Apple surpasses low bar while announcing massive share buyback as it hits a two month high
2min read Apple Inc. $AAPL(AAPL) shares have been under pressure as reports of poor performances in China and weak demand for its products around the globe drove sentiment lower. The company has a long history of proving the critics wrong and it has done so once again. The top and bottom-line figures were generally in line with expectations but better than the feared assumptions. iPhone sales proved to be better than feared. The company"s projected death in China also appears to be premature as the -8% decline in revenues was well above expectations. According to CNBC, Tim Cook sees sales in Q3 rising single digits which is better than expected. The company will provide full guidance on its call, but it certainly points to numbers outpacing low expectations. Perhaps the most impressive part of the report is the company"s massive capital return plan announcement, which will help improve its valuation. The stock has reacted positively as it rallies 7% in the after-hours. Shares rallied to $180, which marks a two-month high. It faces resistance at the 200-day moving average ($181). An upbeat outlook on its call, particularly around its China business would allow the stock to challenge that level. Financial Highlights: • Quarterly Revenue: Apple posted a revenue of $90.8 billion, marking a decrease of 4% year-over-year but slightly above analyst expectations of $90.4 billion. • Earnings Per Share (EPS): The company reported EPS of $1.53, slightly up from $1.52 year-over-year, surpassing expectations of $1.51. • Product Sales: Revenue from products totaled $66.89 billion, down 9.5% year-over-year, reflecting a broader slowdown in the hardware sector. • Services Growth: Service revenue showed a notable increase of 14% year-over-year to $23.87 billion, exceeding estimates and highlighting robust growth in this segment. Segment Performance: • iPhone Sales: Revenue from iPhone sales declined by 10% to $45.96 billion, in line with market expectations influenced by last year"s pent-up demand easing. • Mac Sales: Mac revenue increased by 3.9% to $7.45 billion, outperforming expectations and indicating strong market demand. • iPad Sales: iPad revenue decreased by 17% to $5.56 billion, underperforming against estimates, reflecting possible market saturation or shifts in consumer preference. • Wearables and Accessories: This segment saw a decrease of 9.6% to $7.91 billion, indicating a slight slowdown in consumer spending on these items. Regional Insights: • Greater China: Revenue from Greater China stood at $16.37 billion, a decrease of 8.1% year-over-year, yet better than expected, suggesting resilience in a challenging market. Strategic Developments: • Dividend and Share Buybacks: Apple"s board declared a quarterly dividend increase of 4% and authorized an additional $110 billion in share repurchases, signaling confidence in long-term financial health and returning value to shareholders. • Innovations and Outlook: CEO Tim Cook highlighted the launch of Apple Vision Pro and anticipated product announcements, suggesting ongoing innovation as a core strategy. Cook also projected single-digit revenue growth for the upcoming June quarter. Market Reaction: • Stock Performance: Shares rose over 4% in after-hours trading, reflecting investor optimism around the company"s strategic buybacks and robust services sector performance. Challenges and Forward-Looking Statements: Despite the dip in product revenues, particularly from iPhones and iPads, Apple"s continued revenue growth in services and strategic product launches like the Apple Vision Pro positions the company well in the competitive tech landscape. The management"s forward-looking statements and substantial buyback program reflect a strategic pivot to bolster investor confidence and navigate through market fluctuations effectively. Overall, Apple"s fiscal Q2 2024 paints a picture of a tech giant leveraging its robust services segment and strategic capital management to maintain growth trajectories amidst broader market challenges.