Apple misses mark on second quarter earnings, but CEO Cook optimistic about 'what's in pipeline'

CUPERTINO, Calif., April 26 (UPI) -- Apple Inc., was way off target Tuesday when it announced lackluster earnings and revenue for the second quarter of 2016 -- a report that shows the company's iPhone sales are down more than 15 percent this year.

The Cupertino, Calif., company revealed its quarterly report Tuesday, which showed $50 billion in revenue and an increase of $1.90 per diluted share in net income -- well short of the respective $52 billion and $2 analysts expected.

"These results compare to revenue of $58 billion and net income of $13.6 billion, or $2.33 per diluted share, in the year-ago quarter," the company wrote in a news release.

The decline had only a slight impact on shares of Apple (NYSE: AAPL) during regular trading Tuesday, a modest 0.7 percent drop, but entered free fall in after hours trading -- losing 8 percent to end at $95.69.

Apple sold 51 million iPhones during the quarter, which met analysts' forecasts, but that represented a 16 percent decline over the same quarter a year ago.

"It's not just a matter of missing forecasts. Profits fell 18 percent from the same period a year ago," USA Today analyst Matt Krantz said. "Apple missed by a mile -- fanning concerns that the world has finally reached a saturation point with smartphones."

Apple executives, including CEO Tim Cook, said the lackluster figures are partially to blame on "macroeconomic headwinds" -- but said his company performed "extremely well" despite that climate.

"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," he said.

"We generated strong operating cash flow of $11.6 billion and returned $10 billion to shareholders through our capital return program during the March quarter," Apple CFO Luca Maestri said. "Thanks to the strength of our business results, we are happy to be announcing today a further increase of the program to $250 billion."

Cook added that he believes tough economic challenges in China took somewhat of a toll on Apple's second quarter performance, but noted his belief that it hasn't been as big a factor as many analysts think.

"I think China is not weak as has been talked about. I see it as maybe not giving us the wind at our backs as before but it's a lot more stable than the common view of it."

Among other places, Cook said Apple will continue to focus on emerging markets like India, where he said Apple sales are up 56 percent.

Cook also acknowledged to USA Today the possibility of smartphone market saturation, but said he believes that's only a temporary situation.

"We're optimistic this too shall pass," he said. "We're very excited about what's in our pipeline."