Apple profits up 70% - but shares drop 6% due to iPad stock issues

Apple share prices have dropped in the wake of its latest financial results, having failed to entirely live up to profit forecasts despite announcing revenue of $20.34 billion.

Revenue has risen by 67 per cent from the same time last year, while the posted profit of $4.31 billion is a leap of 70 per cent.

Wall Street estimates had previously topped out at $22.4 billion in sales. Missing this resulted in a 6.1 per cent overnight drop on Apple's share price (falling below last week's record high of over $300 per share to $298.50), despite general ebullience about the results.

It was Apple's first $20 billion quarter - five times as high as in fiscal 2005.

The bulk of the money came from iPhones, at 14.1 million sales accounting for 43 per cent of the quarter's revenue. In total, iPhone sales shot up 91 per cent on the same time last year.

Analysts, however, expressed disappointment that the iPad had not cracked 5 million sales. The tablet device shifted 4.2 million units for the quarter, which though not living up to expectations was the result of supply problems rather than a lack of demand. An investor conference call revealed that Apple had 3 to 4 weeks of iPad channel inventory, compared to a target of 4 to 6 weeks.

In the call, Apple boss Steve Jobs attacked rival smartphone Android, which currently holds a bigger market share than the iPhone.

"In our part of the market, Android is our biggest competitor," he said. "They beat us while we were transitioning to the iPhone 4, so we're waiting to find out what they did in this quarter.

"Google loves to characterise Android as "open" and iOS and iPhone as "closed". We find this a bit disingenuous and clouding the real difference between are two choices... Android is very fragmented...Multiple hardware and software iterations presents developers with a daunting challenge. Compare with iPhone where every iPhone works the same.

"Even if Google were right and the real issue is closed vs. open, it is worthwhile to remember that open systems don't always win."

He also brushed off the incoming wave of smaller tablets. "We think the current crop of 7-inch tablets will be DOA... The reason we don't make a 7-inch tablet isn't because we don't want to hit a price point, but because we think you can't make a great tablet for 7-inches."

He did not, however, address the 10" Android-based rivals due from the likes of Archos and PC World in the coming weeks.

Apple's former flagship product, the Mac, did well too - rising 30 per cent to 874,000.

The company boasted of better things still from Q1 of fiscal 2011. Said CF Peter Oppenheimer, "We expect revenue of about $23 billion."