Apple Is Experiencing More Supply Issues After A Good Start To The Year

Apple Inc (AAPL.O) forecasted more troubles on Thursday as China’s COVID-19 lockdowns stymie production and demand, the war in Ukraine dampens sales, and development in services, which the iPhone manufacturer sees as its engine for expansion, slows.

Apple News

In late trading, Apple shares were down 2.2 percent after executives expressed their pessimism on a conference call. The announcement overshadowed Apple’s fiscal second-quarter profit and sales, which concluded in March.

In a statement, Apple’s Chief Financial Officer Luca Maestri cautioned that the conflict in Ukraine, which forced the company to halt sales in Russia, will hurt sales even more in the fiscal third quarter.

On the call, he said supply-chain concerns would harm sales by $4 billion to $8 billion in the third quarter, which would be “significantly larger than the hit in the second quarter.

He stated that the supply issues were centered on a corridor near Shanghai, China, and mirrored COVID disruptions and chip shortages. According to him, the epidemic was harming demand in China as well.

Tim Cook, Apple’s CEO, claimed that almost all of the Chinese plants that conduct the final assembly of Apple goods have reopened following recent COVID shutdowns, but he did not say when the chips shortage, which primarily affects older models, would end.

Cook expressed the hope that COVID problems will be transitory and improves over time.

Other high-profile tech firms have expressed their concerns as well. Due to supply chain issues, Amazon (AMZN.O) forecasted a difficult quarter, driving its stock beneath 9 percent after the close on Thursday. Intel Corp (INTC.O) predicted a bleak quarter due to supply chain issues, bringing its stock down 4%.

Both businesses, along with Apple, are members of the Nasdaq index, which has lost roughly 19 percent this year as investors flee from increasing prices.

According to Refinitiv statistics, Apple’s total financial second-quarter revenue was $97.3 billion, up 8.6% from the previous year and higher than analysts’ average expectation of $93.89 billion.

Worldwide phone sales income increased 5.5 percent year over year to $50.6 billion, and services revenues increased 17 percent to $19.8 billion, both exceeding analyst average projections.

Maestri, on the other hand, predicted that service growth would slow from the March quarter but stay in double digits. He highlighted a number of causes, including higher currency exchange rates.

The company’s total earnings of $25 billion, or $1.52 per share, are considerably beyond analysts’ projections of $23.2 billion and $1.43 per share.

Apple also increased its dividend by 5% to $0.23 per share, and the board approved a $90 billion stock repurchase.

Investors have been anticipating for a drop in consumer expenditure on technology products and services as the crisis in Ukraine and other factors drive up the cost of crude, food, and other necessities.

Apple reported iPad sales declined 2% to $7.65 billion owing to supply-chain challenges, but revenue from Mac computers grew 14.7 percent to $10.4 billion, despite supply-chain issues.

Wearables, home speakers, and accessories sales increased 12 percent to $8.8 billion, missing Wall Street estimates for the first time. According to Maestri, the smartwatch and AirPods sold successfully, and the miss was due to seasonal differences in demand for other products.

Apple announced that it now has 825 million paying customers across at least seven subscription services, up from 785 million in the previous quarter. Its expansion comes as competitors such as Netflix Inc (NFLX.O) report declining user numbers.

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