Apple

Apple’s profit climbs to $34.6 billion in the holiday quarter despite supply issues.

Apple's profit climbs to $34.6 billion in the holiday quarter despite supply issues.

Apple weathered the supply chain rumbles at the end of 2021 that tripped up the global electronics market and other industries, announcing an 11% increase in revenue and a 20% increase in profits on Thursday. during its last quarter while offering optimism that the worst of the problems were behind.

Apple, the world’s most valuable public company, exceeded Wall Street analysts’ expectations with its record results, allaying fears that the tech industry’s long period of rapid growth is coming to an end. It made a profit of $34.6 billion on revenue of $123.9 billion in the three months to December, although its revenue growth continued to slow.

As usual, the iPhone boosted Apple’s sales, which briefly exceeded $3 trillion in market value earlier in January before falling back to around $2.6 trillion on Thursday. iPhone sales totaled $71.6 billion, up 9% from a year earlier. Demand for the latest iPhone 13 sales has increased, but the company has warned for months that computer chip shortages and pandemic-related manufacturing issues in Asia were likely to limit supply and hamper sales. income.

A global chip shortage has hurt a wide range of industries, including consumer electronics and cars. On Monday, Gina M. Raimondo, the Secretary of Commerce, said the United States faces an “alarming” shortage of semiconductors.

Chip shortages have forced some factories to slow down or suspend production. This hurt US economic growth and led to soaring inflation in the United States.

Tim Cook, Apple’s chief executive, said in October that supply constraints cost his company $6 billion in revenue during its fall quarter. In a call with investors on Thursday, he said Apple “experienced higher supply constraints than the September quarter” over the holidays, but he declined to give a specific number.

Mr Cook said he saw light at the end of the tunnel for Apple: he expected supply problems in the current quarter to be less than they were during the holidays.

“We pride ourselves on delivering products to customers who really want them, and we try to do that quickly, so it’s frustrating that we can’t always do it at the speed that we would like,” he said. during the results. call. “However, March is better than December, so there are encouraging signs there.”

Mr Cook said much of the difficulty stemmed from purchasing a particular type of computer chip, but he did not believe the difficulties forced Apple to reassess how it operated its supply chain.

“I think our supply chain is working very well given the shortages because it’s a rapidly changing supply chain,” he said.

Apple reported sales growth worldwide, led by a 20% year-over-year increase in China and 19% in the rest of the Asia-Pacific region, although sales in Japan were down. fell 14% compared to the same quarter of the previous year. iPad sales have been particularly constrained by supply chain issues, Cook said; the company reported a 14% drop in tablet sales from the same period a year earlier.

Apple announced a slate of new hardware products in the fall, including new models of its MacBook Pro laptop, AirPods, iPad and Apple Watch. He’s working on an augmented reality headset that could rival offerings from companies like Meta, Facebook’s parent company, as tech companies increase their influence in the nascent Metaverse, a futuristic online universe.

Mr Cook dodged a question about how Apple views the metaverse during the earnings call, saying: “We see a lot of potential in this space and are investing accordingly.”

Apple has also benefited from strong growth in its services business, including its App Store, which Mr Cook described as an “economic miracle for developers everywhere” even as it continues to be accused of stifle competition and levy onerous fees on app developers. . Services business rose nearly 24% in the quarter from a year ago to $19.5 billion.

Apple also said it plans to use nearly $27 billion of its cash to pay dividends to shareholders. Apple shares jumped more than 4% in after-hours trading Thursday night.

Apple’s positive results came toward the end of a week of wild stock trading, driven in part by fears about how quickly the Federal Reserve could raise interest rates in a bid to rein in inflation. Higher interest rates are making riskier investments, like tech stocks, less attractive, adding to concerns that the pandemic-fueled tech business recovery may end soon.

But Microsoft and Tesla, despite their own supply chain issues, posted record profits this week and beat industry expectations. Next week Alphabet, Google’s parent company, and Amazon will release their results for the last three months of 2021, providing insight into the health of online advertising and retail.