Source: AFP
Apple on Thursday reported quarterly earnings that fell but beat market forecasts as it announced an unprecedented $110 billion share buyback.
The iPhone maker reported a profit of $23.6 billion on revenue of $90.8 billion in the first three months of this year.
“Given our confidence in Apple’s future and the value we see in our stock, our board has authorized an additional $110 billion in share repurchases,” Chief Financial Officer Luca Maestri said in the earnings release.
Shares rose nearly 6 percent to $183.20 in after-market trading, boosted by the epic buyback program.
Apple took in a record high amount of digital goods and services sold to fans of the company’s iPhone gadgets, Chief Executive Tim Cook said in an earnings call.
As expected, iPhone sales have declined as pressure mounts from China and increased competition from Huawei.
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The Silicon Valley giant reported $45.7 billion in revenue from iPhone sales, its main money maker, compared to $51.3 billion in the same period last year, a ten percent decline.
In the core market of greater China, iPhone sales fell to $16.4 billion from $17.8 billion a year earlier, according to earnings data.
“It’s been a tough year for Apple, no longer the world’s most valuable company or the leading smartphone provider,” Emarketer analyst Jacob Bourne said in a note to investors.
“Slowing iPhone demand in China has significantly reduced revenue.”
Tech giant Huawei recently reported first-quarter profit more than quintupled year-on-year as the US-imposed company continues to eat into rival Apple’s sales.
“Apple’s sales were sluggish during the quarter as Huawei’s return directly impacted Apple in the premium segment,” said Ivan Lam, senior analyst at Counterpoint.
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In another setback for the iPhone, Samsung regained its position as the world’s top smartphone seller in the first quarter of this year, according to industry tracker International Data Corporation.
Cook said he remains very optimistic about the China market, noting that iPhones were top sellers in urban areas and that his recent visit to open an Apple store in Shanghai was “fantastic.”
“I maintain a great view on China for the long term,” Cook said.
Apple’s sales decline in China was less than expected and the company appears to be holding up better than expected there, according to CFRA senior equity analyst Angelo Zino.
No impact on Vision Pro
As competitive pressure mounts on the iPhone, the Silicon Valley tech giant continues to push to increase revenue from services and digital content sold to fans of its devices.
But that move faces a threat from regulators and app makers who accuse Apple of effectively holding a monopoly because of its tight control of the App Store and gadget operating software.
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The US Department of Justice is suing Apple, accusing the company of illegally maintaining a monopoly over its iPhone, stifling competition and imposing exorbitant costs on consumers.
Apple said the lawsuit was “false on the facts and the law, and we will vigorously defend against it.”
The EU, meanwhile, is investigating whether the App Store allows developers to show consumers offers, free of charge, outside of those app markets.
Apple is also under pressure to keep up when it comes to integrating artificial intelligence into its offerings.
Apple has said little about the technology, which rivals Google and Microsoft have been aggressively developing.
“We see genetic AI as a very important opportunity for our products,” Cook said.
“We’ll talk more about that as we go through the next few weeks.”
An Apple event next week is expected to highlight the new iPads, and news of software innovation will be the focus of an annual WWDC developer conference in June.
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“WWDC announcements could dispel concerns about Apple’s AI strategy,” analyst Bourne said.
Meanwhile, recently launched Vision Pro “spatial reality” headsets and new MacBook Air laptop models are unlikely to have “any impact on the company’s bottom line any time soon,” Forrester principal analyst Thomas Husson said in a note to investors.
Source: AFP