Other records for Apple, another quarterly with dizzying numbers, with the total value approaching 2500 billion dollars. But there is some shadow in the future of the richest tech company in the world: the global shortage of chips, which for now has marginally affected Mac and iPad, could also affect the production of iPhones. So much so that the company expects double-digit growth for the fiscal fourth quarter, but below the 36.4% recorded in the third quarter just ended. Growth will also slow in the services sector.
For the rest, in Cupertino they have something to celebrate: Apple reported sales and profits in the third quarter that exceeded analysts’ expectations, especially with regard to the premium versions of the iPhone 5G and its subscription services. Sales in China increased 58% to $ 14.76 billion in the quarter. Boosted by iPhone sales, total revenue reached $ 81.43 billion, above analysts’ expectations of $ 73.30 billion. Apple’s earnings were $ 21.74 billion, or $ 1.30 per share, above estimates of $ 1.01 per share.
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Demand beyond expectations
In the call, CEO Tim Cook explained that the hard-to-find chips are produced with old technologies, but are still needed to make the company’s flagship device, the iPhone. “We have some difficulties,” admitted Cook, “because the demand for the iPhone has been far beyond our expectations, and it is difficult to have all the necessary components within the expected delivery times.” Cook did not comment on the possibility that the chip shortage could extend into Apple’s first fiscal quarter, when the highest iPhone sales typically occur, due to the concomitance of the new models and the Christmas season.
Apple could therefore decide to set aside chips for the next generation of phones at the expense of current models, and to do so it would have to reduce production of current models. Overall, the chip shortage could cause $ 3 or $ 4 billion in lower revenues, according to what the company told investors last quarter. Cook said in an interview with Reuters, however, that the impact on overall revenue in the third quarter was less than expected.
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Geography
The biggest increase in sales was in China, where Cook says customers are buying accessories like the Apple Watch to pair with their iPhones. “It wasn’t just the iPhone. We set a new quarterly record for the Mac, for wearables, home and accessories, and for services,” Cook said. “It was our strongest geographic area.” The update to the new models with 5G seems to have pushed iPhone purchases far beyond analysts’ forecasts, which were evidently based on the still scarce availability of fifth-generation networks in the world. But this may mean that for iPhone 8 and other 5G smartphones) the best is yet to come.
According to Apple’s data, iPhone sales generated $ 39.57 billion in profits, nearly 50% more than the same period last year and above analysts’ expectations of $ 34 billion. The iPhone 12 Pro and 12 Pro Max, the top two models, were the best sellers, and this helped push gross margins to 43.3%, above estimates of 41.9%, according to Refinitiv.
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Services
The other big push to Apple’s results came from services, such as paid subscriptions for television and music and the cloud, as well as the App Store. Total revenue reached a record high of $ 17.49 billion, up a third from the previous year and above analysts’ expectations of $ 16.33 billion. Cook told Reuters that Apple now has 700 million subscribers across its various platforms, up from 660 million in the previous quarter.
CFO Luca Maestri noted that the trend could slow down. “We still expect significant growth, but not at the level seen in June.” Cook said Apple set quarterly sales records on many of its first-party services, including its AppleCare hardware insurance plans, which had slowed down a bit during the pandemic when many of the company’s outlets closed.
Finally, the sales of iPad and Mac are also good: respectively $ 7.37 billion and $ 8.24 billion, against analysts’ expectations of $ 7.15 billion and $ 8.07 billion.
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