Apple's Strong Revenue, Earnings Tempered As iPad Sales Fall Short

Apple on Monday reported fourth quarter revenue and earnings that were its highest ever thanks to a big jump in iPhone sales.

However, a drop in iPod sales and a constraint in iPad availability along with lower-than-expected gross margin marred an otherwise optimistic financial report, leading to a drop in the company's share price in after-hours trading.

Apple reported revenue for its fiscal fourth quarter 2010, which ended September 25, of $20.3 billion, up 66 percent over the revenue it reported during it fourth quarter of 2009.

The company also reported a profit of $4.3 billion, or $4.64 per share, in its fourth quarter, up from the profit of $2.5 billion, or $2.77 per share, it reported last year. Gross margin for the quarter was 36.9 percent compared to 41.8 percent last year.

Fiscal year 2010 revenue reached $65.2 billion, up 52 percent from the $43 billion it reported last year. The company reported a profit of 14 billion, or $15.15 per share, up from the $8.2 billion, or $9.08 per share, it reported last year.

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Fiscal fourth quarter 2010 sales did well across all of Apple's primary product lines, with the exception of the iPod line, which saw sales drop.

Apple said it sold 3.9 million Macs during the quarter, up 27 percent from last year. Sales of iPhones reached 14.1 million units, up 91 percent over last year. iPod sales, on the other hand fell 11 percent to 9.1 million units.

Apple also reported selling 4.2 million iPads during the fourth quarter, which was the first full quarter of shipments for the new devices. However, that was lower than what many analysts had been expecting as Apple worked to resolve supply chain issues.

As a result of lower-than-expected iPad shipments, along with gross margins that disappointed some analysts, Apple's share price, which opened on Monday at $318.50 per share, were down nearly 6 percent to around $300 per share a couple hours after the close of the trading day.

Apple expects revenue for its first fiscal quarter 2011 to reach $23 billion, with earnings per share to reach about $4.80. This compares to revenue of $15.7 billion and earnings per share of $3.67 for the first fiscal quarter of 2009.