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Apple Inc. reported that profits slipped slightly but sales grew amid the spread of COVID-19, and promised investors billions more in stock repurchases and dividends.
The company posted fiscal second-quarter net income of $11.25 billion, or $2.55 a share, down slightly from $11.56 billion, or $2.46 a share, a year prior, but easily higher than estimates as the FactSet consensus modeled $2.24 a share. Apple’s AAPL, +2.11% total revenue grew slightly to $58.31 billion from $58.02 billion, while analysts were expecting $54.78 billion.
“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,” Chief Executive Tim Cook said in Thursday’s announcement.
See more: Can Apple make new iPhones while dealing with coronavirus, and who will buy them?
Apple shares initially rose more than 1% in extended trading immediately following the release of the results Thursday afternoon, then sank to a loss of about 1.8%. Shares of Apple have declined 10% over the past three months, as the Dow Jones Industrial Average DJIA, -1.17%, which counts Apple as a component, has fallen 16%.
Chief Executive Tim Cook said on the company’s earnings call that Apple would not be issuing fiscal third-quarter guidance due to “the lack of visibility and certainty in the near term.”
Apple announced that it would add $50 billion to its share-buyback program and boost its quarterly dividend by 6% to 82 cents a share. The company boosted its repurchase authorization by $75 billion a year ago and $100 billion the year before that, while upping its dividend 5% in 2019 and 16% in 2018.
The company aims to winnow down its net-cash balance, which stood at about $100 billion heading into the report, and it typically makes updates to its capital-return priorities in conjunction with March-quarter earnings.
Apple “has historically been very opportunistic with buybacks,” Evercore ISI analyst Amit Daryanani wrote prior to the report. He expected Apple to boost its buyback program by $75 billion to $100 billion, which he said would be “a logical decision given how attractive the current stock price is.”
The company saw March-quarter iPhone sales drop to $28.96 billion from $31.05 billion a year prior as the COVID-19 outbreak forced the closure of stores outside China starting March 13. Revenue from the iPhone business came in higher than the FactSet consensus of $28.39 billion.
Apple continued to see fast growth from its services business, which generated $13.35 billion in revenue, up from $11.45 billion a year earlier. Analysts were expecting $12.85 billion in revenue for the segment.
Revenue from iPads fell to $4.37 billion from $4.87 billion, while analysts were expecting $4.28 billion. The company generated $5.35 billion in sales from the Mac category, down from $5.51 billion a year prior and above the FactSet consensus of $5.26 billion. It also brought in $6.28 billion in revenue from wearables, accessories, and other products, up from $5.13 billion but below the $7.05 billion analysts had been modeling.
