Apple Inc painted a rosy picture for its new iPhones as it reported quarterly results on Tuesday, but investors were more focused on the company's next test--topping last year's record holiday sales.

Shares of the company initially rose 3 percent in extended trade after Apple beat Wall Street's sales and profit forecasts, but the gains largely evaporated later.

In Greater China, Apple's sales in its fourth fiscal quarter nearly doubled since last year to $12.5 billion. This accounted for nearly a quarter of its total revenue.

"We continue to have wonderful success there," Apple's chief financial officer, Luca Maestri, told Reuters. Apple now has 25 stores in China and opens a new one roughly every month.

But China sales dipped from the fiscal Q3, when Apple notched $13.2 billion in revenue.
The sequential decline is important as many analysts believe China is set to replace the United States as Apple's biggest market.

"As the Chinese market matures, it is beginning to show spikes around the holidays and slumps before the release of a new phone, as in the U.S. market", Analyst Ben Bajarin of Creative Strategies told Reuters.

Apple sold about 48.05 million iPhones worldwide in its fiscal fourth quarter, slightly below analysts' average forecast of 48.72 million, according to Fortune magazine.

For the current quarter, which will include three months of sales of the new iPhone models, Apple forecast revenue sales between $75.5 billion and $77.5 billion.

The company's generally conservative forecast was in line with Wall Street's average estimate, according to Reuters.

The forecast was slightly below expectations but investors were pricing in a worse outcome, which was why the stock initially rose after hours, Brain Colello, Morningstar analyst said.

Boosted by a new pink or 'rose gold' colour option, Apple posted record sales of its latest iPhones in the first weekend that they hit stores in late September.

The release of the iPhone 6 set off a sales frenzy last year, propelling Apple to the most profitable quarter ever for a U.S. company.

Analyst Shannon Cross of Cross Research said Apple's guidance for the current quarter suggested the company can top its success last year.

But some analysts expressed concerns.

"I am a little sceptical about how much more market share they can gain in markets," said Tuong Nguyen, a principal analyst at Gartner, cited concerns whether consumers in emerging markets could buy a phone.

Apple's net income rose to $11.12 billion, or $1.96 per share, in the fourth quarter, up from $8.47 billion, or $1.42 per share, a year earlier.

Net sales rose about 22 percent to $51.50 billion.

Analysts on average had expected a profit of $1.88 per share and revenue of $51.11 billion.