In an indication that customers may have held back purchases in anticipation of the 10th-anniversary edition of the company's most important product later this year, Apple Inc reported a surprise fall in iPhone sales for its second quarter on Tuesday.
Apple boosted its capital return program by $50 billion, increased its share repurchase authorization by $35 billion and raised its quarterly dividend by 10.5 percent, under pressure from shareholders to hand over more of its $250 billion-plus hoard of cash and investments.
In after-hours trading, the shares of the world's most valuable listed company were down 1.9 percent at $144.65 as investors were unmoved.
Down from 51.19 million a year earlier, Apple sold 50.76 million iPhones in its fiscal second quarter ended April 1.
According to financial data and analytics firm FactSet, analysts on average had estimated iPhone sales of 52.27 million.
Given the peculiarities of how phone sales are calculated, the decline was not as bad as it looked, argued Apple Chief Financial Officer Luca Maestri.
Instead of "sell-through" figures, which measure how many phones are actually sold to consumers, the California based company reports what are called "sell-in" figures for the iPhone, a measure of how many units it sells to retailers.
The company sold about 52 million phones to customers on a sell-through basis as it reduced the volume of inventory going through its retail channel by about 1.2 million units in the quarter, Maestri said.
However, helped by a higher average selling price, iPhone revenues rose 1.2 percent in the quarter despite the dip in unit sales.
With investors hoping that the launch would help bolster sales, expectations are building ahead of Apple's 10th-anniversary iPhone range this fall.
Apple typically launches its new iPhones in September.
Before demand tapers over the next few quarters as customers hold back ahead of the next launch, a big jump in sales usually follows in the holiday quarter.
Sport features such as wireless charging, 3-D facial recognition and a curved display might be sported by Apple's 10th-anniversary iPhone range.
"There is a general softening in phone demand to contend with as well as expectations of a big upgrade, all of which softens the blow of this quarter's miss," said James McQuivey, a Forrester Research analyst. "If we see Apple downplaying expectations before the next upgrade cycle, it might mean that the company isn't confident it will beat those expectations."
According to Thomson Reuters I/B/E/S, while analysts on average were expecting $45.60 billion, the company forecast total revenue of between $43.5 billion and $45.5 billion for the current quarter. According to FactSet, 42.31 million iPhones in the current quarter is expected ot be sold by the company, according to analysts on the average.
Compared with $10.52 billion, or $1.90 per share, a year earlier, the company's net income rose to $11.03 billion, or $2.10 per share for the second quarter. According to Thomson Reuters I/B/E/S, analysts on average had expected $2.02 per share.
Compared with analysts' average estimate of $53.02 billion, revenue rose 4.6 percent to $52.90 billion in the quarter.
Revenue was boosted to $7.04 billion by its services business - which includes the App Store, Apple Music, Apple Pay and iCloud, which noted a 17.5 percent jump.
"We are particularly encouraged by the fact that service revenue is nowhere near as cyclical as product revenue," Neil Saunders, Managing Director of GlobalData Retail, wrote in a note to clients.
(Source:www.reuters.com)
Apple boosted its capital return program by $50 billion, increased its share repurchase authorization by $35 billion and raised its quarterly dividend by 10.5 percent, under pressure from shareholders to hand over more of its $250 billion-plus hoard of cash and investments.
In after-hours trading, the shares of the world's most valuable listed company were down 1.9 percent at $144.65 as investors were unmoved.
Down from 51.19 million a year earlier, Apple sold 50.76 million iPhones in its fiscal second quarter ended April 1.
According to financial data and analytics firm FactSet, analysts on average had estimated iPhone sales of 52.27 million.
Given the peculiarities of how phone sales are calculated, the decline was not as bad as it looked, argued Apple Chief Financial Officer Luca Maestri.
Instead of "sell-through" figures, which measure how many phones are actually sold to consumers, the California based company reports what are called "sell-in" figures for the iPhone, a measure of how many units it sells to retailers.
The company sold about 52 million phones to customers on a sell-through basis as it reduced the volume of inventory going through its retail channel by about 1.2 million units in the quarter, Maestri said.
However, helped by a higher average selling price, iPhone revenues rose 1.2 percent in the quarter despite the dip in unit sales.
With investors hoping that the launch would help bolster sales, expectations are building ahead of Apple's 10th-anniversary iPhone range this fall.
Apple typically launches its new iPhones in September.
Before demand tapers over the next few quarters as customers hold back ahead of the next launch, a big jump in sales usually follows in the holiday quarter.
Sport features such as wireless charging, 3-D facial recognition and a curved display might be sported by Apple's 10th-anniversary iPhone range.
"There is a general softening in phone demand to contend with as well as expectations of a big upgrade, all of which softens the blow of this quarter's miss," said James McQuivey, a Forrester Research analyst. "If we see Apple downplaying expectations before the next upgrade cycle, it might mean that the company isn't confident it will beat those expectations."
According to Thomson Reuters I/B/E/S, while analysts on average were expecting $45.60 billion, the company forecast total revenue of between $43.5 billion and $45.5 billion for the current quarter. According to FactSet, 42.31 million iPhones in the current quarter is expected ot be sold by the company, according to analysts on the average.
Compared with $10.52 billion, or $1.90 per share, a year earlier, the company's net income rose to $11.03 billion, or $2.10 per share for the second quarter. According to Thomson Reuters I/B/E/S, analysts on average had expected $2.02 per share.
Compared with analysts' average estimate of $53.02 billion, revenue rose 4.6 percent to $52.90 billion in the quarter.
Revenue was boosted to $7.04 billion by its services business - which includes the App Store, Apple Music, Apple Pay and iCloud, which noted a 17.5 percent jump.
"We are particularly encouraged by the fact that service revenue is nowhere near as cyclical as product revenue," Neil Saunders, Managing Director of GlobalData Retail, wrote in a note to clients.
(Source:www.reuters.com)