Updated from 8:26 a.m. EDT to provide analyst comments in the seventh paragraph.
"Are you not entertained!?!?"
NEW YORK (
) -- Pulling his best Maximus Decimus Meridius from
(AAPL - Get Report)
CEO Tim Cook said he simply doesn't see the same smartphone slowdown that many thought to be going on in the high-end segment of the market. That's a positive sign for investors, even if Apple's report did have some "bitemarks" in it.
When asked about the increasing concerns that people have about the
smartphone market slowdown
, Cook said he simply doesn't see it. "And I don't subscribe to the common view that the higher end if you will of the smartphone market is at its peak," Cook said. "I don't believe that but we will see and we will report our result as we go along."
Judging by Apple's
, Cook may be right about there being no slowdown at the high-end of the market, but it's also noticeable that the average selling price (ASP) of iPhones continued to trend lower this quarter, dropping under $600 to $580 per phone. That was a big decline sequentially, as the iPhone 4/4S continued to still sell well.
"iPhone ASPs declined 4% Y/Y to $581 which suggests relatively strong uptake of the lower priced iPhone 4 (vs. iPhone 5) in developing markets," wrote Deutsche Bank analyst Chris Whitmore in a note.
Total iPhone sales were up sharply during the quarter, as Apple sold 31.2 million iPhones. That's up from 26 million in the year-ago quarter, showcasing 20% growth, which is pretty healthy for the company's biggest revenue generator. The iPhone 5 is still the top selling phone for Apple, as Cook and Chief Financial Officer Peter Oppenheimer mentioned on the call last night repeatedly.
Morgan Stanley analyst Katy Huberty, who rates Apple "overweight" with a $540 price target, believes that the strength in the iPhone points to the "stickiness" of iOS. "Strong iPhone sales point to stickiness of ecosystem as Y/Y unit growth accelerated to 20% (from 7% in March Q) despite a channel inventory reduction," Huberty wrote in a note.
More growth from Apple's biggest revenue driver is expected to come, noted Credit Suisse analyst Kulbinder Garcha. "Going forward, we see further catalysts to spur growth. First, we see an iPhone 5S and low-end iPhone coming in late FQ4 and believe that, net-net, this will be additive to growth," Garcha wrote in a note. "Second, we see additional carriers as a significant driver for Apple's high-end business, and continue to believe that China Mobile and NTT DoCoMo will be added within the next 12 months. We see the potential for iPhone volumes to grow to over 200mn in CY14." He rates Apple "outperform" with a $525 price target.