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Apple sets iPad, Mac sales records

Wall Street's reaction to missed iPhone target is 'knee-jerk,' says analyst

October 19, 2011 06:31 AM ET

Computerworld - Apple on Tuesday reported selling a record number of iPads and Macs in the third quarter but missed the aggressive targets set by Wall Street analysts for the iPhone.

Apple sold 17 million iPhones, down 16% from the record 20.3 million it sold in the second quarter of 2011, and also significantly falling short of Wall Street estimates of 20 million to 22 million.

Apple executives blamed the poorer-than-expected iPhone sales on rumors that the company would roll out a new smartphone, dubbed "iPhone 5" by most, this fall.

"As a result of new product rumors, sales did decline, especially in the second half of the quarter as speculation intensified," said Peter Oppenheimer, Apple's chief financial officer, during Tuesday's conference call with analysts.

Analysts said the explanation made sense in hindsight, and argued that the sales downturn wasn't anything to get worked up about.

"This is a knee-jerk reaction," said Brian Marshall, an analyst with International Strategy and Investment Group (ISI), of the market reaction to Apple's numbers. In after-hours trading, Apple's stock fell more than $28, or almost 7%. "This is all a matter of timing," Marshall said.

He was referring to Apple's decision to push back the launch of the newest iPhone this year from its usual June or July date to October. On Monday, Apple said it had sold 4 million units of the iPhone 4S in the first three days of retail availability, more than double what the iPhone 4 sold in a comparable period after its 2010 debut.

"The question everyone's asking is, 'What happened to three-to-four million iPhones?'" said Marshall. "The problem is that this update was delayed by several months, and exacerbated the transition to the iPhone 4S."

"Is their share declining? No," said Marshall, adding that the sales that would have otherwise been in the third quarter simply shifted into the current period, with the iPhone 4S.

Another analyst, Ezra Gottheil of Technology Business Research, echoed Marshall.

"My first thought when I heard the four million [iPhone 4Ss] sold was: well, those were four million they didn't sell last quarter," said Gottheil. "They were just deferred sales, pent-up demand."

That demand has been high -- supplies of the iPhone 4S are tight -- but Apple CEO Tim Cook was unwilling to forecast when the company would have enough on hand.

"We're confident that we will have a large supply, but I don't want to predict when supply and demand might balance because the demand is obviously extremely high right now," said Cook. "But I'm confident that we will set an all-time record for iPhone this quarter."

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