Apple expects revenue hit in current quarter

Apple on Thursday beat expectations with its quarterly earnings, but warned that revenue for the current quarter will take a significant hit due to ongoing chip shortages as well as COVID-related production challenges.

Why it matters: Apple is a bellwether for the tech industry thanks to both its size as well as the fact that it is a key buyer of other components, including displays and memory chips.

Apple didn't provide specific revenue expectations for the current quarter, which runs through June. However, on a conference call with analysts, CFO Luca Maestri said Apple expects a revenue impact of between $4 billion and $8 billion due to chip shortages as well as COVID-related production issues in China.

• That impact, executives said, is far greater than the constraints it saw during the January-to-March quarter, which were mostly a result of the industrywide chip shortage.
• It expects its services growth to be up from the prior year, but revenue will be dented by the supply constraints, the pause of sales in Russia and a strong dollar.
• Demand for products and services remains strong, Maestri said.

By the numbers (compared to a year ago):

• Per-share earnings: $1.54 (vs. $1.41)
• Total revenue: $97.28 billion (vs. $89.58 billion)
• iPhone revenue: $50.57 billion (vs. $47.94 billion)
• Mac revenue: $10.43 billion (vs. $9.1 billion)
• iPad revenue: $7.65 billion (vs. $7.8 billion)
• Wearables, home and accessories: $8.8 billion (vs. $7.8 billion)
• Services revenue: $19.8 billion (vs. $16.9 billion)

Analysts were expecting the company to report per-share earnings of $1.42 on revenue of approximately $94 billion, per FactSet.

• Apple shares, which rose after the initial earnings report, headed lower after Apple issued its guidance on the conference call. Shares traded recently at $156.57, down $7.07, or more than 4 percent.

Between the lines: The year-over-year dip in iPad sales came amid anticipated supply constraints for the iPad.

• Geographically speaking, Apple grew sales in most parts of the world, including the Americas, Europe and Greater China, though they were down in Japan and the rest of Asia Pacific.
• When it comes to dealing with inflation, CEO Tim Cook noted that while some component costs have increased, others are declining. "I think we are doing a reasonable job currently navigating what is a challenging environment," Cook said.