Apple Results Hit by Supply Chain Woes, CEO Tim Cook Says Holiday Quarter Impact Will Be Worse

Provide chain woes price Apple $6 billion (roughly Rs. 44,890 crore) in gross sales through the firm’s fiscal fourth quarter, which missed Wall Road expectations, and Chief Govt Tim Prepare dinner mentioned that the impression shall be even worse through the present vacation gross sales quarter.

Prepare dinner instructed Reuters on Thursday the quarter ended September 25 had “bigger than anticipated provide constraints” in addition to pandemic-related manufacturing disruptions in Southeast Asia. Whereas Apple had seen “important enchancment” by late October in these Southeast Asian services, the chip scarcity has endured and is now affecting “most of our merchandise,” Prepare dinner mentioned.

“We’re doing the whole lot we will do to get extra (chips) and likewise the whole lot we will do operationally to ensure we’re transferring simply as quick as attainable,” Prepare dinner mentioned.

Prepare dinner mentioned the corporate expects year-over-growth for its quarter ending in December. Analysts anticipate development of seven.4 % to $119.7 billion (roughly Rs. 8,95,413 crore).

“We’re projecting very strong demand development yr over yr. However we’re additionally predicting that we’ll be in need of demand by bigger than $6 billion,” Prepare dinner mentioned.

Shares of the Cupertino, California-based firm, which had risen practically 15 % this yr, fell 3.4 % in prolonged buying and selling on Thursday. The dip might make Microsoft the world’s most respected firm after a run-up in Microsoft shares on the energy of its cloud computing enterprise.

Apple’s outcomes had been combined in a fiscal fourth quarter seen as a lull earlier than the high-sales vacation finish of yr.

Apple mentioned revenues and earnings for the fiscal fourth quarter had been $83.4 billion (roughly Rs. 6,23,739 crore) and $1.24 (roughly Rs. 92) per share, in contrast with analyst estimates of $84.8 billion (roughly Rs. 6,34,241 crore) and $1.24 per share, based on IBES knowledge from Refinitiv.

The outcomes had been a rocky finish to a fiscal yr of above-expectations gross sales led by its iPhone 12 fashions and powerful gross sales of Mac computer systems and iPads for working and studying from dwelling through the COVID-19 pandemic.

Apple instructed buyers in July that chip constraints would begin to hit its iPhone and iPad lineups for the primary time within the fourth quarter.

Apple posted its outcomes shortly after retailer Amazon forecast holiday-quarter gross sales effectively under Wall Road expectations, citing labor provide shortages and world provide chain points partially.

Apple has “managed to navigate the issues pretty effectively, however hasn’t escaped unscathed, and an prolonged period of those issues will spell bother, particularly as a result of the market is unforgiving in relation to Apple’s efficiency,” mentioned Sophie Lund-Yates, fairness analyst at Hargreaves Lansdown.


Apple missed expectations in two key classes.

Apple mentioned fourth-quarter iPhone gross sales had been $38.9 billion (roughly Rs. 2,90,968 crore), in need of estimates of $41.5 billion (roughly Rs. 3,10,415 crore), based on Refinitiv knowledge.

Prepare dinner mentioned that chips made with older expertise stay the important thing provide constraint. He mentioned that Apple stays uncertain whether or not the shortages will ease after the vacation purchasing season.

“It’s totally troublesome to name,” Prepare dinner instructed Reuters.

The corporate’s equipment section, which comprises fast-growing classes like its AirPods wi-fi headphones, got here in at $8.8 billion (roughly Rs. 65,837 crore), half a billion {dollars} decrease than analyst expectations of $9.3 billion (roughly Rs. 69,575 crore), based on Refinitiv knowledge.

Different segments fared higher. Gross sales for iPads and Macs had been $8.3 billion (roughly Rs. 65,823 crore) and $9.2 billion (roughly Rs. 68,815 crore), in contrast with analyst estimates of $7.2 billion (roughly Rs. 53,855 crore) and $9.2 billion, based on Refinitiv knowledge.

The corporate’s companies section — which comprises its App Retailer enterprise — had gross sales of $18.3 billion (roughly Rs. 1,36,897 crore) in income, up 26 %, in contrast with analyst expectations of $17.6 billion (roughly Rs. 1,31,661 crore). Prepare dinner instructed Reuters that Apple now has 745 million paid subscribers to its platform, up from the 700 million it disclosed 1 / 4 in the past.

“Companies had been robust, and it exhibits the sweetness and sturdiness of software program and companies, as there are higher margins and no provide points, since software program does not arrive on a container ship,” mentioned Hal Eddins, chief economist at Apple shareholder Capital Funding Firms.

© Thomson Reuters 2021

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