Apple beats financial expectations, plans $100B cash return

Tech giant plans to return cash to investors following resilient quarterly results

Apple has beat revenue and profit expectations in its March quarter as it sold 52.2 million iPhones, barely below Wall Street targets and showing some resilience as global demand for smartphones wanes.

The company also predicted a revenue range of US$51.5 billion to US$53.5 billion for the June quarter, with a midpoint ahead of the US$51.6 billion Wall Street expected.

Apple also boosted its capital return program by US$100 billion, with repurchases from the increase set to begin in the June quarter, and said it bought US$23.5 billion of stock back in the March quarter, a sign that it is bringing back most of its hundreds of billions of dollars in cash to the United States.

The share repurchases in the March quarter drove Apple's cash net of debt down slightly to US$145 billion.

"We are returning the cash to investors as we have promised,” Apple CFO Luca Maestri told Reuters in an interview.

Apple has been at a challenging crossroads this year with sales of its flagship iPhone X disappointing many observers.

Investors have watched Apple closely in recent weeks as a string of poor forecasts from the smartphone supply chain signalled that iPhone demand may be lower than previously expected. They have also been watching carefully for signs of what Apple plans to do with its hundreds of billions of dollars in cash.

Apple posted revenue for its March quarter of US$61.1 billion, up from US$52.9 billion last year. Wall Street expected US$60.8 billion, according to Thomson Reuters I/B/E/S.

The company sold 52.2 million iPhones versus expectations of 52.3 million, according to data from Thomson Reuters, up from 50.7 million last year.

Average selling prices for iPhones were US$728, compared with Wall Street expectations of US$742.

Maestri told Reuters that clearing channel inventory of 1.8 million iPhones - most of them iPhone X and iPhone 8 models - accounted for some of the difference.Profits were US$2.73 per share versus expectations of US$2.68 per share and up from US$2.10 a year ago.

The company forecasted a midpoint of US$52.5 billion in revenue for the June quarter, beating analyst expectations of US$51.6 billion.

Apple's services business, which includes Apple Music, the App Store and iCloud, posted US$9.1 billion in revenue compared with expectations of US$8.3 billion. Heading into earnings, investors were hopeful that growth in that segment could help offset the cooling global smartphone market.

Apple traditionally updates its share buy-back and dividend program each spring, and the US$100 billion it added this year compares with an increase of US$50 billion last year. The company also increased its quarterly dividend 16 per cent, compared with a 10.5 per cent increase last year.

In February, Apple said it planned to draw down its excess cash, though CEO Tim Cook had downplayed the possibility of a special dividend.

But investors have had concerns around Apple because of a brewing trade tensions with China. While there has not yet been a tariff on devices such as Apple's iPhone, Cook last week travelled to Washington to meet with U.S. President Donald Trump at the White House to discuss trade matters.

"We believe tariffs at the end of the day are a tax on the consumer," Maestri said.

Apple has been emphasising its contributions to the U.S. economy in recent months, outlining a US$30 billion U.S. spending plan and highlighting the tens of billions of dollars it spends each year with U.S.-based suppliers.

In recent months, Apple has been emphasising the size of its overall user base, which includes used iPhones, rather than focusing strictly on new device sales, a sign of the increasing importance of making money off users without selling them new hardware.

Apple shares have dropped 0.1 per cent this year and closed at US$169.10 on Tuesday, down 1.8 per cent from their price of US$172.26 at the start of the year. Their performance lags the NASDAQ Composite Index, which was up 3.3 per cent for the year.

(Reporting by Stephen Nellis; Editing by Peter Henderson and Lisa Shumaker)

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags Apple

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.
Reuters

Reuters

Channel Asia Singapore
Show Comments

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Maryellen Rose George

Brother PT-P750W

It’s useful for office tasks as well as pragmatic labelling of equipment and storage – just don’t get too excited and label everything in sight!

Cathy Giles

Brother MFC-L8900CDW

The Brother MFC-L8900CDW is an absolute stand out. I struggle to fault it.

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?