Apple Earnings Beat as Services Strength Softens Blow to iPhone Sales

Apple Earnings Beat as Services Strength Softens Blow to iPhone Sales thumbnail

Stock MarketsApr 30, 2020 04:33PM ET

© Reuters.  Apple Earnings, Revenue Beat in Q2© Reuters. Apple Earnings, Revenue Beat in Q2

By Yasin Ebrahim – Apple reported on Thursday second-quarter earnings that beat analysts’ forecasts and revenue that topped expectations as a jump in services revenue helped ease the impact of declining iPhone revenue.

Apple (NASDAQ:)shares gained 1.74% in after-hours trade following the report.

Apple announced earnings per share of $2.55 on revenue of $58.31 billion. Analysts polled by anticipated EPS of $2.31 on revenue of $54.99 billion. That compared with an EPS of $2.46 on revenue of $58.02 billion in the same period a year before. Apple had reported EPS of $4.99 on revenue of $91.82 billion in the previous quarter.

“Despite COVID-19’s unprecedented global impact, we’re proud to report that Apple grew for the quarter, driven by an all-time record in services and a quarterly record for wearables,” CEO Tim Cook said in a statement.

IPhone revenue fell to about $29 billion from $31 billion year-on-year and services revenue grew to $13.3 billion from $11.4 billion.

Greater China revenue dropped to $9.5 billion from $10.2 billion a year earlier as coronavirus-led disruptions to the supply chain weighed on growth.

Apple raised its dividend by 6% and bumped up its existing share buyback program by $50 billion.

Analysts are expecting Apple to report EPS of $2.09 and revenue of $51.27 billion in the upcoming quarter.

“Unlike many tech service providers whose businesses are growing in this pandemic, Apple is not in the same boat,” analyst Haris Anwar said. “The company is heavily dependent on retail sales of iPhones which may not be on top of the customers’ buying list when millions of people are losing their jobs. Any sign of sales recovery in China after reopening there, and a solid plan to navigate in this tough environment should support Apple stock in the short-run even if the current numbers are weak.”

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