By Rex Crum, MarketWatch
SAN FRANCISCO (MarketWatch) -- Apple Inc. shares continue their
rally Thursday as investors flock to the company's shares following
a strong earnings report led by gains in iPhone sales and plans for
a 7-for-1 stock split.
But while Apple (AAPL) climbed more than 7% to $562.25 a share
and appeared ready to hold its gains, much of the rest of tech
sector took a sharp turn south after what was initially a strong
start to the day's market action.
Apple benefitted from a better-than-expected fiscal
second-quarter earnings report that featured massive iPhone sales.
The company said that for the quarter ended in March, it earned
$10.2 billion, or $11.62 a share, on revenue of $45.6 billion.
Analysts surveyed by FactSet had forecast Apple to earn $10.19 a
share on $43.67 billion in sales.
The results also allayed fears that Apple was going to report a
decline in year-over-year sales, which would have been the first
time for such an event in 11 years. Leading Apple's performance
were sales of 43.7 million iPhones, a 17% increase from a year ago.
Apple highlighted the iPhone gaining ground in areas such as China,
where sales rose 28% and Brazil, which saw a 61% increase in iPhone
sales from last year.
"Emerging markets drove the upside to the iPhone, driven by
lower capacity [iPhone] 5S's and a more normal distribution of
sales across the iPhone family," said Piper Jaffray analyst Gene
Munster. "We see this as an encouraging sign the global iPhone
franchise is intact."
There had been concerns that Apple's sales might decline due to
slowing iPhone sales ahead of the release of the so-called iPhone 6
in a few months.
Canaccord Genuity analyst Michael Walkley said that due to the
stronger-than-anticipated performance of the iPhone in emerging
markets, as well as growth in the Mac, iOS and iTunes "we believe
Apple has a strong base with greater channel reach for anticipated
second-half [of the year] product launches, including the iPhone
6.
Walkley raised his price target on Apple's stock to $610 a share
from $600. Apple said Wednesday it would enact a 7-for-1 stock
split effective June 9. It will be the first time Apple has split
its stock since 2005.
But while Apple showed resilience Thursday, much of the rest of
the tech sector wavered, first in a mass rising, then a quick slide
into the red, before mounting a comeback that hinted at a long day
for investors.
Much of the losses were tied to concerns about the situation
between Russia and Ukraine as Moscow planned a slate of military
drills in the troubled region.
Facebook Inc. (FB) regained some of its momentum, rising 1% to
$61.99 in the wake of an upbeat first-quarter earnings report late
Wednesday.
Amazon.com Inc. (AMZN) shares rose 2% to $331.58 in advance of
the online retailer's quarterly results, due after the close of
trading. Analysts are anticipating Amazon's revenue to rise from a
year ago and the company to tout sales of its line of Kindle
tablets.
Microsoft Corp. (MSFT) was off by 1% at $39.31 a share. The
world's largest software company will give its fiscal third-quarter
report after the market close, and it will be the first earnings
results since new Chief Executive Satya Nadella took over in early
February.
The Nasdaq Composite Index (RIXF) rose 4 points to 4,130 and the
Philadelphia Semiconductor Index (SOX) edged into positive
territory.
More must-read news from MarketWatch:
Apple CEO Cook discusses earnings, buyback and iPhone sales
First earnings report for Microsoft CEO Nadella
Amazon looking for sales growth in quarterly report
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