Apple's
Inside the Numbers
In its fiscal fourth quarter, Apple reported earnings per share of $1.24 which was in line with expectations of $1.24 per share.
Revenue fell slightly short of expectations at $83.3 billion vs. $84.9 billion, although it was a 29% increase from last year. iPhone revenue was 47% higher but also fell short at $38.9 billion vs. $41.5 billion. Services revenue topped expectations at $18.3 billion vs. $17.6 billion, a 25.6% year-over-year increase. Gross margins also topped at 42.2% vs 42%.
In his public comments, CEO Cook said, "We had a very strong performance despite larger than expected supply constraints, which we estimate to be around $6 billion. The supply constraints were driven by the industry-wide chip shortages that have been talked about a lot, and COVID-related manufacturing disruptions in Southeast Asia."
Despite this headwind, Apple's revenue still increased by 29% with growth in each product category. The company expects these challenges to get worse in the next quarter but still expects significant revenue growth in Q4 and is expected to be its biggest in the company's history.
The company said that one month into the current quarter, coronavirus-related manufacturing issues have significantly improved, while chip shortages are continuing. Based on current projections, Apple will not be able to completely meet the demand for the iPhone 13 this quarter.
One area unaffected by these issues is the services business which saw 26% growth. Currently, the company has 745 million paid subscriptions, an increase of 160 million over the last year and a five-fold increase over the last 5 years.
Stock Price Outlook
This is Apple's first time missing on earnings estimates since April 2016 and first revenue miss since May 2017. It's also interesting to note that Apple's chip difficulties are mostly with older chips rather than newer chips. It's also remarkable that Apple is still growing revenues by 29% despite being worth more than $2 trillion.
Given its combination of value and growth, Apple is a good choice for any portfolio.