Baxia Markets
By
July 28, 2021

Apple warns that sales growth might slow down

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Apple Inc. slipped as much as 2.9% in late trading after warning that sales growth may be slowing and supplies are getting tight, putting a damper on investor excitement following a record-setting third quarter.

On a conference call Tuesday, the company said that supply constraints will affect the iPhone and iPad in the current quarter. Decelerating demand for services also will drive the slowdown. Apple declined to provide specific revenue forecasts, a practice it adopted during the pandemic.

The cautious remarks followed a sales gain of 36% in the third quarter, with revenue of $81.4 billion shattering Wall Street’s $73.8 billion estimates. But investors are sticking to a wait-and-see attitude. The parts shortages and a patchwork of Covid restrictions will continue to weigh on Apple’s business this year.

 

Apple July 27th 2021

Apple previously warned that third-quarter revenue would take a hit of $3 billion to $4 billion because of the chip shortage affecting some iPad and Mac components. Earnings for the third quarter were $1.30 a share, compared with an estimate of $1.01 a share.

Apple also saw its wearables, home, and accessories segment grow 36% to $8.78 billion. That category includes the Apple Watch, AirPods, Apple TV, the HomePod, and various other accessories. Apple hasn’t updated the AirPods earbuds since 2019, last year’s Apple Watch upgrades were minor, and this year’s Apple TV updates were focused on a faster processor and redesigned remote.

As economies have continued to reopen due to vaccines, demand for Apple devices has generally increased. However, with Covid cases again rising and the chip shortage continuing, challenges are expected to persist through the holiday season.

 

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