"We Sold Every iPad 2 We Could Make"

April 20, 2011 at 2:13 pm PT

No surprise that Apple posted another blowout quarter. But Apple’s earnings report did contain at least one wrinkle — an iPad sales number well below what Wall Street was looking for.

Apple sold 4.7 million iPads in the first 3 months of this year — enough to generate $2.8 billion in revenue. But that number is more than a million units short of what Wall Street’s consensus of 6.2 million (via Piper Jaffray).

What happened?

Apple chief financial officer Peter Oppenheimer won’t spell it out in his remarks, but is basically arguing that Apple couldn’t make enough. In his prepared remarks, he said the company is “thrilled with the momentum for iPad,” and is seeing “very robust demand for iPad.”

“Customer enthusiasm has been tremendous for ipad 2, and we’re working as hard as we can to get into their hands as fast as possible,” he added. “We sold every iPad 2 that we could make.”

The iPad numbers led some people to immediately conclude that the Japanese earthquake affected Apple’s supply chain, but COO Tim Cook says that’s not the case.

Cook said Apple “did not have any supply or cost impact” from the disaster in the last quarter, and doesn’t anticipate any for the current quarter.

Still, Cook said, Apple can’t rule out another iPad supply issue this time around. “I am confident we’re going to produce a very large number for the quarter,” he said. “Whether that will be enough to meet demand, I don’t know.”

Cook went into a bit more detail about the iPad shortage problem, and I’ll add that in when I can get to my notes. But here’s his most concise description: It’s the “mother of all backlogs”.

Tagged with: Apple, earnings, Internet, iPad, MediaMemo, Peter Kafka, software, Steve Jobs

comments so far. Add yours.

Anonymous

Of course Apple did well. They always intentionally underestimate their guidance so they can “wow” everyone. They have to be the most dishonest company in the world, and the shareholders are the stupidest as well, as the stock is so overvalued it isn’t even funny any more.
http://twitter.com/thejaycarlson Jay Carlson

spoken like a true, uneducated hater. congrats.
Anonymous

Read: “I wish I had bought stock in Apple before it surged to where it is now.”
Anonymous

yep — that’s what my wife said right before I picked hundreds of shares back at $140. So you keep telling yourself they are overvalued when they have over 60 billion in cash.
GeorgeS

Apparently, you have no clue as to responsible corporate governance. Companies that overestimate performance and underdeliver are the dishonest ones. Apple’s estimates have little impact on the stock price beyond the first week or two after the earnings release. What really counts are the estimates by analysts and especially by hedge funds & mutual funds, as over 70% of AAPL is owned by institutions.
http://twitter.com/sanelly Sanel Selimovic

He is right though, Apple is notorious for underestimating and over delivering in their earnings calls and even with product anticipation and delivery. I wouldn’t call it dishonest. If you’ll note, analysts always anticipate and project much higher than Apple guidance and even then the company usually beats analyst estimates.

Other companies offer more “realistic” estimates, however they’re unfairly punished by the market when they don’t beat the estimates (e.g., Google’s last earnings). It’s better to be cautious. Investors are fickle animals.
Anonymous

Just imagine how many tablets the others could sell, if it wasn’t for Apple using most of the capacity on essential components in Tablets. The damn firm is keeping tablet development on a low with their unfair buying deals.
http://profiles.google.com/stefanyoungs1945 Stefan Youngs

Oh my! So Samsung (Galaxy) made 2 million and shipped them all into distribution, where they still lie gathering dust, and that’s because Apple bought up all the components?? You need to learn to appreciate excellence when you see it. Galaxy doesn’t even use the same screen size as the iPad, so how Apple’s success could impact Samsung beggars belief.

Tablet development on a low because of Apple? RIM just shipped their ‘iPad killer’ and it can only send email if it’s tethered to a Blackberry: sounds like a winner to me.

Apple has EARNED its market position. The competition can earn its success too by developing competitive products together with excellent user-focused eco-systems. This won’t be easy.. Apple has set the bar really high.
http://profiles.google.com/stefanyoungs1945 Stefan Youngs

With your genius for financial analysis so obvious for all to see, pray enlighten us with the stocks we should be buying.

Just give us a wink and I’ll sell my Apple stock in a New York second.
http://pulse.yahoo.com/_47XHGLZVO6IUYLMWVUYFVN5LQU Dr No

Cry more, justjc.
Anonymous

But when Apple constantly grow at a breath taking rate, I’d argue it is best practice to be on the more cautious side, no?

It is the most valuable tech company in the world and it grows 87% YOY. Every prediction would be a underestimation comparing to reality.

Google was punished not because its solid revenue, but the suddenly worsened margin and near future uncertainty.
http://twitter.com/lemieuxd David Lemieux

Growing at these rates when a business is small is exciting. Growing like this when you are big is almost frightening. Can it be a new measure of magnitude is developing which will make this seem normal?
Anonymous

Wrong. I did buy it before the last split, and sold last year. Made 7 figures. That’s not relevant. I hate Steve Jobs (arrogant prick), and hate the iToy 2, it’s a POS. You are clearly an Apple lemming.
Anonymous

I did better. Bought at $45, sold at $295. Sell now, Apple will drop over the next couple of months to below $300. Count on it.
Anonymous

The analysts are all Apple lemmings. Grow up and smell the reality. Apple is about the most dishonest company in the world. They are the most sued for a reason. Not because of success, but because they steal ideas.
Anonymous

True, and RIM is much more honest, but is getting screwed. Maybe they should be dishonest like Apple.
Anonymous

Sell AAPL now, as it is going to start free falling next week. Buy uranium stocks. Buy Intel (too late, but I bought last week).
http://twitter.com/giolomba giovanni lombardi

Riiight, you made 7 figures. I guess living in your mom’s basement, you are prone to moments of grand delusion. Next thing you are going to tell us is that you have a social life beyond the Palm sisters.
Anonymous

To giovanni lomardi: Hey Captain OCD. I see you’ve infested another forum. Too bad that a low life mental retard like you is permitted to post here. It is you that lives in your mommy’s basement, as I’ve noted elsewhere. I see you still can’t come up with an original though and have to steal other people’s words. Pathetic. See a shrink, you brain dead maggot.
Anonymous

You must be Canadian..
http://www.facebook.com/people/Terrin-Bell/690507487 Terrin Bell

It is possible, but highly unlikely that Apple will drop way below $300. Apple currently is significantly undervalued. There is an excellent piece on this at CNN Money called, “Why is Apple Shares are Dirt Cheap.”

In a nut shell, Apple/s P/E is at depression levels. Further, Apple has more cash on hand then any other tech company, it is debt free, and it is growing its business year over year at an unheard of 70 percent.

If Apple stock drops as you are suggesting, and Apple keeps generating the type of cash it is doing, Apple could buy itself in two to three years thereby making itself a private company. There is no other tech company in such a position.
http://www.facebook.com/people/Terrin-Bell/690507487 Terrin Bell

When you buy a candy bar at a gas station the price is higher because the gas station had to pay more for the candy bar because it couldn’t’ buy candy in the same volume as large retailers. Nobody is calling the supermarket’s practices unfair. You buy based on customer demand. The more you buy, the lower the price.

Further, you honestly think anybody else feels confident enough in market demand for its products that it would bet the company and buy sixty percent of the available supply for components by prepaying? Samsung manufacturers the components Apple uses and copies Apple’s products and sells these products itself. If Samsung wanted, it could withhold all the components for itself. I wonder why it doesn’t do this? Perhaps, it is because Samsung doesn’t have faith in its products enough to keep the components for its own products instead of selling them to Apple. Samsung doesn’t have to sell to Apple.

Finally, I don’t recall a Tablet marketing existing before Apple making the iPad a success.
Anonymous

What a goof you are! Growth rates are so high that it defies comparison….. many stocks are much more over priced… I guess the after market jump means that everyone else does not agree with you… sounds a little bit Ballmerish to me…
Anonymous

You must be American. My condolences!
Anonymous

You can’t be serious! Depression level? Hahaha. Wow, you must the be biggest Appletard cheerleader of them all. Apple is WAY WAY WAY overvalued. It will jump up a bit becasue Apple “beat” the fraudulently low guidance numbers they provided, and people are too stupid to realize Apple does this on purpose (Steve Jobs and his lemming execs should be in jail). But it will drop after that to where it belongs, below $300. Depression level … Hahahahaha … That’s a good one Apple sheep!
demodave

SpaceFace, I hope you are feeling OK.

I bought X shares at $18 in 2002 before the 2:1 split, then later sold half, so I now have X shares with a $9 cost basis. Later I bought at $120 only to drop to $80. Later still, bought at $200 and at $335. At $350 today, AAPL has a P/E ratio of 14, which is ridiculously low for a company with its growth rate. I’m holding.

With all that money you made, though, I hope you can buy a few antacid pills!

I still feel bad about trading AAPL, which was an irresponsibly high risk, for something so predictable and stable as JNJ. But I think JNJ does sell some form of bellyache pills…. And maybe some catheters to help me with their flatline…

"We Sold Every iPad 2 We Could Make"

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