Apple announces largest-ever $110 billion share buyback as iPhone sales drop 10%

Apple
shares
climbed
7%
in
extended
trading
on
Thursday
after
the
iPhone
maker

reported
fiscal
second-quarter
earnings
that
topped
estimates
and
announced
an
expanded
stock
buyback
program.

Apple
announced
that
its
board
had
authorized
$110
billion
in
share
repurchases,
a
22%
increase
over
last
year’s
$90
billion
authorization.
It’s
the
largest
buyback
in
history,
ahead
of
Apple’s
previous
repurchases,
according
to
data
from
Birinyi
Associates.

However,
overall
sales
fell
4%
and
iPhone
sales
fell
10%
year
over
year
during
the
quarter,
which
Apple
attributed
to
a
tough
comparison
versus
last
year.

Here’s
how
Apple
did
versus
LSEG
consensus
estimates
in
the
quarter
ended
March
30: 

• 
  EPS:
  $1.53
  vs.
  $1.50
  estimated 
• 
  Revenue:
  $90.75
  billion
  vs.
  $90.01
  billion
  estimated 
• 
  iPhone
  revenue:
  $45.96
  billion
  vs.
  $46.00
  billion
  estimated 
• 
  Mac
  revenue:
  $7.5
  billion
  vs.
  $6.86
  billion
  estimated 
• 
  iPad
  revenue:
  $5.6
  billion
  vs.
  $5.91billion
  estimated 
• 
  Other
  Products
  revenue:
  $7.9
  billion
  vs.
  $8.08
  billion
  estimated 
• 
  Services
  revenue:
  $23.9
  billion
  vs.
  $23.27
  billion
  estimated 
• 
  Gross
  margin:
  46.6%
  vs.
  46.6%
  estimated 

Apple
did
not
provide
formal
guidance,
but
Apple
CEO
Tim
Cook
told
CNBC’s
Steve
Kovach
that
overall
sales
would
grow
in
the “low
single
digits”
during
the
June
quarter.
 

Apple
posted
$81.8
billion
in
revenue
during
the
year-ago
June
quarter
and
LSEG
analysts
were
looking
for
a
forecast
of
$83.23
billion.
 

On
an
earnings
call
with
analysts,
Apple
finance
chief
Luca
Maestri
said
the
company
expected
the
current
quarter
will
deliver
double-digit
year-over-year
percentage
growth
in
iPad
sales.
What’s
more,
he
said
the
Services
division
is
forecast
to
continue
growing
at
about
the
current
high
rate
it’s
achieved
during
the
past
two
quarters.

Apple
reported
net
income
of
$23.64
billion,
or
$1.53
per
share,
down
2%
from
$24.16
billion,
or
$1.52
per
share,
in
the
year-earlier
period.

Cook
told
CNBC
that
sales
in
the
fiscal
second
quarter
suffered
from
a
difficult
comparison
to
the
year-earlier
period,
when
the
company
realized
$5
billion
in
delayed
iPhone
14
sales
from
Covid-based
supply
issues. 

“If
you
remove
that
$5
billion
from
last
year’s
results,
we
would
have
grown
this
quarter
on
a
year-over-year
basis,”
Cook
said. “And
so
that’s
how
we
look
at
it
internally
from
how
the
company
is
performing.” 

Apple
said
iPhone
sales
fell
nearly
10%
to
$45.96
billion,
suggesting
weak
demand
for
the
current
generation
of
smartphones,
which
were
released
in
September.
The
sales
were
in
line
with
analyst
estimates,
and
Cook
said
that
without
last
year’s
increased
sales,
iPhone
revenue
would
have
been
flat.
 

Mac
sales
were
up
4%
to
$7.45
billion,
but
they
are
still
below
the
segment’s
high-water
mark
set
in
2022.
Cook
said
sales
were
driven
by
the
company’s
new
MacBook
Air
models
which
were
released
with
an
upgraded

M3
chip
in
March.
 

Other
Products,
which
is
how
Apple
reports
sales
of
its
Apple
Watch
and
AirPods
headphones,
was
down
10%
year
over
year
to
$7.9
billion. 

During
the
quarter,
Apple
released
its
first
new
major
product
category
in
years,
the
Vision
Pro
virtual
reality
headset,
but
the
$3,500
device
is
expected
to
sell
in
low
quantities,
especially
compared
to
Apple’s
major
product
lines.
 

“We’re
only
scratching
the
surface
there
so
we
couldn’t
be
more
excited
about
our
opportunity
there,”
Cook
said. 

Apple
has
not
released
a
new
iPad
since
2022,
which
is
a
drag
on
sales.
Revenue
for
the
division
fell
17%
to
$5.6
billion.
Apple
is
expected
to
announce

new
iPads
on
May
7
that
could
revive
demand
for
the
product
line.
 

Cook
said
that
Apple
has “big
plans
to
announce”
at
its
iPad
product
event
next
week
and
at
the

Worldwide
Developers
Conference
in
June.
 

The
company’s
Services
business
was
a
bright
spot
during
the
quarter.
Sales
rose
14.2%
to
$23.9
billion.
That’s
how
Apple
reports
revenue
from
its
subscription
services,
warranties,
licensing
deals
with
search
engines,
and
payments.
The
company
has
a
broad
definition
of
subscribers,
including
users
subscribing
to
apps
through
Apple’s
App
Store.
It
counts
over
1
billion
paid
subscriptions.
 

Sales
in
Greater
China,
Apple’s
third
largest
region,
were
off
8%
to
$16.37
billion
in
revenue,
which
was
significantly
better
than
the
$15.25
billion
in
sales
expected
by
FactSet
analysts,
potentially
quelling
investor
worries
the
iPhone
maker
may
have
been
losing
market
share
to
local
competitors
such
as
Huawei.
 

“I
feel
good
about
China.
I
think
more
about
long
term
than
to
the
next
week
or
so,”
Cook
said. 

Cook
told
CNBC
that
iPhone
sales
grew
in
China
during
the
quarter,
which “may
come
as
a
surprise
to
some
people.”
 

In
addition
to
the
buyback
authorization,
Apple
said
it
would
pay
a
25-cent
dividend,
a
1-cent
increase.

Correction:
Cook
said
that
Apple
has “big
plans
to
announce”
at
its
iPad
product
event
next
week
and
at
the
Worldwide
Developers
Conference
in
June.
An
earlier
version
misstated
the
context
of
the
plans.