Apple reports shrinking profits with 37.5M iPhones, 19.5M iPads sold

Apple’s (s aapl) profits took a dip for the first time in a very long time on Tuesday when it reported second fiscal quarter earnings results of $43.9 billion in revenue, profits of $9.5 billion and earnings per share of $10.09. Revenue was up slightly from the $39.2 billion earned a year ago, but profits were down from the $11.6 billion and earnings of $12.30 per share in its 2012 second quarter. The results did ever-so-slightly beat Wall Street’s expectations: on average, Wall Street analysts were looking for earnings per share of $10.07 and revenue of $42.59 billion.

In terms of device sales, the numbers are:

  • 37.4 million iPhones, up from the 35.1 million sold a year ago.
  • 19.5 million iPads, up from 11.8 million a year go.
  • 4 million Macs, the exact same number as the same quarter a year ago.
  • 5.6 million iPods, down from 7.7 million a year ago.

Another big number that Apple watchers are focused on is the company’s gross margins. Last quarter, Apple forecast its gross margin would fall somewhere between 37.5 percent and 38.5 percent. In actuality it was 37.5 percent, compared to 47.4 percent in the year-ago quarter.

In a conference call with analysts and investors Tuesday afternoon, CEO Tim Cook acknowledged that the company’s growth rate had slowed down. He said  its weekly growth during the quarter had dropped to 19 percent. In addition to that, he noted that gross margins were closer to where they were two years ago.

Cook added, “The decline in Apple’s stock price over last couple quarters has been very frustrating to all of us. But Apple remains very strong and we will continue to do what we do best.”

Between January and March, Apple added $12.5 billion to its cash pile, bringing to total to $145 billion. The company also elected to return more of that to shareholders.

Apple said it will be increasing its dividend payment to 15 percent; each shareholder will now received a dividend of $3.05 per share each quarter, starting May 16. In addition, it plans to spend $60 billion on stock buybacks before the end of 2015. That’s a significant increase from the $10 billion buyback program announced a year ago. In total, Apple plans to spend $100 billion of its cash. The company plans to take on debt to do that: the cash return program will be funded by the company’s existing domestic cash, cash it brings in in the future and money it borrows, CFO Peter Oppenheimer said.

Looking ahead to next quarter, the company is projecting more revenue between $33.5 billion and $35.5 billion, which is on the lower end of its revenue reported for that same quarter in 2012, $35 billion. Cook added that Apple is “hard at work on amazing new hardware, software and services this fall and throughout 2014.”

The news sent Apple’s stock up 4.7 percent to $425.19 in after-hours trading.

This post was updated several times, the last at 2:29 p.m. PT.