Apple: Great Sales, Disappointing iPhone & iPod Units

Apple (AAPL) just released its earnings for last quarter (ending December). We'll look at other things in time, but the first big observation is that while the bottom line financials, with a 32 percent year-over-year revenue increase were killer, there were two major disappointments. iPhone sales, even though the almost doubled those of the same quarter in the previous year, failed to hit what many analysts expected, leaving RIM (RIMM) to expand its Blackberry unit lead. Furthermore, iPod sales actually dropped in a year-over-year comparison.

Apple had such an undeniably hot quarter that it would seem unfair to condemn it as bad performance. But the potential is there, particularly on the way Apple usually neatly steers analyst expectations so it almost always comes out smelling like an indomitable winner. The iPhone and iPod details aren't going to make most market seers happy.

Apple cheerleader and Piper Jaffray analyst Gene Munster had predicted 9.3 million iPhones selling last quarter. That's a difference of 600,000, which is significant. And he wasn't the only one. Kauffman Bros. analyst Shaw Wu predicted 9.5 units. Andy Hargreaves of Pacific Crest Securities Inc. said between 9.1 million and 9.2 million.

"IPhone shipments will be the key issue this quarter," [Sanford C. Bernstein & Co. analyst Toni Sacconaghi], the top-ranked computer analyst by Institutional Investor magazine, said in a note last week. Some investors may have set their expectations too high, at 10 million or more, he said.That enthusiasm may be driven in part by Apple's entry last quarter into China, the world's biggest mobile-phone market. China Unicom (Hong Kong) Ltd. said last month that it has sold more than 100,000 iPhones since the product debuted in the country in October.

As I mentioned in December, if you looked at the closest comparable time frames (because their quarters are a bit out of synch), Blackberrys were outselling iPhones in units on a consistent basis. This continued, with RIM's 10.1 million in the quarter ending in November (so not even enjoying any additional bump from December holiday purchases) far out ahead of Apple's 8.7 million. Here's a comparative graph:

Next up, Apple sold 21 million iPods, an 8 percent unit drop from the same period in 2008. Again, lots of units, lots of money, but even worse than missing analyst expectations is a drop in unit sales.

More on the numbers tomorrow as I go through them for whatever additional details they might yield.