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By Stephen Nellis
April 30 (Reuters) - Apple Inc said sales in China were stabilizing and touted how increasing demand for services and accessories such as Apple Music and the Apple Watch helped offset a record drop in iPhone revenue.
Sales of iPhones, which account for more than half of all revenue, fell 17% in the fiscal second quarter from a year earlier and slightly missed analyst expectations.
After Apple slashed prices in China, iPhone sales picked up toward the end of the quarter and revenue rose from iPads, wearables and services. While consumers may be putting off phone purchases longer than in the past, they are deepening ties with the Cupertino, California company's brand.
Shares, which have mostly recovered from an end-of-year sell-off, are rising toward a new high. They gained more than 5% in after-hours trading after Apple announced the results and plans for a new $75 billion share buyback. (Graphic: https://tmsnrt.rs/2WdDgyh)
Apple said it expects revenue between $52.5 billion and $54.5 billion for the current quarter ending in June, above analysts' average estimate of $51.93 billion, according to IBES data from Refinitiv.
In an interview, Apple Chief Executive Tim Cook said that iPhone sales started to strengthen during the last few weeks of the fiscal second quarter, including in China. "These, along with the continued success with wearables and so forth, give us some confidence that things are getting a bit better," Cook told Reuters in an interview.
Apple reported net earnings per share of $2.46 for the March quarter, down about 9.9% from a year earlier, compared with Wall Street's average estimate of $2.36. Actual net income declined 16.3% to $11.56 billion. Apple spent a record $27 billion on share buybacks and dividends during the fiscal second quarter. Buybacks boost earnings per share by cutting the number of shares outstanding.
Apple said iPhone revenues were $31.05 billion, slightly below analyst estimates of $31.10 billion, according to data from FactSet.
But revenue from wearables and accessories sales of $5.13 billion beat estimates of $4.79 billion, according to FactSet data. And services revenue, which includes sales from iCloud, the App Store and other businesses, reached $11.45 billion, compared with analyst estimates of $11.32 billion, according to FactSet.
Apple has wrestled with a slowdown in iPhone sales in key markets such as China and saw its first ever year-over-year decline in iPhone revenue for the holiday shopping season.
The slowdown stemmed in part from the iPhone's high cost and competition from rivals such as Huawei Technologies Co Ltd , Xiaomi Corp, Oppo and Vivo - all of which sell cheaper phones with features similar to the iPhone.