Apple chief apologizes in price furor - He offers a $100 store credit to mollify early iPhone buyers riled over a $200 price cut.

Apple Inc.'s chief executive issued a rare mea culpa Thursday for slashing the iPhone's price this week, only two months after the company's most ardent fans waited in line for hours to buy the $600 gadget.

Apologizing for "disappointing" those initial buyers, he offered $100 store credits to anyone who had paid full price for the much-hyped product that combines a cellphone, a Web-surfing device and an iPod.

"Our early customers trusted us, and we must live up to that trust with our actions in moments like these," Jobs wrote on Apple's website.

Apple, based in Cupertino, Calif., has built its business on the goodwill of a devoted band of customers who can't wait to buy the latest Mac, iPod or software. They know something cheaper, faster and cooler is always on the way, but they're willing to pay a premium because Apple generally doesn't cut prices on products for six to eight months, when it has fancier versions to show off.

That long-standing compact was broken Wednesday when Apple cut the price of the high-end iPhone, to $399 from $599. Jobs had also said Apple would discontinue a $499 version with half the storage capacity because customers preferred the other.

Apple lets customers return products for a full refund within 14 days. Those who bought iPhones earlier appeared to be out of luck.

Jobs said the discount, timed to boost sales during the holidays, showed that Apple intended to "go for it" with its first entry to the cellphone market. Some investors worried that the price cuts signaled that sales had slowed since the June 29 launch. They sent Apple shares down nearly 6% on Wednesday and a further 1% on Thursday, to $135.01.

The discounts appeared to achieve their intended effect Thursday -- shoppers seeking the cheaper iPhones packed Los Angeles-area Apple and AT&T stores. AT&T Inc. is the iPhone's wireless carrier.

"I was going to get the phone anyway, but the price drop brought me in sooner," said Andrew Hines, 25, who bought an 8-gigabyte iPhone at an AT&T store near West Hollywood.

But they were joined by disgruntled customers who had paid full price and wanted some money back. The disillusioned also complained on Apple's online message boards, swearing they would be more circumspect the next time the company released a new product.