Apple Inc’s iPhone is reeling in buyers in China, sending quarterly profit up by 33 percent and fueling a surge in growth that led the company to boost its capital-return program by US$70 billion.
Net income in the period that ended last month was US$13.6 billion, or earnings per share of US$2.33, and revenue rose by 27 percent to US$58 billion, the Cupertino, California-based company said in a statement on Monday. iPhone sales in “Greater China” (in which Taiwan is included) outpaced those in the US for the first time, helped by the Lunar New Year holiday, Apple said.
Booming demand for the iPhone 6 and iPhone 6 Plus is putting Apple on pace for its highest annual profit since 2012 — a record — and the company forecast sales in the current period that might exceed analysts’ estimates. That signals enduring demand for the larger-screened smartphones and optimism for the new Apple Watch, the company’s first new gadget under CEO Tim Cook.
Photo: Reuters
“Given the strength of this iPhone cycle, expanded cash distribution and entry into the first new product category in five years with Apple Watch, we believe Apple remains early in this transformational cycle,” Cantor Fitzgerald & Co analyst Brian White wrote in a note to investors.
Analysts on average had forecast second-quarter profit of US$2.16 per share and sales of US$56 billion, according to data compiled by Bloomberg.
iPhone unit sales jumped 40 percent to 61.2 million. That topped analysts’ average prediction for 58.1 million, based on data compiled by Bloomberg. Total revenue from greater China surged 71 percent to US$16.8 billion.
“The progress we’ve made in China has been remarkable and we continue to make incredible investments in China,” chief financial officer Luca Maestri said in an interview. “The growth rate in China is significantly higher than most parts of the world.”
Apple forecast that the momentum would continue in the third quarter, with revenue projected to rise to between US$46 billion and US$48 billion from US$37.4 billion a year ago. Gross margins are expected to be from 38.5 percent to 39.5 percent, compared with 39.4 percent a year earlier. Analysts on average had predicted revenue would climb 26 percent in the current period to US$47 billion, with gross margin at 39.5 percent.
Renewed investor optimism for new products, including the Apple Watch, has helped boost shares to record levels this year. The company’s market value has surged to more than US$772 billion, making it the world’s largest by that measure.
“The customer response for the Watch has been great,” Maestri said. “We are working very, very hard to catch up from a supply standpoint — keep in mind this is not only a new product, but it’s an entirely new category.”
Apple is working to get its Watch supply and demand in balance by the end of the current quarter, he said. The company plans to begin offering the Apple Watch in other countries by the end of June, Cook said during a conference call with investors.
Cash and marketable securities increased to US$193.5 billion at the end of last month, Apple said. That is driving Apple’s increase to its capital-return program, which now totals US$200 billion through March 2017. The plan unveiled on Monday includes boosting its share buyback authorization by US$50 billion to US$140 billion and increasing the company’s dividend by 11 percent.
The company is to pay a quarterly dividend of US$0.52 per share on May 14 to shareholders of record at the close of business on May 11. Apple returned more than US$112 billion to investors from August 2012 to last month, the company said.
Additional reporting by staff writer
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