Apple Inc. AAPL posted lower-than-expected results for both earnings and revenues in the second quarter of fiscal 2016. Additionally, the tech bellwether provided a soft outlook for the third quarter considering continued macroeconomic headwinds and demand woes. This resulted in a decline of nearly 8% in Apple shares in the after–hours trading session yesterday.Earnings of $1.90 per share not only declined 18.5% year over year, but also fell short of the Zacks Consensus Estimate of $1.97. Revenues of $50.6 billion were also below the Zacks Consensus Estimate of $51.5 billion and down approximately 12.8% from the year-ago quarter. The business was impacted by soft demand for iPhones, the primary revenue generator for Apple. In addition, weakness in high-growth regions like China also acted as a speed-breaker for the company. Another thing to note is that the company faced difficult year-over-year comparison. Results in the year-ago quarter had benefitted from pent-up demand that was met by iPhone 6.Product Details Apple iPhone unit sales came in at about 51.2 million, down 16% year over year. Revenues from iPhone also fell 18% from the year-ago quarter to $32.9 billion (65% of the total revenue).Nearly 10.3 million units of iPad were sold in the quarter, generating revenues of $4.4 billion. However, unit sales and revenues each declined 19% on a year-over-year basis.Though Apple Mac has been gaining market share despite the continued slump in the PC market, both its unit sales and revenues came in lower than the last year quarter. While unit sales declined 12% year over year to over 4 million, revenues dropped to $5.1 billion, down 9% from the prior-year quarter.Services, which include revenues from the Internet Services, AppleCare, Apple Pay, licensing and other services, surged 20% year over year to nearly $6 billion.Other products, which include revenues from Apple TV, Apple Watch, Beats products, iPod and Apple-branded and third-party accessories, rose 30% year over year to over $2.2 billion. However, the segment revenues declined nearly 50% sequentially.Geographical PerformanceDemand for Apple’s products remained soft across most of the geographical regions. As much as 67% of sales were from the International markets.Americas (the biggest market for Apple) generated revenues of $19.1 billion in the quarter, down 10% year over year.Europe generated nearly $11.5 billion in revenues, down 5% on a year-over-year basis.Owing to macroeconomic weakness, Apple revenues declined around 26% year over year in the Greater China region to $12.5 billion.Japan was the only market for Apple this quarter that registered year-over-year growth in sales. Revenues of $4.3 billion rose 24% over the prior-year quarter.In the rest of Asia Pacific, the company reported revenues of $3.2 billion, down 25% year over year. MarginsGross margin was 39.4%, a decline of 140 basis points (bps) from the year-ago quarter. Lower average selling price of Apple devices (especially iPhone) was one of the key reasons for the reduced margins.Operating expenses increased 10.3% year over year to $5.9 billion due to higher research & development expenses. As a result, operating margin plunged 850 bps from the year-ago quarter to 27.7%.Balance Sheet and Cash FlowApple’s cash and cash equivalents (and short-term marketable securities) were $55.3 billion at the end of the quarter, compared with $41.6 billion at the end of fiscal 2015. Long-term debt was $69.4 billion compared with $53.5 billion at the end of fiscal 2015.Other Financial UpdatesFor the quarter, cash generated from operating activities was $11.6 billion. Apple returned about $10 billion in capital returns this quarter though dividends and share repurchases.Apple also expanded its capital return program by $50 billion. This brings the total to $250 billion valid through Mar 2018.The company also increased its quarterly dividend by 10% to 57 cents per share. The increased dividend will be payable on May 12 to shareholders of record as on May 9.GuidanceFor the third quarter of fiscal 2016, Apple forecasts revenues in the range of $41 billion to $43 billion. The Zacks Consensus Estimate for the same is pegged higher at $45.6 billion.Gross margin is expected within 37.5% to 38%, while operating expenses are projected within $6 billion to $6.1 billion. Other income/(expense) is likely to be $300 million, while tax rate is expected to be 25.5%.Our TakeThe company is likely to be impacted by near-term macroeconomic headwinds as is evident from the soft guidance for the ongoing quarter. This is the first time in years that Apple has seen a decline in iPhone shipments and even lower prices for its devices. A prime reason for this is stiff competition from the likes of Samsung SSNLF and Lenovo LNVGY, along with the sluggish demand for iPhone 6s. In addition, the company will still have to find a way around the market saturation in the U.S. and some other important regions in order to keep itself on the growth trajectory.The company can get some respite after it launches iPhone 7 in the back half of this year. Meanwhile, Apple is aiming to tap a greater share of the market with its budget offering iPhone SE. The company seems especially optimistic about emerging nations like India where the scope for growth is high.Apple’s services business is also expected to remain strong as it is mostly dependent on the already installed Apple devices and the company does have a loyal customer base. Also, in the long run, Apple is expected to benefit from its robust cash position, strength in technology and the ecosystem (Apple Watch and Apple Pay) that it has built. Further, its enterprise collaborations with the likes of IBM Corp. IBM are expected to be important growth drivers.Currently, Apple has a Zacks Rank #3 (Hold).Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report INTL BUS MACH (IBM): Free Stock Analysis Report LENOVO GRP LTD (LNVGY): Free Stock Analysis Report APPLE INC (AAPL): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research