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Apple Profit Forecast Falls Short of Analysts' Predictions

Apple Inc. forecast profit for the current quarter that will rise less than analysts predicted as supply constraints hamper sales of the iPad computer. The stock fell in extended trading.

Profit will be about $4.80 a share in the current period, which includes the yearend holiday shopping season. Analysts surveyed by Bloomberg had predicted profit of $5.03.

Apple sold 4.19 million iPads last quarter, fewer than the 4.5 million predicted by Gene Munster, an analyst at Piper Jaffray Cos. in Minneapolis. Sales may have been impeded by difficulty getting parts needed to make the device, said Giri Cherukuri, chief investment officer of Oakbrook Investments.

“People may be a little disappointed with the weaker iPad sales,” said Cherukuri, whose firm owns Apple shares. “Apple also had conservative guidance for the next quarter. The market is trying to digest that.”

Profit and sales in the fourth quarter, which ended in September, exceeded analysts’ projections. Net income rose to $4.31 billion, or $4.64 a share, compared with $2.53 billion, or $2.77, a year earlier, Apple said today in a statement. Sales rose to $20.3 billion. Analysts surveyed by Bloomberg had estimated profit of $4.10 a share and sales of $18.9 billion.

Apple, based in Cupertino, California, slumped as much as 7.9 percent to $292.75 in extended trading. It had climbed $3.26 to $318, a record, at 4 p.m. in Nasdaq Stock Market trading. The shares, up 51 percent this year, surpassed $300 for the first time last week.

Supply Constraints

Revenue this quarter will be about $23 billion, Apple Chief Financial Officer Peter Oppenheimer said in the statement. Analysts had predicted sales of $22.3 billion.

“The pressure I’m getting is on supply,” Chief Operating Officer Tim Cook said on a conference call with investors. “Virtually everyone we’re doing business with wants more supply.”

Apple, now the third-largest company by market value, is benefiting from rising demand for its smartphones and other devices even as rivals lament lackluster household computer purchases. Intel Corp. last week cited tepid buying among consumers in the U.S. and Europe.

Apple Chief Executive Officer Steve Jobs joined the conference call discussing results for the first time in two years. He said Apple’s approach of designing both the hardware and software for devices will help it thrive amid competition from Google Inc. and other rivals.

Photographer: George Frey/Bloomberg

Net income rose to $4.31 billion, or $4.64 a share, compared with $2.53 billion, or $2.77, a year earlier, Apple said today in a statement. Close

Net income rose to $4.31 billion, or $4.64 a share, compared with $2.53 billion, or... Read More

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Photographer: George Frey/Bloomberg

Net income rose to $4.31 billion, or $4.64 a share, compared with $2.53 billion, or $2.77, a year earlier, Apple said today in a statement.

BlackBerry ‘Mountain’

“We are very committed to the integrated approach, no matter how many times Google tries to characterize it as closed,” Jobs said. He said Research In Motion Ltd., maker of the BlackBerry, has a “high mountain” to climb as customers embrace the iPhone as well as smarthphones using Google’s Android operating system.

Jobs said the company plans to hold on to its cash for “strategic opportunities” rather than using it on a stock buyback or dividend. Apple has $25.6 billion in cash and short- term investments. Including longer-term holdings, the company has about $51 billion.

“We strongly believe that one or more very strategic opportunities may come along,” Jobs said.

Today’s results include the first full quarter of sales for the fourth version of the iPhone, released in June, and the second time Apple has reported the performance of the iPad, now available in 26 countries. Apple sold 14.1 million iPhones and 3.89 million Macintosh computers.

Android Gains

Munster projected Apple would sell 11 million iPhones in the fourth fiscal quarter. Supply shortages likely held back sales of the iPhone and iPad, Munster said in a note last week. On Oct. 20, Apple is hosting an event where it’s expected to unveil new features for Mac computers and its operating system.

Jobs also said the company has sold more than 250,000 Apple TV devices since the device went on sale late last month.

Smartphone makers using Android took share from Apple during the second-quarter, researcher ISuppli Corp. said in a report last week.

The Android software, used by manufacturers including HTC Corp., Motorola Inc. and Samsung Electronics Co., is the most popular smartphone software in the U.S., according to a study from Gartner Inc.

Samsung, HTC, Motorola and Dell Inc. are among the companies using the Android operating system in tablet computers to rival the iPad. Hewlett-Packard Co., the largest computer maker, also is developing a tablet computer.

Apple may get a sales boost by expanding availability of the iPhone in the U.S. Verizon Wireless may begin selling the device in January, people familiar with the matter said in June.

The popularity of Apple’s mobile devices also is helping increase sales of its Macintosh computers. Apple’s U.S. computer shipments climbed 24 percent in the third-quarter, making it the No. 3 PC supplier in the county after HP and Dell, researcher IDC said last week. The iPad has created a “halo effect” that has boosted Mac sales, IDC said.

To contact the reporter on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net.

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net.

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