Updated from 10:13 a.m. to include comments from Pacific Crest analyst.
Apple reported fiscal second-quarter results that topped Wall Street expectations, as iPhone shipments blew away consensus estimate. Cupertino, Calif.-based Apple reported second-quarter earnings of $11.62 a share on $45.6 billion in revenue. The company shipped 43.7 million iPhones, 16.4 million iPads, and 4.1 million Macs during the quarter. Gross margin, a highly watched level for Apple, came in at 39.3%.
Wall Street consensus was around 37 million iPhones for the quarter, but strength in several markets, including China, Japan and others really drove the results.
"iPhone was key in driving our stronger-than-expected results," CEO Timothy D. Cook said on the earnings call Wednesday. He noted that demand for each of the three iPhones (4S, 5c, and 5s) was stronger than their predecessors, and helped Apple in a variety of different geographies. "We gained smartphone share in many developed and emerging markets including the U.S., the U.K., Japan, Canada, Germany, France, Vietnam and Greater China, just to mention a few. In fact, we established a new all-time record for total iPhone sales in the BRIC countries." On the conference call, Cook also noted there are more than 800 million iTunes accounts, up from a previous number of around 600 million. Analysts surveyed by Thomson Reuters expected Apple to earn $10.18 a share on $43.53 billion in revenue in the quarter. Shares of Apple were surging in early Thursday trading, gaining 8.1% to $567.03. For the fiscal third quarter, Apple said it expects revenue between $36 billion and $38 billion, with gross margins between 37% and 38%. Operating expenses will be between $4.4 billion and $4.5 billion, and it will have a tax rate of 26.1%.
Apple also announced that it was upping its capital allocation program to more $130 billion by the end of calendar year 2015. As part of the program, Apple's board increased its share repurchase authorization to $90 billion from $60 billion, and boosted its quarterly dividend by 8% to $3.29 a share. "The company also plans to increase its dividend on an annual basis. With annual payments of $11 billion, Apple is among the largest dividend payers in the world," the company said in the release.
From August 2012 through March 2014, Apple has spent $66 billion in cash on its capital return program.
The board also announced a seven-for-one stock split, effective June 2, 2014. Shares will will begin trading on a split-adjusted basis on June 9.
On the conference call, Cook noted Angela Ahrendts, the former CEO of Burberry, would be joining Apple's executive team next week, as she helps to lead Apple's retail stores.