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Apple Smashes Earnings Forecast; China Demand Powers iPhone Sales

A huge rebound in iPhone demand from China powered sales of the iconic handset close to $48 billion over the three months ending in March.

Apple Inc.  (AAPL) - Get Apple Inc. Report posted much stronger-than-expected second quarter earnings Wednesday, and boosted its stock buyback program by $90 billion, as post-pandemic demand in China powered a massive surge in iPhone sales.

The stock pared earlier after-hours gains, however, following comments from CFO Luca Maestri that indicated the tech giant will see a "steeper than usual" sequential revenue decline thanks in part to supply constraints linked to the global semiconductor shortage. 

Apple said profits for the three months ending in March, the tech giant's fiscal second quarter, were pegged at $1.40 per share, up 118% from the same period last year and well ahead of the Street consensus forecast of 99 cents per share. Group revenues, Apple said, rose 54% from last year to $89.58 billion, again topping analysts' estimates of a $77.35 billion tally, with more than two thirds of the overall total coming from overseas markets.

Apple also increased its stock buyback program by $90 billion, and increased its cash dividend by 7% to 22 cents per share. 

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"We are proud of our March quarter performance, which included revenue records in each of our geographic segments and strong double-digit growth in each of our product categories, driving our installed base of active devices to an all-time high,” said Maestri. “These results allowed us to generate operating cash flow of $24 billion and return nearly $23 billion to shareholders during the quarter. We are confident in our future and continue to make significant investments to support our long-term plans and enrich our customers’ lives.”

Apple shares, which closed 0.6% lower on the session at $133.58 each, were marked 1.9% higher in after-hours trading immediately following the earnings release to indicate a Thursday opening bell price of $136.15 each.

Apple said iPhone revenues rose 65% from last year to $47.94 billion, well ahead of the $41.7 billion Street forecast, thanks to what CEO Tim Cook called "strong demand for the iPhone 12 family". 

Greater China revenues, Apple said, rose 88% from last year's pandemic trough to $17.728 billion, while overall services revenues rose 26.6% to $16.9 billion.

Mac sales, Apple said, rose 70% to $9.1 billion as work-from-home dynamics fueled new computer sales, while iPad sales were up an astonishing 78% to $7.81 billion.

Sales from Apple's wearables, home and accessories division jumped 24.8% to $7.84 billion.