Apple pulls off surprise as strong iPhone sales balance weak iPad demand


Apple turned the leaves on its famous logo green, in honor of Earth Day. (Apple)

Apple may finally have some of its mojo. The firm shattered pessimistic expectations for a flat quarter Wednesday with news that it is selling more iPhones, making more money than expected  and -- maybe -- even willing to listen to its investors.

The company, which is notoriously stingy about spending its cash, raised its buyback program to $90 billion from $60 billion. Shares of the company shot up at least 8 percent in after-hours trading, following a disappointing trading day that saw the firm's shares slide to $524.75 on worries that it wouldn't deliver strong results.

But Apple blew all those expectations out of the water, reporting $10.2 billion in profit on $45.6 billion in revenue. Despite those glowing results, however, the firm still faced pointed questions from analysts about when, exactly, it's planning on a releasing a revolutionary new product. Demand for high-end smartphones still continues to slide around the world, and Apple's profits aren't growing as quickly as they used to -- signaling there's still a need for the company to find a new market.

Here are the key takeaways for Apple's second-quarter results:

The company is confident -- and has a lot of money to spend: Apple raised its stock buyback to $90 billion, a staggering amount -- particularly for a company that is often criticized for having too much cash on hand. Apple chief executive Tim Cook first announced a buyback program of $10 billion in 2012. Last April, Apple raised that to $60 billion.

The company is also raising its dividend by nearly 8 percent, to $3.29 per share, payable on May 15 to shares bought by May 12. And Apple will split its stock 7-to-1 in June.

"We’re confident in Apple’s future and see tremendous value in Apple’s stock, so we’re continuing to allocate the majority of our program to share repurchases." Cook said in a statement.

Sales are good: For a quarter where Apple didn't have any major product releases, it sure did well in sales. The company sold 43 million iPhones, up 17 percent from the same period last year. The company reported that 66 percent of its sales were overseas, boosted most by a sales uptick in Japan, although the firm also made gains in what's arguably the world's most important smartphone market: China.

In fact, Cook said that this was Apple's strongest non-holiday quarter ever, and specifically mentioned that sales of its software and services -- basically, for the iTunes store -- rose 11 percent to $4.6 billion. Nearly 800 million people now have iTunes accounts, he said.

The firm also beat expectations on sales of its Mac computers, selling 4.1 million as opposed to predictions of 3.9 million. Tablet sales did disappoint, however, with 16.35 million iPad sold, compared to estimates of about 19 million. Sales of iPads were down 16 percent from the same period last year, as they, too, hit a saturation point. Sales of the iPod also continued to fall, down 52 percent from the previous year.

But Apple's still under pressure to make something new: Apple's been teasing a "pipeline" of exciting new products for a while. Despite all of that chatter, the company still had nothing new to announce, in terms of products -- nothing that should surprise many seasoned Apple observers.  If there's one thing that's consistent about Apple, it's that the firm operates on its very own timeline.

The next likely occasion for a major product announcement will come in June, when Apple holds its developers conference. That is when the firm historically releases updates to its mobile and desktop operating systems. But Apple is clearly investing in new products. On a conference call with investors, Cook said that Apple has acquired 24 firms in the past 18 months.

Cook hinted, again, that Apple has big plans, but that he's not yet ready to divulge them.

"We’re not ready yet to pull the string on the curtain," he said.  "But we’ve got great things there that I’m excited about."

In a note to investors ahead of the report, BCG analyst Colin Gillis said that the "cracks" in Apple's platform are beginning to show, and that the firm needs to make some big moves to stay ahead of the consumer curve. And he's not convinced that, in their current state, they can.

"We see Apple as a provider of premium priced electronics, a lucrative market but one that may not sustain its current market valuation of $473 billion in the years ahead," Gillis wrote.

Hayley Tsukayama covers consumer technology for The Washington Post.
SECTION: {section=business/technology, subsection=null}!!!
INITIAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=bg52e9xhqr, moderationrequired=false, display_more=true, includefeaturenotification=true, canvas_allcomments_id=washpost.com/km4ey0dajm, defaultsort=reverseChronological, comments_period=14, includevoteofftopic=false, allow_videos=false, childrenitemsperpage=3, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, includesorts=true, includeheader=true, defaulttab=all, includeverifiedcommenters=true, includerecommend=true, maxitemstop=2, includereport=true, source=washpost.com, allow_photos=false, maxitems=7, includepause=true, display_ugc_photos=false, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!!

UGC FROM ARTICLE: !!!

FINAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=bg52e9xhqr, moderationrequired=false, display_more=true, includefeaturenotification=true, canvas_allcomments_id=washpost.com/km4ey0dajm, defaultsort=reverseChronological, comments_period=14, includevoteofftopic=false, allow_videos=false, childrenitemsperpage=3, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, includesorts=true, includeheader=true, defaulttab=all, includeverifiedcommenters=true, includerecommend=true, maxitemstop=2, includereport=true, source=washpost.com, allow_photos=false, maxitems=7, includepause=true, display_ugc_photos=false, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!
Comments
SECTION: {section=business/technology, subsection=null}!!!
INITIAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=bg52e9xhqr, moderationrequired=false, display_more=true, includefeaturenotification=true, canvas_allcomments_id=washpost.com/km4ey0dajm, defaultsort=reverseChronological, comments_period=14, includevoteofftopic=false, allow_videos=false, childrenitemsperpage=3, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, includesorts=true, includeheader=true, defaulttab=all, includeverifiedcommenters=true, includerecommend=true, maxitemstop=2, includereport=true, source=washpost.com, allow_photos=false, maxitems=7, includepause=true, display_ugc_photos=false, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!!

UGC FROM ARTICLE: !!!

FINAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=bg52e9xhqr, moderationrequired=false, display_more=true, includefeaturenotification=true, canvas_allcomments_id=washpost.com/km4ey0dajm, defaultsort=reverseChronological, comments_period=14, includevoteofftopic=false, allow_videos=false, childrenitemsperpage=3, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, includesorts=true, includeheader=true, defaulttab=all, includeverifiedcommenters=true, includerecommend=true, maxitemstop=2, includereport=true, source=washpost.com, allow_photos=false, maxitems=7, includepause=true, display_ugc_photos=false, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!
Show Comments
Most Read Business
Next Story
Brian Fung and Cecilia Kang | April 23