San Francisco,
\nApple Inc on Tuesday reported resilient iPhone sales in the face of waning global demand and promised $100 billion in additional stock buybacks, reassuring investors that its decade-old smartphone invention had life in it yet.<\/p>\n
Apple\u2019s quarterly results topped Wall Street forecasts, which dropped ahead of the report on growing concern over the iPhone. The Cupertino, California-based company also was more optimistic about the current quarter than most financial analysts, driving shares up 3.6 per cent to $175.25 after hours.<\/p>\n
Suppliers around the globe had warned of smartphone weakness, playing into fears that the company known for popularizing personal computers, tablets and smartphones had become too reliant on the iPhone.<\/p>\n
Sales of 52.2 million iPhones against a Wall Street target of 52.3 million was a comfort and up from 50.7 million last year, according to data from Thomson Reuters I\/B\/E\/S.<\/p>\n
Apple bought $23.5 billion of stock in the March quarter, and said it planned to hike its dividend 16 percent, compared with a 10.5 percent increase last year. Analysts believe the heavy emphasis on buybacks will bolster share prices, but some investors wished Apple had found different uses for the cash.<\/p>\n
\u201cI\u2019d hoped for more on the dividend side or maybe a strategic investment,\u201d said Hal Eddins, chief economist for Apple shareholder Capital Investment Counsel. \u201cI assume Apple can\u2019t find a strategic investment at the current prices that will move the needle for them. The $100 billion buyback is good for right now but it\u2019s not exactly looking to the future.\u201d The cash Apple earmarked for stock buybacks is about twice the $50 billion market capitalization of electric car maker Tesla Inc.<\/p>\n
Apple posted revenue for its March quarter of $61.1 billion, up from $52.9 billion last year. Wall Street expected $60.8 billion, according to Thomson Reuters I\/B\/E\/S.<\/p>\n
Average selling prices for iPhones were $728, compared with Wall Street expectations of $742. The figure is up more than 10 percent from $655 a year ago, suggesting Apple\u2019s iPhone X, which starts at $999, has helped boost prices.<\/p>\n
Analysts had feared the high price was muting demand for the iPhone X, but Apple Chief Executive Tim Cook said it was the most popular iPhone model every week in the March quarter.<\/p>\n
\u201cThis is the first cycle that we\u2019ve ever had where the top of the line iPhone model has also been the most popular,\u201d Cook said during the company\u2019s earnings call.<\/p>\n
\u201cIt\u2019s one of those things like when a team wins the Super Bowl, maybe you want them to win by a few more points. But it\u2019s a Super Bowl winner and that\u2019s how we feel about it.\u201d The iPhone X has shaped up to be \u201ca good, not a great product. There was a time prior to its introduction that investors expected it to be a great product,\u201d said Thomas Forte, an analyst with D.A. Davidson Companies.<\/p>\n
\u201cNow that we know it is a good product, as investors have lowered expectations, that is enough, in my view, for shares to go higher from current levels.\u201d<\/p>\n
Positive iPhone news boosted shares of chip suppliers.<\/p>\n
Skyworks Solutions Inc rose 2.9 percent, Broadcom Inc was up 2 percent, while Cirrus Logic gained 4.3 percent.<\/p>\n
Apple also predicted revenue of $51.5 billion to $53.5 billion in the June quarter, ahead of the $51.6 billion Wall Street expected as of Monday evening, and the share repurchases in the March quarter drove Apple\u2019s cash net of debt down slightly to $145 billion.<\/p>\n
\u201cWe are returning the cash to investors as we have promised,\u201d Chief Financial Officer Luca Maestri told Reuters in an interview.<\/p>\n
Profits were $2.73 per share versus expectations of $2.68 per share, as of Monday, and up from $2.10 a year ago.<\/p>\n
Apple\u2019s services business, which includes Apple Music, the App Store and iCloud, posted $9.1 billion in revenue compared with expectations of $8.3 billion. Heading into earnings, investors were hopeful that growth in that segment could help offset the cooling global smartphone market.<\/p>\n
Julie Ask, an analyst with Forrester, said Apple\u2019s services segment results were positive but warned that Apple needed to continue to boost subscriptions on its platforms, which reached 270 million users in the March quarter and includes people who subscribe to third-party apps on the iPhone as well as Apple\u2019s own services like iCloud.<\/p>\n
\u201cApps are carrying most (services revenue) right now, but Apple needs to get to a place where it\u2019s mostly subscriptions and monthly fees and not just one-off downloads,\u201d Ask said.<\/p>\n
Apple traditionally updates its share buyback and dividend program each spring, and the $100 billion it added this year compares with an increase of $50 billion last year.<\/p>\n
In February, Apple said it planned to draw down its excess cash, although Cook had downplayed the possibility of a special dividend.<\/p>\n
But investors have had concerns around Apple because of brewing trade tensions with China.<\/p>\n
Greater China sales rose 21 percent from a year earlier, Apple\u2019s best growth rate there in 10 quarters, to $13.0 billion.<\/p>\n
While there has not yet been a tariff on devices such as Apple\u2019s iPhone, Cook traveled last week to Washington to meet with US President Donald Trump at the White House to discuss trade matters.<\/p>\n
\u201cChina only wins if the U.S. wins and the U.S. only wins if China wins,\u201d Cook said on the call, when asked about a possible trade war. \u201cI\u2019m a big believer that the two countries together can both win and grow the pie, not just allocate it differently,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"
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