Hit by a slower growth in its flagship iPhone, iPad and Mac sales globally, Apple announced revenue drop for the first time since 2003 as the tech giant released earning reports for the second quarter of the fiscal year 2016 that ended on March 26.
The company on Tuesday posted a quarterly revenue of $50.6 billion and quarterly net income of $10.5 billion ($1.90 per diluted share), compared to revenue of $58 billion and net income of $13.6 billion ($2.33 per diluted share) in the year-ago quarter, the company said in a statement.
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Gross margin was 39.4% compared to 40.8% in the year-ago quarter while international sales accounted for 67% of the quarter's revenue.
Despite the fall in revenue, Apple CEO Tim Cook said that his team executed extremely well in the face of strong macro-economic headwinds.
"We are very happy with the continued strong growth in revenue from Services, thanks to the incredible strength of the Apple ecosystem and our growing base of over one billion active devices," said Cook.
iPhone sales were down year-over-year for the first time since the product's launch in 2007.
"The company predicts that the year-over-year quarterly decline will continue next quarter," said a report in arstechnica.com.
"Apple expects it will make between $41 and $43 billion in revenue in the third quarter of fiscal 2016 with profit margins between 37.5 and 38%. This is well below the $49.6 billion in revenue that Apple made in Q3 of 2015," the report added.
The revenue was down in both Americas and China - Apple's two biggest territories. It declined around 10% in America and a huge 26% in China.
"The only territory with increased revenue for the quarter was Japan which was up about 24%; Europe fell by about 5% and Asia Pacific fell by 25%," the report added.
iPhone unit sales fell nearly 16% from 61.2 million units last year to 51.19 million this year.
Unit sales of the iPad declined almost 19%, from 12.60 million units to 10.25 million units.
"The iPad is still doing well when compared to other tablets but so far, none of Apple's efforts to improve sales have helped much," the report noted.
Unit sales of Mac fell 12% from 4.6 million units to 4.03 million units.
Keeping up with the new trends, products like Apple Watch, Apple TV, iPod, Beats headphones, accessories, and all other hardware which come under the "Other Products" category grew almost 30% from $1.69 billion to $2.19 billion.
Apple's Services category which has App and iTunes Store revenue to Apple Music and iCloud subscriptions grew 20% from $4.99 billion to $5.99 billion.
The company also announced that its board of directors has authorised an increase of $50 billion to the company's programme to return capital to shareholders.
Under the expanded programme, Apple plans to spend a cumulative total of $250 billion of cash by the end of March 2018.
"We generated strong operating cash flow of $11.6 billion and returned $10 billion to shareholders through our capital return programme during the March quarter," said Luca Maestri, Apple's CFO.
For the fiscal 2016 third quarter, Apple predicts revenue between $41 billion and $43 billion and gross margin between 37.5% and 38%.