Apple Inc reported a rare miss in quarterly results after sales of its flagship iPhone fell well short of Wall Street expectations, hammering its shares.

Shares of the world's most valuable technology corporation dived more than 5 percent to below $400 after it said it sold 17.07 million iPhones -- well short of the roughly 20 million expected by analysts.

Apple's CFO said iPhone sales came in ahead of internal expectations but were hurt in September by customers waiting for a new version.

The September quarterly report was Apple's first under new Chief Executive Tim Cook, who took over in August after co-founder Steve Jobs resigned. The company lost its leading visionary and co-founder when he died October 5.

Cook takes over during a critical juncture for the company, which is battling a fast-rising Google Inc in the mobile arena while fending off consumer electronics giants such as Samsung and Inc.

Expectations for this company were red-hot, that is why we downgraded it, said BGC Partners analyst Colin Gillis, who lowered his rating on the shares days before. The reality is their business is not an annuity. They have to sell their quarter's worth of revenue every 90 days.

They had a big upgrade cycle with the iPhone, the numbers came in weak. They need to set records every time they report to keep up the momentum.

Apple said its revenue rose to $28.27 billion but that was also lower than the average analyst estimate of $29.69 billion, according to Thomson Reuters I/B/E/S.

The company reported a net profit of $6.62 billion, or $7.05 a share. That fell shy of expectations for earnings of $7.39 per share.

A large spike in sales of Mac computers during the September quarter failed to lift earnings. Apple sold 4.89 million Macs, up 27 percent from a year ago. And it moved 11.12 million iPads.

Gross margin came to 40.3 percent -- a tad higher than Wall Street's forecast of 39.74 percent. International sales accounted for 63 percent of the quarter's revenue.

Some analysts had feared the lack of a new iPhone in more than 15 months would hurt the September quarter, while arguing the holiday quarter would prove strong after the introduction of the fifth version of its smartphone, the iPhone 4S.

We expected iPhone sales to decline in the September quarter from the June quarter as a result of the announcements we made at WWDC in June, where we said we would launch iOS 5 and iCloud in fall, said Peter Oppenheimer, Chief Financial Officer, in an interview with Reuters.

That basically created the rumor of the day across the September quarter, especially at the end.

The company moved 4 million iPhone 4S units -- more than double its predecessor -- in its first three days, despite lukewarm reviews.

Apple, which generally provides an ultra-conservative forecast, said it expected December quarter earnings of $9.30 a share on revenue of about $37 billion.

(Reporting by Poornima Gupta and Edwin Chan; Editing by Gary Hill)