Apple Misses; iPhone Sales Light (UPDATE 1)

Updated from 4.47 p.m. ET for latest share price, added context, fiscal first-quarter outlook.

NEW YORK ( TheStreet) -- Apple ( AAPL) shares swung lower in late trades after the gadget maker surprised Wall Street by falling short of expectations with its fiscal fourth-quarter results.

>>>Check out TheStreet's live blog of Apple's report

The company reported earnings of $6.62 billion, or $7.05 per share, on revenue of $28.27 billion for its quarter ended Sept. 24. The average estimate of analysts polled by Thomson Reuters was for a profit of $7.39 a share in the September-ended period on revenue of $29.69 billion. This is just the third time the company has missed the consensus view since 2002.

It looks like a shortfall in iPhone sales may have driven the miss. The company said it sold 17.07 million units during the quarter. That's well below an estimate of 20.4 million units from BMO Capital Markets, which has an outperform rating on the stock.

iPad unit sales totaled 11.12 million during the quarter, up 166% from last year, while Mac unit sales reached 4.89 million, up 26%; and iPod unit sales saw a 27% year-over-year decline to 6.62 million. BMO Capital was estimating 11 million iPads, 4.3 million Macs, and 6.5 million iPods.

Comments from new CEO Tim Cook in the company's press release didn't address Wall Street's expectations for the quarter, choosing instead to focus on full-year performance and the success of its recent iPhone 4S launch.

"We are thrilled with the very strong finish of an outstanding fiscal 2011, growing annual revenue to $108 billion and growing earnings to $26 billion," said Cook in a statement. "Customer response to iPhone 4S has been fantastic, we have strong momentum going into the holiday season, and we remain really enthusiastic about our product pipeline."

For the company's fiscal first quarter ending in December, Apple sees earnings of about $9.30 per share on revenue of roughly $37 billion. That's above the current consensus estimate for a profit of $9.01 a share on revenue of $36.72 billion.

Jefferies & Co., which was expected iPhone shipments of 19.8 million, kept a buy rating and $500 price target on the stock after the report, saying it would be purchasing the stock on the pullback because the guidance is solid.

"CQ4 calendar fourth quarter guidance is bullish and we believe it is very achievable considering the record-breaking iPhone shipments early in the quarter," the firm said, adding the miss is "merely due to timing surrounding the iPhone launch."

The stock was flying high ahead of the report, reaching a new all-time peak of $426.70 in intraday action on Monday. The shares have risen 30% so far this year, while the S&P 500 is off 4.5% on a price basis over the same period.

The shares were last quoted at $393, down 7%, on after-hours volume of 6.3 million, according to Nasdaq.com. The stock had been as low as $388.91 in late trades after closing Tuesday's regular session at $422.24.

Prior to the after-hours pullback, Apple's market capitalization was around $390 billion, making it the world's largest publicly traded company.

Despite a rare downgrade of the stock on Monday, the sell side is still smitten with Apple. Of the 56 analysts covering the stock, 51 rate it at either strong buty (27) or buy (24) vs. four holds and a single sell rating.

It's been a roller coaster month for Apple. Steve Jobs, co-founder and former CEO of the company, passed away on Oct. 5, inspiring an outpouring of condolences from across the globe. Just prior to that sad news, Apple unveiled the iPhone 4S, which was initially greeted as a bit of a disappointment due to its nomenclature, but nonetheless saw record sales after its launch on Oct. 14.

On Monday, the company revealed it sold more than 4 million iPhone 4S devices over this past weekend.

-- Written by Michael Baron in New York.

>To contact the writer of this article, click here: Michael Baron.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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