Apple results: more iPhones, fewer iPads and a $30bn share buyback

Record revenues and a bumper pot of cash returned to shareholders will buy more time for the tech giant to work on new products.

by Rachel Savage
Last Updated: 09 Oct 2014

The iPhone is the cash cow that keeps on giving. Apple sold 43.7 million of them in the quarter to March 29, around 5 million more than analysts had expected and a 17% jump from last year.

That meant record revenues of $45.6bn (£27.1bn), 5% higher than last year, also outstripped estimates by around $2bn. Profits in the tech leviathan’s fiscal second quarter climbed too, rising 7% to $10.2bn. Apple is basically still making eyewateringly huge amounts of money.

However, even the world’s most valuable company can’t sit on its laurels. It’s been four years since Apple unveiled the iPad, sales of which slumped unexpectedly by 16% to 16.35 million (analysts had predicted 19.7 million) as people buy cheaper tablets or decide it’s slightly unnecessary to have the not-so-holy trinity of computer, tablet and mobile. Meanwhile, the once must-have iPod is on its way out, as the number shifted plunged by more than half to 2.8 million.

That means Apple is increasingly dependent on the iPhone, which accounts for over half of the company’s revenues. This shouldn’t worry anyone just yet. Apple’s overall sales in Greater China, where the iPhone only started being sold this year, rose 13% to $9.3bn. The Japanese gadget market is clearly not saturated either: revenues jumped 26% to just under $4bn in the Land of the Rising Sun.

Nonetheless, the company can’t rely on one product to drive growth forever, especially with investors and fanboys alike getting increasingly impatient waiting years for the next game-changing product (rumoured to be a TV or a smartwatch).

Chief exec Tim Cook didn’t sound too concerned about the baying masses though. ‘We didn’t ship the first MP3 player, nor the first smartphone, nor the first tablet. It means much more to us to get it right than to be first,’ he said in a conference call.

Cook has pretty much bought himself time to be blasé, topping up the share buyback programme by a casual $30bn and raising the dividend by 8%. That brings the total being shovelled off Apple’s cash mountain by the end of next year to $130bn. The company also announced a seven-for-one stock split, which it hopes will bring more retail investors on board.

At least veteran activist investor Carl Icahn, who had demanded a $50bn stock buyback, is satisfied (for now).

He still thinks no one gets how much Apple is worth though (but with a multibillion dollar stake in the company he would say that, wouldn't he?).

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