The company said it's still struggling to get enough chips
to meet demand and contending with COVID-related shutdowns at factories in
China that make iPhone handsets and other products.
Although initial results for the January-March period topped
analysts' projections, the good news was quickly eclipsed when management
warned of trouble ahead during a conference call.
The main takeaway: Apple's sales will be squeezed by the
supply problems much harder in the current April-June quarter than in its
previous one. The company estimated it would take a hit to revenue of $4
billion to $8 billion as a result.
“It will affect most of the product categories," Apple
CEO Tim Cook told analysts.
Apple's stock price fell 4 percent in extended trading,
reversing a positive response after the Apple report initially came out. Before
the sobering forecast lowered the shares even further, Apple's stock had fallen
10 percent from its peak in early January.
“It was a solid quarter, but it looks like COVID has reared
its ugly head," said Edward Jones analyst Logan Purk. “It looks like it's
two steps forward, one step back."
Like a wide gamut of companies ranging from automakers to
health care providers, Apple has been grappling with shortages of computer
chips and other key technology components required in modern products.
Apple had expected the crunch to ease as this year
progressed, but recent COVIDs outbreaks are starting to curtail production in
Chinese factories that the company relies on.
Despite those headwinds, the results for the January-March
period drew a picture of a still-expanding empire generating massive profits
that have yielded the firm a $2.7 trillion market value - the largest among US
companies.
Apple announced a 5 percent increase in its quarterly
dividend, which has been steadily rising since the company revived the payment
a decade ago. Effective May 12, Apple's new quarterly dividend will stand at 23
cents per share - more than doubling from 10 years ago.
Even without that supply issues, Apple would still be facing
some of the same challenges confronting many other major technology companies.
After enjoying a pandemic-driven boom, it's becoming tougher to deliver the
same levels of spectacular growth that drove tech-company stock prices to
record highs. The crisis continues to fade away and growth on a year-to-year
basis has become harder to maintain.
Apple's most recent quarter illustrated the high hurdles the
Cupertino, California, company is now trying to clear. Revenue for the period
totaled $97.3 billion, yet it was only 9 percent higher than the same time last
year. It marked the first time in the past six quarters that Apple hasn't
produced double-digit gains in year-over-year revenue.
That number, however, exceeded the average revenue estimate
of $94 billion among analysts surveyed by FactSet Research, indicating that
Apple's growth slowdown hasn't been quite as severe as investors were anticipating.
Quarterly profit came in at $25 billion, or $1.52 per share,
a 6 percent increase from the same time last year. Analysts had predicted
earnings per share of $1.42.
As usual, the iPhone remains Apple's marquee product with
sales of $50.6 billion in the past quarter - a 5 percent uptick from the same
time last year.
Apple has been trying to keep its iPhone sales growing while
chips remain in short supply by siphoning some components from the iPad, which
saw its sales fall 2 percent from last year to $7.6 billion
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