Apple shrugged off the supply crunch that has curtailed production of iPhone units and other popular devices to deliver its most profitable holiday season ever.
Results posted on Thursday for the final three months of 2021 help explain why Apple is looking even stronger at the tail end of the pandemic than it did when the crisis began two years ago.
At the time, sales of Apple’s iPhone were on the decline as consumers began to hold onto their older devices longer. But now the Cupertino, Calif., company can’t keep up with the ever-increasing demand for a device that’s become even more important in the growing era of remote working.
“The iPhone has never been more popular,” Apple CEO Tim Cook said during a conference call with analysts. The company’s Mac computers and, to a lesser extent, iPad devices, continue to grow. With the advance of the iPhone, Apple continues to grow. now revealed that more than 1.8 billion devices are now in use worldwide.
Apple’s inability to fully satisfy the voracious appetite for iPhone handsets stems from a pandemic-induced shortage of computer chips that is affecting production of everything from automobiles to medical devices.
But Apple has so far navigated the shortfall “in an almost Teflon-like fashion,” Wedbush Securities analyst Daniel Ives said in a Thursday research note. That shrewd management enabled Apple to report iPhone sales of $71.63 billion (about Rs 5,37,930 crore). For the October-December period, an increase of 9 per cent from the same period last year.
Those sales gains would have been even stronger if Apple had secured all the chips and other components needed to make the iPhones. That problem ravaged Apple’s July-September quarter when management estimated that supply constraints slashed its iPhone sales by about $6 billion (about Rs 45,060 crore). Without quantifying the amount specifically, Cook said supply constraints dealt an even bigger blow to its sales in the recent quarter.
Those odds dealt the biggest blow to the iPad, whose sales fell 14 percent from the year-ago period. Management predicted that supply problems would not dramatically impact sales during the current quarter ending in March.
Despite being pulled down by the shortfall, Apple still earned $34.63 billion (about Rs 2,60,065 crore) or $2.10 (about Rs 160) per share, 20 more than the same period last year. Revenue grew 11 percent from the previous year to $123.95 billion (approximately Rs 9,30,880 crore).
Apple’s ongoing success helped push the company’s market value above $3 trillion (about Rs 2,25,30,450 crore) earlier this month for the first time. But its stock price has fallen 13 per cent since reaching that peak amid concerns about a projected hike in interest rates aimed at bucking inflation, fueled partly by a lack of supply.
Its shares rose more than 5 percent in extended trading Thursday after Apple’s fiscal first-quarter figures were revealed.
Supply issues surrounding Apple’s devices have increased the importance of the company’s services division, which is driven by digital transactions on the iPhone app, music subscriptions, video streaming, and commissions from repair plans.
Apple collects up to 30 percent commission from apps distributed through its exclusive App Store, which has become the focus of a fierce legal battle that unfolded in a high-stakes testing year, as well as recently proposed reforms in the US Senate. There has been a demand to bring it down. The company’s constraints prevent consumers from using alternative payment systems.
For now, though, the services division is still booming. Its revenue stood at $19.52 billion (about Rs 1,46,600 crore) in the previous quarter, a growth of 24 per cent.
Apple is believed to be heading towards another potentially big money-making opportunity with the introduction of an augmented reality headset that will project digital images and information while its users interact with other physical objects and people. . Going by its covert appearance, the company never said it was working on that kind of technology.
But Cook has openly shared his enthusiasm for the potential of augmented reality in past public presentations, and reiterated that point during Thursday’s conference call.
Responding to a query, he said, “We see a lot of potential in this area and we are investing accordingly.”
Some analysts believe the long-rumored headset may finally roll out later this year — unless it’s delayed by a lack of supply.