Shares of Apple Inc. were pummeled in after-hours trading Wednesday as investors expressed their displeasure over the company's December quarter results and conference call. Though Apple met estimates for sales and slightly beat estimates for earnings, the company's guidance for the March quarter was substantially below Wall Street's consensus expectations.

Apple reported sales of $54.5 billion for its first fiscal quarter, right at consensus. The company also reported earnings of $13.1 billion, or $13.81 in earnings per share (EPS). Wall Street was looking for EPS of $13.48, representing a beat.

Both earnings and revenue set new records for Apple, helped by record numbers of iPhone and iPad sales of 47.8 million and 22.9 million units, respectively. iPhone hit the lower range of consensus estimates of 47-50 million units, while iPad exceeded estimates of 22 million.

Sandbagging

What hurt Apple with after-hour traders was its guidance. Apple muddied the waters a little bit by announcing a change in the way it will offer guidance for the March quarter and going forward. Apple has typically offered "conservative" guidance, according to Apple CFO Peter Oppenheimer, but will begin to offer more realistic guidance.

"In recent years, our guidance reflected a conservative point estimate, or results every quarter that we have reasonable confidence in achieving," Mr. Oppenheimer said during the conference call. "Going forward, we plan to provide a range of guidance that reflect our belief of what we are likely to achieve."

Put another way, Apple has been sandbagging its guidance for years, a practice has caught up to the company as analysts and investors alike expected the company to have blowout numbers every quarter. That practice will change going forward. Apple will also present its guidance as a range, rather than a fixed number.

Accordingly, Apple offered guidance of revenue between $41 and $43 billion. Consensus estimates for revenue were sitting at 45.4 billion. In the old days, Apple's guidance of $41-$43 billion would have been perceived as being roughly in line with that consensus number, but in the new era of a "we're not sandbagging" Apple, that represents a guidance miss.

It's important to note that if we're taking Mr. Oppenheimer at his word, Apple would have guided lower, say $38ish billion if were still taking the conservative route. That would have also been seen as a miss.

Notably—and this could also be having an after-hours affect on $AAPL—Apple didn't offer guidance for earnings.

Be Like Everyone Else

Additionally, Apple CEO Tim Cook specifically poo-pooed analyst questions about Apple offering cheaper iPhones to address the explosion of cheap, low end Android devices. Instead, he emphasized Apple's goal of making products that customers love and said that he and his executives were very pleased with the results of the iPhone 5, iPhone 4S, and iPhone 4.

Mr. Cook said in his opening comments that part of his job is to preserve the culture of Apple, and he said, "The most important thing to us is that our customers love our products. Not just buy them, but love them."

In that many want Apple to do go after the cheap, unprofitable end of the market, Mr. Cook's refusal to do what other companies are doing was very likely to have not sat well with after-hours traders. There is a significant meme with a lot of weight behind it that Apple needs to do what Samsung does by offering more models at more price points.

Instead of indicating a switch to match this meme, Tim Cook emphasized that Apple would instead continue to focus on making great products that people love—i.e. focused products sold at a reasonable profit.

The Hammer

Which is why the stock is being hammered. As of this writing, $AAPL is trading at $460.15, a loss of $53.855 (-10.48 percent). After hours trading is usually exaggerated in either direction following an earnings report, but expect the stock to trade lower on Thursday.

*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.