While reporting estimate beating sales and profits for its fiscal second quarter driven by 5G iPhone upgrades, iApple Inc also issued a warning of possible hit of several billion dollars to sale of iPads and Mac because of the global chip shortage.
Apple noted almost doubling of sales in China in the quarter and its performance in every product category neat estimates of Wall Street analysts. The performance of the company was primarily driven by $6.5 billion increase in revenues from the sale of iPhones compared to predictions while the sale Mac was about one third higher than what the market had estimated.
A $90 billion share buyback program was also announced by Apple.
Apple managed to avert a hit because of the global chip shortage during the fiscal second quarter by using its supply buffers, said Apple’s Chief Executive Tim Cook said on an investor call.
Apple’s Chief Financial Officer Luca Maestri said that there can be a hit of between $3 billion and $4 billion in revenue because of the chip shortage in the company’s fiscal third quarter.
Cook said that the shortfalls “affect primarily the iPad and the Mac”.
“We’ll have some challenges in there,” Cook said and added later that the company could face issues in sourcing semiconductors that are made with older chip-making technology. Those are the same class of older-technology chips bedeviling Ford Motor Co, which on Wednesday said the shortage slashed production in half in its second quarter.
Apple rivals against other industries for chipmaking capacity in those older factories, Cook said and added that “it’s very, very difficult” to predicted a time frame when there will be end to the shortages.
The revenue is expected to grow by “strong double digits” year over year for the quarter ending June, Maestri said, but also warned of a possible more than usual drop in revenue between its fiscal second and third quarters due to delay in the lunch of iPhone 12.
During the Covid-19 pandemic, people staying back at home stocked up on electronic devices and signed up for paid apps and services for fitness and music which helped apple to fare well through the pandemic crisis. The sale revenues of Apple were also further boosted by the release of 5G iPhone models last fall.
Sales and profits for Apple for its fiscal second quarter which ended on March 27 were at $89.6 billion and $1.40 per share respectively, the company said while analysts had estimated the numbers to come at $77.4 billion and 99 cents per share, according to Refinitiv data.
IPhones were the biggest driver of growth, suggesting consumers are upgrading to 5G, said Haris Anwar, senior analyst at Investing.com.
“Stimulus checks and the successful vaccine rollouts are certainly helping to boost consumer demand for tech gadgets across the board,” Anwar said.
(Adapted from NDTV.com)