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Apple has posted better than expected profits but iPhone sales continue to decline Getty Images

Apple posted better than expected profit margins in Q4 2016 even as iPhone sales continued to decline for the third quarter in a row. The company, however, has projected record sales for its next quarter on account of the iPhone 7 range and Watch 2 and hopes to mop up between $76bn (£62bn) and $78bn in revenue.

"We're thrilled with the customer response to iPhone 7, iPhone 7 Plus and Apple Watch Series 2, as well as the incredible momentum of our Services business, where revenue grew 24% to set another all-time record," said Apple CEO Tim Cook in a statement.

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The company reported earnings per share of $1.67, slightly above the $1.66 forecast by Thomson Reuters while revenues came in at $46.9bn, shy of the $46.94bn expected. The quarterly results mark the third straight y-o-y revenue decline for Apple.

Sales of all key products were down as Apple sold 45.5 million iPhones, 9.3 million iPads and 4.9 million Macs in the quarter, a y-o-y decline of 5.2% for iPhones, 6% for iPads and a significant 14% for the Mac. Things are expected to change for the Mac as Apple is to release a new model at the end of this month.

There is no clarity on the watch sales as the company has never revealed individual figures for the Apple Watch. A report published by the International Data Corporation (IDC) a day earlier, however, states that smartwatch sales have tumbled by more than 50% in the last 12 months, with Apple and Motorola suffering maximum losses. According to the report, global sales of the Apple Watch fell by 71.6% in the third quarter of 2016, compared to 2015.

Apple's China sales improved despite revenue falling almost 30%, while global sales, accounted for 62% of the quarter's revenue.

Shedding light on the latest earnings and the forecast for the next quarter, Patrick Moorhead, President and Principal Analyst at Moor Insights & Strategy, told IBTimes UK: " While Apple met most expectations it didn't have a great Q4 as iPhones, Macs and what appears to be Watch sales in China and the US particularly were all down from last year. There also may be availability issues on the iPhone 7 and the Watch 2 even as Apple guides a higher than expected Q1 for 2017. However, given Macs should be updated this week, we expect their sales to increase substantially over Q4 which will be accounted for in the Q1 result."