Apple Inc said it expects supply constraints would cost US$4 billion to US$8 billion in revenue this quarter, a warning that sent the shares tumbling and cast a pall on record-setting results that the company just reported.
COVID-19 pandemic restrictions that have been implemented China in the past few weeks will take a toll on the April-to-June quarter, Apple said during a conference call on Thursday.
The fiscal second quarter’s sales and profit had topped analysts’ estimates, fueled by strong demand for iPhones and digital services, and the company announced US$90 billion in new stock buybacks.
The outlook renewed fears that supply-chain woes would continue to roil the tech industry following a short-lived recovery from pandemic struggles.
Companies ranging from Microsoft Corp to Texas Instruments Inc have already said that China’s COVID-19 lockdowns would crimp sales and make it harder to produce products such as the Xbox.
The administration of Chinese President Xi Jinping (習近平) has embraced a “COVID-19 zero” policy, with the effects of restrictions reverberating through the world’s supply lines.
Chip shortages and the Ukraine war also are causing disruptions, Apple chief executive officer Tim Cook said during the call.
“We are not immune to these challenges, but we have great confidence in our teams, and our products and services, and in our strategy,” Cook said.
Apple shares tumbled as much as 6.2 percent to US$153.50 in late trading after the remarks.
The stock had already fallen about 7.8 percent this year before the company gave the warning, hurt by a broader tech downturn. Apple had gained 34 percent last year, its third straight year of increases.
The latest supply woes did not begin until the very end of last month, so last quarter was not affected, Apple said.
Sales rose 8.6 percent to US$97.3 billion in the period, a record for a non-holiday quarter, Apple said earlier on Thursday.
Analysts had projected US$94 billion on average.
Profit came in at US$1.52 per share, compared with a prediction of US$1.42, initially sending the shares up in late trading.
Apple had previously said the January-to-March quarter would be a record, although its growth rate would decelerate for the overall business and its services segment.
The company’s fourth quarter last year was a blowout sales period, exceeding Wall Street estimates with an all-time revenue high of nearly US$124 billion.
Following its usual pattern, Apple used the company’s second-quarter report to increase its dividend and boost stock repurchases. The dividend is to grow 5 percent to US$0.23 per share.
The Cupertino, California-based company said that China’s COVID-19 restrictions also have affected demand in that country, but that broader demand has been strong.
It said that it is contending with increasing inflation and a pullout from Russia following that country’s invasion of Ukraine.
Analysts are projecting third-quarter revenue of about US$86 billion.
In the fiscal second quarter, which ended on March 26, Apple generated US$50.6 billion from the iPhone, its biggest source of revenue. That compared with an average estimate of US$49.2 billion.
The company launched the low-cost iPhone SE last month, contributing to sales in the first quarter.
However, the flagship iPhone 13 might have been less of a draw than the previous year’s iPhone 12, which was more of a dramatic update.
The iPhone 13 retained the earlier model’s design, with some minor upgrades that focused on camera improvements.
The Mac continued its resurgence, generating revenue of US$10.4 billion in the quarter.
Apple launched the high-powered Mac Studio desktop in the quarter, but many orders of that machine have been delayed due to supply chain shortages, customization time and high demand.
The strong Mac sales are likely primarily due to the new MacBook Pros.
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