Apple plows United States tax cuts into record share buybacks

Apple logo. Reuters

Apple's share of the Indian smartphone market has hovered at 2-3%. The lion's share $200 billion came in the form of buybacks program.

Revenue from that division surged to US$9.1bn, beating last year's figure of US$8.5bn and Wall Street forecasts of US$8.4bn. The firm's target is based on 14.9 times its fiscal 2019 EPS target after better than expected earnings, stable iPhone unit shipments and growing revenue through services.

Cook said customers chose iPhone X more than any other iPhone model each and every week in the March quarter, just as they did following its launch in the December quarter.

Apple announced on Tuesday with its latest quarterly result that an earlier buyback worth some $210 billion will quieten down in the next quarter. Purchases from the App Store hit an all-time revenue record in March, while paid subscription for Apple Music surpassed the 40 million mark.

Apple CEO Tim Cook recognised the low share that the smartphone maker has in India, a market where it reported record revenue growth in the first six months of its fiscal year and whose expanding middle class and expansion into 4G offers a strong growth opportunity amid slowing global demand for the devices.

These metrics also don't mention where the new users of Apple Pay come from: the service launched in several new markets a year ago (it's now available in 21 markets), including Denmark and Finland.

Apple subscribers, who include customers paying for third-party apps on iPhones, rose 100 million in the previous year to 270 million.

The Olathe, Kansas-based company earned 68 cents a share, up 31% year over year, on sales of $710.9 million, up 11%, in the March quarter.

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Other analysts agreed. "Even if smartphone replacement cycles continue to lengthen, we see Apple delivering 4% revenue and 16% (earnings per share) growth over the next three years with services the primary growth engine", Morgan Stanley's Huberty wrote.

Being too reliant on one product has its obvious pitfalls but there are also perhaps "hidden" benefits to generating more sales from the services business.

Apple's price of shares dropped precipitously in anticipation that the company would confirm that fear, a confirmation that never came, according to the Chicago Tribune.

But the key number everyone was looking to was the one that has the greatest impact on AAPL stock: iPhone sales.

Investors support Apple's effort to look beyond its signature product, the iPhone, for growth.

The company plans to spend $10 billion opening and expanding data centres in the USA and another $20 billion on other long-term projects, but it's unclear how much of that Apple would have spent anyway.

Apple predicts revenue of $51.5 billion to $53.5 billion in the June quarter, ahead of the $51.6 billion Wall Street expected as of Monday evening, reports Reuters. He said that "because we're making all the right investments all around the company, it makes flawless sense for us not to keep the cash on our balance sheet but return it to investors".

That said, iPhone sales were well ahead of numerous diminished predictions of the last few weeks as data from supplier component sales made the rounds among investors.

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