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Business

Apple to buy back $100B in stock, says iPhone X isn’t a flop

By
Reuters
Published May 2, 2018
Updated May 2, 2018, 11:27 a.m. ET

Apple on Tuesday ramped up efforts to return some of the nearly $270 billion in cash on hand to shareholders.

The tech titan, while reporting solid sales of its iPhones, jacked up its quarterly dividend by 16 percent and unveiled $100 billion in stock buybacks — among the largest such moves in history.

The dividend increase and buybacks seemed to satisfy investors who had to digest quarterly sales of iPhones, iPads and Macs that fell short of Wall Street expectations.

Shares of the Cupertino, Calif., company, after adding 2.3 percent, to $169.10, in regular trading hours, gained 3.5 percent after hours to bring the shares back into positive territory for the year.

Apple’s numerous iPhone models moved 52.2 million units, coming in just under analyst expectations of 52.3 million.

Apple chief executive Tim Cook, in a statement, brushed aside any worries about the $999 iPhone X’s reported sales issues.

“Customers chose iPhone X more than any other iPhone each week in the March quarter,” Cook said. “Just as they did following its launch in the December quarter.”

Sales of the iPhone X — Apple’s flagship “future of the smartphone” — have disappointed many observers. Investors have watched the company closely in recent weeks as a string of poor supply chain forecasts signaled that demand might be lower than expected.

On a conference call, Cook acknowledged that the iPhone X’s sales weren’t off the charts, but said he “could not be prouder of the product.”

“If a team wins the Super Bowl, maybe you want them to win by a few more points, but it’s a Super Bowl winner,” Cook said.

“This is the first cycle we’ve had where the top-of-the-line iPhone model has also been the most popular,” the executive added.

Apple reported quarterly profits of $61.1 billion, or $2.73 a share, up 16 percent from last year — beating expectations.

Apple revenue grew in each of its geographic segments, including more than 20 percent growth in China and Japan, Cook said.

The company revealed that its services business — which includes Apple Music and the App Store — grew by more than 30 percent, to $9.1 billion in revenue.

Apple’s “Other Products” — which includes devices like the Apple Watch and HomePod speaker — brought in revenue of $3.95 billion, representing 38 percent year-over-year growth.

Apple sold 4.1 million Mac computers last quarter, down slightly from the 4.2 million it sold last year.

On the call, Cook said Apple Watch sales have grown by 50 percent, and that it is now the best-selling watch in the world.

Apple’s dividend increase will take its quarterly payout to 73 cents a share from 63 cents.

Apple said it bought $23.5 billion of stock back in the March quarter, a sign that it is bringing back most of its hundreds of billions of dollars in cash to the US.

The company also predicted a revenue range of $51.5 billion to $53.5 billion for its fiscal second quarter ending in June, with a midpoint ahead of the $51.6 billion Wall Street expected.