Supply chain woes cost Apple Inc US$6 billion in sales during the company’s fiscal fourth quarter, which missed Wall Street expectations, and chief executive Tim Cook said that the impact is likely to be worse during the current holiday sales quarter.
Cook on Thursday said that the quarter that ended on Sept. 25 had “larger than expected supply constraints” as well as COVID-19 pandemic-related manufacturing disruptions in Southeast Asia.
While Apple had seen “significant improvement” this month in those facilities, the chip shortage has persisted and is now affecting “most of our products,” Cook said.
“We’re doing everything we can do to get more [chips] and also everything we can do operationally to make sure we’re moving just as fast as possible,” he said.
Cook said the company expects year-on-year growth for its quarter ending in December. Analysts expect growth of 7.4 percent to US$119.7 billion.
“We’re projecting very solid demand growth year-over-year, but we are also predicting that we’re going to be short of demand by larger than US$6 billion,” Cook said.
Shares of the California-based company, which had risen nearly 15 percent this year, fell 3.4 percent in extended trading on Thursday. The dip could make Microsoft Corp the world’s most valuable company after a run-up in Microsoft shares on the strength of its cloud computing business.
Apple’s results were mixed in a fiscal fourth quarter seen as a lull before the high-sales holiday end of year.
Apple said that revenues and profits for the fiscal fourth quarter were US$83.4 billion and US$1.24 per share, compared with analyst estimates of US$84.8 billion and US$1.24 per share, data from Refinitiv showed.
The results were a rocky end to a fiscal year of above-expectations sales led by its iPhone 12 models, and strong sales of Mac computers and iPads for working and learning from home during the COVID-19 pandemic.
Apple told investors in July that chip constraints would start to hit its iPhone and iPad lineups for the first time in the fourth quarter.
Apple has “managed to navigate the problems fairly well, but hasn’t escaped unscathed, and an extended duration of these problems is likely to spell trouble, especially because the market is unforgiving when it comes to Apple’s performance,” Hargreaves Lansdown equity analyst Sophie Lund-Yates said.
Apple missed expectations in two key categories.
Fourth-quarter iPhone sales were US$38.9 billion, short of estimates of US$41.5 billion, Refinitiv data showed.
Cook said that chips made with older technology remain the key supply constraint. He said that Apple remains unsure whether the shortages are to ease after the holiday shopping season.
“It’s very difficult to call,” Cook said.
The company’s accessories segment, which contains fast-growing categories like its AirPods wireless headphones, came in at US$8.8 billion, half a billion dollars lower than analyst expectations of US$9.3 billion, the data showed.
Other segments fared better. Sales for iPads and Macs were US$8.3 billion and US$9.2 billion, compared with analyst estimates of US$7.2 billion and US$9.2 billion, the data showed.
The company’s services segment — which contains its App Store business — had sales of US$18.3 billion, up 26 percent, compared with analyst expectations of US$17.6 billion. Cook said that Apple now has 745 million paid subscribers to its platform, up from 700 million a quarter ago.
“Services were strong, and it shows the beauty and durability of software and services, as there are better margins and no supply issues, since software doesn’t arrive on a container ship,” said Hal Eddins, chief economist at Apple shareholder Capital Investment Companies.
Another bright spot in the company’s results was its sales in China, up 83 percent to US$14.6 billion.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
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