Apple’s (AAPL) stock is down 7% after the iPhone maker delivered a weak outlook due to growing difficulties in securing the supply of microchips it needs for its electronic devices.
Supply concerns largely overshadowed strong financial results from the company.
Apple announced earnings per share (EPS) of $2.02 U.S., which topped the $1.89 U.S. that had been forecast on Wall Street.
Revenue in what was the company’s fiscal third quarter totaled $109.42 billion U.S., which surpassed the $108.65 billion U.S. consensus estimate of analysts.
Sales in the latest quarter topped 15% for a third consecutive period.
iPhone revenue came in at $54.25 billion U.S. versus $53.86 billion U.S. that had been estimated. iPhone sales were up 22% from a year earlier.
Apple’s other devices, including its MacBook computers and wearables such as the Apple Watch, also posted sales that were ahead of Wall Street’s expectations.
However, the company’s Services unit that includes streaming platforms and the App Store posted revenue of $30.74 billion U.S., which missed the $31.22 billion U.S. estimate.
The company ended the quarter with a gross margin of 50.1%, which beat analyst estimates of 47.9%. Apple had $146.52 billion U.S. of cash on hand at quarter’s end.
Apple noted that its latest earnings got an $0.11 U.S. per share boost from tariff rebates issued by the American government.
While the results were solid, Apple continues to grapple with a global shortage of memory chips that are used in most of its electronic devices.
Memory chips are being gobbled up by artificial intelligence (A.I.) data centres, making it difficult for Apple to secure a reliable supply.
Due to the shortage, the cost of memory chips is surging. In recent months, Apple has raised the cost of its Mac computers and iPads to help cover the rising costs.
Apple CEO Tim Cook has called the situation with memory chips a “hundred-year flood.”
Apple hasn’t said if it will raise prices on iPhones, but many analysts are expecting an increase this September when the latest version of the smartphone is released
This was Tim Cook’s last earnings report before he hands leadership of Apple over to John Ternus, a 25-year company insider and current head of the hardware division.
Prior to today (July 31), AAPL stock had risen 60% over the past 12 months to trade at $333.43 U.S. per share, near an all-time high.
