LOS ANGELES -- Apple Inc. announced Tuesday a 13 percent drop in first-quarter sales compared to the same period last year -- marking the tech giant's first quarterly revenue decline in 13 years.
IPhone sales account for two-thirds of Apple's revenue, but the smartphone has struggled to maintain the vigorous sales pace that drove the company to record revenue and profits in recent years.
Gaining new customers in the United States and Western Europe is proving difficult. And at $640 on average, iPhones are too expensive for new smartphone purchasers in emerging markets.
The trends left Apple selling 51.2 million iPhones from January through March, or about 10 million fewer than the same three months in 2015. Analysts on average had estimated 50 million iPhone purchases, according to data compiled by FactSet.
Including its other products and services, Apple took in $50.6 billion in revenue and generated $10.5 billion in profit during the first quarter, which is the second quarter of its fiscal year. The figures translate to $1.91 in earnings per share, below analyst estimates of about $2.
Shares of Apple plunged more than 6 percent in after-hours trading, falling below $100 for the first time since February to just under $98. They closed regular trading at $104.35 on Tuesday.
The Cupertino, Calif., company reported sales of 10.2 million iPads, suggesting the new iPad Pro in 9.7-inch and 12.9-inch options is helping slow declining sales of the tablet.
In a news release, the company didn't say anything about Apple Watch. Slashing prices of the watch by about $50 last month led to an increase in purchases, according to outside estimates.
Apple hasn't shared detailed sales figures for the watch since it arrived at stores a year ago. But the first anniversary, which fell on Sunday, might be enough for the company to open up in a conference call later Tuesday. Analysts are unsure about whether the watch will ever sell well enough to significantly affect Apple's revenue.
Apple also said Tuesday that it would increase quarterly dividends by 10 percent and expand its share buyback plans by $35 billion.
The company had expected January through March to be its worst sales period of the year. But analysts now say that this month and the following two could add up to the year's worst quarter as shifts in buying patterns sting Apple and its rivals. On Tuesday, Apple forecast sales of between $41 billion and $43 billion for the current quarter, below analyst expectations of $47 billion.
Smartphone shipments in the first quarter fell 1.3 percent to 292 million devices, according to market researcher TrendForce.
"Leading brands such as Samsung and Apple no longer have the same growth momentum as before," the firm said, noting the decline would be worse if Chinese companies weren't getting traction selling affordable smartphones.
Chinese brands sold 125 million devices in the first quarter, beating the combined total for Samsung and Apple for the first time, TrendForce said.
The competition in China comes as consumers in places such as the United States are holding onto smartphones longer.
About 40 percent of smartphones in the United States are iPhones, but that figure hasn't significantly changed since 2012, according to Deutsche Bank analyst Sherri Scribner. Apple's market share in Europe has been around 22 percent for the last seven years.
Some experts maintain hope for blockbuster sales of a new iPhone model this fall. But there is increasing concern that, like last year's iPhone 6s, the newest iPhone won't be radically different than predecessors, which could keep many prospective buyers on the sidelines. The skeptics have pushed their predictions for a sales resurgence to 2017.
"I view this year as a transition year," said Ryan Reith, mobility research director at research firm IDC. "By no means does it mean doomsday for the company."
The concern about Apple isn't limited to iPhones. Basically 91 percent of Apple's revenue generators _ everything beside the cut Apple takes when selling apps, insurance and other services _ is in slow-growth mode or in decline, Scribner said.
She pegs Apple's revenue from app sales, music, iCloud and other services at about $17 annually per user compared to about $31 across the industry. Services revenue grew 20 percent for Apple in this year's first quarter compared with last year's.
It's "a good starting point," Scribner said in a report last week, but "it will be difficult for Apple to grow this segment enough to drive top-line growth for the company."