Credit: Apple Inc.

Apple revenues hit $234bn

The world's most valuable company steps up its share buyback programme as growth in China propels it to a record year.

by Adam Gale
Last Updated: 03 May 2016

It’s easy to expect too much of Apple, but when it delivers, it really delivers. The world’s most valuable company reported a 28% rise in revenues for the year to the end of September, to a whopping $234bn (£152bn). Net income, meanwhile, rose 35% to an all-time high of $53.4bn.

Fears that the slowdown in China might have dampened the company’s growth appear so far to be premature. The country may have lost its appetite for copper and iron ore, but by and large it’s still hungry for iPhones. Sales there nearly doubled year-on-year to $12.5bn, while worldwide the company benefited from a surprisingly high number of converts from Android, accounting for 30% of the 48 million iPhones sold in the quarter.

Boss Tim Cook was upbeat too about the crucial Christmas period, singling out the iPhone 6s, Apple Watch and Apple TV, but the company’s guidance was somewhat more grounded, predicting only a modest increase in revenue for the next quarter to between $75.5 billion and $77.5 billion.

Shares were up 1.8% in after-hours trading, but it’s never easy to judge how much to what extent movements in Apple’s share price is caused by investor sentiment. The firm’s share buybacks amounted to $14bn over the last three months, bringing its total for the last few years to over $100bn.

In Apple’s case it’s actually a fairly smart thing to do with its monumental cash pile, which expanded slightly to $206bn. Its credit is so good that it can finance buybacks with cheap debt, often when the price is depressed, and – if and when the share price increases as it expects it to – sell the shares on for a profit, or just pocket the dividends itself.

An optimist would say Apple’s accelerating the programme now because it believes its stock is undervalued, but it could just as easily be because it anticipates a rate rise from the Fed, which would make debt less attractive.

Twitter not so chirpy

Twitter, meanwhile, must wish it had $200bn to manipulate its share price. Stock in the social media firm fell 10.8% after it revealed its total of active monthly users increased only 1% quarter on quarter to 320 million. Year-on-year it was better at 11%, but the bottom line is it’s slowed to a virtual halt).

The fact that revenues rose 58% to $569m or its underlying net income increasing ten-fold to $67m as it better monetises its product didn’t turn it into a good news day, apparently. Co-founder and returning chief executive Jack Dorsey will certainly have his work cut out for him, as he tries to restore Twitter to growth. If the reaction of investors to these results is anything to go by, it will require more than cost-cutting to get the job done.

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