After weak quarter, Apple CEO sees record profit ahead

— -- Apple on Tuesday let down Wall Street on earnings as iPhone sales came up short of forecasts.

The Cupertino, Calif., company reported fourth-quarter net income of $6.6 billion, or $7.05 a share, compared with net income of $4.3 billion, or $4.64 a share, a year ago. Revenue climbed 39% to $28.3 billion.

Analysts had forecast earnings of $7.39 a share on revenue of $29.7 billion, according to the consensus from Thomson Reuters.

CEO Tim Cook said on the earnings conference call that demand for the new iPhone 4S is extremely high. "We're confident we will set an all-time record with iPhone this quarter," he says.

Apple launched its iPhone 4S on Friday and bagged sales of more than 4 million in three days. But heavy anticipation for that phone meant many people held off purchasing until the new phone came out. As a result, Apple sold 17.1 million iPhones for the quarter ended Sept 24, disappointing analyst predictions for sales of 20 million.

Investors pushed Apple shares nearly 7% lower to $394.42 in after-hours trading on the news, announced after the close of regular trading.

"It's rare that Apple ever misses a number," says Gene Munster, an analyst at Piper Jaffray. "But it's understandable why. Everyone knew a new iPhone was coming, and they decided to wait to buy."

Brian Marshall, an analyst with ISI, said disappointment over the numbers is a knee-jerk reaction. "The story is far from over. Apple is still a great buying opportunity."

The iPhone 4S experienced a near-sell-out quickly, and Cook said he expects to get more phones into consumers' hands soon.

Beyond the iPhone, Apple said it sold 11.2 million iPads in the quarter, up 166% from the year-ago quarter; 4.89 million Mac computers, up 26%; and 6.62 million iPods, down 27% from the 9 million sold in the year-ago quarter.

The big growth opportunity for the company, Cook said, is in tablets. Some 40 million iPads have sold to date, and he expects tablets to eventually overtake sales of PCs.

"It's a huge opportunity for Apple across time," Cook said.

Apple ended the quarter with over $81 billion in cash.