Apple Shares Plunge Despite Record iPhone Sales

Apple CEO, Tim Cook

Apple's latest financial report shows the iPhone is still the key engine of the company's success. But the impact of its newest product, the Apple Watch, isn't clear.

The California tech giant turned in another strong performance Tuesday, thanks to sales of its signature smartphone.

  Apple's stock fell nearly 8 percent in late trading, indicating investors weren't satisfied with the report.

Apple said Tuesday that it sold more than 47.5 million iPhones during the three months ending in June, or 35 percent more than a year ago.

Apple's stock fell nearly 8 percent in late trading, indicating investors weren't satisfied with the report.

Apple also forecast that revenue for the quarter ending in September will fall between $49 billion and $51 billion, indicating total sales could fall below Wall Street estimates of $50.8 billion.

'We had an amazing quarter, with iPhone revenue up 59 percent over last year, strong sales of Mac, all-time record revenue from services, driven by the App Store, and a great start for Apple Watch,' said Tim Cook, Apple's CEO.

'The excitement for Apple Music has been incredible, and we're looking forward to releasing iOS 9, OS X El Capitan and watchOS 2 to customers in the fall.'

'In the third quarter our year-over-year growth rate accelerated from the first half of fiscal 2015, with revenue up 33 percent and earnings per share up 45 percent,' said Luca Maestri, Apple's CFO.
'We generated very strong operating cash flow of $15 billion, and we returned over $13 billion to shareholders through our capital return program.'

It posted quarterly revenue of $49.6 billion and quarterly net profit of $10.7 billion

Apple was less forthcoming about the watch, which some analysts and investors see as an important indicator of the company's ability to produce successful new products.

Top executives stood by their decision not to release sales figures for the company's sleek new smartwatch, saying the information could be used by competitors.

'We made a decision in September not to disclose shipments on the Watch, it was a matter of not giving our completition insight on a product we've worked really hard on,' said Tim Cook.

'Sales of the watch did exceed our expectations, despite supply constraints.

'It was higher than the original launch time of the original iPhone and original iPad.'
Cook also revealed the Watch was to be given more prominence in stores, and said the firm expects it to be a top seller this Christmas.

In one tantalizing clue, Apple reported $2.6 billion in revenue from the segment that includes the watch and several other products, or about $952 million more than the previous quarter, when the watch had not yet gone on sale.

That's significantly less than the $1.8 billion in watch sales that analysts surveyed by FactSet were expecting.

'it's a rare and special privilege to launch a platform with such potential,' said Cook.'

'In just the past few days, we've been able to catch up with demand and expand to 19 countries.

'The feedback from Apple Watch customers is very positive, and we hear from people every

'94% of owners wear it regularly, with messaging and social networking the most popular.'

But Chief Financial Officer Luca Maestri told The Associated Press that revenue from the watch amounted to 'well over' that $952 million increase.

He said the category also includes revenue from iPods and accessories, which saw declining sales in the quarter.

'We beat our internal expectations' for the watch, Maestri said, adding that the number of watches sold in the first nine weeks was greater than the number of iPhones or iPads that the company sold in a comparable period after those products launched.

Apple Watch

Apple has previously said it sold 1 million iPhones in the first 74 days, or more than 10 weeks, after sales began in 2007.

Apple has said it sold 2 million iPads in the first 60 days, with iPad sales hitting 3 million in 80 days after the iPad was launched in 2010.