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Apple Rides iPhone Wave, iPad Backlog

Stocks in this article: AAPL

CUPERTINO, Calif. ( TheStreet) -- Record iPhone sales laid the foundation for Apple's (AAPL) stellar second-quarter results, released after market close on Wednesday, but supply issues continue to weigh on the iPad.

The consumer tech giant shipped 18.6 million iPhones during the quarter, a massive 113% hike on the prior year's quarter, accounting for half of the firm's total revenue of $24.7 billion.

iPad sales came in below analysts' expectations, with Apple shipping 4.7 million iPads, compared to the 6.15 million and 6.5 million predicted, respectively, by Goldman Sachs and Canaccord Genuity.

Apple said the iPad problem is one of supply -- not demand. Speaking on the company's conference call after market close Wednesday, CFO Peter Oppenheimer said Apple sold every iPad 2 it made during the quarter, and would have liked to end the period with more channel inventory.

COO Tim Cook was also quizzed about the iPad, saying that Apple will produce "a very large number" during the third quarter. "Whether that will be enough to meet demand, I don't know. Demand has been staggering -- I'm not going to predict when supply and demand will come into balance."

Widespread sellouts were reported at Apple stores and retailers when the iPad 2 debuted last month, and, at one point, the company's online shop listed a four- to five-week wait for the device. Apple.com now says that the second-generation iPad will ship within one- to two-weeks, although Cook said that the firm is still facing the "mother of all backlogs."

Despite Cook's vagueness, analysts remain bullish on Apple iPad prospects. "We believe demand is very strong and expect sales to increase significantly in the second half of fiscal 2011 as supply ramps," said Michael Walkley, an analyst at Canaccord Genuity, in a note released on Thursday. "Despite the introduction of competitive 10-inch Android 3.0 tablets at CES, MWC, and CTIA from Motorola (MMI), LG, Samsung and others, we expect Apple to hold dominant market share of the tablet market in calendar 2011."

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