Don't Count Out iPhone
Apple looks undervalued as the market remains too bearish on the prospects for future iPhone growth.
Brian Colello: Apple reported third-quarter earnings. Revenue and EPS both beat street estimates, and were a little ahead of our expectations as well. The fourth-quarter forecast was also ahead of expectations. EPS, or implied EPS, is about in line with expectations. So, overall, this still isn't the most important quarter to look at for Apple, because the new iPhones are coming in September, so this is sales of the older products. But that said, revenue earnings were not as bad as initially feared.
IPhone sales were about in line with expectations. They saw a mix to the iPhone SE at lower prices, which was a little bit of a negative in terms of pricing, and weighted on revenue, slightly. But on the other hand, they were getting more switchers over from Android than ever before. So, in terms of the SE, trying to get that midrange customer that could never afford an iPhone in the past, and bring them into the iOS ecosystem, I think Apple started off quite well with the iPhone SE.
Brian Colello does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.