No iPhone 'Super Cycle' but Solid Results for Apple
We plan to modestly raise our fair value estimate for the narrow-moat firm.
Apple sold 52.2 million iPhones in the September quarter, up 3% year over year. However, iPhone revenue rose 14% year over year, thanks to an 11% increase in ASPs driven by sales of the higher-priced iPhone X. Apple noted that the X was its highest selling model in each of its 13 weeks in the March quarter (as opposed to the iPhone 8 or 8 Plus), which we again view as an encouraging sign regarding Apple’s ability to maintain premium pricing. Other Products revenue rose 38% year over year thanks to Apple Watch and Airpods, which we think is an underrated, innovative hit for Apple. Services revenue rose 31% year over year, accelerating from 18% year-over-year growth in the December quarter, with particular strength in iCloud storage and Apple Music.
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