Apple had a basket full of goodies for investors in its earnings report Wednesday: Better-than-expected earnings, strong iPhone sales, an increase in the company's dividend, an additional $30 billion for its stock repurchase program, the first stock split in nearly a decade -- and the promise of new products.
Investors responded by bidding up Apple's stock by nearly 8 percent.
"It was a great quarter," said Andy Hargreaves, a financial analyst who covers the company for Pacific Crest Securities. He added that by allotting more money for dividends and stock repurchases, Apple's executives are "certainly trying to show confidence in the business, and that's great."
The results follow a series of lackluster earnings reports marked by slowing sales and profit growth. There were widespread worries that the latest quarter would include more of the same, and that the company had lost its innovative edge.
The Cupertino company said it earned $10.2 billion, or $11.62 a share, in the period ended March 29. That was up from $9.5 billion, or $10.09 a share, in the same quarter a year earlier. Apple's sales rose 4.6 percent from its second quarter of 2013 to $45.6 billion.
Driving its results was a standout quarter from the iPhone. The company sold 43.7 million iPhones, a record number for its fiscal second quarter and a result that was up 17 percent from the same period last year.
Apple executives, in a conference call with analysts, said the company gained share in smartphones in both developed markets and developing ones, including Vietnam. And Apple sold record numbers of phones in China.
"We feel very, very good about that," CEO Tim Cook said on the call.
Apple's results topped Wall Street's forecast. On average, analysts were expecting the company to earn $10.18 a share on sales of $43.5 billion.
But the company had more good news for investors. Along with its earnings announcement, Apple said it would boost its share repurchase program to $90 billion from the $60 billion previously announced and increase its quarterly dividend to $3.29 a share, up about 8 percent from the previous rate.
The company also announced a 7-for-1 stock split. The split, which will take effect June 9, is the first for the company since February 2005.
The split should make Apple's stock, which has been trading at more than $300 for more than three years, more attractive to regular investors, said Scott Rothbort, founder and president of LakeView Asset Management.
"People who couldn't afford it at $550 a share ... all of a sudden can afford it," said Rothbort, who owns shares of Apple in his personal and client accounts.
Perhaps most tantalizing for consumers, though, was the promise of new products, potentially in new categories. Cook was coy on the call about what the company would introduce, but reports have indicated that Apple is working on both a smartwatch and a revamped version of its Apple TV digital media player.
"We're comfortable in expanding the things we're working on," Cook said. "We're doing that in the background. We're not ready yet to pull the string on the curtain, (but) we've got some great things we're working on that I'm proud of and very excited about."
To be sure, Apple's results weren't perfect. Sales of the iPad, which until recently was Apple's fastest-growing product line, fell 16 percent from the year-ago period to 16.4 million units. And iPod sales continued their precipitous decline, falling 51 percent from the year-ago quarter.
Of perhaps more concern, the company offered guidance for its fiscal third quarter that was toward the lower end of analysts' estimates. Apple's forecast implies earnings of $6.7 billion to $7.5 billion, or about $7.66 to $8.52 a share if its share count remains the same, on sales of $36 billion to $38 billion.
Before the reports, analysts had predicted Apple would earn $8.46 a share on sales of $37.9 billion in the current quarter. In the same period last year, Apple posted a profit of $6.9 billion, or $7.47 a share, on sales of $35.3 billion.
Apple's stock closed regular trading down $6.95 a share, or 1.3 percent, to $524.75. In late trading, Apples shares were up $41.40, or 7.9 percent, to $566.15.
For now, analysts and investors seem focused on the positive.
Referring to the iPhone sales, Hargreaves said, "They showed they still have the best product out there and that consumers are willing to pay for it."