Apple reported Thursday fiscal second-quarter results that topped Wall Street estimates amid better-than-feared performance in its key China market and the tech giant unveiled its largest ever stock buyback.
Apple Inc (NASDAQ:AAPL) rose more than 7% in afterhours trading following the report.
For the quarter ended Mar 30, the company announced earnings of USD1.53 per share on revenue of USD90.8 billion. Analysts polled by Investing.com had anticipated EPS of USD1.5 on revenue of USD90.32B.
In greater China, a key market for the iPhone maker, sales fell 8% to USD16.37B, amid rising competition from smartphone rivals in the country. But that was less bad than feared as analysts had forecast revenue in China falling to USD15.25B.
iPhone revenue, which makes up about half of total revenue, fell to USD45.96B from USD51.33B a year earlier, but that just missed estimates of USD46B.
The weaker than expected iPhone revenue, and pressured margins “show that the revenue growth plateau is more than a regional problem and should keep on deepening without new, more innovative products,” Investing.com senior analyst Thomas Monteiro said Thursday.
Revenue from Apple’s service business, which includes Apple Music, Apple TV+ and iCloud, grew to USD23.87B from USD20.91B a year earlier, above estimates of USD23.27B.
Wearables and accessories raked in $7.91B in revenue, down from USD8.76B, while iPad revenue fell 16.7%, while Mac sales were up 3.9% in Q2 from a year earlier.
“We expect AAPL trade higher on the better-than-expected F3Q24 revenue guidance (+LSD% yoy), a surprise upgrade in buyback authorization to $110 bn suggesting a strong FCF outlook for the next year, and in-line F2Q24A results that included record Services revenue and better-than-expected China performance,” Goldman Sachs analysts said.
The company also announced a USD110B stock buyback program and hiked its dividend by 4% to USD0.25 a share.
The largest ever buyback could buy investor support and trust, Monteiro adds, that will be needed in the mid-term for the company to launch new products and solutions that “will shift its behemoth operation back into the sustained growth path.”
The shift for the company to resume its growth path would likely involve “higher and better hardware-to-product AI integration,” Monteiro said. “This is something that has already begun to show some success on a smaller scale on the Mac operation, which did surprisingly well despite the overall woes.”
Looking ahead, Apple CEO Tim Cook told CNBC’s Steve Kovach that sales would “grow low single digits” in the June quarter. – Investing.com
