CORRECTED - UPDATE 2-Apple beats forecasts, but iPad disappoints

(Corrects fourth bulletpoint to reflect stock drop)

* Q4 EPS $4.64 vs Street view $4.08

* Q4 rev $20.34 bln vs Street view $18.9 bln

* Sees Q1 EPS $4.80, rev of $23 bln

* Shares fall

SAN FRANCISCO, Oct 18 (Reuters) - Apple Inc (AAPL.O) posted better-than-expected profit and revenue, and issued strong forecasts again as iPhone sales took off, but its weaker-than-expected gross margins and iPad shipments disappointed investors.

Apple shares fell 7 percent in extended trading.

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

Apple sold 4.2 million iPads in its second quarter on the market, below Wall Street's expectations.

Some analysts had projected shipments of closer to or even more than 5 million for the tablet computer launched only in April, but others had warned that supply constraints had held back sales.

The company on Monday reported a net profit of $4.31 billion, or $4.64 a share, in the fiscal fourth-quarter ended Sept. 25, up from $2.53 billion, or $2.77 cents a share, in the year-ago period.

That was better than the average analyst estimate of $4.08 a share, according to Thomson Reuters I/B/E/S.

"It's an incredible phenomenon -- not only did they beat our heightened expectations but they've blown past forecasts, and it's primarily driven by the iPhone," said BGC's Colin Gillis.

Revenue surged 67 percent to $20.3 billion, ahead of Wall Street's target of $18.9 billion.

The company forecast current-quarter earnings of $4.80 a share on revenue of $23 billion.

Shares of Cupertino, California-based Apple closed at $318.00 on Nasdaq and were halted in after-hours trading. (Reporting by Gabriel Madway; Editing by Richard Chang)