Q2 proves iPhone is here to stay

When Apple (AAPL) released its second-quarter results, marked by outstanding sales performance and a mammoth share buyback program, the only conservative element was the outlook for the third quarter. The better-than-expected results validated the acceptance of iPhone X and triggered a stock rally, though the momentum cooled later.

iPhone’s double-digit sales growth across the board came as a surprise to the market, which was abuzz with rumors that demand for the iconic smartphone brand had started faltering after the launch of the high-priced iPhone X. While sales crossed the $100-billion mark in the first half of the fiscal year, the credit for the spike in the final three months goes to iPhone X.

Putting speculations about the future of the iPhone franchise to rest, Apple reiterated its strategy of offering different models of the gadget for people to meet their specific needs, hinting at new launches in the near future.

The highlight of the results was probably the phenomenal growth in the sales of iPhone in the Chinese market, where total revenues grew 21%. While continuing to make huge strides in China, Apple intends to focus more on India, which according to the company is a huge market for smartphones. Sales of iPhone climbed 14% in the second quarter, driving overall revenues up by 16%.

The broad-based growth in the second quarter, which accelerated for the sixth consecutive quarter, made it the best March quarter for the tech giant. The top-line also benefited from a 31% growth in services and a record growth in App Store.

Buoyed by the relaxed tax rule for deploying global cash, Apple has laid out a plan to strategically allocate its huge cash pile, with the first step being a $100-billion share repurchase program. More than $350 billion has been earmarked for investments in the US in the next five years. Suitable M&A activities are also on cards.

The better-than-expected results validated the acceptance of iPhone X and triggered a stock rally

In an effort to expand its presence in the education sector, Apple rolled out a revamped iPad in the most recent quarter and announced a slew of new products for the academic community.

Addressing investors after the earnings release, CEO Tim Cook dwelled on the company’s resolve to protect user privacy, with a veiled reference to the data breach controversy involving Cambridge Analytica and Facebook (FB). Terming privacy a fundamental right, Cook claimed Apple gathers much less information than others do, and uses state-of-the-art encryption technology to protect data.