Apple Earnings Another Record But Misses Expectations Due To Supply Constraints Costing $6 Billion

Consumer electronics giant Apple reported weaker September quarter earnings Thursday. iPhone sales increased nearly 47% BUT chip supply constraints impacted iPhones and iPads this quarter.Tim Cook says supply issues cost company $6 billion.

Consumer electronics giant Apple reported weaker September quarter earnings Thursday. iPhone sales increased nearly 47% BUT chip supply constraints impacted iPhones and iPads this quarter.Tim Cook says supply issues cost company $6 billion.

iPhone 13

Apple (NASDAQ: $AAPL) Reported Earnings After Close Thursday

 $1.24 Matched $1.24 EPS Forecast AND $83.36  Missed $84.85 Billion Forecast in Revenue 

Q4 2021 earnings release: 4:30 p.m.; conference call: 5 p.m.

Earnings Highlights

  • EPS: $1.24 vs. $1.24 estimated
  • Revenue: $83.36 billion vs. $84.85 billion estimated, up 29% year-over-year
  • iPhone revenue: $38.87 billion vs. $41.51 billion estimated, up 47% year-over-year
  • Services revenue: $18.28 billion vs. $17.64 billion estimated, up 25.6% year-over-year
  • Other Products revenue: $8.79 billion vs. $9.33 billion estimated, up 11.5% year-over-year
  • Mac revenue: $9.18 billion vs. $9.23 billion estimated, up 1.6% year-over-year
  • iPad revenue: $8.25 billion vs. $7.23 billion estimated, up 21.4% year-over-year
  • Gross margin: 42.2% vs. 42.0% estimated

“This year we launched our most powerful products ever, from M1-powered Macs to an iPhone 13 lineup that is setting a new standard for performance and empowering our customers to create and connect in new ways,” said Apple’s CEO Tim Cook.

 

Apple Inc  NASDAQ: AAPL

Earnings Reaction

$152.57 ▲ 3.72 (+2.50%) Close Pre-Earnings

$47.50▼ 5.07 (-3.32%) After Hours

Breakdown

Apple saw massive growth as sales of iPhones, iPads and Macs grew a new leg after pandemic. Apple’s annual revenue for its fiscal 2021 was up an astonishing 33% from 2020 to $366 billion. Every category posted gains, though Cook said revenue was affected by supply constraints to the tune of $6 billion.

The strongest growth in Apple product categories aside from iPhones was in its services business, which includes sales from the App Store, music and video subscription services, advertising, extended warranties, and licensing. Sales were up in all regions, with China’s revenue nearly doubling from $8 billion to $14.6 billion. Apple said it also doubled its business in India and Vietnam.

AAPL Earnings Q4 2021

Services

Apple’s services grew 26% annually. Cook said that Apple has 745 million paid subscriptions, which  includes first-party services like Apple Music and also subscriptions through Apple’s App Store.

“That’s up 160 million year on year, which is up five times in five years. So it’s been quite the growth cycle,” Cook said.

Supply shortages linked to the global chip shortage affected its Mac and iPad sales.

Macs

Apple’s Macs only increased 1.6% annually, but the quarter did not include sales of new MacBook Pro models that were announced in October.

iPads

Apple’s iPads grew 21% year-over-year, although they were supply constrained. Apple’s

Other Products

Other Products category, which includes Apple Watch and AirPods models, grew 11% without new products, which went on sale in October.

AAPL Rev Change Q4 2021

Outlook

Apple hasn’t provided official guidance since the start of the pandemic, but Cook said Apple expects “solid year-over-year revenue growth” in the December quarter despite the fact Cook said Apple will face worse supply constraints in the current quarter.

“So we’ve finished about a month of the quarter. The Covid related manufacturing disruptions have improved greatly. The chip shortages linger on,” Cook said.

Cook said that the supply issues were with chips were on “legacy nodes,” or older chips, instead of the technologically advanced processors at the heart of Apple’s devices. The expectation of year-over-year sales growth suggests that Apple sees significantly more demand for its new iPhone 13 models than it can supply. Apple’s fourth quarter only included a few days of iPhone 13 sales as it ended on Sept. 25.

Source: Apple, CNBC

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