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Apple Profit Beats Forecasts, but iPad Sales Light

Apple surpassed quarterly earnings expectations again with the help of strong sales of its iPhone, but iPad sales and margins disappointed, and its shares sank.

Apple Store
Flickr: hairygrumpy
Apple Store

Weaker-than-projected gross margins and iPad shipments disappointed investors who had expected more from a company that had smashed Wall Street's targets in each of the past eight quarters.

The company said it earned $4.31 billion, or $4.64 a share, in its fiscal fourth quarter, against $1.82 a share last year.

Revenue for the quarter was reported at $20.34 billion, versus $9.87 billion last year.

Equity analysts who follow Apple expected the company to turn in a profit of $4.08 a share on sales of $18.90 billion, according to Thomson Reuters.

Apple shares dropped 7 percent in late trading after initially being halted. Get after-hours quotes for Apple here.

The stock finished the regular Nasdaq session more than 1 percent higher.

Sales of Apple's popular iPhone jumped 91 percent to 14.1 million units in the quarter. The company sold 3.89 million Macs, an increase of 27 percent. Apple sold 9.05 million iPods, marking a decline of 11 percent year over year. The company 4.19 million iPads in the quarter.

"Iphones continue to steal the show. Well over a million units of upside relative to whisper," said Gleacher & Co. analyst Brian Marshall.

"Ipad, a little bit disappointing there. Street was expecting closer to 5 million units," he said. "The problem is supply, they can't make enough of them. iPad will shine in the December quarter. I believe it will be the holiday gift of choice."

Gross margins in the fiscal fourth quarter came to 36.9 percent, a tad below Wall Street's average forecast of 38.2 percent.

"It's an incredible phenomenon—not only did they beat our heightened expectations but they've blown past forecasts, and it's primarily driven by the iPhone," said BGC's Colin Gillis.

The company forecast current-quarter earnings of $4.80 a share on revenue of $23 billion.

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