(NEW YORK) — Apple Inc. (AAPL), the world’s largest company by market capitalization, announced its third-quarter profit on Tuesday that disappointed analysts, who were expecting more from the maker of the phenomenally successful iPad and iPhone.
The company said profit rose to $8.8 billion from $7.3 billion a year ago, and $35 billion in revenue. Apple sold 26 million iPhones, up 28 percent over the last year, four million Mac computers, a two percent jump, and 17 million iPads, an increase of 84 percent. The company announced lower earnings per share outlook for the fourth quarter.
Analysts had expected third-quarter revenue of more than $37 billion.
Many current iPhone users may be waiting for the next generation of the popular smartphone. Unconfirmed reports indicate the next model may be released this fall.
Michael Holt, senior equity analyst with investment firm Morningstar Inc., said the importance of the iPhone to Apple’s bottom line is clear with the strength of iPad unit shipments unable to offset the “surprise miss” in iPhone shipments.
“Though we are surprised with just 26 million iPhone units, it doesn’t change our belief that Apple continues to assimilate new customers and lock them into the iOS platform,” Holt said of Apple’s mobile operating system.
Holt said the current quarter reflects two trends. First, consumers are more in tune with the product release cycle. Second, there is greater competition from Google’s Android phones “that can make the iPhone look stale more quickly.”
“We expect to see greater volatility in Apple’s quarterly results going forward due to the growing importance of the product cycle,” Holt said.
Apple CEO Tim Cook said the company was “thrilled with record sales of 17 million iPads in the June quarter.”
“We are also really looking forward to the amazing new products we’ve got in the pipeline,” Cook said in a statement.
The tech giant sold 35.1 million iPhones last quarter, 88 percent unit growth year-over-year.
In April, Apple reported record-second quarter sales of iPhones, iPads and Macs and that its profit had almost doubled to $11.6 billion.
Shares of AAPL, which have risen nearly 50 percent this year, closed at $600.92 on Tuesday, down 0.48 percent. After the earnings were announced, shares tumbled six percent in after-hours trading.
Copyright 2012 ABC News Radio
Matt McFarland, CNN
Jethro Mullen Ivana Kottasova and Patrick Gillespie, CNN
Tara Bench, KSL.com
Madison Park, CNN