Except Apple shares did not drop based on "bad news." It dropped when Apple reported actual numbers, which indicated the stock price need to be realigned more with reality...Apple is fine. Their products are great. Their sales are great. Their margins are high but dwindling. Based on that they are solidly in first place market cap again. There might be a shred of justification to drive them back up to a $507b company (but that is above even 'high' guidance). They don't currently justify a $700b market cap, but who knows- another awesome new surprise might change that.
Apple's reported actual numbers were misinterpreted. It was not widely known that the previous year's quarter had an extra week of earnings. Adjusting that out led to a revenue increase of 27% yoy. And their margins are not "dwindling"; they are lower due to the extraordinary number of new products Apple brought on line for fy 2013 Q1. The margins are set to improve quarter by quarter.
The reality is that, as another poster said, Apple's P/E is being compressed by its huge size, not by some supposed failure on its part. And that kind of P/E compression is close to unique. Conventional thinking like yours fails to appreciate that salient fact and thus fails to realize that Apple more than justifies a much, much larger market cap, say with a P/E on the order of Google's (presently around 24). With EPS of $44, that would equate to a price of $1,056/share. Note that this doesn't even take into account Apple's war chest of cash.