Apple reported a 13% drop in its second quarter revenue on Tuesday as sales of iPhones slipped.
The technology giant reported quarterly sales of $50.56bn (£34.39bn) down from $58bn last year – the first fall in sales for the company since 2003.
Apple sold 51.2 million iPhones during the quarter, down from 61.2 million in the same quarter of 2015.
China was a particular weak spot – sales there fell 26%. Results were also hit by the impact of a stronger dollar.
Tim Cook Apple’s chief executive said the company performed well “in the face of strong macroeconomic headwinds”.
Apple’s quarterly profit slipped to $10.5bn from $13.5bn.
Apple also announced it would return $50bn to shareholders through an increase in share buybacks and a 10% increase in quarterly dividends.
Back in January the company warned that it was experiencing its slowest-ever increase in orders for iPhones and that this would cut into second quarter earnings.
Declining growth in smartphone sales has impacted the entire industry and companies are struggling to find the next area of innovation.
“The industry is in a lull between the mobile boom and what comes next in automotive, the connected home, health and industrial applications of the internet of things,” said Geoff Blaber, from CCS Insight.
One bright spot for Apple was its services unit, which includes App Store downloads, Apple Pay and Apple Music. The division experienced a 20% growth compared with the same quarter in 2015.
Apple also said it is looking to grow through acquisitions, and on a conference call with investors Mr Cook said that over the previous four quarters it had bought 15 companies