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Apple announces US$100bn share buyback as 2Q earnings beat estimates on strong services growth

Last updated: 21:51 01 May 2018 BST, First published: 16:51 01 May 2018 BST

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iPhone sales missed expectations, but Apple is becoming less reliant on its top earner

Apple Inc (NASDAQ:AAPL) shares surged in after-hours trading after the world’s largest company topped expectations with its fiscal second-quarter results and announced a staggering US$100bn share buyback.

The tech giant posted revenue of US$61.1bn in the three months ended March 31 – up 16% year-on-year and just ahead of Wall Street forecasts for US$60.8bn.

Earnings per share jumped 30% compared to the year-ago period to US$2.73, versus expectations of US$2.67.

Apple shares rose 3.4% to US$174.85 after the bell in New York.

iPhone sales miss forecasts

Reports of weak iPhone sales in the run-up to the earnings proved to be true, with Apple shifting "just" 52.2mln units in the quarter, behind analysts’ already-lowered estimates of 52.5mln.

But the higher prices of the new iPhone X and 8 more than offset the lower volumes, with total iPhone sales climbing to US$38.0bn. That was also behind expectations, though.

Although the iPhone still accounts for more than half of all sales, Apple is becoming less reliant on its top earner, and the real growth this time around came in services, which is made up of businesses such as Apple Music, iCloud and App Store.

Services revenue jumped to US$9.1bn, beating last year’s figure of US$8.5bn and Wall Street forecasts of US$8.4bn.

Many investors will have been paying close attention to the capital return program, and Apple didn’t disappoint.

US$100bn buyback and div hike

The company – which has a cash pile in excess of US$300bn – unveiled a US$100bn share repurchase program and hiked its quarterly dividend by 16% to US$0.73 a share.

“We’re thrilled to report our best March quarter ever, with strong revenue growth in iPhone, Services and Wearables,” said Tim Cook, Apple’s Chief Executive. “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.

He added: “We also grew revenue in all of our geographic segments, with over 20% growth in Greater China and Japan.”

As for its outlook, Apple is guiding for fiscal third-quarter revenue of between US$51.5bn and US$53.5bn – towards the higher end of the US$51.6bn Wall Street number crunchers had pencilled in.

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