Sept. 10 (Bloomberg) -- Apple Inc.'s Steve Jobs led a revival that saved the computer maker, and survived a stock- options scandal. He also may recover from a surprise price cut last week that alienated customers and spooked investors.

Apple shares fell 8.6 percent, losing almost $11 billion in market value in three days, after Chief Executive Officer Jobs said on Sept. 5 Apple was slashing the price of the most expensive iPhone by a third. Jobs said today that Apple sold its millionth iPhone on Sept. 9.

The price cut raised concern that demand for the combination mobile phone and iPod music player had stalled. Jobs also said he received hundreds of e-mails from angry customers who paid $599 for the iPhone when it was introduced June 29.

As an early iPhone buyer, Jim Grossman found the cut ``a little upsetting.'' As an Apple investor, he applauded the move. ``It was a competitive choice,'' said Grossman, a fund manager at Thrivent Financial for Lutherans in Appleton, Wisconsin. ``They can take a lot more share at $399 than $599.''

Eleven of 12 Apple analysts who issued ratings following the announcement reiterated their buy recommendations, according to data compiled by Bloomberg. Among them was Gene Munster of Piper Jaffray & Co. in Minneapolis. ``It's going to be a quick rebound,'' Munster said.

1 Million

Apple's millionth iPhone sale, coming 74 days after the handset was released in the U.S., may reassure investors concerned about demand, Munster said. The shares rose $4.94, or 3.8 percent, to $136.71 at 4 p.m. New York time in Nasdaq Stock Market trading.

The stock has gained 61 percent this year, even after the price cuts and reports last month that hackers had figured out ways to make the iPhone work with telecommunications companies other than AT&T Inc., the only Apple-authorized provider of service for the phone in the U.S.

Jobs, 52, is counting on the iPhone, which also serves up e- mail and Web pages, to become the company's third main business alongside Macintosh computers and the iPod. Those products each generate about $10 billion in annual sales.

Apple says it expects to sell 10 million iPhones in 2008 to take a 1 percent share of the mobile-phone market as it lures customers away from Research In Motion Ltd., Motorola Inc. and Palm Inc.

Motorola declined to comment on Apple's pricing strategy, spokeswoman Jennifer Erickson said. Research In Motion will provide a business update when it reports earnings Oct. 4 and won't comment before then, said spokeswoman Courtney Flaherty.

Palm isn't concerned about the price reduction because its Treo and the iPhone target different customers, said Rose Rodd, a vice president at Sunnyvale, California-based Palm. The Treo is designed for ``heavy'' mobile e-mail users and the device works better with business applications than the iPhone, Rodd said.

Moving Faster

The price cut is a sign Apple wants to be a bigger competitor and faster than originally anticipated, said Munster, who has rated the shares ``outperform'' since June 2004 and doesn't own any.

``If they kept it at the same price, it would never be widely adopted,'' he said. ``It's definitely going to be more than 1 percent market share now; I think that 1 percent would be a failure.''

Jobs offered $100 in credit to previous iPhone buyers and apologized in a letter on Apple's Web site Sept. 6. Jobs said he wanted to spur demand during the holidays, a quarter that typically accounts for 30 percent of Apple's sales.

``Even though we are making the right decision to lower the price of iPhone, and even though the technology road is bumpy, we need to do a better job taking care of our early iPhone customers as we aggressively go after new ones with a lower price,'' Jobs wrote after receiving the e-mails complaining about the cut.

Alienating Users

``It did alienate a lot of core customers, and those are the customers that create literally hundreds of millions of dollars in free marketing,'' said Andy Hargreaves, an analyst at Pacific Crest Securities in Portland, Oregon.

Hargreaves predicts a rebound in the shares as the cheaper iPhone, faster Mac computers and new iPods also announced last week fuel sales. He reiterated his ``outperform'' rating on the stock on Sept. 6.

Trip Chowdhry, an analyst at Global Equities Research in San Francisco, lowered his rating on Apple to ``equal weight'' after the price cut, saying the company still may fail to attract customers because of the requirement to use AT&T's service.

``Apple's AT&T relationship needs a major overhaul,'' Chowdhry wrote in a Sept. 6 note. ``Apple's iPhone is suffering from significant strategic and tactical missteps.''

Slower Network

The iPhone doesn't use San Antonio-based AT&T's fastest data network and offers a slower connection than the technology used by most e-mail phones sold by Verizon Wireless and Sprint Nextel Corp.

AT&T spokesman Mark Siegel and Apple spokeswoman Natalie Kerris both said last week they their companies were ``very pleased'' with the arrangement.

IPhone pricing won't have much impact on the stock now because that business is still in the early stages, said Romeo Dator, a fund manager at U.S. Global Investors Inc., which has about $4.5 billion under management including Apple shares.

``The iPhone is a smart move, but I think it's a longer-term strategy for them,'' said Dator, based in San Antonio. ``It's really the Mac sales that are going to be driving it.''

Some customers who were annoyed by the price cut said they harbor no ill will. Rick Evans, an engineer who bought his iPhone at Apple's store in Palo Alto, California, on June 29, said he felt ``a little foolish'' after hearing about the price cut 10 weeks later.

``But I take responsibility for standing in line and buying the iPhone and taking the risk in buying a new technology out of the chute,'' Evans said.

Pacific Crest's Hargreaves, who bought an iPhone in the early days for his wife, said he may use his rebate to help buy himself one.

To contact the reporters on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net; Crayton Harrison in Dallas at tharrison5@bloomberg.net.

Last Updated: September 10, 2007 16:44 EDT