Apple tumbled in late trading after component shortages weighed on the company’s sales forecast, signaling that industrywide supply constraints are taking a bigger toll than anticipated.
Revenue will rise 9% to 11% in the fiscal fourth quarter, which runs through September, the company said on a post-earnings conference call Thursday. Analysts had estimated growth of more than 12% in the period, which is likely to be the debut quarter for the next iPhone models, Bloomberg News‘ Mark Gurman reports.
Apple has been struggling to secure enough memory chips and computer processors, a situation that forced the company to raise prices on Macs and iPads last month. The supply crunch has also led to extended wait times on key computers like the Mac mini and Mac Studio.
The constraints will affect the iPhone, Mac and iPad in the September quarter, Chief Financial Officer Kevan Parekh said during the call. Currency fluctuations are hampering growth as well, he said.
Apple shares fell about 8% in extended trading following the announcement.
The tech giant’s results also showed weaker-than-expected expansions in China and services, two onetime growth engines. Though total revenue topped estimates, the China sales amounted to $18.8 billion in the fiscal third quarter, well short of the $19.6 billion estimated by analysts.
Services revenue of $30.7 billion also missed expectations of about $31.4 billion.
Chief Executive Officer Tim Cook said constraints would affect more Macs, iPhones and iPads in the current quarter. He likened the memory cost issue to a “100-year flood,” while adding that the chip shortages were fueled by higher-than-expected demand for the iPhone and Mac. He specifically cited consumer interest in the iPhone 17 line and MacBook Neo, a new low-cost laptop.
“This is not a regular supply issue, it’s a demand forecast issue to be candid,” Cook said during the company’s conference call with analysts on Thursday. “We’ve got a quarter ahead where we’ll be scrambling on the supply side.”
Overall, Apple reported fiscal third-quarter revenue of $109.4 billion, up 16% from a year earlier and above estimates, with net income rising to $29.7 billion. iPhone revenue jumped 21.7% to $54.25 billion, while Mac sales rose sharply as well.
MacDailyNews Take: The “disappointing” outlook (if revenue rising 9% to 11% YoY could ever be called “disappointing”) sent AAPL shares down as much as 9.78% in subsequent trading, marking one of the stock’s sharpest declines in more than a year.
If every company is forced to raise prices, and they are, the one with the most affluent customers stands to benefit most. Its buyers can better absorb the higher costs, while users of rival products may rethink their choices based on long-term value and resale potential rather than just the sticker price, helping Apple amass market share in the process.
These sort of irrational haircuts are resplendent gifts that will never stop giving! If you’re in position, take them!
Please help support MacDailyNews — and enjoy subscriber-only articles, comments, chat, and more — by subscribing to our Substack: macdailynews.substack.com. Thank you!
Support MacDailyNews at no extra cost to you by using this link to shop at Amazon.
First. We know how this cycle goes… Apple saw a huge run up and the market wants an excuse so they can sell shares and take a quick profit. The stock is likely to rebuild to the $330 range or higher over the next 3 to 4 months.
Secondly, it is not so much supply constraints Apple can get the chips at once in the memory wants it has to pay more and product might cost more like the MacBook products, but they can hide costs in $100 higher priced iPhone Air w/2 cameras, the high margin high priced foldable AiPhone, and maybe a higher priced iPhone Pro Max.
The disappointing part of the quarter was services revenue with record iPhone sales you would think services revenue would at least meet expectations or beat them, but they underperformed decently so…
Thus, the real fear in Apple’s earnings is when AiPhone sales while they will continue to grow, come down to earth a bit, will services revenue really fall down to the 6% range or so, which is indeed very weak and a big problem… it is where massive margin can cover increasing HW costs, but not if they are not growing….