Apple Services Revenue Hits $24B Record, Boosts Dividend and Buyback
Apple's services division, including Apple TV and Apple Music, has achieved a record $24 billion in revenue, marking a 14% increase year-on-year. Despite facing significant challenges in the stock market and China, Apple has boosted its dividend for the twelfth consecutive year and announced the largest share buyback in US history, worth $110 billion.
The tech giant's share price had been down almost 9% year-to-date prior to its quarterly earnings call on 2 May 2024. This decline contrasts with the stock market today, which is up almost 11% in 2024. Apple's recent financial results, however, have beaten analysts' forecasts, leading to a rise in its share price.
Apple's challenges in China are substantial. Its market share has been declining, falling to 15.6% in Q3 2024, while local brands like Huawei have seen sales rise by 42% in the same period. The iPhone Air model's approval has been hindered due to mandatory eSIM technology requirements, further impacting sales. Moreover, intense competition from Android manufacturers like Xiaomi and Motorola, potential regulatory and legal risks, and new tariffs on imports pose additional threats to Apple's premium market position.
Despite these challenges, Apple continues to innovate and grow. The number of active Apple devices has reached a new all-time high across all products and geographic segments. The company remains the second most valuable in the world, behind Microsoft. Morningstar analysts rate Apple's stock as 'fairly valued', indicating that it is not trading at a discount.
Apple's services arm has delivered record revenue, and the company has increased its dividend and announced a significant share buyback. However, Apple faces substantial challenges in the stock market today and increased competition, which may impact its premium market position. As Apple continues to innovate and grow, investors and consumers alike will be watching to see how the company navigates these challenges.
