The pandemic caught up with Apple in its fourth quarter as shortages in chip supplies cost it $6 billion in potential revenue, with iPhone sales missing analysts’ estimates.
As The Wall Street Journal reports, Chief Executive Tim Cook “had largely helped Apple navigate the turbulent waters of COVID-19 and avoid a hit to its financial results during the past year as other companies struggled with chip shortages.”
But after warning in July that a global shortage of computer chips would extend to its iPhone production, Apple reported fourth-quarter revenue of $83.4 billion on Thursday, below analysts’ estimates of $84.8 billion.
“The results were a rocky end to a fiscal year of above-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,” Reuters said.
Apple CFO Luca Maestri said the supply-chain disruptions during the fiscal fourth quarter were worse than expected, with the chip shortage roiling everyone and an unanticipated increase in COVID-19 cases in Southeast Asia affecting manufacturing.
Wait times for some Apple products were longer than the company would like. Supply constraints hurt potential revenue by $6 billion, Maestri said, and will be worse in the current period.
“We fully expect to set a new December quarter record for revenue,” he told the Journal. “But we also expect the supply constraints will be greater than the $6 billion … We expect most of our product categories to be constrained during the December quarter.”
Fourth-quarter iPhone sales were $38.9 billion, short of estimates of $41.5 billion, while Apple’s accessories segment, which includes fast-growing categories like its AirPods wireless headphones, came in at $8.8 billion, half a billion dollars lower than analyst expectations of $9.3 billion.
Cook said chips made with older technology remain the key supply constraint and that Apple remains unsure whether the shortages will ease after the holiday shopping season.
“It’s very difficult to call,” he told Reuters.
Profit rose in line with expectations to $20.6 billion for the quarter, or $1.24 per share, from $12.7 billion a year earlier.