Key Takeaways:
On Thursday, May 2nd, Apple reported its fiscal second-quarter results. The tech giant posted earnings per share (EPS) of $1.53, surpassing Wall Street projections of an estimated $1.50. The iPhone maker also unveiled a record share buyback program that sent its stock up almost 7% in extended trade.
Apple Initiates Biggest-Ever Stock Buyback Program During Unremarkable Fiscal Quarter
Despite exceeding earnings expectations, the company’s overall revenue for Q2 2024 decreased by 4%, totaling $90.75 billion. There was also a notable 10% drop in iPhone sales, which brought in $45.96 billion for the tech behemoth.
However, Apple bolstered its financial health by increasing its cash dividend by 4% and authorizing an additional program to buy back $110 billion worth of shares, up 22% from the $90 billion stock buyback program initiated in the previous quarter.
Investing.com analyst Thomas Monteiro called it the largest buyback in the company’s history.
iPhone, iPad, and Wearable Sales Falter, While Mac and Services Departments Excel
While there was a slowdown in the sale of iPhones, the company could count on other products in its lineup, like the Mac, which experienced a modest 4% sales growth in the last quarter. This was driven by the recently launched M3 MacBook Air models, which helped contribute $7.5 billion in sales.
In contrast, the revenue from the iPad fell by 17% to $5.6 billion, which can be attributed to the lack of new models launched since 2022. The most robust sector of Apple’s business was its services containing the lucrative App Store, Apple Music, and Apple TV segments, which grew 14.2% in the fiscal second quarter to reach $23.9 billion. This further highlighted the strength of the company’s subscription services and digital content offerings.
Apple’s wearable segment, which represents the Apple Watch and AirPods headphones, saw sales drop to $7.91 billion, compared with analyst estimates of $8.08 billion.
For the fiscal second quarter, iPhone sales dropped 10.5% to $45.96 billion. This was in contrast to analysts’ expectations of $46 billion. Company executives said in February that last year’s fiscal second quarter had benefited from a $5 billion surge in iPhone sales as the company was caught up in a supply-chain snarl during the COVID-19 lockdowns.
Apple CEO Tim Cook is optimistic about the company’s performance. In his comments to CNBC, Cook explained that the year-over-year decline in smartphone sales was the result of high base effects from the delayed iPhone 14 release. He also said that when adjusted for these anomalies, the underlying growth trend for the company remains positive.
Apple is Amping up its Artificial Intelligence Investments, Products set to Come Out Later This Year
China, Apple’s third-largest market, saw a steep 8% decline in sales to $17.8 billion for Q2 2024. Even though this was above analyst expectations of $15.59 billion, it eases concerns about Apple’s position in the Chinese market amid stiff competition from local players like Huawei.
Apple revealed very little about its artificial intelligence endeavors, which is the wave that its chief rivals Microsoft and Alphabet (Google) are riding on. Cook said the company has spent more than $100 billion on AI research and development in the last five years and has amped up spending in that department.
Cook is “very bullish” on Apple’s opportunities in generative AI and said he is looking forward to sharing “some very exciting things with our customers” at various events to be held later this year.
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