Sales of Apple's iPhone blazed past Wall Street estimates in the third quarter, with U.S. shipments up 51 percent, lifting its stock 5 percent even as profit fell.

The world's largest technology company said Tuesday that profit fell 22 percent as gross margins fell below 37 percent from more than 42 percent in the year-ago quarter.

The company sold 31.2 million iPhones last quarter - far more than the estimated 26 million, and 14.6 million iPads.

While some may rush to judgement and say the iPad's glory days are behind it, the main reason for the fall in 'sales' is down to a reduction of 1.9 million units in its channel inventory, accounting for roughly 80% of the year-on-year drop.

The rest of the drop can be attributed to the fact that in the same period last year Apple launched the third generation iPad, while this year we are yet to see a new iPad launch.

The solid showing eased concerns that growing competition is hurting demand for Apple's top-selling product as the global smartphone market matures.

Apple's stock, which has fallen 20 percent since January, rose 5 percent to $437.94 in after-hours trade. It closed at $418.99 on the Nasdaq.

Presented by Adam Justice

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