Apple Shares Plunge on Weaker-Than-Expected 3Q Earnings

Brisk sales of new iPads fail to offset lower-than-expected sales of its iPhones, sending Apple's shares down almost 5 percent

Apple on Tuesday reported a rare miss in quarterly revenue that fell short of Wall Street's estimates on lower than expected sales of its flagship iPhones, sending its shares down 5 percent.

Apple sold 26 million iPhones during the quarter compared to an expected 28 million to 29 million as buyers held off ahead of the latest version of the smartphone, which will be released in the fall.

By contrast, the company sold 35.1 million iPhones in the March quarter.

The most valuable U.S. technology company said fiscal third-quarter revenue rose to $35 billion, much lower than the average analyst estimate of $37.22 billion, according to Thomson Reuters.

Also read: Apple Embraces Facebook, Spurns Google at WWDC

Gross margin for the quarter was 42.8 percent, also lower than the expected 43.68 percent.

Few were expecting Apple to deliver a blowout quarter as they remembered that chatter over the launch of a new iPhone last year caused Apple to miss quarterly expectations in the fall – the first time in years. The economic slowdown in Europe and China also made many investors nervous.

Earlier Tuesday, Apple claimed it is entitled to $2.525 billion of damages in its high-stakes battle against Samsung Electronics over patents for technology used in smartphones and tablets, such as the iPhone and iPad.

The estimate was revealed in a court filing, six days before the world's largest consumer electronics companies are scheduled on July 30 to begin a jury trial before U.S. District Judge Lucy Koh in San Jose, California.

Apple accused Samsung of infringing its patents by making its popular Galaxy phone and computer tablets "work and look" like Apple products, enabling the South Korean company to overtake it as the world's largest maker of smartphones.

Samsung has countered that it simply developed its own "unique" products in a bid to "best the competition," and that Apple actually owes money for using its patented technology.

In its court filing, Apple said Samsung owes "substantial monetary damages" because it illegally "chose to compete by copying Apple."

It said Samsung has been "unjustly enriched" by an undisclosed amount — presumably $2 billion — and deprived Apple of $500 million of profit and $25 million of reasonable royalty damages.