Apple's innovation crown under threat as profits slide

Apple's iPad Credit: Press Association

Apple is coming under increasing pressure to retain its reputation as one of the world's leading innovators after reporting its first fall in profits in a decade.

Second quarter profits for the technology company were down £1.38 billion from the same time last year. Analysts say the announcement of £6.27 billion profit could have been worse, but the next 12 months will prove crucial.

Tim Cook, Apple's chief executive officer, remained defiant, saying:

Apple's iPod Credit: Press Association

Apple is however finally opening the doors to its bank vault, saying it will distribute £65 billion in cash to its shareholders over two years.

Investors have been clamouring for Apple to give them access to its cash hoard, which ended March at an unprecedented £95 billion. Apple's tight grip on its cash has been blamed for the steep decline in its stock price over the winter.

Crowds in Munich, Germany waiting to buy the iPhone5 Credit: Press Association

The company has faced continued pressure from Wall Street over the use of its cash, which earns less than 1% in interest. Investors reason that if the company has no good use for the money, it should be handed over to shareholders.