Apple Misses Sales Expectations with Supply Issues Costing Company $6 Billion

iPhone maker Apple reported its fiscal fourth quarter financial results on Thursday that missed expectations.

While overall revenue was still up 29% on an annual basis, coming in at $83.36 billion was below the $84.85 billion expected per Refinitiv.

According to the company’s CEO Tim Cook, supply issues attributed to the revenue miss and had cost Apple $6 billion.

The company hasn’t provided official guidance since the start of the pandemic, but Cook said Apple expects “solid year-over-year revenue growth” in the December quarter even with worsening supply constraints.

Shares of the company’s stock were falling over 4% in after-hours trading.

“We had a very strong performance despite larger than expected supply constraints, which we estimate to be around $6 billion,” Cook told CNBC’s Josh Lipton. “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.”

“So we finished about a month of the quarter, the COVID related manufacturing disruptions have improved greatly. The chip shortages linger on,” Cook said.
For the quarter, Apple reported earnings per share of $1.24, which were in line per Refinitiv estimates.

iPhone revenue at $33.87 billion was lower than the $41.51 billion expected. Still an increase of 47% YOY.

Services revenue at at $18.28 billion was higher than $17.64 billion expected, and an increase of 25.6% YOY.

The expectation of year-over-year sales growth suggests that Apple sees significantly more demand for its new iPhone 13 models than it can supply. Apple’s fourth quarter only included a few days of iPhone 13 sales.

Cook also said that Apple has 745 million paid subscriptions, which not only includes first-party services like Apple Music but also subscriptions through Apple’s App Store.
“That’s up 160 million year on year, which is up five times in five years. So it’s been quite the growth cycle,” Cook said.

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