Apple warns supply chain issues could have US$8b impact – Hardware

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Apple on Thursday announced a record-breaking second fiscal quarter revenue haul of US$97.3 billion, up 9 percent year-over-year, as the tech giant said it could take an US$8 billion hit from supply chain constraints.

The Cupertino, Calif.-based IT icon has so far bucked worries about COVID lockdowns that may be affecting more than half of its component suppliers in China. But Apple says the supply chain aftermath could cost them US$4 billion to US$8 billion in future quarters.

Still, the recent earnings announcement, which cover the quarter ended March 26, came as a pleasant surprise to some analysts.

“This quarter’s record results are a testament to Apple’s relentless focus on innovation and our ability to create the best products and services in the world,” said Apple CEO Tim Cook in a statement.

The company also reported iPhone revenue of US$50.57 billion versus US$49.16 billion expected – growing 5 percent year-over-year, Mac revenue was US$10.44 billion versus US$9.23 expected, iPad revenue was US$7.65 billion versus US$7.19 billion down 7 percent year-over-year, wearables revenue was US$8.81 billion versus US$8.98 billion expected (up 12 percent year-over-year), and services revenue at US$19.82 billion versus US$19.78 billion expected.

“We are very pleased with our record business results for the March quarter, as we set an all-time revenue record for Services and March quarter revenue records for iPhone, Mac, and Wearables, Home and Accessories. Continued strong customer demand for our products helped us achieve an all-time high for our installed base of active devices,” said Luca Maestri, Apple’s chief financial officer, in a statement. “Our strong operating performance generated over US$28 billion in operating cash flow, and allowed us to return nearly US$27 billion to our shareholders during the quarter.”

Apple’s board of directors said it had declared a cash dividend of US$0.23 per share of the company’s common stock, an increase of 5 percent. The dividend is payable on May 12, 2022 to shareholders of record as of the close of business on May 9, 2022. The board of directors also authorized an increase of US$90 billion to the existing share repurchase program.

Alcyr Araujo, founder and chief executive officer of Winter Park, Fla-based Apple mobile device management provider Mosyle, said he was excited about the earnings report. “The growth of Apple and its enterprise business has been amazing,” he said. “Traditional Microsoft customers are starting to buy their first Mac device…. It shows that our vision that Apple is a phenomenal device for enterprise is now being confirmed by customers.”

Apple has largely dodged supply chain constraints throughout the pandemic, setting records in Q1 as well. Maestri, however, did acknowledge that iPhone and Mac products were struggling with supply chain issues. Analysts say supply chain ripples from the current COVID-19 shutdowns in China and Russia’s war with Ukraine may not be felt until later in the year.

“We expect the constraints to be in the range of US$4 billion to US$8 billion dollars and will also have an impact on customer demand in China,” Maestri told analysts and media during a conference call.”

Cook said, “Right now, our main focus is on the supply side. For Q2 … we had constraints, but they were significantly lower and driven by industry wide chip shortages. Looking ahead, there are two causes of constraints: Covid disruptions and silicon shortages. These (COVID-19 lockdown) constraints are primarily around the Shanghai corridor… almost all of the affected factories have now restarted. We’re encouraged that the COVID case count in Shanghai has decreased over the last few days.”

Apple stock sank 3 percent to US$163.64 in after-hours trading Thursday.

This article originally appeared at crn.com

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