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Apple sales miss expectations, Tim Cook says supply issues cost company $6 billion
CNBC ^ | OCT 28 20218:16 PM | Kif Leswing

Posted on 10/29/2021 5:14:50 AM PDT by Red Badger

KEY POINTS:

Apple revenue fell short of Wall Street expectations in its fiscal fourth quarter on Thursday, which Apple CEO Tim Cook attributed to larger-than-expected supply constraints.

Apple’s overall revenue was still up 29% on an annual basis and each of its product categories grew on an annual basis.

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 Apple will face worse supply constraints.

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Apple revenue fell short of Wall Street expectations in its fiscal fourth quarter on Thursday, which Apple CEO Tim Cook attributed to larger-than-expected supply constraints on iPhones, iPads, and Macs.

Apple fell under 3% in extended trading.

“We had a very strong performance despite larger than expected supply constraints, which we estimate to be around $6 billion,” Cook told CNBC’s Josh Lipton. “The supply constraints were driven by the industry wide chip shortages that have been talked about a lot, and COVID-related manufacturing disruptions in Southeast Asia.”

However, Apple’s overall revenue was still up 29% and each of its product categories grew on an annual basis.

Here’s how Apple did versus Refinitiv consensus estimates:

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

iPhone sales were up 47% year-over-year, but still came in under Wall Street estimates.

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, higher than the $6 billion hit to revenue in the September quarter. Still, Apple says that its December quarter will be the company’s largest in terms of revenue in its history.

Apple CFO Luca Maestri said in a call with analysts that iPad sales would decline year-over-year in the December quarter due to supply constraints while other product categories would grow.

“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 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.

Apple is currently in the middle of massive growth as sales of iPhones, iPads and Macs exploded during the pandemic. Apple’s annual revenue for its fiscal 2021 was up 33% from 2020 to $366 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. Apple’s services grew 26% annually, which Cook said was higher than the company expected.

WATCH NOW VIDEO01:14 Dan Ives on Apple: It’s a demand-supply issue, they can’t get phones to consumers

Cook said that Apple has 745 million paid subscriptions, which not only includes first-party services like Apple Music but 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.

Apple’s Macs did not grow strongly, only increasing 1.6% annually, but the quarter did not include sales of new MacBook Pro models that were announced in October. Apple’s iPads grew 21% year-over-year, although they were supply constrained. Apple’s Other Products category, which includes Apple Watch and AirPods models, grew 11% without new products, which went on sale in October.

This quarter marks the first time since April 2016 that Apple has failed to beat earnings estimates, and it’s the first time since May 2017 that Apple’s revenues have missed estimates, according to Refinitiv data.


TOPICS: Business/Economy; Computers/Internet; Music/Entertainment; Society
KEYWORDS: apple; ccp; china; ipad; iphone; laptop; macbook; supply; supplychain; taiwan; timcook; tsmc

1 posted on 10/29/2021 5:14:50 AM PDT by Red Badger
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To: Swordmaker

APPLE PING!..................


2 posted on 10/29/2021 5:15:12 AM PDT by Red Badger (Homeless veterans camp in the streets while illegal aliens are put up in hotels.....................)
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To: Red Badger

“That’s a shame...” ;)


3 posted on 10/29/2021 5:34:45 AM PDT by Diana in Wisconsin (I don't have 'Hobbies.' I'm developing a robust post-Apocalyptic skill set. )
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To: Red Badger

He asked for it, as did anyone who voted for Biden.


4 posted on 10/29/2021 5:36:30 AM PDT by djpg
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To: Red Badger
Apple’s overall revenue was still up 29% on an annual basis…

Wow, some supply constraint!

5 posted on 10/29/2021 5:39:11 AM PDT by ProtectOurFreedom (“Everything Woke turns to shit.” ~ President Donald Trump)
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To: ProtectOurFreedom

Revenue is not profits....................


6 posted on 10/29/2021 5:43:49 AM PDT by Red Badger (Homeless veterans camp in the streets while illegal aliens are put up in hotels.....................)
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To: Red Badger

We were all going to buy new iPhones this past month, but with the privacy issues Apple is now bringing forth, we are going to see what de-Googled phones become available.


7 posted on 10/29/2021 6:04:55 AM PDT by ConservativeMind (Trump: Befuddling Democrats, Republicans, and the Media for the benefit of the US and all mankind.)
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To: Red Badger

Supply chain determines units sold, ie, rev. It is remarkable they grew top line rev by a third! I didn’t look to see if number of units also increased by a third.


8 posted on 10/29/2021 6:22:16 AM PDT by ProtectOurFreedom (“Everything Woke turns to shit.” ~ President Donald Trump)
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To: Red Badger

Has nothing to do with bad product design. The new Macbook? Getting rid of the 9V port on iPhones (who on Earth would want to charge their phone while listening to something?)

Too many XY only orgies in the executive suite? Could be.


9 posted on 10/29/2021 6:25:06 AM PDT by RinaseaofDs
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To: ProtectOurFreedom

If they were smart they would have had a reserve in stock, just in case.

If they were very smart they would have had a second source of stock, just in case.

If they were extremely smart they would have had a in house source of stock, just in case.


10 posted on 10/29/2021 6:25:45 AM PDT by Red Badger (Homeless veterans camp in the streets while illegal aliens are put up in hotels.....................)
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To: Red Badger

Apple can pay six billion for a cup of coffee.


11 posted on 10/29/2021 6:28:01 AM PDT by Jim Noble (The nation cannot be saved until the GOP is destroyed)
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To: Jim Noble

And leave a TIP of twice that................


12 posted on 10/29/2021 6:30:40 AM PDT by Red Badger (Homeless veterans camp in the streets while illegal aliens are put up in hotels.....................)
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To: Red Badger

I’ve personally known a couple of companies that ordered two years of materials inventory, but in both cases they were going into low tech products with long product life cycles.

It isn’t so easy when you have such short product life cycles. It’s easy to get caught with excess inventory of obsolete parts.


13 posted on 10/29/2021 6:31:25 AM PDT by ProtectOurFreedom (“Everything Woke turns to shit.” ~ President Donald Trump)
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To: ProtectOurFreedom
Wow, some supply constraint!

A LOT of Apple's money depends on intangibles. You don't need shipping to make money off of ApplePay, iTunes, Apple+, AppleCare, iCloud, Claris FileMaker Pro software, etc.
14 posted on 10/29/2021 7:00:20 AM PDT by Dr. Sivana ("There are only men and women."-- George Gilder, Sexual Suicide, 1973)
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To: RinaseaofDs
who on Earth would want to charge their phone while listening to something?

I do. I sometimes have audiobooks, music, or podcasts streaming to a speaker while constantly switching environments on my desktop. If the battery is low, I plug it in for a charge.
15 posted on 10/29/2021 7:04:51 AM PDT by Dr. Sivana ("There are only men and women."-- George Gilder, Sexual Suicide, 1973)
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To: Dr. Sivana

Everybody does Doc. I was being facetious. Apologies for my horrible attempt at humor.


16 posted on 10/29/2021 7:23:30 AM PDT by RinaseaofDs
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To: Red Badger; Swordmaker
However, Apple’s overall revenue was still up 29% and each of its product categories grew on an annual basis.
Wow, that is a real letdown. /s

17 posted on 10/29/2021 7:37:14 AM PDT by SunkenCiv (Imagine an imaginary menagerie manager imagining managing an imaginary menagerie.)
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To: ProtectOurFreedom

Yeah, I wish I had their problems.


18 posted on 10/29/2021 7:38:14 AM PDT by SunkenCiv (Imagine an imaginary menagerie manager imagining managing an imaginary menagerie.)
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To: Red Badger

Apple works with the chinese communists and uses slave labor and supports the democrat party. I hope they lose more money.


19 posted on 10/29/2021 9:16:15 AM PDT by minnesota_bound (I need more money. )
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To: Dr. Sivana

Isn’t iTunes sort of dying on the vine? I know that I no longer use it. Why buy music when you can get anything you want on Spotify’s free service if you are willing to listen to a few commercials.


20 posted on 10/29/2021 9:58:54 AM PDT by Tallguy
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