Apple executives said revenue would grow in double digits in the fourth quarter of the current fiscal, but down from the 36.4 percent growth rate in the third quarter. Growth in Apple’s closely watched services business will also slow, he said. In a conference call with investors, Apple executives also said that the global chip shortage had a less severe impact than the company feared in the third quarter, but would extend to iPhone production in the fourth quarter.
chief executive Tim Cook Said that the affected chips are made from older technology but are needed to build the company’s flagship equipment. “We have something lacking,” Cook said, “where demand is so high and beyond our own expectation that it is difficult to get the full set of parts within the lead time that we strive to achieve.”
Shares, which have more than doubled in value in nearly three years, fell 2.3 percent to $143.38 in after-hours trading on the call. East, Apple It reported third-quarter sales and profits that beat analysts’ expectations as consumers bought premium versions of its 5G iPhones and signed up for its subscription services. Driven by better-than-expected iPhone sales, total revenue reached $81.43 billion, according to IBES data from Refinitiv, which exceeded analysts’ expectations of $73.30 billion. According to Refinitiv, Apple’s profit was $21.74 billion, or $1.30 per share, above estimates of $1.01 per share.
Apple’s strongest sales growth came from China, where Cook told Reuters that customers are buying accessories like the Apple Watch to pair with their iPhones. China’s sales rose 58 percent to $14.76 billion in the third quarter of the fiscal year ended June 26. “It wasn’t just the iPhone. We set a new quarterly record for Macs, for wearables, home and accessories, and services” in China, Cook said in an interview. “It was our strongest geography.” Investors who once worried that Apple was relying too heavily on iPhone sales pushed the company’s value to nearly $2.5 trillion.
“Their main challenge now is to maintain success to justify their +$2 trillion valuation,” said Jesse Cohen, a senior analyst at Investing.com. Apple launched its iPhone 12 models, all thanks to the chips that can rapidly connect to 5G wireless networks. From Qualcomm Inc., later than usual last year. Because that delay pushed some iPhone purchases that would normally have occurred in the company’s fiscal first quarter into the second quarter, executives warned investors to expect a larger-than-normal decline in iPhone sales in the third quarter. Consumers began holding off on purchases this fall in anticipation of the new generation of phones. But the impetus to upgrade to 5G is driving a better buying cycle for iPhones than many analysts expected. Apple said iPhone sales were $39.57 billion, up nearly 50 percent from a year earlier and exceeding analyst expectations of $34 billion.
Cook told Reuters that Apple’s iPhone 12 Pro and 12 Pro Max, the premium tier of the device, were strong sellers. According to Refinitiv, this helped push gross margin to 43.3 per cent, above estimates of 41.9 per cent. The other major driver of Apple’s results was its services business, which includes television and music, as well as paid subscriptions to its App Store. Services revenue hit a record high of $17.49 billion, a third from a year earlier and higher than analysts’ expectations of $16.33 billion. Cook told Reuters that Apple now has 700 million customers across various platforms, up from 660 million a quarter ago.
Chief financial officer Luca Maestri told investors that services growth would be slow. “We still expect significant growth in services but not to the level we saw in June,” he said on the call. Cook said Apple set quarterly sales records across several of its first-party services, including AppleCare hardware insurance. Plans, which were slowed somewhat during the pandemic when many of the company’s retail locations were closed.
Last quarter, Apple told investors that global chip shortages could stifle sales by $3 billion to $4 billion.
Cook told Reuters that although the reduction in how many Macs and iPads Apple was able to sell, the hit to Apple’s total revenue in the third quarter was “less than the low end” of its previously estimated range. iPad sales and Macs were $7.37 billion and $8.24 billion, compared to analyst expectations of $7.15 billion and $8.07 billion, according to Refinitiv data.
In the long term, Apple’s services business also faces regulatory risks. Charging a commission of 15 percent to 30 percent for developers who sell in the company’s App Store and requiring them to use Apple’s payment system could face scrutiny from regulators in the United States and Europe, where legislators also do so. Laws are proposed which can make some deductions. About Apple’s practices. A verdict is also expected in the coming months in an antitrust lawsuit filed against Apple by “Fortnite” maker Epic Games.
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