Apple, the tech giant, surpassed modest expectations with its quarterly results and forecast on Thursday, unveiling a record share buyback program that sent its stock soaring by 6% in extended trade.
The company increased its cash dividend by 4% and authorized an additional program to buy back $110 billion of stock, marking the largest buyback in its history.
While quarterly revenue declined slightly, it fell less than analysts had predicted. CEO Tim Cook expressed optimism, stating that revenue growth is expected to return in the current quarter.
These results and forecasts suggest that Apple may be regaining its footing in the smartphone market, despite facing stiff competition and regulatory challenges.
The surge in Apple’s shares following its report boosted its stock market value by over $160 billion.
Apple reported fiscal second-quarter revenue of $90.8 billion, down 4% but beating the average analyst estimate of $90.01 billion, according to LSEG data.
For the current quarter ending in June, Cook told Reuters that Apple expects “to grow low-single digits” in overall revenue, slightly surpassing Wall Street’s expectation of 1.33% revenue growth to $82.89 billion, according to LSEG data.
Despite facing challenges such as weak iPhone demand and tough competition in China, Apple anticipates double-digit growth in services and iPad revenue for the current quarter. CFO Luca Maestri emphasized the company’s expectation of gross margins between 45.5% and 46.5% for the fiscal third quarter.
However, Apple faces various challenges across its business. Smartphone rivals like Samsung Electronics have introduced competing devices, and regulatory pressure is mounting. In Europe, Apple’s services business, particularly its App Store, faces scrutiny under new legislation. In the United States, the Department of Justice has accused Apple of monopolizing the smartphone market.
For the fiscal second quarter, iPhone sales declined 10.5% to $45.96 billion, slightly below analyst expectations of $46 billion. However, Cook noted growth in some markets, including China, despite stiff competition from Huawei Technology.
Apple’s revenue decline in China was less than anticipated, with Greater China sales reaching $16.37 billion for the fiscal second quarter, down 8.1% but surpassing analyst expectations, according to data from Visible Alpha.
Apple has remained relatively quiet about its plans for artificial intelligence (AI), an area where competitors like Microsoft and Alphabet’s Google are investing heavily. However, Cook hinted at upcoming developments, stating that the company has made significant investments in research and development, surpassing $100 billion over the past five years.
With its massive buyback program and better-than-expected earnings per share of $1.53, Apple aims to reassure investors amidst its declining stock price.
Sales in Apple’s services segment, which includes Apple Music and TV offerings, exceeded analyst expectations, reaching $23.87 billion. Mac sales also exceeded estimates, growing to $7.5 billion, driven by the popularity of the new MacBook Air.
However, sales in the iPad segment declined to $5.56 billion, below analyst expectations, and sales in the wearables segment, including Apple Watches and AirPods headphones, fell to $7.91 billion, missing estimates.
Overall, Apple’s quarterly results and forecast indicate resilience in the face of challenges, with optimism for future growth and innovation.
