Apple Announces $100 Billion Stock Buyback, Tops Quarterly Earnings Forecasts

Apple turned in another quarterly beat with revenue up 16% to $61.1 billion and earnings per share up 30% — and announced a whopping $100 billion share buyback program and a higher dividend to shower cash on investors and signal bullishness in the business.

“Given our confidence in Apple’s future, we are very happy to announce that our board has approved a new $100 billion share repurchase authorization and a 16% increase in our quarterly dividend,” Luca Maestri, Apple’s CFO, said in announcing the results.

Apple CEO Tim Cook said the U.S.’s recent tax-reform legislation “enables us to deploy our global cash more efficiently.” The company in January said it expects to make about $38 billion in U.S. tax payments, as required under changes in the tax code to repatriate overseas funds, and that it will invest billions in the American economy over the next several years.

Apple shares were up as much as 4% in after-hours trading Tuesday after reporting earnings for the quarter ended March 31. The company reported net income of $13.82 billion, up 25% year over year, or earnings of $2.73 per diluted share.

The tech giant topped Wall Street’s lowered expectations. Analyst consensus estimates had forecast revenue of $60.82 billion and adjusted EPS of $2.67 for the period, Apple’s fiscal second quarter of 2018.

In recent weeks, several analysts have lowered expectations for Apple on signs of slowing iPhone growth — and that the company’s “super-cycle” model of selling the latest-and-greatest smartphone is losing steam as consumers hold on to their iPhones longer.

That was borne out in the results: Apple sold 52.2 million iPhones in the March 2018 quarter, up just 3% from 50.8 million units in the year-earlier period — in line with average analyst expectations of 52.3 million units for fiscal Q2 2018. However, iPhone revenue jumped 14.3%, to $38.0 billion, in the most recent quarter. That undoubtedly was fueled by the iPhone X, Apple’s priciest model ever, which starts at $999.

Cook cited strong sales growth of iPhones, services and wearables for the most recent quarter, its best-ever FYQ2 for revenue and income. “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 said in prepared remarks.

International sales accounted for 65% of Apple’s quarterly revenue (the same as in the year-earlier period). The company grew revenue in all geographies, with 21% growth in Greater China and 22% growth Japan. Some analysts have been predicting that Apple will lose market share in China to cheaper smartphone rivals.

Asked about the threat of a U.S.-China trade war, Cook said he was optimistic that the two sides could iron out their differences. “I’m a big believer that the two countries together can both win and grow the pie, not just allocate it differently,” he told analysts on the earnings call. “I don’t know every play-by-play that will happen, but over time, I think that view will prevail.”

Apple’s services segment — which includes revenue from iTunes digital content and services, Apple Music, AppleCare, Apple Pay, licensing and other services — soared 31% year-over-year, to $9.2 billion. Apple had 270 million paying subscribers across services at the end of fiscal Q2 2018, up 100 million year over year, according to Cook.

Meanwhile, iPad revenue was up 6%, to $4.1 billion, while unit sales increased 2% to 9.1 million. Mac unit sales dropped 3% year-over-year and revenue was flat at $5.8 billion.

On the earnings call, Maestri said Apple did not have a specific end-date for the new $100 billion share repurchase program. “The amount is very, very large,” he said. “We will try to execute it… at a very fast pace, but we will also do it efficiently.”

From August 2012 through March 2018, Apple has now returned $275 billion to shareholders, including $200 billion in share repurchases.

For its fiscal Q3, Apple projected revenue of $51.5 billion and $53.5 billion; analysts have been estimating $51.6 billion in revenue.

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