Apple shares surged and then turned lower in after-hours trading after the company beat earnings forecasts and doubled the amount of cash it will return to shareholders. However, its outlook fell short of expectations.
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Apple reported fiscal second-quarter earnings of $10.09 a share on revenue of $43.60 billion versus $12.30 a share on $39.19 billion a year earlier. That was the first time Apple's profit declined in a decade.
Analysts had expected the tech giant to report earnings excluding items of $10.00 per share on revenue of $42.33 billion, according to a consensus estimate from Thomson Reuters.
Apple sold 37.4 million iPhones in the quarter, compared with 35.1 million in the year-ago quarter. The tech company sold 19.5 million iPads versus 11.9 million a year earlier.
But the company's gross margin shrank to 37.5 percent from 47.4 percent a year earlier.
For the third quarter, Apple forecast revenue of between $33.5 billion and $35.5 billion, well below the $38.25 billion Wall Street was forecasting. It also expects its gross margin to continue to slide to between 36 percent and 37 percent.
Apple said for the June quarter the lower gross margin will come from lower revenue and a different product mix.