Apple beats on earnings, but revenue outlook falls short

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Apple reported fiscal third-quarter earnings and revenue that beat analyst forecasts on strong iPhone shipments, sending shares higher in late trading. But fourth-quarter sales guidance fell short.

"I don't subscribe to the view that the higher end of the smartphone market has hit its peak," CEO Tim Cook said on the earnings call.

Net income fell 22 percent to $6.9 billion, or $7.47 per share, from $8.8 billion, or $9.32 per share, in the year-earlier period.

Revenue ticked up to $35.3 billion from $35 billion a year ago.

(Read more: Surge in iPhone sales rings well with Apple investors)

The results still beat analyst forecasts for earnings of $7.32 per share on sales of $35.02 billion, according to estimates for Thomson Reuters.

The solid showing eased concerns that growing competition is hurting demand for Apple's top-selling product as the global smartphone market matures.

Rival Samsung Electronics is facing a similar challenge with its Galaxy phones. The company, which like Apple has had a track record of beating forecasts, issued a disappointing earnings forecast earlier this month. Samsung reports earnings after the bell on Thursday.

Apple's stock, which has fallen 20 percent since January, rose more than 3 percent in after-hours trading. What's the stock doing now? (Click here for the latest after-hours quote.)

"The iPhone number should provide some comfort to investors who were worried about smartphone demand. That's one of the reasons the stock is up. Expectations were not strong for this quarter," said Shannon Cross of Cross Research.

Piper Jaffray analyst Gene Munster told CNBC's "Closing Bell" that investors should continue to look ahead to potential new product launches in the back half of the year. "I don't think it's the best days of Apple," he said, but added, "There are still some huge opportunities ahead for the company."

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On the conference call, Apple's CFO said new products will arrive in the fall and they will go into more detail in October.

The company shipped 31.2 million iPhones in the quarter, up 20 percent from the 26 million shipped in the year-ago quarter. It sold 14.6 million iPads, down from 17 million a year earlier.

"Eighty-four percent of tablet web traffic comes from iPads," Cook said on the call. "I'm not sure what the other tablets are used for," he quipped.

Apple sold 3.8 million Macs, down 5 percent from a year ago.

International sales accounted for more than half of the quarter's revenue, with Apple posting increased revenues in Japan and the Americas. But it saw a more challenging environment in the rest of the world, with Apple posting declines in sales in Europe, China and the rest of Asia.

The company's profitability also suffered. Apple's gross margin shrank to 36.9 percent from 42.8 percent a year ago.

Apple also declared a cash dividend of $3.05 per share, payable on August 15, 2013.

Looking ahead, Apple forecast revenue of $34 billion to $37 billion for the fiscal fourth quarter and a gross margin between 36 percent and 37 percent.

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Wall Street was looking for $37.05 billion in revenue for the fiscal fourth quarter.

"It's pretty remarkable that they are selling as many phones as they are, given that it's not a new product," said Michael Yoshikami, chief executive of Destination Wealth, which owns Apple shares. "That's really the key for them; they've got to come up with a new product."