Apple posts record profit with $97 billion in revenue and expects slowdown next quarter

Apple on Thursday reported strong quarterly results despite supply shortages, but warned that the slowdown is likely to deepen. The company said it is still trying to get enough chips to meet demand and is struggling with the closure of factories in China that make iPhones and other products due to COVID-19.

Although initial results for the January-March period beat analysts’ forecasts, the good news was quickly overshadowed when management warned of upcoming problems during a conference call.

Bottom Line: Apple’s sales will be squeezed by supply issues in the current quarter from April to June much more than in the previous quarter. The company estimates that revenue will fall from $4 billion (roughly Rs. 30,615 crore) to $8 billion (roughly Rs. 61,230 crore) as a result.

“This will affect most product categories,” Apple CEO Tim Cook told analysts.

Apple’s share price fell 4 percent in extended trading, reversing the positive reaction following the initial release of Apple’s report. Before the sobering outlook pushed the stock further down, Apple stock was down 10% from its peak in early January.

“It was a solid quarter, but it looks like COVID has reared its ugly head,” Edward Jones analyst Logan Purk said. “It looks like it’s two steps forward, one step back.”

Like a wide range of companies, from automakers to healthcare providers, Apple is struggling with a shortage of computer chips and other key technology components required for today’s products.

Apple expected the crisis to ease this year, but recent COVID outbreaks are beginning to cut production at Chinese factories on which the company depends.

Despite these headwinds, the January-March results painted a picture of a still-expanding empire generating huge profits that gave the firm a market value of $2.7 trillion (roughly Rs. . companies.

Apple announced a 5 percent increase in its quarterly dividend, which has been rising steadily since the company revived the payout ten years ago. Effective May 12, Apple’s new quarterly dividend will be 23 cents (roughly Rs. 20) per share, more than double what it was 10 years ago.

Even without these supply issues, Apple would still be facing some of the same problems many other big tech companies face. In the wake of the pandemic-driven boom, it is becoming increasingly difficult to sustain the same impressive levels of growth that propelled tech stock prices to record highs. The crisis continues to fade, and it becomes more and more difficult to maintain growth from year to year.

Apple’s last quarter showed the high hurdles the Cupertino, California-based company is trying to overcome. Revenue for this period was $97.3 billion (approximately Rs 7,44,710 crores), but this is only 9 percent more than the same period last year. This marks the first time in six quarters that Apple hasn’t posted double-digit revenue growth from a year ago. That number, however, topped the average earnings estimate of $94 billion (roughly Rs. 7,19,410 crore) among analysts polled by FactSet Research, indicating that Apple’s growth slowdown was not as severe as investors had expected.

Quarterly earnings were $25 billion (roughly Rs. 1,91,330 crores), or $1.52 (roughly Rs. 120) per share, up 6 percent from the same period last year. Analysts had forecast earnings per share of $1.42 (roughly Rs. 110).

As usual, the iPhone remains Apple’s flagship product with sales of $50.6 billion (roughly Rs. 3,87,105 crore) last quarter, up 5% from the same period last year. Apple is trying to keep iPhone sales up while chips remain in short supply by siphoning some components from the iPad, whose sales fell 2 percent year-over-year to $7.6 billion (roughly Rs. 58,140 crore).