Due to supply constraints, Apple Inc. has forecast a drop of $4 billion to $8 billion in revenue for the current quarter. The warning sent the shares tumbling and then gloomed the recently declared record-setting results.
The loss of Apple’s revenue
In a conference call on Thursday, Apple said that the Covid restriction in China in recent weeks would take a toll in the quarter ending June. Analysts’ fiscal quarter two estimates on sales and profitability have topped estimates fueled by solid demand for iPhone and digital services. The company also announced a $90 billion buyback of new stocks.
The outlook renews the fear about supply chain issues continuance as the tech industry continues to suffer after a short-lived recovery from the struggles during a pandemic. Many companies, including Microsoft Corp. and Texas Instruments Inc., have said that it will be difficult to produce products like Xbox during lockdowns, and sales will be impacted.
According to CEO Tim Cook, the shortage of chips and the war in Ukraine has caused disruptions.
Apple shares fell by 6.2% to $153.50 after the warnings. The stock had already fallen by 7.8% this year, affected by the broader downturn in tech stocks. In 2021, Apple had gained 34%, its continuous increase for the third year.
The supply issues cropped up during the end of March, so the last quarter was not affected. Sales rose to $97.3 billion, up by 8.6% for the period making a record in a non-festive season quarter. Analysts had predicted $94 billion in average sales. Profit per share was $1.52 compared to $1.42. The December quarter had a blowout sale with an all-time high of $124 billion.
Apple increased the dividend and boosted stock buyback based on the second-quarter results. It has increased the dividend by 5 % to 23 cents per share.
The Cupertino, California-based Apple Inc. said that the broader covid restrictions in China had also affected demand. It also had to contend with increasing inflation and Russian pull-out after the Ukraine invasion. Analysts are projecting $86 billion in revenue in the third quarter.
The second quarter of this fiscal saw sale of $50.6 billion from iPhone sales which is its most significant source of revenue, against an average estimate of $49.2 billion.
In March, the company launched iPhone SE, the low-cost model that contributed to sales last quarter. However, the iPhone 13 was less successful than the iPhone 12 model, and the iPhone 13 had the same design as the earlier model. Still, it made some minor improvements with a focus on the camera. The iPad sales were $7.65 billion, with degrowth of 2.1 % from the quarter in the previous year. At the same time, Mac continued to do well, generating revenue of $10.4 billion in the last quarter.
