Instant view: Apple iPad sales disappoint

LOS ANGELES (BestGrowthStock) – Apple Inc (Read more about Apple stock future.) surpassed quarterly earnings expectations again with the help of strong sales of its iPhone, but iPad sales and margins disappointed and its shares sank.

IBM reported a higher-than-expected profit and raised its outlook for the full year, helped by sales of new hardware products. But its shares retreated after hitting historic highs earlier in the day.

Commentary:

Apple:

JANE SNOREK, ANALYST, FIRST AMERICAN FUNDS

“It looked likes iPhones were what drove the quarter. They did 14 million. Most people were at 12 million and whisper number was around 13 million. Certainly no one was at 14 million.

“iPads were low, but I also think they had a lot of production problems getting that off the ground. So I don’t think that really is a good demand indicator for iPad.

“IPad demand is red hot and they can sell as much as they can make.

Light margins “again would be because of the production ramp for the iPad. Those should go straight up from here, especially if component prices stay like this.

“I’m sure cooler heads will prevail and it (the stock) will continue to go up. They’re going to have a huge Christmas. Frankly, they won’t have any real competition for a year. Tablets are just crucifying notebooks.

“I’d be a buyer on any weakness.”

VAN BAKER, ANALYST, GARTNER

“The one surprise is on the margin side. Everything else is pretty spectacular — extraordinary revenues, good earnings, nice growth across all the product lines, except for the iPod, which is to be expected.”

ASHOK KUMAR, ANALYST, RODMAN & RENSHAW

“You don’t have a comparable company with as deep a product pipeline to fuel earnings growth over the near term.

“The fact that they were able to get 4 million iPads out in what is a very difficult supply situation is a testament to the supply chain of Apple. Looking out to the December quarter they should be able to take that out to 6 million units.”

BRIAN MARSHALL. ANALYST, GLEACHER & CO

“Looking at it holistically, very, very solid numbers.

“Iphones continue to steal the show. Well over a million units of upside relative to whisper.

“Ipad, a little bit disappointing there. Street was expecting closer to 5 million units. The problem is supply, they can’t make enough of them. iPad will shine in the December quarter. I believe it will be the holiday gift of choice.

“Margins were a little bit light. Look forward to hearing what they say about that.

Net , all tallied looks pretty solid. Very solid. The trends are intact. Think Apple should continue to be your largest position in technology.”

DAN EARNST, ANALYST, HUDSON SQUARE RESEARCH

“Another stellar quarter for Apple. With 14.1 million iPhones, that’s well ahead of most expectations. Obviously the Android launches haven’t been slowing than down.

“iPad came in under our number. Not sure why that was, other than it seems like supply was limited in the quarter. Our sense was that demand was greater than supply for the iPad. If there is any question mark on the quarter, it’s on that iPad number.

“People got ahead of themselves with that. As for computers, there was a 28 percent growth for Macs, which is more than two times the 11 percent industry growth.”

COLIN GILLIS, ANALYST, BGC PARTNERS

“It’s an incredible phenomenon — not only did they beat our heightened expectations but they’ve blown past forecasts, and it’s primarily driven by the iPhone.”

IBM:

ANDY MIEDLER, EDWARD JONES

“This was a very strong performance overall with earnings above estimates and a good revenue as well.

“IBM specifically said if one deal had closed 8 deals earlier, they would have beaten expectations.

“IT services are very large in nature and difficult to predict quarter to quarter. We think it’s important to look at IBM over the long term. And over the long term, they continue to perform very well with their business transformation, increasing their long term growth and profitability profile which we don’t believe is yet reflected in the share price.

“For them to continue to again raise guidance for 2010 and continue to perform well overall means they’re a company to invest in.

“Make no mistake they’ve made a large business transformation to software and IT services but hardware is still very important to them strategically.”

(Reporting by Liana Baker and Yinka Adegoke in New York, Noel Randewich and Alexei Oreskovic in San Francisco)

Instant view: Apple iPad sales disappoint