Apple reported better-than-expected sales and profit as the iPhone maker's services revenue surged 31% to $9.2 billion in Q2 2018 from a year earlier, per a company press release. Despite this, Cook gave a lot of credit for the company's success to the iPhone, particularly countering reports of the iPhone X sales plummeting.
Apple reported second-quarter earnings of $2.73 a share, up 30 percent year-over-year, on revenues of $61.1 billion. Now, the Cupertino, California, company is bringing most of the money home in a move that will generate a $38 billion tax bill for Apple and a windfall for shareholders.
The $999 iPhone X, which features an edge-to-edge display and facial recognition technology to unlock the phone, has been plagued by supply bottlenecks and concerns about weak sales since it went on sale in November in the United States.
Apple's iPhone average selling price was up 11%, which is one of the reason that iPhone sales rose 14% despite a 3% increase in the number of iPhones sold.
During a conference call with investors on Wednesday, Apple CFO Luca Maestri said iPhone ASP increased to US$728 from US$655 a year ago, driven primarily by the performance of iPhone X, iPhone 8 and iPhone 8 Plus.
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The biggest overhaul of the U.S. tax code in more than 30 years, the new law slashes the corporate income tax rate to 21% from 35% and charges multinationals a one-time tax on profits held overseas. However, more cheaper products were sold during the period, thereby dragging down the ASP. "I don't see that from a market point of view or - and certainly not from an iPhone point of view", he replied.
"According to our estimates, iPhone X's production volume fell by 50% in the first quarter compared to the fourth quarter", Huang said.
Cook took a triumphant - yet almost scolding - tone during his call with analysts, repeatedly talking about his confidence in Apple's future and its iPhone franchise, which accounts for nearly two-thirds of Apple's revenue.
"Apple Watch had another great quarter with revenue growing by strong double digits year-over-year to a new March-quarter record", Cook said.
Cook also stated that iPhone X has achieved a stellar rating of 99 percent customer satisfaction.
Turns out the iPhone X isn't too pricey after all. Those that saw the highest sales were iPhone 8, iPhone 7, iPhone 6s and iPhone SE series.
Analysts were encouraged by Apple's third-quarter outlook, which included projected revenues of US$51.5 billion to US$53.5 billion, implying it could top analyst forecasts for US$52 billion. As a result, analysts had expected Apple to repatriate most of its $252bn in cash overseas.
Investors feel quite comfortable with Apple after its latest results. That's a big change from the previous half decade when 86% of the company's growth came from iPhone sales.