Apple Approves Record-Breaking Share Buyback... iPhone Sales Decline by 10% (Comprehensive)

Apple announced a record $110 billion share repurchase program. This is an attempt to boost the stock price, which has been declining due to concerns over iPhone sales. With iPhone sales down 10% this year, Apple's quarterly revenue has decreased by nearly 4%.

[Image source=Reuters Yonhap News]

On the 2nd (local time), after the market closed, Apple revealed this share repurchase plan during its fiscal second-quarter (January to March) earnings announcement. This amount is 22% higher than last year's approved $90 billion, marking the largest scale ever. Along with this, Apple also decided to pay a dividend of $0.25 per share.

The quarterly revenue disclosed that day was $90.75 billion, exceeding Wall Street expectations, but it was down 4% compared to the same period last year. Net income also fell 2% to $23.64 billion ($1.53 per share).

In particular, the sluggishness in iPhone sales, which account for more than half of total revenue, stood out. iPhone sales revenue was $45.96 billion, matching market estimates ($46 billion), but it plunged 10% compared to a year ago. CNBC evaluated that this iPhone sales performance indicates weak demand for the iPhone. Sales of other products, including the Apple Watch, also dropped about 10% year-over-year to $7.9 billion. During the same period, Mac sales were $7.45 billion, and service segment revenue was $23.9 billion.

Apple did not provide guidance for the next quarter in this earnings announcement. However, Apple CEO Tim Cook stated in an interview with CNBC that he expects "low single-digit growth."

Along with this, CEO Cook previewed a "major announcement plan" related to artificial intelligence (AI) at next week's iPad launch event and the June annual developer conference. Regarding the Chinese market, which has raised significant concerns in the market, he emphasized that iPhone sales increased in China this quarter, adding that Apple is "thinking more long-term."

Investors are expecting AI-related announcements to lead to a resumption of iPhone sales. While Microsoft (MS), the company with the largest market capitalization, saw its stock rise about 5% since the beginning of the year thanks to the AI rally, Apple's stock fell 10% during the same period due to concerns over slowing iPhone sales.

Charles Reinhardt, Chief Investment Officer (CIO) of Johnson Investment, a shareholder of Apple, said, "The most important thing we are looking for is the stability of hardware, the iPhone," and evaluated, "Although iPhone sales have declined, profitability has been maintained." Hal Edins, Vice President of Apple-Investor Capital, said, "We expect Apple to compete by launching new AI features in the iPhone 16."

Meanwhile, with Apple revealing better-than-expected earnings and a large-scale shareholder return policy, the stock price is on the rise. Apple closed the regular session on the New York Stock Exchange up 2.2% that day and has been trading up about 7% in after-hours trading since the share repurchase news was announced.