Apple Shares Fell For This Reason Despite Crushing Earnings Expectations

iPhone maker Apple reported its fiscal third quarter earnings on Tuesday.

While the company demolished expectations, shares were still in the red anyway after the company warned of an iPhone chip supply constraint.

For the third quarter, all of Apple’s major product lines grew over 12% on an annual basis and iPhone sales increased nearly 50% on an annual basis.

Apple’s sales were up 36% from the June quarter last year while iPhone sales increased nearly 50% on an annual basis.

For the third quarter, the company reported EPS of $1.30 compared to $1.01 expected, per Refinitiv estimates.

Revenue was $81.41 billion, way ahead of the $73.30 billion expected and a growth of 36% YOY.

iPhone revenue was $39.57 billion compared to $34.01 billion anticipated. This was a growth of 49.78% YOY.

Services revenue at $17.48 billion was better than the $16.33 billion estimated, up 33% year-over-year.

Other Products revenue at $8.76 billion was compared to $7.80 billion estimated, up 40% year-over-year.

Mac revenue came in at $8.24 billion vs. $8.07 billion estimated, up 16% year-over-year.

iPad revenue was $7.37 billion vs. $7.15 billion estimated, up 12% year-over-year.

Gross margin was reported at 43.3% vs. 41.9% estimated

Apple did not provide formal guidance for the sixth quarter.

CFO Luca Maestri said Apple expects double-digit, year-over-year growth in the current quarter. According to Maestri, the company had expected less than 36% growth in the September quarter
because of foreign exchange rates, less growth in its services business and supply constraints for iPhones and iPads.

Despite the strong quarterly results, Apple shares fell over 2% in extended hours trading after executives warned that chip supply constraints could impact iPhones and iPads this quarter.

Apple CEO Tim Cook said in a call with analysts that Apple is seeing supply constraints related to “silicon” that would affect the company’s iPhone and iPad sales in the September quarter.

“The shortage primarily affected Mac and iPad,” Apple CEO Tim Cook told CNBC’s Josh Lipton for this past quarter. “We had predicted the shortages to total $3 to $4 billion. But we were actually able to mitigate some of that, and we came in at the lower than the low end part of that range.”

Cook also said on a call with analysts that the company believes that freight costs are high.

Apple also declared a dividend of $0.22 per share of stock. In a statement, the company said that it spent $29 billion on shareholder return during the quarter.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.