What happens to Apple?
Apple closes the first quarter of the year with declining revenues and profits, still beating analysts' expectations. But the Cupertino giant impressed shareholders with its largest share buyback ever… Facts, numbers and insights
Apple shares shine after the iPhone maker recorded profits and revenues above expectations and announced the largest share buyback in its history.
Increase of over 7% in the after-hours for the Cupertino giant's stock after the publication of the quarterly report. The surge in Apple's shares has increased the value of the stock market by more than $160 billion, Reuters reports.
The board of directors of the Bitten Apple company has in fact authorized a share buyback of 110 billion dollars, or 22% more than last year's buyback of 90 billion, which in turn was the largest in Apple's history.
However, the company reported a new decline in revenue in the last quarter, but less than analysts had expected. Revenues were affected by a lower-than-expected performance in iPhone sales, due to increased competition in the smartphone market in China.
But the number one of the Cupertino giant Tim Cook remains optimistic, stating that revenue growth would return in the current quarter. And now there is great anticipation for the next developer conference where announcements related to artificial intelligence are expected. “We can't wait to share some really cool things with our customers,” Cook said.
All the details.
ACCOUNTS DECREASING BUT HIGHER THAN EXPECTED
Apple closed the first quarter of the year with a net profit of 23.64 billion dollars (-2%), or 1.53 dollars per share, on revenues of 90.75 billion, against expectations for 1.50 dollars on 90.01 billion. If revenues beat analysts' estimates, they are still down 4%, with iPhone sales decreasing by 10% compared to the same quarter of 2023 to 45.96 billion, just below the 46 billion consensus.
WHAT HAPPENS TO IPHONES
iPhone sales fell 10.5% to $45.96 billion, from $51.3 billion a year earlier and comparing with analysts' expectations of $46 billion. Weighing on the result, sales in China – a market on which investors have been particularly focused – fell to 16.3 billion dollars for the quarter, compared to 17.8 billion dollars a year ago, notes the Financial Times .
A report from Counterpoint Research last month said iPhone sales in the country fell 19% year-on-year during the quarter ended in March – the worst showing for the company's flagship device since early 2020, when the coronavirus crisis has begun. According to market research firm International Data Corporation, Apple has lost leadership in the global smartphone market to Samsung and Chinese rivals such as Xiaomi and Huawei which have gained ground as the broader market recovers.
Additionally, analysts expected Mac sales to decline, but instead they grew to $7.5 billion, compared to estimates of $6.86 billion. Revenues from the iPad, equal to 5.6 billion, against the consensus of 5.91 billion, and from other products (7.9 billion, against the consensus of 8.08 billion), were below expectations.
THEY COMPENSATE FOR THE SERVICES
But the company's ultra-profitable services division (which includes the App Store, Apple Pay, Apple TV and Music) made up for it, jumping 14.2% to $23.87 billion, above analysts' expectations of 23.27 billion dollars. “Apple today reports revenue of $90.8 billion for the March quarter, including an all-time revenue record in the services sector,” said Apple's CEO.
RECORD BUYBACK KICKS OFF FOR APPLE
“Thanks to extremely high levels of customer satisfaction and loyalty, our active installed base reached a new all-time high across all products and geographic segments, and our business performance led to a new EPS record for the March quarter – said Luca Maestri, Apple CFO – Given our confidence in Apple's future and the value we see in our shares, our board has authorized an additional $110 billion for share repurchases. We are also increasing our quarterly dividend for the twelfth consecutive year.”
Apple's board declared a cash dividend of $0.25 per share of common stock, an increase of 4%. The dividend will be payable on May 16, 2024 to shareholders of record as of the close of business on May 13, 2024. The board also authorized an additional program to repurchase up to $110 billion of common stock.
THE WORDS OF TIM COOK
“During the quarter, we were excited to launch Apple Vision Pro and show the world the potential unlocked by spatial computing,” Tim Cook announced, adding that “We look forward to an exciting product announcement next week and a amazing global developer conference next month. As always, we are focused on providing the best products and services to our customers, and doing so while respecting the core values that guide us."
WAITING FOR THE NEWS
There is great anticipation for the Worldwide Developers Conference on June 10, where Apple is expected to announce some generative AI plans.
In the aftermath of OpenAI's ChatGpt release in November 2022, generative AI has risen to prominence in the tech conversation, but Apple has remained largely on the sidelines for the past year (unlike big tech rivals like Microsoft and Google ) and is now expected to release its first generative AI offering in mid-2024.
Meanwhile, Tim Cook said last February that the company was investing “significantly” in generative AI and would reveal more about its plans to use the technology later this year.
Apple and OpenAI discussed a potential deal earlier this year , Bloomberg reported. Those talks have since been reopened, according to people familiar with the matter. The possible deal could concern OpenAI integrations in iOS 18.
The news agency also reported last month that Apple was also in negotiations with Google to license the Gemini chatbot for new iPhone features.
Who will sign a partnership with the Bitten Apple company? We'll know maybe next month.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/che-cosa-succede-a-apple/ on Fri, 03 May 2024 09:19:12 +0000.