What do you do for an encore after you’ve reported the biggest quarterly profit ever for any company anywhere on Earth? If you are Apple AAPL -0.1%, you keep selling iPhones at a brisk pace, especially in China, and investors are sure to cheer.
On Monday, Apple said its revenue in the second quarter surged to $58 billion, up from $45.6 billion a year earlier. Net income was $13.6 billion. Apple reported earnings per share of $2.33, up from $1.66 a year earlier.
The results topped already strong forecasts, which called for Apple to report $56 billion in revenue and profit of $2.15 a share.
Apple also said it would increase its capital return program to more than $200 billion by March 2017.
Shares were up more than 1% in after hours trading, after rising nearly 2% during regular trading.
Revenue in China grew a staggering 71 percent to $16.8 billion, driven by iPhone sales, making that country the company’s second biggest market after the United States.
“We are thrilled by the continued strength of iPhone, Mac and the App Store, which drove our best March quarter results ever,” Tim Cook, Apple’s CEO said in a press release. “We’re seeing a higher rate of people switching to iPhone than we’ve experienced in previous cycles, and we’re off to an exciting start to the June quarter with the launch of Apple Watch.”
As in recent quarters, all eyes where on the iPhone, which in the first quarter, when the company sold 74.5 million units, accounted for nearly 70 percent of Apple’s revenue. In the second quarter, Apple sold 61 million iPhones, ahead of forecasts of about 56 million. Sales of iPhones in China topped those in the United States for the first time.
Revenue in China grew a staggering 71 percent to $16.8 billion, making it the company’s second biggest market after the United States.
Sales of iPads and Macs came in below forecasts.
During a conference call with analysts, Cook did not give sales figures for the Apple Watch, which went on sale Friday. But he said that demand is currently exceeding supply. “We are working hard to remedy that,” Cook said. As a new product category, the Apple Watch is expected to take “time” to fully ramp up, he said, noting that gauging demand was difficult given that the watch is not currently available in stores. Cook said that he believed the company would be able to solve the supply-demand imbalance by late June, when it plans to begin selling the watch in additional countries.
Cook said customer response to the Apple Watch had been “overwhelmingly positive.” He also said that the number of apps available for the watch, which stands at approximately 2500, far exceeded the company’s expectations. Cook said the iPhone launched with 500 apps, which the company finally opened the device to developers, and the iPad with 1000 apps. He said the company had hoped the Apple Watch would top the iPad numbers by a bit.
“It’s hard to imagine it being better,” Cook said of the Apple Watch debut.
Cook admitted that the iPad is suffering from “cannibalization” from buyers of both iPhones and Macs. “We’ve never worried about that,” he said. “At some point it will stabilize.” He said that he believes that at some point in the future, iPad sales will begin to grow again.
Investors had been eager to hear updates on how Apple plans to use its giant pile of cash, which stood at $178 billion at the end of the first quarter. Apple has already spent more than $100 billion in dividends and stock buybacks, part of a plan to return $130 billion to shareholders by the end of this year. Apple it was increasing the program by $70 million. The company, which ended the quarter with a record $194 billion in cash, said it would update the cash return program again a year from now.
Via Miguel Helft at Forbes