UPDATE 5-Apple's Jobs blasts rivals as iPad sales disappoint

* Production bottlenecks dampen iPad

* Shares fall 6 percent after brief half (Adds Samsung, Dell, context on share move)

By Gabriel Madway

SAN FRANCISCO, Oct 18 (Reuters) - Apple Inc (AAPL.O) CEO Steve Jobs went on the offensive on Monday after a rare sales disappointment by the iPad maker sent its shares tumbling, but his biting words failed to reverse market sentiment.

Jobs, who has not addressed investors on an earnings call for two years, lashed out at competitors Google Inc (GOOG.O) and Research in Motion (RIM.TO)RIMM.TO and dismissed the upcoming range of smaller tablets made by rivals such as Samsung Electronics (005930.KS) and Dell Inc (DELL.O).

"The current crop of 7-inch tablets are going to be DOA, dead on arrival," Jobs told analysts on the conference call. "Their manufacturers will learn the painful lesson that their tablets are too small and increase the size next year."

Shares of Apple -- the second largest corporation on the Standard & Poor's 500 index, after Exxon Mobil (XOM.N) -- slid 6 percent, which would be the biggest single-day loss since 2008.

Supply and production bottlenecks kept iPads, which have a 9.7-inch touch screen, from store shelves and buyers waiting weeks for their gadget. Although the 4.19 million iPads sold in the fiscal fourth quarter fell short of Wall Street's target of around 5 million, analysts said sales should ramp up in the holiday quarter as Apple resolves supply hitches.

Gross margins fell short of target as iPads, whose profit margin is lower than for iPhones, made up a larger proportion of Apple's sales. Investors had expected more from a company that had smashed Wall Street's targets in each of the past eight quarters.

Margins in the fiscal fourth quarter came to 36.9 percent, below Wall Street's average forecast of 38.2 percent.

There was no disappointment in iPhone sales, however. Apple sold 14.1 million of the smartphones, a gain of 91 percent and better than Wall Street had expected. The company said demand is still outstripping supply.

Mac sales surged 27 percent to 3.9 million, at the high end of analysts' estimates. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Graphic showing Apple's earnings history, click on r.reuters.com/peg98p)

Graphic showing earnings breakdown: r.reuters.com/teg98p

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