If you look around to see how people move around a common denominator will be the smartphone. People walk down the street with their phones, people put their phones on a stand in their vehicles, part of the clothing is given to the smartphone. The 2 biggest suppliers on phones are Apple and Android (powered by Google), but the more important company is Apple. For the past few years, before the growth of services, the company lived on the sales of iPhone.

In an article by Stephen Nellis, Max A Cherney and Yuvraj Malik of Reuters, Apple reported for the quarter and Apple expects to return to a growth in the future.

In the 2nd quarter, sales fell to $90.8 billion beating the estimates of $90.01 billion. For the quarter, iPhones sales fell 10.5% to $45.96 billion compared to analyst expectations of $46 billion.

Apple executives note in February, Apple benefited from a $5 billion surge in iPhone sales as the company caught up with supply-chain snarls during the pandemic lockdowns. China is Apple’s biggest market and sales were $16.37 billion down 8.1% but above analyst expectations of $15.59 billion.

CEO Cook told the analysts, Apple had spent over $100 billion on research and development over the past 5 years and feel very bullish about our opportunities in generative AI. Expect to see the new iPhone will some capabilities in the September launch.

Apple also announced the largest stock buyback of $110 billion. The effect of a stock buyback is to reduce the shares which all things being equal will increase the earnings per share which means the multiple of earnings to price will be low or the stock price will increase to the old level multiple. Apple earned $1.53 per share, above the estimates of $1.50 per share.

Linking to dividend paying stocks, analysts evaluate stocks and for the larger companies, they tend to be close or within a slight margin of error. It is very rare that a larger more established company does remarkably better (it happened with Nvidia) or worse than analysts’ expectations. For your investments in larger companies, this means you can trust the analysts. You picked the company for a variety of reasons and being profitable is one of them. The company still needs to deliver or execute on their business plan, but will larger companies there will be fewer surprises and that is a good thing.

There are more questions than answers, till the next time – to raising questions.