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Better-than-expected gross profit margins helped Apple Inc. (Nasdaq: AAPL) beat Wall Street forecasts.
Apple earnings were $1.28 per share in its fiscal third quarter, the Cupertino, Calif.-based tech giant reported after the market close today (Tuesday). That easily topped expectations for earnings of $1.23 per share.
But the rest of Apple's earnings report was nothing to get excited about.
The mixed bag of news left Apple stock flat in after-hours trading.
Revenue came in at $37.4 billion, about $600 million below expectations. Although some analysts were looking for unusually strong iPhone sales, Apple sold 35.2 million of them in the June quarter – at the lower end of the forecast range of 35 million to 36 million.
Still, that's a 13% increase over the June quarter last year.
But those otherwise lukewarm numbers were offset by a nice surprise in Apple's gross margins, which increased to 39.4% from 36.9% from the same quarter last year.
That should temporarily calm any worries investors might have had about Apple being able to maintain its historically high margins in the face of tablet and smartphone competition from increasingly cheaper rivals running Google Inc.'s (Nasdaq: GOOG) Android operating system.
Sales in Apple's other product categories also fell closely in line with expectations. The company sold 13.3 million iPads, a 9% drop from the previous year and about 1 million fewer than analysts expected.
Guidance for the current quarter was tepid as well. Apple said it expects revenue to be between $37 billion and $40 billion, with gross margin between 37% and 38%. Those numbers are just about what most analysts were looking for.
Investors hoping June's Apple earnings might give AAPL stock a push will now have to wait for a different catalyst, though they won't need to wait too long – the iPhone 6, with its larger and nearly indestructible screen, is expected to be unveiled in September.
UP NEXT: Now that Apple's Q3 earnings are out, the focus will return to speculation about the iPhone 6. Customers are seeking details about then new screen sizes, new features and durability, but investors will want to know how those features will translate to sales and profits. Here's why the iPhone 6 could single-handedly push AAPL stock to a new all-time high…
About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.