Apple Profit, Revenues Tops Street; Shares Gain 5%

(RTTNews) - Shares of Apple Inc. (AAPL) gained 5 percent in extended trading session after the tech giant reported a third-quarter profit and revenues that trumped Wall Street expectations driven by higher-than-expected iPhone sales.

Although, Apple reported its second year-over-year decline in iPhone sales, it sold 40.4 million iPhone units during the quarter, generating $24.05 billion in revenues. Analysts were expecting iPhone sales volume to be 40 million.

Apple's bottom line continues to be buoyed by iPhone sales, as it contributes about two-thirds of Apple's revenues and a major part of its profit. Apple is expected to release its next-gen iPhone next month, the success of which is really important for Apple.

The sales of iPhones have slowed down reflecting mainly a saturated smartphone market, sluggish demand in China -- Apple's second-biggest market after the U.S, and less frequent upgradation of iPhones by customers.

Apple's third-quarter profit dropped to $7.80 billion or $1.42 per share from $10.67 billion or $1.85 per share last year. Analysts had expected the company to earn $1.38 per share, according to figures compiled by Thomson Reuters.

Apple said its revenue dropped to $42.36 billion from last year's $49.61 billion, its second consecutive year-over-year quarterly sales drop. Analysts had predicted revenues of $42.09 billion.

Gross margins narrowed down to 38 percent from 39.7 percent last year.

Commenting on the results, CEO Tim Cook, said, "We are pleased to report third quarter results that reflect stronger customer demand and business performance than we anticipated at the start of the quarter. We had a very successful launch of iPhone SE and we're thrilled by customers' and developers' response to software and services we previewed at WWDC in June."

Apple's Financial Chief Luca Maestri said that the company returned $13 billion to investors through share repurchases and dividends, and has completed almost $177 billion of its $250 billion capital return program.

Looking forward to the fourth quarter, Apple expects revenue between $45.5 billion and $47.5 billion. Analysts currently project revenues of $45.71 billion.

AAPL closed Tuesday's trading at $96.63, down $0.67 or 0.73%, on the Nasdaq. The stock, however, gained $5.12 or 5.30% in the after-hours trade.