Apple misses on profit and revenue, plans to raise dividend, return $50B more to shareholders

27.04.2016 00:17

Apple misses on profit and revenue, plans to raise dividend, return $50B more to shareholders

Everett Rosenfeld |

Apple reported quarterly earnings and revenue that missed analysts’ estimates on Tuesday, and its guidance for the current quarter also fell shy of expectations.

The tech giant said it saw fiscal second-quarter earnings of $1.90 per diluted share on $50.56 billion in revenue. Wall Street expected Appleto report earnings of about $2 a share on $51.97 billion in revenue, according to a consensus estimate from Thomson Reuters.

That revenue figure was a roughly 13 percent change against the comparable year-ago period — representing the first year-over-year quarterly sales drop since 2003.

Shares in the company fell more than 7 percent in after-hours trading, erasing almost $41 billion in market cap. That after-hours loss is greater than the market cap of 391 of the S&P 500 companies.

Importantly, the company announced a 10 percent dividend increase and a $50 billion increase to its capital return program. Under that new plan, Apple expects to spend a total of $250 billion of cash by the end of March 2018, it said.

On the dividend, Apple said its board had declared a dividend of $.57 per share, payable on May 12, 2016 to shareholders of record as of the close of business on May 9.

Speaking with CNBC, Apple CEO Tim Cook said the company is in “the early innings of the iPhone” and that they “feel good” about their business in China.

On the company’s earnings call, Cook said that Apple had seen “continued currency weakness in the vast majority of our international markets.”

In fact, Apple beat Wall Street’s estimates on iPhone shipments, reporting 51.2 million for the quarter. Analysts had expected 50.3 million, according to StreetAccount.

Still, that iPhone unit count was a 16 percent decline from the 61.17 million shipped during the same period last year. For his part, however, Cook described the iPhone business as “healthy and strong” on the call.

In fact, Cook said the company added more switchers from Android and other platforms in the first half of the year than in any other six month period ever.

On Apple’s “services” business, Cook said that segment saw its best ever revenue in the March quarter (ignoring sums from a patent settlement in an earlier quarter). Services brought in $5.99 billion in Q2 — topping analyst estimates of $5.78 billion, according to StreetAccount.

Services was Apple’s second-largest source of revenue (behind the iPhone) in the quarter, the company said. And unlike the 18 percent decrease in iPhone revenue against the comparable year-ago period, services revenue grew 20 percent year-over year.

Looking ahead to the fiscal third quarter, Apple said it expects revenue between $41 billion and $43 billion — Wall Street had expected $47.42 billion on average, according to StreetAccount.

One area of weakness for Apple in its second-quarter was the Greater China segment — comprising mainland China, Taiwan and Hong Kong. Revenue for that region fell 26 percent year-over-year to $12.49 billion. Previously, that area had posted consistent growth for China.

Apple shares have struggled of late, falling about 20 percent over the last year.

Part of that decline is attributable to stalling iPhone sales. The device usually accounts for more than half of Apple’s revenues, but it struggled to achieve significant year-over-year growth during the fiscal first quarter, and analysts were even less optimistic about the second quarter.

Many analysts, however, say they expect iPhone sales to grow again when the company releases its expected iPhone 7 model.

—CNBC’s Josh Lipton contributed to this report.





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