Apple has strong quarter despite flat hardware sales

Steve Phelps
May 3, 2018

"The $100 billion buyback is good for right now but it's not exactly looking to the future". The company did not provide a timeline for the repurchases.

Apple said its dividend increase would be reflected in a cash dividend of 73 cents per share payable on May 17.

Apple also bought back $US23.5 billion worth of its own stock in the March quarter, a sign that it is bringing money earned offshore back to the United States. "We believe it stays this year but goes away at some point, potentially in the 2018 model", said analysts in 2017. This repurchase authorization permits the iPhone maker to purchase up to 11.9% of its stock through open market purchases. "And the infrastructure has come quite a ways since we began to put a lot of energy in there due to their leadership and so forth", he said. In short, the record-setting amount of share buybacks that the company executed in Q1 was just an appetizer.

The company, flush with a huge cash pile on strong earnings boosted by the USA tax cut plan of 2017, also announced a 16% boost to its quarterly dividend.

The company said it would complete the previous $210bn share buy-back programme during the current quarter. "But if you look at hundreds of examples, you find that stock buybacks do increase long-term value".

Apple is showering its investors with cash.

Apple's growth story is gradually shifting from hardware sales to its services business as the company builds out the iPhone platform with app sales, music streaming subscriptions, cloud storage and mobile payments. Revenue rose 16 per cent to US$61.1 billion.

Per Kuo the dual-SIM iPhone will however cost more and the price will range between $650 and $750.This year according to the analyst three new iPhones will be unveiled and this will include the lower-priced model as well as an upgraded iPhone X. The third smartphone from Apple will be the iPhone X Plus.

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Digital Content NewFronts continues through May 4 in New York City, an event created to connect content creators with big brands. It's already taken several steps this year, including cracking down on spambots and banning shady ads for cryptocurrencies .

"We are not giving an end date to the programme this time because the amount is very, very large", Apple chief financial officer Luca Maestri told analysts on a conference call.

The quarterly revenue of $61.1 billion was an increase of 16 per cent from the year-ago quarter and global sales accounted for 65 per cent of the quarter's revenue. The firm's target is based on 14.9 times its fiscal 2019 EPS target after better than expected earnings, stable iPhone unit shipments and growing revenue through services.

Still, the iPhone remains Apple's most critical product, making up almost 70 percent of its total revenue - which is why any hint that Apple smartphone sales are weakening prompts panic among investors.

"There's obviously huge opportunities there for us and we have extremely low share in that market overall and so we're putting a lot of energy there", Cook said on Tuesday's call with analysts. "Apple can support the stock as the investment thesis evolves from one of product cycle to services-led growth". But Apple's results suggest that Chinese consumers are willing to pay for the pricier iPhones.

He said: "We're thrilled to report our best March quarter ever, with strong revenue growth in iPhone, Services and Wearables".

Apple had also reported $13 billion in revenue from greater China during its second fiscal quarter - a 21 percent year-over-year spike.

IPhone sales rose 2.9% to 52.2 million units, in line with analyst estimates of 52.3 million.

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