Apple says supply constraints to worsen this quarter, impact iPhone sales

The global supply chain crunch will have an even greater negative impact on the company this quarter, said CFO Luca Maestri.
Written by Tiernan Ray, Senior Contributing Writer

Following much better-than-expected fiscal Q3 results this afternoon from Apple, the company's CFO, Luca Maestri, told Wall Street analysts on a conference call that sales growth this quarter will be affected as the impact of the global supply chain on Apple's business worsens from what it was the previous quarter.

"We expect very strong double-digit year over year revenue growth during the September quarter," said Maestri, adding "we expect revenue growth to be lower than our June quarter year-over-year growth of 36%, and for three reasons."

Explained Meastri,

First, we expect the foreign exchange impact on our year over year growth rate to be three points less favorable than it was during the June quarter. Second, we expect our services growth rate to return to a more typical level then the growth rate during the June quarter, which benefited from a favorable comparison as certain services were significantly impacted by the Covid lockdown a year ago. And third, we expect supply constraints during the September quarter to be greater than what we experienced here in the June quarter, the constraints will primarily impact iPhone.

Asked whether the supply chain impact will persist into Apple's December quarter, CEO Tim Cook said "I don't want to predict that today, we're going to take it one quarter at a time." Asked if Apple was absorbing higher costs, Cook said the cost of global freight has risen for the company. "We're paying more for freight than I would like to pay," he said. But chips and other ingredients are not driving up costs, he suggested. "Component costs continue in the aggregate to decline," said Cook. 

The earnings report initially sent Apple shares up slightly in late trading, though the stock quickly gave up gains and turned down by almost 3%. 

Revenue in the three months ended in June rose 36%, year over year, to $81.4 billion, yielding a net profit of $1.30 a share.

Analysts had been modeling $73.33 billion and $1.01 per share.

Within the categories of revenue, Apple's sales of iPhone rose by 50%, year over year, to $39.6 billion.

Maestri's forecast for "strong double-digit growth" compares to Wall Street consensus for growth of 26.4%, totaling $81.79 billion. Hence, if sales growth is expected to be below the 36% of last quarter, it could still be higher than that consensus outlook.

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