Jobs Upbeat About iPhone, But Apple Stock Gets Hit

Apple CEO Steve Jobs downplayed investor disappointment with iPhone sales, telling CNBC that consumers love the smart phones and that "we feel great" about sales so far.

Jobs, speaking earlier at the annual Macworld convention in San Francisco, put the iPhone's total sales at 4 million units since its debut in June.

No Title_22668067

But Apple shares fell more than 6 percent as investors who expected an even bigger sales figure sold the stock. The street was looking for something closer to 5 million units sold.

"Apparently, investors aren't impressed with what they've heard so far," said one trader, who asked for anonymity.

But in an exclusive interview with Silicon Valley Bureau Chief Jim Goldman, Jobs said that as long as Apple keeps innovating, customers will buy and so will investors.

"You know the thing that makes us feel even better than the numbers?" Jobs said. "The customer feedback we get on the iPhone is just off the charts. People love their iPhones."

Apple's first cell phone represented about 19.5 percent of the U.S. smart phone market in the first 90 days it was on sale, according to Jobs.

Smart phones, which have computer-like features such as Web browsing, represent a small part of the cell phone market. The company said in October that it had sold about 1.12 million units of iPhone in the third quarter.

AT&Tis the exclusive U.S. carrier for the device, which is also on sale in Europe.

Super-Skinny Laptop

Jobs took the wraps off a super-slim new laptop at Macworld, unveiling a personal computer less than an inch thick that turns on the moment it's opened.

Apple and Intelworked together to miniaturize Intel's Core 2 Duo processor for the laptop. The laptop is made of precision-machined aluminum, Jobs said.

"We said to ourselves, if we can make this real, we'll all lust after it," Jobs told CNBC.

Always a showman, Jobs unwound the string on a standard-sized manila office envelope and slid out the ultra-thin MacBook Air notebook computer to coos and peals of laughter from fans at the conference.

At its beefiest, the new computer is .76 inches thick; at its thinnest, it's 0.16 inches, he said. It comes standard with an 80-gigabyte hard drive, with the option of a 64GB flash-based solid state drive as an upgrade.

Macbook Air
Macbook Air

The new laptop, which has a 13.3-inch screen and full-sized laptop keyboard, will cost $1,799 when it goes on sale in two weeks, though Apple's Web site already has been updated to reflect Tuesday's announcements. The price is competitive with other laptops in its market segment.

The machine helps fortify Apple's already-sizzling Macintosh product lineup and burnish its polished image as a purveyor of cool.

Apple's Macintosh business hit record sales of 7 million units in the company's fiscal 2007, up more than 30 percent from the previous year.

After hovering for years with a 2 percent to 3 percent share of the personal computer market in the United States, Apple's slice has grown to almost 8 percent, making it the nation's third-largest PC vendor, according to the latest figures from market researcher Gartner.

iTunes Movie Rentals

Apple also unveiled a new iTunes movie rental service that will feature films from all the major movie studios.

Users will be able to rent library titles for $2.99 and new releases for $3.99, and watch them on a computer, an iPod, or iPhone, or Apple TV.

Once a movie is rented, it will download from the iTunes Store directly to iTunes or Apple TVs. Users with a fast Internet connection can start viewing the movie in seconds, Apple said.

Customers will have up to 30 days to start watching the film, and once a movie has been started, customers have 24 hours to either finish it, or watch it multiple times.

The movie rental service launches Tuesday and will offer more than 1,000 titles by the end of February, including over 100 titles in high definition.

iPhone's New Tricks

Jobs also announced new software for iPhone, including a "web clips" feature, which essentially turn bookmarks into icons that can be displayed on the phone's home screen.

"The iPhone is not standing still. We keep making it better and better and better," Jobs said.

Web clips and other features will also be available for the iPod Touch, which has a Wi-Fi short range connection but no cell phone links. Apple said plans to charge existing iPod Touch customers $19.99 for the software upgrade, which will be available free for existing iPhone users.

Jobs also showed how iPhone users can now pinpoint their location on Web maps, text message multiple people at once and customize their home screens.

A packed auditorium cooed and applauded when Jobs demonstrated an upgrade to the iPhone's mapping function that identifies the user's location and allows them to chart direction and easier navigate outings.

Other new features Jobs rolled out included the ability to switch around the icons on the iPhone's home screen. Users can create up to 9 home screens.