iPod shipments fall shy of Wall Street hopes.

Shares of Apple Computer Inc. continued to tumble Wednesday, after the company reported robust sales of its personal computers and still-sizzling iPods, but overall shipments of the digital music player falling shy of Wall Street's high hopes.

The reaction was immediate — Apple shares plunged more than 10 percent late Tuesday after the company reported its fourth quarter results. Shares fell $3.26, or 6.3 percent, to $48.33 in Wednesday morning trading on the Nasdaq Stock Market.

Analysts were expecting anywhere from 7.5 million to 8.5 million units sold, said Shaw Wu, analyst with American Technology Research. Instead, Apple sold nearly 6.5 million iPods in the quarter, bringing cumulative sales of the portable player to about 28 million units, said Peter Oppenheimer, Apple's chief financial officer.

Still, Apple's results were far from glum.

For the quarter ended Sept. 24, the Cupertino, Calif.-based company said Tuesday it earned $430 million, or 50 cents a share, up from the previous year's fourth-quarter earnings of $106 million, or 13 cents a share.

Excluding a special 12-cents-a-share tax benefit, Apple said it would have earned 38 cents a share. On that basis, the results exceeded the per-share estimate among Wall Street analysts by a penny, according to research firm Thomson Financial.

Revenue rose to $3.68 billion — up from $2.35 billion in the year-ago quarter but short of the $3.73 billion in sales analysts were expecting.

In the fourth quarter, the iPod accounted for nearly a third of the quarter's revenue; Macintosh computers — Apple's historical core product — accounted for about 44 percent with 1.2 million units sold.

For the year, Apple said it earned $1.335 billion on revenue of $13.93 billion.

"We had nearly $14 billion in revenue — the best in our history," Oppenheimer said.

Riding high on the success of its market-leading and ever-evolving line of iPods, Apple's share price nearly tripled from its 52-week low of $18.83 on Dec. 12, 2004 to close Tuesday up $1.22 at $51.59 on the Nasdaq Stock Market.

The company is set to unveil yet another new product Wednesday, and industry observers speculate it will be an iPod capable of playing video.

After Tuesday's report, however, perhaps investors are sobering up, analysts say.

"When you're such a class act, it's hard to keep it going," Wu said of Apple. "I think investors got a little too excited, the stock got too high, and the stock is just trying to correct itself now."

For the first quarter, Oppenheimer said Apple expects to reach sales of $4.7 billion, up $1.2 billion, or about 34 percent from the year-ago quarter.

Meanwhile, during a conference call with analysts, Oppenheimer cited an "enormous backlog" in orders for Apple's newest portable player, the pencil-thin iPod Nano released Sept. 7. One million of them were shipped before the fourth quarter ended, Oppenheimer said.

He refused to say when he expected production constraints to ease so that supply would meet demand.

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