The explanation for the weak guidance: higher component costs, back-to-school discounts and a mysterious "product transition" will cause Apple earnings to come in lower than expected.

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The group is trading sharply lower following disappointing guidance this morning from optical networking component provider Ciena (CIEN).

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Quarter after quarter, Apple beats its gross margin guidance based upon more favorable than expected component pricing.

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Under his guidance Apple has better access, at preferential rates, to more component suppliers than the majority of other manufacturers.

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Over the next few weeks, the guidance commentary about Europe is going the be the most important part of conference calls of key component names like Qualcomm and Nvidia.

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