Apple optimistic about sales as price cuts on the iPhone help China

(Reuters) – Apple Inc. on Tuesday announced higher-than-expected sales for the third quarter and CEO Tim Cook said iPhone sales had begun to stabilize in China, a sign that declines prices made by Apple helped to limit sales declines.

IPhone sales recorded their largest decline ever recorded: 17% in the second fiscal quarter compared to the previous year and a little below the expectations of analysts. But Apple executives said that the resumption of iPhone sales towards the end of the second quarter, as well as the growth of sales of services and wearable devices, made them optimistic about the current quarter.

Shares rose more than 5% to $ 211.50 after Apple announced the results.

Apple has announced revenues between $ 52.5 and $ 54.5 billion for the current quarter ending in June, an estimate of over $ 51.93 billion according to analysts, according to Refinitiv's IBES data.

In an interview, Apple CEO Tim Cook said that iPhone sales had begun to strengthen in the last few weeks of the second fiscal quarter.

"When we look at the results of the iPhone until the second quarter, the results were stronger from one year to the next in the last weeks of the quarter. We also found a similar result in China, "Cook told Reuters during an interview. "These, with continued success with wearable devices and so on, give us some assurance that things are a little better."

Apple reported net earnings per share of $ 2.46 for the March quarter, compared to an average estimate of $ 2.36 for Wall Street.

According to Apple, the turnover of the iPhone amounts to 31.05 billion dollars, a level slightly lower than analysts' estimates, which would amount to 31.10 billion dollars.

Service revenues, which include sales of Apple Music, the App Store and other companies, reached $ 11.45 billion, against $ 11.32 billion, according to analysts, according to FactSet.

Apple has been battling the slowdown in iPhone sales in key markets such as China and has seen its first year-on-year decline in the company's sales volume. iPhone for the holiday season.

This slowdown is partly due to the high cost of the iPhone and competition from competitors such as Huawei Technologies Co Ltd, Xiaomi Corp., Oppo and Vivo, all of whom sell cheaper phones with similar functionality to the Iphone.

But Cook said that China's price adjustments, the drop in Chinese taxes on the iPhone and Apple's proposed takeover and financing offerings, have helped iPhone sales to recover to the end of the quarter. Mr Cook also said that he was "optimistic" about the upcoming conclusion of a trade agreement between the United States and China.

"Trade relations, compared to the previous quarter, are better. The tone is better, "Cook told Reuters. "The sum of all this together, it helped us."

Investors are counting on Apple's service sector to fuel growth as iPhone sales slow. Last month, Apple unveiled a new credit card offering and new subscription services for news, television and games, although only the news subscription is currently available for sale.

Apple announced Tuesday it has 390 million subscribers to its own services and third-party services on its devices. The company has set the goal of 500 million euros by 2020.

Apple has also exceeded analysts' expectations for its ready-to-wear business, generating a business turnover of $ 5.13 billion versus $ 4.79 billion, according to data from FactSet.

Tom Plumb, founder of Wisconsin Capital Management and shareholder of Apple, said the results looked good, especially the slight rise towards the end of the quarter. But other shareholders such as Brian Pirri, one of the major shareholders of Apple's New England Investment Group and Retirement Group, said they took the results with a "grain of salt" because the expectations were low on reading the report.

"I do not think phones are the answer. (Apple) will have to continue to innovate, and I do not see a ton of this report that fascinates me, "said Pirri.

For the second quarter of its fiscal year ended March, Apple reported revenue of 58.02 billion USD, higher than the average estimates estimated at 57.37 billion USD by analysts, according to Refinitiv data.

Apple said it spent $ 27 billion on stock repurchases and dividends in the second quarter of the year, a record high for the company. Apple also said that its board of directors had authorized $ 75 billion of additional share buybacks and increased its dividend by 5%.

"I imagine that people are extrapolating the positive developments in China towards the end of the quarter and are hoping for a better environment there," said Hal Eddins, chief economist at Capital Capital Shareholder. Apple, shareholder of Apple. "For me, the determining factor of the evolution of tonight (the share price) is the increase of the dividend … and especially the purchase of 75 billion dollars. Anyway, I'll take it. "