Apple's supply chain issues cost the company $6 billion in sales during its fiscal fourth quarter, which fell short of Wall Street projections, and Chief Executive Tim Cook predicted that the impact would be considerably greater during the current holiday sales quarter.
Cook told Reuters on Thursday the quarter ended Sept. 25 had “larger than expected supply constraints” as well as pandemic-related manufacturing disruptions in Southeast Asia. While Apple had seen “significant improvement” by late October in those Southeast Asian facilities, the chip shortage has persisted and is now affecting “most of our products,” Cook said.
“We’re doing everything we can do to get more (chips) and also everything we can do operationally to make sure we’re moving just as fast as possible,” Cook said. Cook stated that the company anticipates a year-over-year increase for the December quarter. Analysts predict a 7.4 percent increase to $119.7 billion.
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“We’re projecting very solid demand growth year over year. But we are also predicting that we’re going to be short of demand by larger than $6 billion,” Cook said.
Shares of the Cupertino, California-based firm, which had increased about 15% this year, fell 5% in extended trading on Thursday. After a run-up in Microsoft shares on the strength of its cloud computing division, a drop in Apple shares might make Microsoft Corp the world's most valuable firm.
Apple's performance was mixed in the fiscal fourth quarter, which was viewed as a lull before the high-sales holiday season at the end of the year. According to IBES statistics from Refinitiv, Apple's revenues and profits for the fiscal fourth quarter were $83.4 billion and $1.24 per share, respectively, compared to analyst projections of $84.8 billion and $1.24 per share.
The ultimate result was a rough conclusion to a fiscal year of exceeding expectations sales led by its iPhone 12 models and strong sales of Mac computers and iPads for working and learning from home during the COVID-19 pandemic.
Apple told investors in July that chip constraints would start to hit its iPhone and iPad lineups for the first time in the fourth quarter.
Apple posted its results shortly after retailer Amazon forecast holiday-quarter sales well below Wall Street expectations, citing labor supply shortages and global supply chain issues in part.
Apple fell short of expectations in two crucial areas. According to Refinitiv statistics, Apple reported fourth-quarter iPhone sales of $38.9 billion, falling short of projections of $41.5 billion. Cook stated that chips produced with outdated technology continue to be a major supply problem. He stated that Apple is unsure whether the shortages will subside following the holiday buying season.
