22 million iPods can be wrong

Apple shares tumble despite record-shattering Q1

Apple reported the best quarterly financial results in its history Tuesday, selling 22.1 million iPods, 2.3 million Macintosh computers and 2.3 million iPhones.

But absent from the data executives shared with investors Tuesday, though, was the number of Apple TV set-top boxes the company sold. Apple TV is the conduit for moving iTunes content to television screens, an important device now that iTunes has begun renting movies and TV shows.

The Steve Jobs-led Apple posted fiscal first-quarter profit of $1.6 billion, ahead of forecasts and up 58% from the same quarter a year ago. Revenue rose 35% to $9.6 billion, also besting forecasts.

The record-setting numbers didn't impress Wall Street, though, and Apple shares fell 11% in after-hours trading after having shed 4% during the regular session.

Analysts seemed to be keying on lackluster guidance and on what some called disappointing 5% unit growth in iPod sales, nothing when compared with the 44% unit growth for Macintosh computers.

During a conference call, CFO Peter Oppenheimer and COO Timothy Cook defended Apple's potential for growth in the increasingly saturated market of digital music players, mostly by talking up the new iPod Touch.

With its big video screen and technology borrowed from the iPhone, Apple is positioning the iPod Touch as "the first mainstream WiFi mobile platform running all sorts of mobile applications," Cook said.

Apple forecast $6.8 billion in revenue for the current quarter, missing analysts' expectations of $7 billion, and earnings of 94 cents per share, short of the $1.09 analysts were looking for. The conservative outlook had after-hours traders bidding Apple shares down to their lowest point in four months.

During the conference call, analysts who tried to get details about Apple TV's popularity were mostly thwarted.

Oppenheimer said "customers are really gonna love" the new iTunes rental service, which Apple will run just above break-even in the hopes that it will spur sales of iPods and computers, neglecting to include Apple TV.

Pressed by an analyst about Apple TV's potential, the execs noted that several companies have, in the past, attempted devices that marry the Internet to TV and have failed, but that they are confident they have cracked the code with Apple TV.