Tuesday, May 1st 2018

iPhone X Sales Better than Feared in Q2

Update

Apple reported a strong quarter on May 1st, having sold 52.2M iPhones in the period. This was much better than many investors feared given iPhone X supply constraints in recent months.

Management expects the business momentum to continue, but the highlight was their announcement of a new share buyback program ($100B). These robust fundamental and financial results defied many investors' gloomy expectations.

For context: back in Sept. 2017, the company announced its most expensive handset to date, the iPhone X. Apple struggled to meet initial orders due to supply constraints, and hence many investors expected weaker market demand in the past few months. It seems that Apple proved them wrong this quarter, selling 52M iPhones (above many investors' expectations).

Apple's board also approved a new $100B share buyback program and a 16% increase in its quarterly dividend. With the new tax legislation in place, Apple has said that it aims to hold zero net cash. It currently holds about $270B in cash. It will spend its excess cash through returns to investors in the form of dividends and share buybacks as well as investments in expansion and product development.

We're pleased with these results. It's clear the Apple's management team is focused on not simply executing well in the core business but also growing shareholder returns through return of capital.

As of this writing, AAPL was a portfolio holding of Titan. This security may cease to be a portfolio holding at some point in the future.
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