Some analysts say Apple simply cannot yet produce enough iPads to meet demand [GALLO/GETTY]
Steve Jobs, the CEO of Apple Inc, has lashed out at his company’s rivals in a conference call with Wall Street analysts and investors after Apple released an earnings report that marked a rare failure by the consumer electronics company to meet analysts’ expectations.
It was the first time Jobs joined such an investor call in two years, and he used the opportunity on Monday to predict increased success for Apple’s iPad tablet computer and declare his competitors’ smaller tablets “dead on arrival”.
Shares of Apple fell six per cent in after-hours trading on Monday night after the company released a quarterly earnings report for the period between June 26 and September 25 that failed to meet Wall Street’s predictions for gross margins and iPad production numbers.
Apple sold 4.19 million iPads in that time – the company’s fiscal fourth quarter – falling below predictions that it would sell closer to five million. The company’s gross margins – the amount of profit gleaned from sales revenue – was 36.9 per cent, slightly less than the expected 38.2 per cent.
But in other areas, Apple’s business continued to boom. Days after the company’s share price eclipsed $300 for the first time, the company posted a record revenue of $20.34 billion in the latest quarter.
Apple also stated a net profit of $4.31 billion, or $4.64 per share, exceeding most analysts’ predictions of earnings between $3.43 and $4.41 per share. The price did fall below the $5.03 per share expected by analysts surveyed by Bloomberg News.
On the conference call with investors, Jobs predicted failure for the iPad’s smaller rival tablets, manufactured by companies such as Samsung and Dell.
“The current crop of 7-inch tablets are going to be DOA, dead on arrival,” Jobs said. “Their manufacturers will learn the painful lesson that their tablets are too small.”
The iPad, which was released for the first time in April, features a 9.7-inch touchscreen.
Jobs said there were a “handful of credible” rivals to the iPad but that none could match the iPad’s starting price of $499. Some analysts agree, the Reuters news agency reported, predicting that sales will jump when Apple begins offering the tablet in more countries and mass-market outlets such as Wal-Mart next year.
Following the release of Apple’s earnings report, industry research group iSuppli increased its estimate for iPad sales in 2010 from 12.9 million to 13.8 million.
Apple has previously faced problems finding an adequate supply of component parts for the iPad, such as LCD panels, leading to delays in shipping the tablet to consumers who have purchased it. But as the company signs deals with new suppliers, iSuppli predicted Apple will sell a stunning 43.7 million iPads in 2011.
Though Apple seems to be dominating the tablet niche, it faces stiff competition in the world of mobile phones, where its operating system is tied to one carrier – AT&T. Google’s Android operating system appears on dozens of companies devices, from Sony to Samsung, and is selling better than Apple.
Apple has scheduled a press conference on Wednesday that is widely expected to address the company’s laptop computer line and Macintosh operating system, subjects that have “fallen behind” the popular iPhones, iPods and iPads, Dan Moran, a senior associate editor at MacWorld magazine, said.
Apple will likely introduce its new Macintosh operating system, Mac OS 10.7, and will probably unveil an update to the slim, ultralight MacBook Air laptop.