Updated: Apple Earnings: A Rare Miss, 17 Million iPhones, 11 Million iPads

Apple’s long track record of underpromising and overdelivering when it comes to expectations of the financial community seems to have finally reached an end, despite an otherwise strong quarter. Apple (NSDQ: AAPL) reported revenue of $28.27 billion and earnings per share of $7.05, both strong increases compared to the prior year, but both numbers fell short of analyst estimates.

Apple’s revenue of $28.27 represents a 38 percent increase compared to last year, and its net profit of $6.62 billion was up 54 percent compared to last year. The company even grew more profitable, increasing its gross margin from 36.9 percent to 40.3 percent.

But financial analysts were looking for more. On average, as polled by Yahoo (NSDQ: YHOO) Finance, analysts were expecting Apple to post revenue of $29.45 billion and earnings per share of $7.28.

Apple’s own guidance for the quarter coming off of its last earnings call was for $25 billion in revenue and earnings per share of $5.50. But the financial community has gotten so used to Apple’s notoriously conservative financial guidance over the years that few analysts take those numbers seriously: the most pessimistic estimate compiled by Yahoo Finance was for $26 billion in revenue and $6.10 in earnings per share.

Still, there’s no doubt that Apple is selling an awful lot of gear. iPhone sales were smaller compared to the previous quarter, but given the hype surrounding the launch of what turned out to be the iPhone 4S, it’s not surprising that some people would prefer to wait and see what Apple had in store. iPhone sales were up 21 percent compared to the prior year.

The discrepancy between the analyst estimates and Apple’s official numbers appears to have come about because of slower-than-anticipated demand for the iPhone 4 in the weeks leading up to the launch of the iPhone 4S. CEO Tim Cook didn’t directly comment on the earnings targets (they never do), but said there was a noticeable decline in “sell-through,” or the number of iPhones that are purchased as opposed to sitting in inventory, as rumors and speculation gathered about what many expected would become the iPhone 5.

He also attributed that decline in sell-through to the fact that Apple has launched a new iPhone during this quarter of the year each year since 2007 except for this one, meaning that people had come to expect that summer upgrade cycle. Couple that with people’s ability to put two and two together when Apple announced in June that iOS 5 would be available in the fall, and the company saw a greater number of people sitting on the sidelines than perhaps the financial community had expected.

iPad sales of 11 million units grew 20 percent compared to the previous quarter and 166 percent year-over-year. Cook said the tablet market has the potential to be a huge opportunity for Apple, declining to directly address the introduction of the Kindle Fire but noting that competitors to the iPad don’t have much to show for their efforts.

He also declined (unsurprisingly) to comment on Apple’s legal strategy in the numerous patent suits it has launched over the past few years. Some believe that Apple is not interested in cutting cross-licensing deals or settling with its opponents–the common outcome of most patent disputes–but Cook wouldn’t take the bait as to whether or not Apple has taken that hard a line.

Looking ahead to the holiday quarter, typically the biggest of Apple’s year by far, the company said it expected to record $37 billion in revenue and earnings per share of $9.30. That would be a 38 percent jump in revenue and a 153 percent increase in profit, huge numbers, although Oppenheimer reminded those on the call that the quarter this year will have an extra week than normal.