Apple Inc. reported a 7% increase in quarterly profit, amid
intensifying competition for mobile devices, and announced
increases to its stock buyback and dividend programs.
Apple increased its share repurchase authorization to $90
billion from the $60 billion level announced last year. The company
also increased its quarterly dividend by about 8% and said it will
split its stock 7-for-1 in June.
Chief Executive Tim Cook said the company chose to expand its
stock-buyback program by $30 billion because it views its shares as
undervalued.
"That should show you how much confidence we have in the future
of the company," Mr. Cook said in an interview with The Wall Street
Journal.
The company said it would boost the overall size of its capital
return program to more than $130 billion by the end of 2015, up
from its previous $100 billion plan.
After more than a decade of remarkable earnings growth, the
Cupertino, Calif., technology giant's revenue and profit are
flattening and the company is fighting the perception that its best
days are behind it. It has promised to expand its product line-up
and drive growth as it did with the iPhone and iPad.
Apple said net income was $10.22 billion in its fiscal second
quarter ended March 29 versus $9.55 billion in the year-ago period.
However, Apple's earnings per share rose to $11.62 from $10.09,
because the company's stock repurchase program decreased the pool
of total shares.
Revenue rose to $45.6 billion from $43.60 billion in the same
period a year earlier.
Analysts, on average, estimated that Apple would post earnings
of $10.18 per share on revenue of $43.53 billion, according to
Thomson Reuters.
Mr. Cook pointed to the iPhone as an area of strength for the
company. Apple said it sold 43.7 million iPhone units in the three
months ended March 29, far surpassing analysts' expectations of
sales of 38.2 million units. He said the company saw strength
across its entire line-up of phone models including the
less-expensive 5C and that it was bolstered by strength across many
markets including China, Vietnam and Poland.
The iPhone remains Apple's most important product. It is the
largest contributor to revenue and is its most profitable hardware
product. However, the iPhone is steadily losing market share to
smartphones running on Google Inc.'s Android operating system.
In recent years, as rivals rolled out larger-screen displays and
lower-price offerings, Apple has held the line on iPhone prices
while keeping the screen size relatively small compared to the
competition. The Journal has reported that Apple is working on a
larger-screen iPhone for release later this year.
The growing competition for smartphones is also hurting Apple's
main rival, Samsung Electronics Co. When the company reports
earnings next week, Samsung is expected to report a second straight
year-on-year decline in quarterly operating profit as demand for
its Galaxy smartphones has started to slow.
Write to Daisuke Wakabayashi at Daisuke.Wakabayashi@wsj.com
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