point the other way. Merrill Lynch gave six reasons why Apple's shortfall did not mean slowing demand for all PC retailers. Their explanations ranged from demand shifting to laptops, where Compaq has a greater market share, to problems in Apple's distribution of new product lines.
After the six reasons came the clear conclusion: "We do not see this as a one-quarter phenomenon for Apple, but rather as the start of many tough quarters ahead."
