Despite earnings that easily beat the Street’s expectations, Apple (AAPL) shares dropped sharply, giving up more that $18 (nearly 5.7%) in after-hours trading.

The numbers:

• Revenue: $20.34 billion, up 66.6% from Q4 2009 and well over the Street’s $18.86 consensus
• EPS: $4.64, up 67.6% and ahead of the $4.06 consensus
• iPhones: 14.1 million units, up 91.4% — a solid win
• Macs: 3.89 million, up 27.4%
• iPods: 9.05 million, down 11%
• iPads: 4.19 million, up 28.4% from last quarter, but lower than expected
• Gross margin: 36.9%, down from 39.1% last quarter
• Guidance: earnings of $4.80 on revenue of $23 billion, with GM at 36%, conservative as always

“We are blown away to report over $20 billion in revenue and over $4 billion in after-tax earnings—both all-time records for Apple,” said Steve Jobs in a prepared statement.

“iPhone sales of 14.1 million were up 91 percent year-over-year, handily beating the 12.1 million phones Research in Motion sold in their most recent quarter. We still have a few surprises left for the remainder of this calendar year.”

A solid quarter, but not what the most bullish Apple watchers were looking for. As RBC’ Capital’s Mike Abramsky put it succinctly: “Net-Net: iPhone business rolling: iPhones and Macs above expectations. iPads light.”

Jobs made a rare appearance during the conference call with analysts, addressing the competition from RIM’s (RIMM) BlackBerry and more pointedly, Google’s (GOOG) Android. He called for Android phone makers to report their unit sales and compared the two versions of Apple’s iOS software with what he said were dozens of versions of Android and at least four different Android software stores. “This will be a mess for both users and developers,” he said.

“It’s worth remembering,” he said, “that open systems don’t always win.”

“In reality, we think the open versus closed argument is just a smokescreen,” he concluded. The real issue he said, is integrated versus fragmented. “We thing integrated will trump fragmented every time.”

He also commented on the tablets coming to market, pointing out that the 7-inch screens most have are only 45% the size of the iPad’s 11-inch screen and that Google has told tablet makers not to use the current version of Android.

“What does it mean when your software supplier tells you not to use their software on your tablet?”

We lost count of the reasons not to buy Android tablets — it was at least seven. Jobs ends with this warning:

“These are among the reasons we believe the current crop of 7-inch tablets will be DOA — dead on arrival.”

This will be a transcript worth downloading.

Entering the Q&A: “I think we’ve got a tiger by the tail,” Jobs replied on a question about the iPad sales trajectory. “I think it’s going to be really really big.”

On Apple TV: “We’ve gone to a streaming model on Apple TV. It’s complete streaming. We’ve already sold over 250,000 of them. I think when we get the AirPlay stuff in place before the end of the year, it’s going to give people another reason to buy it.”

Asked what Apple will do if the market shifts to low-cost phones, Jobs tells the questioner (Bernstein’s Toni Sacconaghi), somewhat rudely, that he doesn’t get it. “You’re thinking like a hardware manufacturer in a fragmented market,” Jobs says, trying to figure out how to lower prices and assuming that the software will “somehow take care of itself.”

That’s a wrap. Will post the transcript when it’s available.

See also:

• Five numbers that could end — or extend — Apple’s eight-week rally
• Apple analysts’ frenzied Q4 round-up

[Follow Philip Elmer-DeWitt on Twitter @philiped]