Apple shares jump on upbeat forecast, record buyback
Apple Inc. shares jumped in early trading after the company posted stronger-than-expected sales last quarter and predicted a return to growth in the current period, sparking optimism that a slowdown is easing.
Though revenue fell 4.3 per cent to US$90.8 billion in the March quarter, that was better than the US$90.3 billion predicted by analysts. Profit also topped Wall Street projections in the period, and Apple announced the biggest stock buyback in United States history.
The results came as a relief to investors, who have been waiting for the iphone maker to pull out of a long slump. Apple has posted sales declines in five of the past six quarters, hurt by a sluggish smartphone market and headwinds in China. The company had warned analysts in February that revenue in the latest period would be down about 5 per cent from a year earlier.
In the current period, Apple expects sales to climb by a percentage in the low single digits. The company predicted that both its ipad and services business would grow by a rate in the double digits, but declined to give a forecast for the iphone — its flagship product.
Shares surged more than 6 per cent on Friday after the bell, on track to add about US$160 billion to its market value if the gains hold at the open in New York. Apple had been down 10 per cent to US$173.03 this year through the close on Thursday.
Earnings amounted to US$1.53 a share in the fiscal second quarter, which ended March 30. That exceeded the US$1.50 analysts had estimated. Apple increased its dividend 4 per cent to 25 cents a share, in line with expectations. And the board approved plans to buy back an additional US$110 billion of the company's stock.
A lack of innovative new devices has contributed to slow sales at Apple, but the company looks to begin rectifying that on May 7. That's when it plans to unveil new ipads — the first updates to its tablet line in a year and a half.
The company also is planning a long-awaited push into generative artificial intelligence. In June, chief executive Tim Cook is expected to lay out Apple's AI strategy at its annual Worldwide Developers Conference.
“We are making significant investments in the space,” chief financial officer Luca Maestri told Bloomberg Television's Emily Chang.
Cook said Thursday that Apple will stand out from its AI rivals by tightly integrating hardware and software, using in-house chips, and making privacy and security a priority.
Apple's slowdown in China has been of particular concern to investors in recent months. Consumers there are flocking to homegrown smartphone brands, and the government has banned the use of foreign technology in some offices.
Counterpoint Research estimated that sales of the iphone nosedived 19 per cent in China during the first three months of the year, the product's worst quarter since 2020. Worldwide, shipments of the device fell nearly 10 per cent in the quarter, according to IDC.
Against that backdrop, Apple's China results were more upbeat than expected. The company generated US$16.4 billion in revenue from greater China last quarter. Though that number was down from a year earlier, it handily beat the US$15.9 billion analysts had predicted.
Maestri said that the China concerns were overblown. “The reality is different from maybe what you read at times.”
Cook also pushed back on the idea that the iphone was suffering in the country, saying that revenue from the device actually grew in mainland China. The weakness stemmed from other parts of the business, he said.