All Eyes on New iPhone

Brian Colello: On Tuesday, Apple reported solid second-quarter results. The only slight issue that came in, iPhone sales were a little light, but really not too bad compared to expectations, compared to a year ago. I think even on an inventory-adjusted basis, on a sell-through basis, iPhone sales were up slightly from a year ago.

IPad sales were a little bit below our expectations, but in line with management's, so we think that implies a supply issue rather than a demand issue there. The Mac, the pricing is still strong on the Mac thanks to the new MacBook Pro, so even though sales were up slightly, we still see good pricing there.

The services business grew as expected, and that continues to be an important part of the story, as we think it will help customers, current iPhone customers continue to buy more iPhones in the future as they use more Apple services. They buy more apps. They subscribe to iCloud storage. They subscribe to Apple Music, things of that nature. Other products also did pretty well. Watch was a little bit ahead of our expectations. Also, they saw some strength in Beats and the AirPods business. So a little nice pickup there.

Looking at Q3, the forecast was a little bit light, but not too terrible relative to expectations. This is still a story about the new iPhones coming out in the fall. So we're getting into the spring, summer months where it's about selling the older, or the iPhone 7s, the current lineup, but everyone's looking to the next model at this point. That's where the real value and possible uptick to the stock is going to be.

Finally, they announced an update to the dividend and buyback program. They increased the dividend by about 10%, increased the buyback by $35 billion, about in line with what we were expecting. Apple could certainly spend more if they wanted to, but it was a nice raise for investors. It's not counting any sort of tax changes into the U.S. or anything like that. I know some investors might have been hoping for something bigger if there was a tax cut coming through. So there's no change at this point, but overall, Apple continues to give capital back to shareholders, and it's a real positive.