Jon Swartz, and Marco della Cava

USA TODAY

SAN FRANCISCO — Apple's streak of iPhone-powered sales ended Tuesday when the company reported its first quarterly sales drop in more than a decade.

The news sent Apple's (AAPL) stock into a tailspin with shares plunging 6.5% to $97.55 in late trading Wednesday.

CEO Tim Cook signaled a saturated smartphone market would keep a lid on sales, although he suggested the company's new entry-level smartphone, the SE, promised to eventually goose sales among Android switchers and in emerging markets such as China and India.

"The SE is attracting two types of customers, who want the latest tech in a more compact package, and there are more than we thought in that category. And those who want an iPhone but couldn't afford the entry price (before)," Cook told analysts. "We're excited where this can take us."

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Sales dropped 13% to $50.6 billion Apple said late Tuesday. Profits were $10.5 billion, or $1.90 per diluted share, down 22% from $13.6 billion ($2.33 per diluted share) last year.

Analysts polled by S&P Global Market Intelligence expected sales of $52 billion and a profit of $2 per share.

The disappointing quarter can be summed up in two words: iPhone sales. Apple sold 51.2 million in the quarter, down 16% from the same period a year ago. It's the first year-over-year decline in Apple's franchise product since it debuted in 2007.

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"The company relies on iPhone sales not only for profit but also to extend their ecosystem," says Gartner analyst Brian Blau. "By any measure a $10 billion profit in a quarter would be great performance, but for Apple that high level is simply getting by."

Cook signaled that the company remains optimistic about its ability to capture new customers in emerging markets. In China, Apple has now opened 35 stores and expects to open five more in the coming months, Cook said on the analyst call. In India, the gradual adoption of high-speed LTE networks will "unleash the power and capability of the iPhone in the way a 2G network would not do."

Apple's first year-over-year quarterly sales decline since 2003 hammered its stock in after-hours trading Tuesday and fell further as CEO Tim Cook and other analysts talked. (Apple announced its results after markets closed.)

Apple did have some good news for investors. The company’s board approved a $50 billion increase to the capital-return program for shareholders. The world's most valuable public company plans to spend an aggregate of $250 billion in cash by March 2018.

Separately, the board said it was increasing its quarterly dividend 10%.

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The bumpy second-quarter results could be the start of a rocky ride for the iconic company, which faces tough year-over-year comparisons in the June and September quarters, according to S&P Global Market Intelligence.

Apple said Tuesday it forecasts $41 billion to $43 billion in fiscal third-quarter sales, far short of Wall Street estimates of $47.3 billion. Consumers have not snapped up the latest iPhones, the 6S and 6S Plus, because they aren't much different from previous models, analysts say.

Things should pick up in the December quarter, analysts predict, after the expected release of what could be an iPhone 7 in early September.

Follow USA TODAY San Francisco Bureau Chief @jswartz on Twitter and tech reporter Marco della Cava @marcodellacava.