Apple shares spiked in after-hours trading on Tuesday as the tech giant topped earnings expectations and announced a $100 billion boost to its share buyback program. The rally came even as iPhone sales fell slightly short of Wall Street’s expectations.
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The Cupertino, California-based company’s revenue jumped 16% to $61.1 billion in the second quarter, up from $52.9 billion for the same period a year earlier. Analysts had expected revenue of $60.82 billion.
Earnings per share rose 30% to $2.73, ahead of analyst projections of $2.67. Apple reported iPhone unit sales of 52.2 million, slightly below the Thomson Reuters consensus of 52.3 million.
Apple also announced a 16% increase of its cash dividend to 73 cents per share, up from 63 cents per share, as well as a stock buyback program that will extend into the third quarter. The company was widely expected to reward investors after repatriating most of its more than $250 billion in overseas cash after the passage of corporate tax reform.
The company’s stock climbed nearly 4% in after-hours trading on the earnings beat.
The average sale price for iPhones rose 11% to $728, driven by the release last year of the $999 iPhone X, a premium version of the flagship smartphone.
“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,” Apple CEO Tim Cook said in a statement. “We also grew revenue in all of our geographic segments, with over 20% growth in Greater China and Japan.”
Several Wall Street firms had slashed their expectations for iPhone unit sales in Apple’s second and third fiscal quarter after several of the company’s parts suppliers reported weak demand or sales forecasts, particularly in China. Some analysts suggested the iPhone X's price point was causing "sticker shock" among consumers.
On a conference call, Cook downplayed the notion of a brewing trade war between the U.S. and China, noting that the iPhone was "the most popular smartphone in all of China" in the second quarter.
"I'm a big believer that both countries can win and grow the pie," Cook said.
Cook said Apple is committed to protecting the data of its users, telling analysts that the company believes "privacy is a fundamental human right." The Apple CEO added that customers are "not our product."
Apple sold 9.1 million iPads and 4.08 million Mac computers in the second quarter. The company released an updated version of the iPad aimed at teachers and students earlier in 2018 as part of a push to capture market share in the education space.
The company set revenue guidance for the third quarter at between $51.5 billion and $53.5 billion. At present, analysts expect revenue for the June quarter of $51.61 billion, according to Thomson Reuters data.
Apple Chief Financial Officer Luca Maestri said the company has a net cash balance of $145 billion. Maestri previously said the company would seek to reduce the balance to "approximately zero" over time through potential mergers and acquisitions, buybacks and dividends.