Apple sales roar to beat all expectations sending shares surging 4%

Firm thrived as home-bound consumers stocked up on electronic devices and signed up for paid apps and services for fitness and music

People stand in front of an Apple store advertising 5G capable phones. Picture: Kevin Frayer/Getty Images

Apple posted sales and profits last night far ahead of Wall Street expectations and announced a $90bn (€74.5bn) share buyback as customers continued to upgrade to 5G iPhones and snapped up new Mac models with Apple's house-designed processor chips.

Sales to China nearly doubled and results topped analyst targets in every category, led by $6.5bn more in iPhone sales than predicted and Mac sales about a third higher than estimates. 

Apple chief executive Tim Cook said the company sees an economic recovery coming.

"I think the US will be very strong. Certainly, all indications that I see would be very positive on the US economy," Mr Cook said.

The results came the midst of a global semiconductor shortage that has hobbled US automotive manufacturers but that appears to have left Apple, a major chip buyer known for its supply chain expertise, unscathed.

"There wasn't a material issue with our results due to supply," Mr Cook said.

Apple thrived through the coronavirus pandemic as home-bound consumers stocked up on electronic devices and signed up for paid apps and services for fitness and music, and sales shot up even higher as Apple released 5G iPhone models last autums.

For the fiscal second quarter ended March 27, Apple said sales and profits were $89.6bn and $1.40 per share, compared with estimates of $77.4bn and 99 cents per share.

Apple shares rose 4% in extended trading after the results.

While Apple's business is booming, its App Store, one of its fastest-growing businesses, has come under increased antitrust scrutiny because of Apple's in-app payment rules and app review policies. 

In the coming weeks, Apple will defend a high-profile competition lawsuit brought by Fortnite maker Epic Games, while EU regulators are set to chare the company following a complaint by music streaming service Spotify.

Macs and iPads — two product categories that Wall Street rarely counted on to supply growth — both benefited from consumers working from home and remote learning. 

On top of those trends, Mr Cook said Apple customers were responding strongly to the company's M1 chip, its first in-house processor for Mac computers.

"Both of those things happening at once really supercharged the Mac sales. The last three quarters on Mac have been the strongest three quarters ever in the history of the Mac," he said.

Apple's sales in the greater China region during the fiscal second quarter, which included the busy Lunar New Year shopping season, were up 87.5% to $17.7bn, compared with a 57% rise in the previous quarter.

Apple raised its dividend 7% to 22 cents per share, a penny ahead of estimates, as well as announcing the $90bn share repurchase. Google announced a $50bn buyback on Tuesday.

Apple said iPhone sales were $47.9bn compared with analyst estimates of $41.4bn. Sales of Macs and iPads were $9.1bn and $7.8bn, respectively.

Apple investors are looking for growth from Apple's accessories business, which includes products like AirPods headphones and its new AirTag trackers, and its services business, which includes its App Store and new offerings such as paid podcasts.

Shares of Apple are up some 93% over the past year, compared with a 61% rise for the Nasdaq 100 index of which Apple is a component.