Apple beats the Street

Still, iPad supply problems drop shares

By Herald wire services
Tuesday, October 19, 2010 - Added 8 hours ago

Apple Inc. easily surpassed profit and revenue forecasts again, but supply bottlenecks curbed iPad sales to below Wall Street’s bullish targets, sending its shares down 6.5 percent in extended trading.
Weaker-than-projected gross margins and iPad shipments disappointed investors who had expected more from the company.
Some analysts said sales of the iPad, which began only in April, should ramp up in the current quarter as the company resolves hitches in the supply chain.

“IPads were low, but I also think they had a lot of production problems getting that off the ground,” said analyst Jane Snorek of First American Funds. “IPad demand is red hot and they can sell as much as they can make.”
Apple sold 4.2 million iPads in its second quarter on the market, below Wall Street’s expectations. Some analysts had projected shipments of closer to or even more than 5 million for the tablet computer launched only in April.
The company sold 14.1 million iPhones from July through September, more than the 12 million or so analysts were looking for.
Apple CEO Steve Jobs made a rare appearance on a conference call, noting Apple sold more iPhones than Research in Motion sold BlackBerry phones in the most recent quarter. “I don’t see them catching up with us in the foreseeable future,” he said.
Jobs also spoke disparagingly of the new tablet computers built on Google’s Android software. “The seven-inch tablets are tweeners, too big to compete with a smart phone and too small to compete with an iPad,” which has a 10-inch screen, he said.
Cupertino, Calif.-based Apple’s net income rose to $4.3 billion, or $4.64 per share, from $2.5 billion, or $2.77 per share, in the same period last year. Revenue jumped 67 percent to $20.3 billion from $12.2 billion last year.