Apple Inc. (AAPL, Financial) released its second-quarter earings after the closing bell on Monday. The company smashed its earnings report, beating analysts' earnings expections. Apple posted earnings per share of $2.33 per share, a 40% increase compared to last year. The company had revenues of $58 billion, a 27% increase compared to last year. Analysts were expecting $2.15 per share on revenues of $55.94 billion. In the same quarter of last year, the company reported earnings of $1.66 per share on revenues of $45.5 billion. After Apple reported its second-quarter earnings, shares were up in after-hour trading by 1.36%. The company also, in its second-quarter report, updated and expanded its capital return program to $200 billion. Apple will increase its capital return program by 50% and will increase its share repurchase program to $140 billion from $90 billion as well.
Apple CEO Tim Cook said in a statement after the second earnings report, “We are thrilled by the continued strength of iPhone, Mac and the App Store, which drove our best March quarter results ever,” and he went on to say, "We’re seeing a higher rate of people switching to iPhone than we’ve experienced in previous cycles, and we’re off to an exciting start to the June quarter with the launch of Apple Watch."
Key metrics
During the second quarter, international sales made up 69% of Apple total sales and the company had gross margin of 40% for the quarter. Apple had 61.2 million in iPhone units and also reported new records for Mac sales and App store sales for the second quarter.
Third-quarter guidance
For the third quarter Apple expects revenues between $46 and $48 billion and gross margins between 38.5% and 39.5%. Analyst have concerns about Apple's guidance, mainly from currency headwinds because Apple's currency hedges are starting to roll off. Wall Street analyst are expecting revenues of $47 billion which is right in line with Apple's guidance. Apple is expecting operating expenses to be between $5.65 billion and $5.75 billion.
Apple has expanded its capital return program to $200 billion
Press Release, Today Apple announced that its board of directors has authorized an increase of more than 50 percent to the company’s program to return capital to shareholders. Under the expanded program, Apple plans to utilize a cumulative total of $200 billion in cash by the end of March 2017.
As part of the revised program, the board has increased its share repurchase authorization to $140 billion from the $90 billion level announced last year. In addition, the company expects to continue to net-share-settle vesting restricted stock units.
The board has also approved an increase of 11 percent to the company’s quarterly dividend and has declared a dividend of $.52 per share, payable on May 14, 2015 to shareholders of record as of the close of business on May 11, 2015.
From the inception of its capital return program in August 2012 through March 2015, Apple has returned over $112 billion to shareholders, including $80 billion in share repurchases.
To assist in funding the program, the company plans to continue to access the domestic and international debt markets. The management team and the board will continue to review each element of the capital return program regularly and plan to provide an update on the program on an annual basis.
Apple CEO Tim Cook said in the press release about the expanded capital return program.
"We believe Apple has a bright future ahead, and the unprecedented size of our capital return program reflects that strong confidence,” Tim Cook went on to say, "While most of our program will focus on buying back shares, we know that the dividend is very important to many of our investors, so we’re raising it for the third time in less than three years.”
