Wells Fargo: AAPL Q3 was Meh, but the Future Looks Bright

Apple reported US$37.4 billion in revenue for its third fiscal quarter and 35.2 million iPhones sold, coming in below Wells Fargo analyst Maynard Um's expectation of $38.2 billion. That may be disappointing, but it doesn't spell certain doom for Apple because Mr. Um sees the upcoming fall product launches as a big boost for the company's performance.

Apple's Q3 iPhone sales missed Maynard Um's expectationsApple's Q3 iPhone sales missed Maynard Um's expectations

Along with $37.4 billion in revenue and 35.2 million iPhones sold, Apple reported $7.7 billion in earnings, plus 13.3 million iPads and 4.4 million Macs sold. iPhone sales were up 13.3 percent year-over-year and Mac sales were up 17.6 percent, but iPad sales dropped 9.2 percent.

Mr. Um told investors, "Of concern to us was the lack of iPhone unit growth though gross margin surprised us equally to the upside -- we gather it was related to accounting reversals."

He called the quarter "status quo," adding that gross margins saved Apple's numbers. Looking to Q4, Mr. Um expects we'll see new product launches including the next generation iPhone and the iWatch, Apple's jump into the smartwatch and wearable tech markets.

The new iPhone is expected some time in September and rumors say it will come with two larger display options at 4.7-inches and 5.5-inches. The iPhone 5 and iPhone 5S both include a 4-inch display. The still unconfirmed iWatch is expected to sync information with our iPhones and collect health and fitness data based on our daily activities.

Mr. Um lowered his fiscal 2014 revenue expectations from $181.4 billion with $6.34 EPS to $180.6 billion and $6.37 EPS. For fiscal 2015, Mr. Um is modeling $187.1 billion in revenue, up from $181.9 billion.

Mr. Um is maintaining his "Market Perform" rating for Apple's stock with a target range between $59 and $98. Apple is currently trading at $97.60, up 2.88 (3.04%).