TMTPost -- Shares of Apple Inc. surged as much as 8.1% intraday before closing 6% higher on Friday. Shares notched their largest daily gain since November 30, 2022 after the iPhone maker posted better-than-expected top and bottom line for its fiscal 2024 second quarter, suggesting sales in its key market China didn’t accelerate decline amid increasing competition from Chinese rivals.
Credit：Apple
Apple reported earnings per share (EPS) of $1.53 on revenue of $90.75 billion during the fiscal second quarter ended March 30, 2024, beating analysts’ estimated EPS of 1.50 on revenue of $90.01 billion. “Thanks to very high levels of customer satisfaction and loyalty, our active installed base of devices has reached a new all-time high across all products and all geographic segments, and our business performance drove a new EPS record for the March quarter,” said Apple’s Chief Financial Officer (CFO) Luca Maestri. Maestri told analysts at an earnings call that Apple expected revenue growth in current quarter to be in the low single digits.
The March quarter saw Apple’s EPS edged up 0.66% year-over-year (YoY) record hight, better than analysts’ expected decrease of 1.3%. Overall revenue fell 4% YoY for the fifth time in the past six quarters, less deeper than Wall Street projected decrease of 4.8%. iPhone, Apple’s top product line, generated $45.96 billion that quarter with a 10.5% YoY decline, reversing its YoY growth for third consecutive quarter. As a main force that dragged down Apple’s revenue, iPhone sales did show weak demand of iPhone 15 series launched last September, though not as sluggish as analysts’ forecast.
Performance of Apple’s all-important iPhone seems not as bad as some investors anticipated, which partially fueled the company’s shares surge. “The main thing we’re looking for is some form of stability in the hardware and iPhone,” said Charles Rinehart, chief investment officer at Johnson Investment Counsel, an Apple shareholder. “The iPhone is down a bit, but it held on to their profitability.”
Another surpring highlight of Apple’s results came from China, which has been a source of concern for investors wary of slowdown. Greater China, which includes mainland China, Taiwan, Hong Kong and Singapore, brought $16.37 billion in the March quarter, representing an 8% YoY fall. That, however, still topped estimates of $15.87 billion with a YoY decrease of 11%. As Apple’s third largest market next to North America and Europe, Great China contributed 18% of total revenue that quarter. Apple didn’t provide detailed financial or sales figures in China, but Apple CFO Maestri said in an interview with Yahoo Finance that the company saw growth in mainland China during the quarter.
In his interview with CNBC, Apple CEO Tim Cook said it may come as a surprise to some peopel, but iPhone sales grew in China that quarter. "I feel good about China, I think more about long term than to the next week or so," Cook said. At an earnings call, Cook said he remains very optimistic about the Chinese market despite fierce competition. Cook maintained Apple has a lot of happy customers in China, citing enthusiasm from customers in the country. As to the competition there, Cook said China has been and is the most competitive market in the world, while the iPhone 15 and iPhone 15 Pro Max are the leading smartphones in urban China.
The Wall Street became more upbeat on Apple following the financial results and its plan to repurchase $110 billion, the biggest ever buyback in U.S. history. Morgan Stanley lifted their price target to $216 from $210 on Friday, citing Apple’s quarterly performance, YoY growth in iPhone shipments to China in March, stock buyback and upcoming artificial intelligence (AI) updates that Cook hinted. Analysts at Bank of America reiterated their buy rating of Apple stock, calling it a top pick, and hiked their price target to $230 from $225 the same day. “Apple is growing iPhones in Mainland China, estimate revisions are turning positive and GenAI features will drive a strong upgrade cycle,” the analysts wrote in their investor note.