Apple results hit by supply chain woes, Cook says holiday quarter impact will be worse By Reuters

© Reuters. FILE PHOTO: The Apple Inc. emblem is seen hanging on the entrance to the Apple retailer on fifth Avenue in Manhattan, New York, U.S., October 16, 2019. REUTERS/Mike Segar

By Stephen Nellis

(Reuters) -Provide chain woes price Apple Inc $6 billion in gross sales in the course of the firm’s fiscal fourth quarter, which missed Wall Avenue expectations, and Chief Govt Tim Prepare dinner stated that the impression can be even worse in the course of the present vacation gross sales quarter.

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

“We’re doing every thing we will do to get extra (chips) and likewise every thing we will do operationally to ensure we’re transferring simply as quick as doable,” Prepare dinner stated.

Prepare dinner stated the corporate expects year-over-growth for its quarter ending in December. Analysts count on progress of seven.4% to $119.7 billion.

“We’re projecting very stable demand progress yr over yr. However we’re additionally predicting that we will be in need of demand by bigger than $6 billion,” Prepare dinner stated.

Shares of the Cupertino, California-based firm, which had risen practically 15% this yr, slumped 5% in prolonged buying and selling on Thursday. The dip in Apple shares (NASDAQ:) may make Microsoft Corp (NASDAQ:) the world’s most precious firm after a run-up in Microsoft shares on the energy of its cloud computing enterprise.

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

Apple stated revenues and earnings for the fiscal fourth quarter have been $83.4 billion and $1.24 per share, in contrast with analyst estimates of $84.8 billion and $1.24 per share, in line with IBES knowledge from Refinitiv.

The outcomes have been a rocky finish to a fiscal yr of above-expectations gross sales led by its iPhone 12 fashions and robust gross sales of Mac computer systems and iPads for working and studying from dwelling in the course of 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 (NASDAQ:) forecast holiday-quarter gross sales effectively beneath Wall Avenue expectations, citing labor provide shortages and international provide chain points partly.


Apple missed expectations in two key classes. Apple stated fourth-quarter iPhone gross sales have been $38.9 billion, in need of estimates of $41.5 billion, in line with Refinitiv knowledge.

Prepare dinner stated that chips made with older know-how stay the important thing provide constraint. He stated that Apple stays not sure whether or not the shortages will ease after the vacation procuring season.

“Most of what we design are modern (chip manufacturing) nodes, however the entire merchandise have some legacy node parts in them as effectively. And in order that (scarcity) continues into (fiscal) Q1, and we’ll see what it appears like past that. It’s totally troublesome to name,” Prepare dinner instructed Reuters.

The corporate’s equipment phase, which comprises fast-growing classes like its AirPods wi-fi headphones, got here in at $8.8 billion, half a billion {dollars} decrease than analyst expectations of $9.3 billion, in line with Refinitiv knowledge.

Different segments fared higher. Gross sales for iPads and Macs have been $8.3 billion and $9.2 billion, in contrast with analyst estimates of $7.2 billion and $9.2 billion, in line with Refinitiv knowledge.

The corporate’s companies phase – which comprises its App Retailer enterprise – had gross sales of $18.3 billion in income, up 26%, in contrast with analyst expectations of $17.6 billion. 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.

One other brilliant spot within the firm’s outcomes have been its gross sales in China, which have been up 83% to $14.6 billion.

The corporate stated it returned $24 billion to shareholders in the course of the quarter.

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