Apple investors shrug off sputtering iPhone sales

Stronger growth in China and the prospects of new iPhones in September gave investors reason to cheer Apple's latest financial results. 

The Cupertino, California-based company beat Wall Street earnings expectations, a relief to shareholders expecting steeper drops in the report. The technology giant's revenues of $53.8 billion topped Wall Street expectations for $53.4 billion, according to analysts surveyed by Capital IQ. Earnings per share came in at $2.18, versus expectations for $2.10 per share. 

Apple shares rose 4% in after-hours trading. Dwindling iPhone sales is the main reason Apple's profit for the April-June period fell 13% from this time last year to about $10 billion. iPhone sales fell 12% from $29.5 billion last year to nearly $26 billion this quarter.  

The latest quarterly results underscore the challenges ahead for a tech giant that has been riding the smartphone revolution since 2007. Apple has been trying to offset the decline in smartphone sales by milking more money from services such as music subscriptions.

But investors bullish on the company are cheered that Apple CEO Tim Cook noted "marked improvement" in China, which is important for iPhone upgrades for the company.  

"The company is guiding to relative strength in the September quarter on the heels of a trifecta of new iPhones expected to be released in early September," Wedbush analyst Daniel Ives wrote in a earnings note. 

Apple was also optimistic about its performance for the latter half of the year, releasing robust guidance for $61 billion and $64 billion, versus Wall Street estimates for $60.9 billion.