Updated to include information on Apple Watch.

NEW YORK (TheStreet) -- Apple (AAPL - Get Report) shares surged after the world's largest company said it shipped more than 74 million iPhones, led by strength in China.

For the quarter ending Dec. 27, Apple earned $3.06 a share on $74.6 billion in revenue, up 30% year-over-year. In the quarter, Apple shipped 74.5 million iPhones, 5.5 million Macs and 21.4 million iPads. Gross margins, a closely watched level for Apple, came in at 39.9%, as international sales now account for 65% of Apple revenue.

For Apple's fiscal 2015 first quarter, Wall Street estimated earnings per share of $2.59 on revenue of $67.7 billion, according to analysts polled by Thomson Reuters.

"We'd like to thank our customers for an incredible quarter, which saw demand for Apple products soar to an all-time high," said Tim Cook, Apple's CEO, in the press release. "Our revenue grew 30% over last year to $74.6 billion, and the execution by our teams to achieve these results was simply phenomenal."

For the fiscal second quarter, Apple said it expects revenue to be between $52 billion and $55 billion, with gross margin between 38.5% and 39.5%, operating expenses between $5.4 billion and $5.5 billion and other income of $350 million.

On the earnings call, Cook noted that the Apple Watch would start shipping in April, following its announcement in Sept. 2014.

Apple shares closed lower, falling 3.2% to close at $109.51. Shares were moving sharply higher in after-hours trading, gaining, 5.2% to $114.83.

-- Written by Chris Ciaccia in New York

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