Apple Inc. posted earnings yesterday that came below analyst expectations, resulting in an over 6 percent drop in price in after-hours trading. After posting its best fiscal third-quarter profit ever, even though iPhone sales climbed 35 percent to 47.5 million units in the period that ended in June, the result fell short of the 48.8 million shipments projected by analysts.

Lower than expected revenue forecasts for the current period also triggered the drop; which is the largest since January 2013.

Sales of the Apple Watch were interpreted as modest, indicating that Apple will have to keep relying on the iPhone to fuel growth. This has prompted analysts and investors alike to pose the question “What’s next?” as the investing community is second guessing the rationale as to why they should hold onto Apple shares for the next couple of months.

As of now, taking into consideration the 6 percent drop today, Apple shares are up 18 percent this year.

In a conference call held yesterday, CEO Tim Cook said the iPhone “has a lot of legs to it” and that 73 percent of old iPhone owners still haven’t upgraded to the new device, which was introduced last September.

Cook also said the company is incredibly happy to see the highest Android switcher rate that they have observed.

In terms of growth, China is expected to remain a key driving force, where revenue more than doubled to $13.2 billion in the latest results. Sales of the iPhone rose 87 percent in China in the third quarter, Luca Maestri, Apple’s chief financial officer, said in an interview. Cook said that the company is rushing to double the number of retail stores in the country by the middle of next year, as the company expects the region to become Apple’s largest market, as comparatively sales in the Americas region rose 15 percent to $20.2 billion.

CFO Maestri said that currency headwinds impacted the bottom line quite significantly, with total revenue, which rose 33 percent to $49.6 billion compared with a year ago, would have been 8 percent higher.

IPad sales continued to suffer, with tablet shipments falling 18 percent to 10.9 million, marking the sixth straight quarter of declines. Apple is working on a new larger-screened version of the iPad that could appeal to corporate customers looking to use the device as a replacement for a laptop computer. Mac shipments climbed 8.7 percent to 4.8 million, matching projections.

Net income for the period ended in June, was $10.7 billion, or $1.85 a share, marking the best April-through-June period since 2012.

Microsoft Corp. posted quarterly earnings and revenue that topped analysts' expectations yesterday after the bell, but took a hit from restructuring charges and soft demand for its legacy software products. The company’s shares have fallen over 4% after the technology giant reported earnings of 62 cents per share on $22.18 billion in revenue, but had a loss for the quarter once previously disclosed write-downs were included.

Consensus was for Microsoft to post quarterly earnings of 56 cents a share, including charges, on $22.03 billion in revenue.

A $7.5 billion cost related to its Nokia acquisition and other restructuring totalling $8.4 billion in the company's fiscal fourth quarter, ultimately reporting a $3.2 billion quarterly net loss including the write-downs.

Microsoft’s shift away from PC software toward cloud services was reflected in the results, with revenue from the company’s commercial cloud computing growing 88 percent year on year. The company said it added nearly 3 million subscribers to its Office 365 platform. More than 15 million people now subscribe to the service.

Sales of Microsoft's Windows and Office software, which historically accounted for the bulk of its business, continued to struggle amid a sagging personal computer market. Windows OEM revenue in the quarter dipped 22 percent. The company said sales were "impacted by PC market declines following the XP end-of-support refresh cycle." In Microsoft's conference call, CEO Nadella stressed that Microsoft 10's release could ease some of the pressure on the PC market.