And things are only going to get worse in the third quarter…
Apple has announced poor financial results for its fiscal 2016 second quarter ended 26 March 2016, marking its first revenue dip in 13 years.
The company posted quarterly revenue of $50.6 billion and quarterly net income of $10.5 billion, or $1.90 per diluted share. These results compare badly to revenue of $58 billion and net income of $13.6 billion, or $2.33 per diluted share, in the same quarter last year.
Gross margin was 39.4% compared to 40.8% in the same quarter 2015. International sales accounted for 67% of the quarter’s revenue from the company’s 51.2 million device sales over the period, a dip of 10 million on the same quarter in 2015.
Things are not looking positive for the company going forward either; Apple stated it is predicting revenue of between $41 billion and $43 billion, with gross margin between 37.5% and 38%, for its fiscal 2016 third quarter.
However, the head of the company, Tim Cook, Apple’s CEO, is remaining positive: “Our team executed extremely well in the face of strong macroeconomic headwinds. We are very happy with the continued strong growth in revenue from Services, thanks to the incredible strength of the Apple ecosystem and our growing base of over one billion active devices.”
The company also announced that its Board of Directors has authorised an increase of $50 billion to the company’s programme to return capital to shareholders. Under the expanded programme, Apple plans to spend a cumulative total of $250 billion of cash by the end of March 2018.
“We generated strong operating cash flow of $11.6 billion and returned $10 billion to shareholders through our capital return programme during the March quarter,” said Luca Maestri, Apple’s CFO. “Thanks to the strength of our business results, we are happy to be announcing today a further increase of the programme to $250 billion.”
As part of the updated programme, the board has increased its share repurchase authorisation to $175 billion from the $140 billion level announced last year. The company also expects to continue to net-share-settle vesting restricted stock units. The board has approved an increase of 10% to the company’s quarterly dividend, and has declared a dividend of $.57 per share, payable on 12 May 2016 to shareholders of record as of the close of business on 9 May 2016. From the inception of its capital return programme in August 2012 through March 2016, Apple has returned over $163 billion to shareholders, including $117 billion in share repurchases.
The company plans to continue to access the domestic and international debt markets to assist in funding the programme. The management team and the board will continue to review each element of the capital return programme regularly and plan to provide an update on the programme on an annual basis.
Apple is providing the following guidance for its fiscal 2016 third quarter: operating expenses between $6 billion and $6.1 billion; other income/(expense) of $300 million; tax rate of 25.5%.
