Apple's second-quarter revenue declines after drop in iPhone sales

The iPad has a strong quarter, with revenue growing in all five of the tech giant's geographic regions

(FILES) In this file photo taken on February 18, 2019 US multinational technology company Apple's logo is displayed on a tablet in Paris.  Apple said on April 30, 2019 that profits in the past quarter dropped amid slowing iPhone sales, but the results were above Wall Street expectations and sent shares sharply higher. / AFP / Lionel BONAVENTURE
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Apple posted second-quarter revenues of $58 billion, a 5 per cent decline compared to the same period last year, after iPhone sales suffered the steepest decline.

But chief executive Tim Cook was optimistic about this fiscal quarter, to the end of June, because of a pick-up in smartphone purchases towards the end of March, and sales of services and wearable devices.

Mr Cook said iPhone sales had started to stabilise in China after the tech giant cut prices to beat sales decline.

Apple smartphone sales fell 17 per cent in the second quarter, as did Mac sales, with revenues declining from $5.8bn a year ago to $5.5bn.

But chief financial officer Luca Maestri said Apple generated double-digit revenue growth from Macs in Japan and Korea in the second quarter.

Mr Maestri said nearly half of customers purchasing Macs during the quarter were first-time buyers.

IPad revenues grew in all five of Apple's geographic regions, with the most growth in Korea, Japan, Mexico and Thailand, where revenue at least doubled from that of the same quarter last year.

Mr Maestri said there had been a great customer response to the new iPad designs.

Shares rose more than 5 per cent to $211.50 in after-hours trading after Apple announced the results.

Quarterly earnings per diluted share were $2.46, down 10 per cent. But Apple’s board of directors declared a cash dividend of $0.77 a share of the company’s common stock, an increase of 5 per cent.

The tech giant’s third-quarter guidance included revenue of between $52.5bn and $54.5bn, a gross margin from 37 to 38 per cent, and operating expenses of between $8.7bn and $8.8bn.

Mr Cook said Apple “had our best quarter ever” for sales from the app store. He said Apple Pay was now in 30 markets and expected it to be live in 40 by the end of the year.

“Our goal now is to pick up the pace," Mr Cook said. "Our active installed base of devices continues to grow in each of our geographic segments.

“Our March quarter results show the continued strength of our installed base of over 1.4 billion active devices, as we set an all-time record for services, and the strong momentum of our wearables, home and accessories category, which set a new March quarter record.

“We delivered our strongest iPad growth in six years and we are as excited as ever about our pipeline of innovative hardware, software and services.

"We’re looking forward to sharing more with developers and customers at Apple’s 30th annual Worldwide Developers Conference in June,” Mr Cook said.

Mr Maestri said: “We generated operating cash flow of $11.2bn in the March quarter and continued to make significant investments in all areas of our business.

“We also returned over $27bn to shareholders through share repurchases and dividends.

"Given our confidence in Apple’s future and the value we see in our stock, our board has authorised an additional $75bn for share repurchases.

"We are also raising our quarterly dividend for the seventh time in less than seven years.”