Apple (AAPL) Reports Earnings Up +33 Percent on iPhone Sales, Increases Dividend
Shares of Apple Inc. (AAPL) were trading up +3.38 or +2.55 percent to $136.03 per share in pre-market trading this morning after the company reported better than expected earnings for the company's second quarter late yesterday. In addition, the company announced it would raise its dividend to shareholders by eleven percent. Apple Inc. stock closed at $132.65, up +2.37 or +1.82 percent in Monday's regular trading session.
Cupertino, California based Apple Inc., formerly known as Apple Computer Inc. is the second largest information technology company in the world by revenue, and the world's third largest manufacturer of mobile phones after Samsung and Nokia.
Apple reported a quarterly net profit of $13.57 billion, or $2.33 per diluted share on revenue of $58.01 billion in its second quarter for fiscal 2015, compared to $10.22 billion or $1.66 per diluted share, on revenue of $45.65 billion for the same period one year ago. Analysts were expecting the company to report a profit of $2.16 per share on revenue of $56 billion.
Gross margins, or the percentage of revenue that the company keeps after manufacturing costs, were also strong for the company's second quarter, increasing to +40.8 percent and beating analyst estimates of +38.5 to +39.5 percent.
Apple's Chief Executive Officer, Tim Cook, said that, "We are thrilled by the continued strength of iPhone, Mac and the App Store, which drove our best March quarter results ever. We're seeing a higher rate of people switching to iPhone than we've experienced in previous cycles, and we're off to an exciting start to the June quarter with the launch of Apple Watch.
The main driver for the improved earnings were sales of the company's iPhone, which had sales of 61.2 million in the company's second quarter ended on March 28th, an increase of +40 percent from the same period one year ago. Adding to the bottom line was the fact that the average selling price for a new iPhone increased by about $60 per unit to $659. Analysts expected the company to report 60 million iPhone sales in the quarter.
Another driver for earnings and revenue in the quarter were sales in Greater China, which includes Hong Kong and Taiwan. Apple reported a +71 percent increase in revenue for the region at $16.8 billion. CEO Cook said in a conference call after the earnings release that, "Everything you look at in China was extremely good, we're really proud of the results there and continue to invest in the country.
In addition to the impressive earnings report, Apple announced it would increase its dividend by +11 percent and added an additional $50 billion to its share repurchase program, which now stands at $140 billion. The company pledged to return as much as $200 billion to stockholders by March of 2017 through dividends and share repurchases. The company had previously pledged to return $130 billion to shareholders by the end of this year.
Apple stock is already gaining before the market opening. Many analysts are adjusting their price targets for the stock, with some analyst raising their target to as much as $195 per share in light of the company's new Apple Watch release. The company, which started shipping the device last Friday said that new orders for the watch may not be delivered until June.
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