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Gone are the days when Apple (AAPL - Analyst Report) would report new quarterly earnings and smash expectations like so many pumpkins on doorstoops during Halloween. The iBehemoth brought in $8.26 per share on sales of $37.5 billion in the quarter, both of which are decent-sized beats from the Zacks Consensus Estimates. Yet AAPL stock was sold off aggressively in the first minutes of after-hours trading today. So what gives?

One word: margins. While a 37% profit margin is certainly nothing to sneeze at -- especially for such a huge company designing, creating and mass-producing so many high-tech gadgets -- Apple investors have seen margins sliding in the smartphone space for the past few quarters, and that's not great for a company that's made its name on mind-blowing innovation and products it takes its competition literally years to catch up to.

And Apple's guidance for its all-important holiday season quarter (Q1 fiscal 2014)? Expected gross margins of 36.5-37.5% marks the potential to see this number sink even lower. And with main competition for all intents and purposes already "caught up" to Apple -- Samsung, Google , heck even Microsoft (MSFT) will have the ability to make snazzy smartphones, too -- it's going to be tougher and tougher for the Cupertino giant to keep its big lead in the market, especially without new innovations coming down the pike to re-invigorate the hopes of investors.

Make no mistake, either: the iPhone is the key to Apple's success these days. Sales of the iPhone make up over 50% of the company's business, and when Steve Jobs held the first prototype in his hand those many years ago now, anyone could see it was unquestionably a superior product compared to what else was on the market at the time. But these days people see the iPhone 5s launch and they start weighing their options -- sometimes to await a new upgrade or opt for a smartphone elsewhere. And that's no way to exude dominance in the industry, especially the kind Apple (and everyone else) had grown used to over time.

Thus, traders in the late session have kept AAPL shares in the red, though some of the fervor seems to have burned away by now. Apple shares are down around 3% in the after-market, but they were encroaching on -4% early in the session. Very curious from a casual observer's perspective that such a big company with such well-known brands would post a 3.7% positive surprise and bring in more than $200 million in sales than analysts expected over the past three months would wind up selling off on this news.

After all, the U.S. Olympic Team once put the "Dream Team" on the basketball court. Nobody could even hope to compete with them. But it was only a matter of time before the U.S. finally wound up losing that Gold medal.

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