Apple defies critics by meeting expectations on iPhone sales in first quarter results
Apple allayed industry fears that it would be hit by declining sales of its flagship product by selling 52.2m iPhones in the first quarter.
The figures
Shares in the tech giant were up by about four per cent in after-hours trading as it posted a 16 per cent climb in revenue to $61.1bn (£44.8bn).
Sales of the iPhone met analysts expectations of 52.3m giving cause for Apple to remain confident in its flagship product after forecasters warned declining sales would prove to be its Achilles heel.
Along with its first-quarter results, Apple also announced a $100bn buyback programme to shareholders and a 16 per cent increase in its quarterly dividend.
It said it will complete the previous $210bn buyback programme during its third fiscal quarter.
Reflecting the approved increase, the board declared a cash dividend of 73 cents per share of Apple’s common stock payable on 17 May to shareholders of record as of the close of business on 14 May.
Profit per share was $2.75 for the period, an increase of 30 per cent on the same quarter last year. Analysts estimates were closer to $2.64. International sales accounted for 65 per cent of the quarter’s revenue.
Why it’s interesting
Apple has been grappling with the fact that its sales are far too dependant on one product – the iPhone, which accounts for 62 per cent of all sales. That has come to be a cause for concern because customers have become increasingly willing to hold on to their iPhones for longer, coming to the conclusion that each new phone does not offer many different or new features from the last.
On the back of that, the tech giant has seen disappointing sales of the iPhone 8 and iPhone X as well as weak results from Apple supplier TSMC in the first quarter.
Apple has also been damaged by its own admittance that it had been deliberately slowing down the battery life of old models, which, according to YouGov, has damaged its brand. There were also battery issues concerning some MacBook Pros, which Apple offered to replace.
Research Institute Forrester said: “Lower demand from some Apple suppliers combined with low quarter seasonality and a slowdown of the global smartphone market seem to suggest weaker Apple’s iPhone X sales. Does that mean innovation in the high-end smartphone is dead? Certainly not. However, it indicates Apple will have to smartly manage its iPhone product portfolio and pricing, especially in Asia, where some countries still witness smartphone growth. Apple has proven over the past few years that it masters the art and science of managing its product portfolio.”
What Apple said
Tim Cook, Apple’s CEO, said: “We’re thrilled to report our best March quarter ever, with strong revenue growth in iPhone, services and wearables. Customers chose iPhone X more than any other iPhone each week in the March quarter, just as they did following its launch in the December quarter. We also grew revenue in all of our geographic segments, with over 20 per cent growth in greater China and Japan.”
Luca Maestri, Apple’s chief financial officer, added: “With the greater flexibility we now have from access to our global cash, we can more efficiently invest in our US operations and work towards a more optimal capital structure. Given our confidence in Apple’s future, we are very happy to announce that our board has approved a new $100bn share repurchase authorisation and a 16 per cent increase in our quarterly dividend.”