Analysis: Apple results loom large for tech NEW YORK (Reuters) - When Apple's shares fall, is Wall Street's entire performance at risk? The outsize influence of Apple on both the technology sector and the entire stock market was thrown into sharp relief when the iPad maker's shares fell 4.1 percent on Monday. The alpha male of the stock market, Apple accounts for a third of the S&P tech sector's 20 percent year-to-date return, the best performance of any of the 10 sectors in the Standard & Poor's 500 index this year. The problem is, Apple's success may be masking a larger trend in the wider market toward slower profit growth. Technology companies are expected to report earnings growth of 7.5 percent for the first quarter, according to Thomson Reuters estimates. But excluding Apple, which is due to report results next Tuesday, the technology sector is looking at an earnings decrease of 0.3 percent, according to the data. "It seems like every quarter, every year, everyone is predicting technology is this great group, and recently, without Apple it would never be there," said Daniel Morgan, who helps manage about $3.5 billion at Synovus Trust Company in Atlanta. Synovus Trust's assets include about 30,000 Apple shares. Big tech companies that have already reported this quarter have done little to inspire Wall Street. Google reported in-line revenue last week, while International Business Machines and Intel Corp results reported late Tuesday failed to ignite buying. All three stocks ended lower on Wednesday. Still to come are results from Microsoft, due Thursday, and Texas Instruments, expected on Monday. In addition to earnings, another key performance measure are company profit margins, an indication of how much control a company has over its costs. Profit margins are higher for tech companies than for any other sector in the S&P 500 sectors, but much of that advantage is a result of Apple. For the first quarter, the net profit margin for the tech sector is estimated at 17 percent. That falls to 15.7 percent when Apple is excluded, Thomson Reuters data showed, enough to push technology into the second spot, after the financial sector. It's a similar story for revenue Tech sector revenue growth is estimated at 6.7 percent. Without Apple? It's just 2.3 percent, Thomson Reuters data showed. Apple's stock accounts for 4.5 percent of the S&P 500 index, a weighting not seen by any company since 1999, when Microsoft Corp had a 4.9 percent weighting. Apple is the largest holding for many money managers, to say nothing of the billions of dollars in index funds of which Apple is a core holding. Apple's massive market capitalization, which stands at $566 billion after hitting $600 billion earlier this month, means that the company's impact on the market has been "enormous," S&P analyst Howard Silverblatt said. Apple stock is up about 50 percent for the year so far, helping the S&P 500 to a rise of about 10 percent. Among stocks in the S&P, its performance is ranked sixth so far this year, and most of those that have out-performed Apple, such as Netflix, are rebounding from big losses in 2011. Not Apple. If you were not in Apple in the first quarter, you were hurting. Options on it are extremely expensive," Silverblatt said. Year-over-year profit growth for S&P 500 companies slowed from 18 percent in the third quarter of last year to 9.2 percent in the fourth quarter. It is estimated at 4.4 percent in the first quarter, Thomson Reuters data showed. Apple's earnings growth has been on the opposite path. Earnings per share jumped 52 percent in the third quarter from the year-ago period and 116 percent in the fourth quarter. First-quarter EPS is seen up 54 percent, based on the Thomson Reuters consensus estimate. Within the exchange-traded funds market, Apple accounts for about 18 percent of Powershares QQQ Trust. Given this prominence, an earnings disappointment from Apple would hit far more than the stock itself. If Apple were to see margins squeezed, even slightly, it would have an outsized influence on tech sector margins, earnings and by extension, broader S&P 500 performance, Dan Greenhaus, chief global strategist at BTIG LLC in New York, wrote in a recent report. That's part of what frightened investors as the stock tumbled nearly 9 percent in a five-session run of losses that ended Tuesday. Of course, Apple, with its long record of beating market expectations, is not in the business of disappointing people. Thomson Reuters StarMine shows a predicted surprise of 3.9 percent for Apple's upcoming results. A number above 2 percent suggests a strong likelihood the company will beat estimates. That compares with a 1 percent surprise for the whole S&P 500 tech sector, according to StarMine. Among other individual companies, Microsoft has a predicted surprise of negative 0.2 percent for earnings. The pullback in Apple shares has underscored the fact that other tech companies simply do not have the same kind of heft. Some fund managers and individual investors are assessing the risks of owning too much Apple. "'No tree grows to the sky' is the adage," said Joseph Doyle, co-fund manager at Morris Capital Advisors LLC in Malvern, Pennsylvania. The firm has trimmed its Apple position twice to take profits, though Apple remains among its top holdings. Technically, the stock could be headed for more losses, which could drive the S&P 500 lower. The stock broke below its five-day and 20-day moving averages of $623.77 and $613.19, respectively, last Friday, and remains below those levels. "We expect Apple to act as a drag on the major composites due to its outsized impact on S&P 500 earnings and price movements," said Gareth Feighery, president of options education firm MarketTamer.com in Philadelphia. Some managers noted more tech companies are paying dividends these days to attract more investors. "A lot of the old core, mature-growth tech companies like Intel, Microsoft, Cisco and Qualcomm are paying dividends, and that's opening them up for the possibility of new funds that could go into them," Morgan said. Apple, too, in March said it would pay a dividend, declaring its first dividend in 17 years. It's hard to deny that Apple presents a conundrum. It's too valuable not to own - creating a risk should its stratospheric rise eventually falter. "Apple has kind of led us to this point," Morgan said. The question is, Do some of these other names start picking up the slack if Apple is not doing quite as well? Additional reporting by Doris Frankel in Chicago; Editing by Eddie Evans and Leslie Adler