Apple shares tank after weak iPhone results

Apple 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 US$121 after the company released its results, from US$130.75 at the close.

The forecast overshadowed Apple's strong sales in China, which more than doubled to US$13.2 billion from a year earlier.

Apple chief financial officer Luca Maestri said 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 claimed in the nine weeks since its launch in late April, the device had sold better than either iPhones or iPads over a similar period after their launch.

Apple said 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 US$49 billion to US$51 billion, missing analysts' average estimate of US$51.1 billion according to Thomson Reuters I/B/E/S.

The company's iPhone 6 and 6 Plus, which shattered iPhone sales records when they were launched, are already 10 months old.

Apple said net income rose to US$10.7 billion, or US$1.85 per share, from US$7.8 billion, or US$1.28 per share, a year earlier.

Analysts had expected earnings of US$1.81 per share, according to Thomson Reuters I/B/E/S.

Revenue rose 32 percent to US$49.6 billion from a year earlier, beating Wall Street's expectations of US$49.4 billion.

Just prior to the release of the results Apple struggled with a three-hour outage to its App Store, Apple Music, iTunes Store and some other services.