Apple is not running away either: the brutal chip shortage has caught up with the iPhone maker

I was disappointed with iPhone sales

Really, Apple’s sales in China, the world’s second-largest phone market, exploded after customers willing to spend more on a high-end device turned to iPhones because of Huawei’s suffering. Apple’s smartphone sales revenue in China rose 83 percent in the July-September quarter compared to the same period last year, according to the company’s quick report. The big difference compared to the base period is that while this year’s new handsets were already available for purchase in September, so the numbers for the closed quarter were dropped somewhat, last year only Apple launched new 5G models in October, before that new phones could wait. customers.

Analysts say the iPhone’s strong sales numbers are clearly due to Huawei is increasingly pushed back into the top category, it takes time for other Chinese mobile manufacturers to really identify them with the top category. Apple’s biggest competitors now in China, for example, are Honor, a former subsidiary of Huawei, which was replaced by Huawei after U.S. sanctions cut off the chips. Honor handsets are mostly in the lower-middle class, but in August it launched its more expensive Magic 3 for 7,999 yuan. (The cheapest iPhone 13 costs 5,199 yuan in China.) According to Canalys, Honor was already the third largest smartphone maker in China in terms of the number of handsets sold in the July-September quarter. Vivo and Oppo, which sell cheaper handsets, were in the top two, but sales from both mobile manufacturers fell during the period.

IPhone sales revenue grew nearly 47 percent globally from a year ago, a robust increase, but Apple was still disappointed by analysts ’expectations.

Instead of the expected $ 41.5 billion in revenue, the company had $ 38.9 billion in revenue from iPhone sales. It was the first time since May 2017 that Apple reported lower-than-expected quarterly revenue.

Figures for July-September 2021 (USD million)
3Q 203Q 21 expected3Q 21 factschange (year / year)fact / expected
iPhone revenue26444415113886847,0%-6,4%
net income64698848088336028,8%-1,7%
gross margin level38,2%42,0%42,2%4,0%0,2%
operating profit14775241732378661,0%-1,6%
net profit12673202002055162,2%1,7%
EPS (USD)0,731,241,2469,9%0,3%
Source: Refinitive, Portfolio

Apple CEO Tim Cook explained the lower-than-expected numbers with supplier problems that had already reached Apple and hit it harder than previously expected.

Supplier problems are responsible for the $ 6 billion outage

Sales of not only the iPhone but also iPads and Macintosh computers were negatively impacted by supplier concerns. Tim Cook told CNBC he estimated $ 6 billion could be credited to supplier problems. The chip shortage also determines the outlook, but nonetheless, management expects revenue growth for the current quarter, although the dynamics may be only in single digits on a year-on-year basis. In the iPad segment, however, sales revenue may decline on a year-on-year basis in the October-December quarter, which is particularly important due to the Christmas season, due to the chip shortage.

Apple’s revenue rose another nearly 30 percent in the closed quarter, but it’s hard to compare performance to the base period, since its highest-revenue product, the iPhone, was already available in September this year, and only from October last year. However, Apple’s third-quarter revenue still fell short of analysts’ expectations by about $ 1.5 billion.

The services business, which is now the second largest revenue division became Apple, grew nearly 26 percent and exceeded analysts ’expectations, kicking in at $ 18.28 billion instead of the $ 17.64 billion in the consensus. Revenue for Macintoshes rose just 1.6 percent, and sales for iPad rose 21 percent from a year ago. Revenues from other products rose nearly 12 percent.

Apple’s fiscal year ended at the end of September, with the company achieving record revenue in all product categories and geographies over the past year, despite the uncertainty in the macroeconomic environment, commented Luca Maestri, Apple’s chief financial officer. Numerical expectations have not been set by management since the outbreak of the covid epidemic.

Massive profitability

Profit rates improved at Apple in the third quarter, with gross margin rising 4 percentage points to 42.2 percent.

Apple posted an increase of over 60 percent in both operating profit and net income from a year earlier, and earnings per share jumped even more, by 70 percent, due to the share-reducing effect of treasury share purchases.

Apple’s earnings per share kicked in at $ 1.24 during the period, which was in line with analyst consensus, which was also $ 1.24 according to Refinitiv’s collection.

The exchange rate is falling

Apple’s share price fell due to lower-than-expected numbers and chip shortage concerns in response to a quarterly flash report released after closing, currently it is down nearly 4 percent in pre-opening trading. The stock is up 15 percent this year, underperforming the U.S. stock market, while the S&P 500 index rose 22 percent.

Apple Exchange Rate (USD)

Apple shares are currently trading at 26.7 times the 12-month forward P / E rate, a nearly 25 percent premium over S&P 500 pricing.

Cover image source: Apple