APPLE Inc CEO Steve Jobs went on the offensive yesterday after a rare disappointment in sales by the iPad maker sent its shares tumbling, but even his biting words failed to reverse market sentiment.
Jobs, who has not addressed investors on an earnings call for some time, lashed out at competitors Google Inc and Research in Motion and dismissed the upcoming range of smaller tablets made by Apple's rivals.
"The current crop of 7-inch tablets are going to be DOA, dead on arrival," Jobs told analysts on the conference call. "Their manufacturers will learn the painful lesson that their tablets are too small and increase the size next year."
Supply and production bottlenecks kept iPads, which have a 9.7-inch touch screen, from store shelves and buyers waiting weeks sometimes for their gadget. Although the 4.19 million iPads sold in the fiscal fourth quarter fell short of Wall Street's target of around 5 million, analysts said sales should ramp up in the holiday quarter as Apple resolves supply hitches.
Gross margins fell short of target as iPads, whose profit margin is lower than for iPhones, made up a larger proportion of Apple's sales. Investors had expected more from a company that had smashed Wall Street's targets in each of the past eight quarters.
Gross margins in the fiscal fourth quarter came to 36.9 percent, below Wall Street's average forecast of 38.2 percent.
There was no disappointment in iPhone sales, however. Apple sold 14.1 million of the smartphones, a gain of 91 percent and better than Wall Street had expected. The company said demand is still outstripping supply.
Mac sales surged 27 percent to 3.9 million, at the high end of analysts' estimates.
Some analysts agreed with Jobs -- who said the iPad lacked credible rivals -- and foresaw sales of the iPad, which came on the market only in April, jumpstarting in 2011 as the gadget gets rolled out to more countries and to more mass-market retail outlets like Wal-Mart Stores Inc.
"iPads were low, but I also think they had a lot of production problems getting that off the ground. So I don't think that really is a good demand indicator for iPad," said analyst Jane Snorek of First American Funds.
Some analysts had projected shipments of closer to or even more than 5 million for the tablet computer, but others had warned that supply constraints had held back sales.
Apple yesterday reported a net profit of US$4.31 billion, or US$4.64 a share, in the fiscal fourth quarter ended September 25, up from US$2.53 billion, or US$2.77 cents a share, in the year-ago period.
That was better than the average analyst estimate of US$4.08 a share, according to Thomson Reuters I/B/E/S.
Revenue surged 67 percent to US$20.3 billion, ahead of Wall Street's target of US$18.9 billion.
As it looks ahead to the holiday season, Apple -- which typically issues very conservative guidance -- forecast current-quarter earnings of US$4.80 a share on revenue of US$23 billion. The consensus estimate is for a profit of US$5.07 a share on revenue of US$22.4 billion.
Shares of Cupertino, California-based Apple slid 5.7 percent to US$299.67 in extended trading, after a brief trading halt. They closed at US$318.00 on Nasdaq.