Apple Inc shares slumped nearly 7 percent in after-hours trading as its fourth-quarter revenue forecast fell short of estimates and it missed some targets for iPhone sales. The shares dropped to $121 after the company released its results on Tuesday, from $130.75 at the close. The forecast overshadowed Apple's strong sales in China, which more than doubled to $13.23 billion from a year earlier.
Apple Chief Financial Officer Luca Maestri said in an interview the results in China were "spectacular" during the quarter and noted plans to open 40 stores there over the next 12 months. Without disclosing specific figures, Maestri said sales of the Apple Watch beat the company's expectations. He noted that in the nine weeks since its launch in late April, the device has sold better than either iPhones or iPads over a similar period after their launch.
Apple said on Tuesday it sold 47.5 million iPhones in the third quarter, up 35 percent from a year ago. But some analysts had expected around 49 million. Colin Gillis, an analyst for BGC Partners, said the results highlighted the vulnerability of Apple's dependence on the iPhone and the Chinese market's growing importance to the company.
"Where are you going to find growth in the world?" he said. "You've done an amazing job sucking all the smartphone profits into your balance sheet, but smartphone sales are slowing. What's going to happen when the industry matures, just like PCs did?" The company forecast revenue of $49 billion to $51 billion, missing analysts' average estimate of $51.13 billion according to Thomson Reuters. The company's iPhone 6 and 6 Plus, which shattered iPhone sales records when they were launched, are already 10 months old.
Apple had a troubled day, with its App Store, Apple Music, iTunes Store and some other services suffering disruption for more than three hours before results were released. The company said net income rose to $10.68 billion, or $1.85 per share, from $7.75 billion, or $1.28 per share, a year earlier. Analysts had expected earnings of $1.81 per share, according to Thomson Reuters. Revenue rose 32.5 percent to $49.61 billion from a year earlier, beating Wall Street's expectations of $49.43 billion.