Apple's Stock Drops Despite Beating Quarterly Earnings Expectations
The tech giant beat analyst estimates with revenue of $49.6 billion for the fiscal third quarter.
Apple had a strong fiscal third quarter, reporting Tuesday that it earned $1.85 per diluted share on revenue of $49.6 billion, up 39 percent over last year.
Both figures beat Wall Street's expectations. Analysts polled by Thomson Reuters expected Apple to report quarterly adjusted earnings of $1.81 per share and revenue of $49.4 billion.
But while the iPhone 6, which was released last September, continues to boost the company's bottom line, Apple did not sell as many units as analysts had predicted. Wall Street was looking for 48.8 million units sold, but Apple reported 47.5 million units. Even so, iPhone quarterly revenue was up 59 percent year-over-year.
Meanwhile, Apple released few details about the early performance of the Apple Watch, which went on sale in April. Although analysts are keen for details about the new product, which has been the subject of reports that say it is underperforming, Apple did not break out the watch's sales numbers and instead included them in the "other products" category where it also reports numbers for the iPod and Apple TV. That product segment brought in $2.6 billion, up 49 percent from last year.
"Sales of the watch did exceed our expectations," Apple CEO Tim Cook said during a conference call with investors. "The Apple Watch sell-through was higher than the comparable launch periods of the original iPhone and iPod."
The company is forecasting fiscal fourth-quarter revenue between $49 billion and $51 billion, which falls below the $51.1 billion that analysts are looking for.
Apple reported earnings on the same day as its new Music app, iTunes and App Store suffered outages for some users.
Apple shares, which closed down 1 percent for the day to $130.73, dropped as much as 8 percent during after-hours trading on the Nasdaq. The drop likely came from iPhone sales and revenue guidance falling below analysts expectations.