Apple shares jump on iPhone sales

An unexpected jump in iPhone sales helped Apple to beat revenue forecasts for the first three months of the year, driving an 8 per cent leap in its shares as Wall Street cheered a 5 per cent rise in sales when many had feared its growth might stall altogether.

Alongside its earnings, Apple added another $30bn to its capital return programme, increasing its dividend by 8 per cent and taking its total share buyback plan to $90bn until the end of 2015.

Apple said it expects to return to the debt markets this year to help fund the buybacks, including for the first time looking outside the US to raise funds. It added that it would increase its dividend annually from now on.

The company also announced a seven-for-one stock split, to take place in June, which the company hopes will make its stock more accessible to retail investors.

Boosted by sales through new partner China Mobile, the iPhone returned to double-digit unit growth, up 17 per cent to 43.7m units compared with the same quarter a year ago. Wall Street had expected around 38m iPhones. That also helped to improve gross margins to 39.3 per cent, also ahead of forecasts.

However, iPad sales volumes tumbled 16 per cent to 16m in the quarter, 3m below analysts' expectations.

Apple's overall revenues grew 5 per cent to $45.6bn, with net profit of $10.2bn and earnings of $11.62

Apple's shares leapt 8 per cent in after-hours trading.

"We're confident in Apple's future and see tremendous value in Apple's stock, so we're continuing to allocate the majority of our program to share repurchases," said Tim Cook, Apple's chief executive. "We're very proud of our quarterly results, especially our strong iPhone sales and record revenue from services."

Luca Maestri, Apple's incoming finance chief who was appointed last month, told the FT in an interview that revenues and earnings were above Apple's own expectations for the quarter. "It's the best revenue ever that we've had for a non holiday quarter," he said. "The biggest driver for these results was clearly iPhone, but not only iPhone . . . We are especially proud of the performance we had in Greater China."

Apple gained smartphone market share in the US, UK, Canada, Germany and Japan in the quarter he said. In China, overall sales grew 13 per cent over last year, offsetting sluggish 2 per cent growth in the Americas.

Despite the weaker iPad sales, Mr Maestri said that sales were at the high end of Apple's own expectations, due to a tough comparator with the prior year and inventory issues. Looking ahead to the June quarter, Apple's revenue guidance of $36bn to $38bn would represent 2 to 8 per cent growth year on year.

Last year, Apple expanded its cash return programme to $100bn by the end of 2015. Since then, the company had come under pressure from activist investor Carl Icahn, who pushed for a $50bn increase in buybacks, before withdrawing his proxy challenge.

"We are returning more cash to shareholders at a faster pace than any other company ever," Mr Maestri said.

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