New iPhone Market for Apple: China

New iPhone Market for Apple: China
Image credit: REUTERS | Jason Lee

Apple Inc beat Wall Street's revenue and profit forecasts on Monday as it sold more iPhones in China than the United States for the first time, but the company gave no sales figures for its new Apple Watch.

Apple's iPhone sales in China soared, increasing its revenue in the country 71 percent to $16.8 billion, although that was helped by gift-buying for Chinese New Year.

Chief Executive Tim Cook said that China's expanding middle class is fueling iPhone sales there, which is the bulk of the company's sales. The iPhone 6 was launched last autumn in China with a number of carriers.

Wall Street hailed the results but share reaction was muted. Its shares rose 1.6 percent in after-hours trading to $134.52.

Apple sold 61.2 million iPhones in the quarter, up 40 percent from the year-ago quarter, but down from the record-breaking holiday quarter. It sold 12.6 million iPads, down 23 percent from a year ago.

Apple's big screen iPhone 6 and 6 Plus have been popular with customers worldwide, helping the company overtake rival Samsung in global smartphone sales last quarter.

"A 60 million-plus iPhone number is a home run and will be cheered by the Street as this remains the bread and butter of Apple," said FBR Capital Markets analyst Daniel Ives.

Apple gave no sales figures for its recently released Apple Watch, but did say the current quarter was off to "an exciting start".

Cook said demand for the watch continued to be greater than supply, as it has been since pre-orders started earlier this month.

"From a demand point of view, it's hard to gauge when you don't have product in stores," said Cook on a conference call with analysts. Apple is only selling the watch online and in select third-party boutiques due to the large number of models and straps for the watch, which could become a logistics nightmare if it offered every permutation of the many varieties at already jam-packed Apple stores.

The most valuable publicly traded U.S. company raised its quarterly dividend 11 percent to 52 cents per share and boosted its share repurchase program to $140 billion from $90 billion announced last year.

Together, Apple estimated that would mean returning $200 billion to shareholders by the end of March 2017. It ended the quarter with $193.5 billion in cash and marketable securities, up more than $15 billion from the last quarter.

Even so, that was "a bit lower than expectations," said Bernstein Research analyst Toni Sacconaghi.

Apple said net income for the fiscal second quarter rose to $13.57 billion, or $2.33 per share, from $10.22 billion, or $1.66 per share, a year earlier.

Analysts had expected earnings per share of $2.16 per share, according to Thomson Reuters I/B/E/S.

Overall revenue rose to $58.01 billion in the second quarter ended March 28, from $45.65 billion a year earlier. That beat Wall Street's expected revenue of $56 billion.

Apple said it expected fiscal third-quarter revenue of $46 billion to $48 billion, in line with analysts' average forecast of $47 billion.

(Reporting by Bill Rigby in San Francisco, Devika Krishna Kumar in Bengaluru and Yasmeen Abutaleb in New York; Editing by Sriraj Kalluvila, Bernard Orr)

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