Bruised Apple grows as tech stocks tumble

A prolonged drought of new products had analysts bracing for bad news at Apple, but they were off the mark - its shares climbed 8 per cent after the company reported a 14 per cent rise in iPhone sales to just over $26bn last quarter, as well as a 7 per cent rise in pre-tax profits. Moreover, sales climbed 11 per cent at Apple's software and services segment,which includes App store purchases. But those gains were offset by a 16 per cent slump in the number of iPads sold, and a sharp rise in operating expenses to $4.4bn.

There was other good news for investors. Apple raised its dividend by 8 per cent and expanded its share buyback scheme by 50 per cent to $90bn. More unusually, it announced a seven-for-one stock split, intended to make its shares more accessible to private investors.

Like Apple, Facebook's quarterly earnings were also the subject of intense scrutiny. The world’s largest social network - which nearly 1.3bn people logged into in March - has bought mobile-messaging platform WhatsApp for $16bn and virtual-reality headset maker Oculus for $2bn this year, deals that have raised doubts about its direction. And critics have questioned whether it can survive consumers’ shift to mobile and translate its fast-growing user base into profits.

Facebook didn't shed light on its recent deals, but showcased the strength of its core business. Its advertising revenues soared 82 per cent to $2.3bn, with mobile ads accounting for 59 per cent of the total from 30 per cent last year. It also boosted its operating margin from 26 to 43 per cent. And user growth continued at a furious rate - its daily active users rose 21 per cent year-on-year to 802m last month, while over 1bn of its users logged in on a mobile device last month.

Those gains didn't come cheaply though. Facebook’s costs and expenses rose 32 per cent to $1.4bn as it invested in network infrastructure and acquisitions drove up its headcount. It also expects capital spending of $363m this year.