iPhone

Apple’s had an amazing second-quarter against the critics’ speculations

Apple (AAPL) posted FQ2 revenue of $61.1 billion. It exceeds consensus estimates by $160 million. AAPL’s Operating income was $15.8 billion, as gross margin was positively impacted by cost reductions and a mix shift to services. Concerns over the performance of the iPhone X were overblown as the iPhone X was the most popular iPhone model each week in the quarter.

The midpoint of revenue guidance for FQ3 is ahead of consensus, and with iPhone X demand worries likely in the rearview mirror, for now, the skies look clear for a steady rise in share price. The Apple ecosystem is continually growing into a powerful behemoth with record Services revenue, growing contribution from Wearables and home products, and a healthy underlying iPhone segment. Combined with capital allocation tailwinds from a $100 billion share repurchase program and a 16% dividend increase, Apple’s share appears to be attractive.

Lately, there’s been a lot of doubt about the iPhone. The release of the iPhone 6 and 6 Plus in late 2014 led to three straight quarters where growth surpassed 50%. It was huge but unsustainable. iPhone sales shrunk. However, soon it began to grow slowly again. This year the gossip from industry sources was that the iPhone X was a flop and that Apple’s status in the Chinese phone market was shaky. With the release of Apple’s quarterly results, it is visible that Apple and the iPhone are still riding high. The doubts of analysts have been kept at bay, at least temporarily.

With the launch of iPhone X, first-quarter earnings proved that AAPL is much more than just an iPhone company. Second-quarter upheld the status. It is an increasingly multi-faceted hardware company with a burgeoning software segment. The new Apple has higher margins, more steady demand, and more predictable revenue and profits. This is because AAPL is turning into something much more than just an iPhone company. This new company, led by a burgeoning Services segment, has higher margins with more revenue streams.

What is next with the tech giant?

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