Fiscal second-quarter sales to China nearly doubled and
results topped analyst targets in every category, led by $6.5 billion more in
iPhone sales than predicted and Mac sales about a third higher than estimates.
Apple also announced a $90 billion share buyback, a day
after Alphabet Inc promised to repurchase $50 billion in stock.
Apple Chief Executive Tim Cook said on an investor call that
Apple avoided a chip shortage in the fiscal second quarter by burning through
supply buffers.
In the fiscal third quarter, the shortage could cost the
company $3 billion to $4 billion in revenue, said Chief Financial Officer Luca
Maestri.
The shortfalls "affect primarily the iPad and the
Mac," Cook said. "We'll have some challenges in there," Cook
said, later adding that there could be trouble sourcing semiconductors made
with older chipmaking 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.
Cook said Apple competes against other industries for
chipmaking capacity in those older factories and "it's very, very
difficult" to predicted when shortages will end, he said.
Maestri said he expects revenue for the quarter ending in
June to grow by "strong double digits" year over year but a
steeper-than-usual decline in revenue between its fiscal second and third
quarters because of a later iPhone 12 launch.
Apple had thrived through the coronavirus pandemic as
home-bound consumers stocked up on electronic devices and signed up for paid
apps and services for fitness and music, and sales shot up even higher as Apple
released 5G iPhone models last fall.
For the fiscal second quarter ended March 27, Apple said
sales and profits were $89.6 billion and $1.40 per share, compared with
estimates of $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.
While Apple's business is booming, its App Store, one of its
fastest-growing businesses, has come under increased antitrust scrutiny because
of Apple's in-app payment rules and app review policies.
In addition, Facebook warned on Wednesday that its growth
later this year could "significantly" decline as new Apple privacy
policies will make it more difficult to target ads.
In the fiscal second quarter, Macs and iPads - two product
categories that Wall Street rarely counted on to supply growth - both benefited
from consumers working from home and remote learning. On top of those trends,
Cook said Apple customers were responding strongly to the company's M1 chip,
its first in-house processor for Mac computers.
"Both of those things happening at once really
supercharged the Mac sales. The last three quarters on Mac have been the
strongest three quarters ever in the history of the Mac," Cook told
Reuters.
Apple raised its dividend 7% to 22 cents per share.
Apple said iPhone sales were $47.9 billion compared with
analyst estimates of $41.4 billion, according to data from FactSet.
Sales of Macs and iPads were $9.1 billion and $7.8 billion,
respectively, compared with FactSet estimates of $6.8 billion and $5.6 billion.
Apple investors are looking for growth from Apple's
accessories business, which includes products like AirPods headphones and its
new AirTag trackers, and its services business, which includes its App Store
and new offerings such as paid podcasts. Sales in the segments were $7.8
billion and $16.9 billion, respectively, versus estimates of $7.4 billion and
$15.5 billion.
Cook said the company has 660 million paying subscribers on
its platform, an increase from the 620 million in the fiscal first quarter.
Apple's sales in the greater China region during the fiscal
second quarter, which included the busy Lunar New Year shopping season, were up
87.5% to $17.7 billion, compared with a 57% rise in the previous quarter.
Shares of Apple are up some 93% over the past year, compared
with a 61% rise for the Nasdaq 100 index of which Apple is a component.
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