Apple's Strongest June Quarter Ever Was Overshadowed By Chip Shortage

Last week, Apple Inc's AAPL reported record fiscal third-quarter results that were unfortunately overshadowed by the forecast of slowing growth that sent shares south. In total, Apple, Alphabet GOOG, and Microsoft MSFT generated $189.4bn in revenue during the latest quarter, 39 percent more than the same period the year before, and some $15 billion more than Wall Street expected. Together, they raked in $57 billion of quarterly profits, showing that the pandemic-era shift to digital is here to stay.

Figures Of The Fiscal Q3  – June Quarter

Revenue grew 36% YoY as it amounted to $81.41 billion, easily exceeding the estimated $73.30 billion. But perhaps even more fascinating is the fact that every one of Apple's major product lines grew over 12% on an annual basis. iPhone revenue jumped 49.78% YoY as it amounted to $39.57 billion, surpassing Wall Street's expectations by a stunning $5 billion. Services achieved a record-high revenue by growing 33% to $17.5 billion. The growth rate did also benefit from a favorable comparison as certain services were significantly impacted by the pandemic at the same time last year. Other products' revenue amounted to $8.76 billion, growing 40% YoY. Mac revenue amounted to $8.24 billion, increasing 16% YoY.

iPad revenue increased 12% YoY to $7.37 billion. The gross margin was 43.3%, exceeding the estimated. 41.9% with an EPS of $1.30, exceeding $1.01 estimated.

Apple Is Growing Even When Compared To A Strong Basis

What's remarkable is that the quarter ending in June is typically one of Apple's slowest of the year. This was not the case due to work-at-home and remote schooling trends that have boosted sales of its premium computers but even last year's June quarter was a company record for sales despite lockdowns around the world. This means Apple is growing even compared to a strong basis from a year ago.

The Service Strategy Is Working

The paid subscriber figure of 700 million marks an increase of 150 million YoY and undoubtedly confirms that the transformation of Apple's business model is on the right track.

Outlook

The celebration came to a crashing halt when Apple Chief Financial Officer Luca Maestri said that the company's revenue growth would slow in the undergoing quarter.

Apple did not provide formal guidance for the sixth quarter in a row which has been its practice since the beginning of the pandemic.  However, Maestri said Apple expects double-digit, YoY growth in the current quarter. Maestri said that Apple expected less than 36% growth in the September quarter because of foreign exchange rates, "silicon" supply constraints for iPhones and iPads caused by the semiconductor shortage, and tougher comparisons with the previous year.

Big Tech smashed earnings expectations and Apple was no exception as it demolished earnings expectations and shrugged off the worst of the shortages, which had been expected to subdue sales of iPads and Mac computers. But the stock fell after it cautioned that its revenue would not climb as quickly as during the current quarter as increased supply constraints are expected to catch up with the iPhone maker and harm iPhone sales as the traditional September launch of new smartphones is around the corner. Services growth is also expected to slow down.

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