Will Apple Earnings MISS Create Market VOLATILITY?

Apple (NASDAQ:AAPL) shares took a tumble in after-hours trading on Tuesday after third-quarter earnings and revenue missed Wall Street expectations by a huge margin, and the company lowered its predictions for the next period. A high pace of sales of the new iPad was not enough to offset below-expectation shipments of the iPhone, as customers held off on purchasing the smartphone in anticipation of a new model. Shares fell more than 5 percent to $570.70.

A Closer Look: Apple Earnings Cheat Sheet>>

Apple posted earnings of $8.8 billion, or $9.32 per share, on revenue of $35 billion. Consensus expectations had been for profit of $10.35 per share on revenue of $37.2 billion. In the year ago quarter, Apple had turned in revenue of $28.6 billion at $7.79 per share. To give the miss a perspective, since 2003, the company has fallen short of analysts’ projections only once before.

Revenue predictions for the fourth quarter came in at a lowly $34 billion at earnings of $7.65 per share, a big hint that the company is readying for a further drop in anticipatory iPhone sales drop and preparing to launch the next generation of its biggest revenue earner.

“Every quarter that Apple isn’t launching a new iPhone it’s a transition quarter,” ISI Group analyst Brian Marshall told Bloomberg. “That’s the key product that matters.”

The company only sold 26 million iPhones in the last quarter, which was a 28 percent unit increase year-over-year. iPad unit sales were the one positive as they saw an 84 percent jump to total 17 million. Four million Mac computers were sold during the quarter ended June, a two percent increase, while iPod sales declined again, dropping 10 percent to reach 6.8 million.

“We’re thrilled with record sales of 17 million iPads in the June quarter,” chief executive Tim Cook said in a statement. “We’ve also just updated the entire MacBook line, will release Mountain Lion tomorrow, and will be launching iOS 6 this fall. We are also really looking forward to the amazing new products we’ve got in the pipeline.”

Gross margin, the percentage of sales remaining after deducting the costs of production, was 42.8 percent, compared with 41.7 percent a year earlier, while international sales accounted for 62 percent of the revenue.

Company chief financial officer Peter Oppenheimer announced a cash dividend of $2.65 per share.