Apple earnings surge on iPhone sales; co. hikes buybacks

LOS ANGELES — Apple extended its financial winning ways Monday, with a record second quarter.

Strong demand for Apple's iPhones, particularly in China, powered earnings and sales past already lofty forecasts for the first three months of the year.

Another boon to investors: Apple boosted its capital return program. Shares hit a record in after-hour trading.

Just days after shipping the Apple Watch, the first new product since 2010's iPad, the company said net income rose 33% to $13.6 billion, or $2.33 per share, in the three months ending in March.

Apple's revenue rose 27%, to $58 billion.

Wall Street analysts expected Apple to earn $2.15 a share on sales of $55.9 billion. The so-called "whisper number" for the company's earnings, which regularly best expectations by a wide margin, was more than $2.27 in the run-up to results.

Plus, Apple hiked its stock buyback plan to $140 billion from $90 billion and increased its quarterly dividend 11%.

Shares AAPL rose 1% after hours to $134.91, passing an intraday record. The stock is up 62% over the last year.

Apple said it sold 61.1 million iPhones in the quarter, compared to 43.7 million in the year-ago quarter. Analysts polled by FactSet had projected sales of 55 million iPhones.

The iPad continues to fade. Apple said it sold 12.6 million iPads in the quarter, below expectations of 15 million, and down 23% from the year-ago quarter.

Overall, China was a bright spot. Sales in Greater China surged 71% compared to 21% for the Americas.

The results follow a blow-out December quarter. Apple reported sales of $74.6 billion, and earnings of $3.06 a share in that quarter. That's when it released the best-selling iPhone, the iPhone 6 and 6 Plus. Total iPhones shipments were 74.5 million units.

Gartner analyst Van Baker says he expects Apple to continue its winning ways for the remainder of the year, despite new competition for the first time in quite a while from Samsung.

"The new Galaxy phones have gotten great reviews," Baker says. "Could Apple see a challenge from a more aggressive Samsung? That's certainly possible. I think they'll sell as many iPhones as they can build, and the same goes for the Watch. They'll sell every one."

The question for the Watch comes not this year, but 2016. Will consumers still be interested 12 months from now.

"Is the Watch a 20 million unit market or a 200 million market?" Baker says. "No one knows yet."

Apple sold 4.5 million Macintosh computers in the quarter, up from 4.1 million in the year ago quarter.