Morningstar

No iPhone 'Super Cycle' but Solid Results for Apple

We plan to modestly raise our fair value estimate for the narrow-moat firm.

Brian Colello, CFA May 2, 2018

Securities In This Article

Apple sold 52.2 million iPhones in the September quarter, up 3% year over year. However, iPhone revenue rose 14% year over year, thanks to an 11% increase in ASPs driven by sales of the higher-priced iPhone X. Apple noted that the X was its highest selling model in each of its 13 weeks in the March quarter (as opposed to the iPhone 8 or 8 Plus), which we again view as an encouraging sign regarding Apple’s ability to maintain premium pricing. Other Products revenue rose 38% year over year thanks to Apple Watch and Airpods, which we think is an underrated, innovative hit for Apple. Services revenue rose 31% year over year, accelerating from 18% year-over-year growth in the December quarter, with particular strength in iCloud storage and Apple Music.

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About the Author

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Brian Colello, CFA

Strategist

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Brian Colello, CPA, is a strategist, AM Technology, for Morningstar*. He covers semiconductor and hardware companies and supports our equity research-linked Indexes business. Colello was a Director of Technology Equity Research before assuming his current role in 2023.

Before joining Morningstar in 2008, Colello worked in public accounting for KPMG and served as a manager in corporate finance for BMG Music, a subsidiary of Bertelsmann AG.

Colello holds a bachelor’s degree in accounting from Bucknell University. He also holds a master’s degree in business administration from Wake Forest University’s Babcock School of Business. He is also a Certified Public Accountant.

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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