Apple Inc. (NASDAQ:AAPL) shares rose over 1 percent in early trading on Wednesday after the tech giant reported a fiscal third-quarter profit of $7.7 billion, or $1.28 a share, on revenue of $37.4 billion.
Although the company issued earnings per share that beat analysts' estimates after the closing bell on Tuesday, revenue was just shy of expectations.
Wall Street had expected Apple to deliver earnings of $1.23 per share during the quarter on revenue of $37.9 billion, according to analysts polled by Reuters. The tech giant posted a profit of $6.9 billion, or EPS $1.05, on revenue of $35.32 billion a year earlier.
"Apple has started to show a few signs of stalling out just in the last few weeks," Mark Newton, chief technical analyst at Greywolf Execution Partners, said to IBTimes ahead of Apple's earnings report. "It's getting up towards its highs from September 2012. It's really going to take a lot for the company to deliver."
Meanwhile, Apple's fourth-quarter guidance came in below estimates.
"That [fourth-quarter guidance] is definitely going to be important for them," Mark Newton, chief technical analyst at Greywolf Execution Partners, said to IBTimes ahead of Apple's earnings report. "Regardless of how everything comes in, the stock has already anticipated a lot of this move."
For the current quarter, Apple expects revenue between $37 billion and $40 billion, compared with analysts' expectations for $40.6 billion.
Net income rose to $7.7 billion from $6.9 billion a year earlier.
"Our record June quarter revenue was fueled by strong sales of iPhone and Mac and the continued growth of revenue from the Apple ecosystem, driving our highest EPS growth rate in seven quarters," Tim Cook, Apple's CEO, said in the company's third-quarter earnings statement. "We are incredibly excited about the upcoming releases of iOS 8 and OS X Yosemite, as well as other new products and services that we can't wait to introduce."
Newton said the company would need to "blow out a number of different factors" in its third-quarter earnings report in order for the stock to rise above $100 a share.
"My opinion is the stock needs to pull back to the eighties," Newton said. "It would be a lot better area to take a look at buying a stock versus at current levels."
The company said it sold 35.2 million iPhones in the quarter, up nearly 13 percent, but just below analysts' projections for sales of 35.9 million. Apple sold 4.4 million Macs for the quarter, up 18 percent from the year-ago period, as iPad sales fell to 13.3 million.
Apple topped expectations in the second-quarter after the company reported iPhones sales of 43.7 million, ahead of the 37 million to 38 million iPhones analysts had expected on Wall Street.
The iPhone maker announced a 7-for-1 stock split in April and the new split-adjusted trade took place on June 9.
The company said it generated $10.3 billion in cash flow from operations and returned over $8 billion in cash to shareholders through dividends and share repurchases during the June quarter. Apple has now taken action on over $74 billion of its $130 billion capital return program with six quarters remaining to its completion.
"A lot of the price and volume action seems to suggest that a lot has already been baked into the stock at this point," Newton added. "It's really going to need to blow out a number of different factors to think the stock could rise above $100 a share."
Also after the closing bell on Tuesday, Microsoft Corporation (NASDAQ:MSFT) reported fiscal 2014 fourth quarter earnings of 55 cents a share on revenue of $23.38 billion, compared with a profit of 59 cents a share on sales of $19.9 billion in the year-ago period.
"The stock [Microsoft] has had a huge move in the last few months," Newton said. "It's gotten up to nearly $44 a share. It's quite over bought, but long-term it's quite bullish. It's yet another example of these old technology companies that have broken out and are starting to show real signs of growth."
Wednesday, shares of Microsoft rose 0.13 percent to $44.89 in early trading.
