Apple’s Sales Forecast Dims Amid Component Shortages
SAN FRANCISCO – In a striking turn of events, Apple witnessed a notable decline in its stock during late trading as component shortages adversely impacted the company’s sales predictions.
This downturn underscores the pervasive supply constraints plaguing the industry, which may carry consequences more profound than previously anticipated.
The tech titan projected a revenue increase of 9 to 11 percent for the fiscal fourth quarter, which concludes in September, as revealed during a post-earnings conference call on July 31.
Analysts had forecasted growth exceeding 12 percent during this pivotal quarter, which is expected to unveil the latest iPhone models.
Apple has grappled with securing sufficient computer processors while contending with surging memory costs. This predicament prompted the company to increase prices for Macs and iPads effective June.
The supply dilemma has resulted in prolonged wait times for critical machines such as the Mac mini and Mac Studio.
On the call, Chief Executive Officer Tim Cook elucidated that these constraints would extend to additional Macs, iPhones, and iPads in the forthcoming quarter. Currency fluctuations are compounding growth obstacles as well.
The grim forecast precipitated a roughly 6 percent drop in Apple shares during after-hours trading.
Cook characterized the memory cost challenge as akin to a “100-year flood,” noting that the chip shortages were exacerbated by an unanticipated demand surge for the iPhone and Mac.
He particularly referenced heightened consumer interest in the iPhone 17 series and the newly introduced MacBook Neo, which is aimed at budget-conscious consumers.
Furthermore, Apple projected a deceleration in services growth for the September quarter and highlighted potential adverse effects stemming from regulatory changes to its App Store business model within the European Union and beyond.
New regulations permit developers to accept subscription payments directly, circumventing Apple’s fees. Additionally, gaming revenue fell short of expectations.
The company’s quarterly results revealed disappointing revenue figures from China and its services sector for the June quarter. Sales from China totaled US$18.8 billion, falling short of the US$19.6 billion forecast by some analysts.
Revenue from services posted a lackluster 12 percent growth to US$30.7 billion, compared to an anticipated US$31.4 billion.
This sector includes Apple Music, the App Store, iCloud subscriptions, streaming video, and other digital services.
Despite these setbacks, overall sales surpassed expectations, climbing 16 percent to reach US$109.4 billion.
This quarter also marks a transitional period for Cook, who will transition leadership to hardware head John Ternus on September 1.
Having steered the company since 2011, Cook has diversified Apple’s product offerings and catapulted annual sales to nearly half a trillion dollars.
Before the earnings announcement, the company’s stock had risen 23 percent in 2026, outpacing many of its technology counterparts.
Recently, Apple reclaimed its title as the world’s most valuable company, surpassing Nvidia, partly due to its status as a refuge from rampant AI expenditure. The company now boasts a market valuation approaching US$5 trillion.
The iPhone, Apple’s principal revenue generator, emerged as a bright spot in the last quarter. Revenue from this product surged by 22 percent to US$54.3 billion, exceeding the projected US$53.6 billion.
These figures suggest robust demand for the iPhone 17 series launched the previous September, further bolstered by the introduction of an economical 17e model in March.
Earnings for the third quarter, ending June 27, increased to US$2.02 per share, outperforming the average expectation of US$1.89 per share.
Mac revenue reached approximately US$10.4 billion, a 29 percent increase from the previous year. This segment, particularly vital for Ternus, benefited from the launch of new Macs in March, including the MacBook Neo and updated MacBook Pro and MacBook Air models. Analysts had anticipated revenue of US$8.62 billion.
Conversely, the iPad achieved sales of US$6.19 billion, falling short of the anticipated US$6.89 billion. Apple had introduced a new iPad Air in March and an updated iPad Pro last October, but these upgrades primarily centered on enhanced chips rather than significant design alterations.
Looking forward, Apple has plans for several new Macs and iPads slated for release by the end of 2026 and into next spring, which could potentially invigorate sales.
These include the first touchscreen MacBook and a refreshed iPad mini, part of comprehensive updates to both product lines.
The company’s wearables, home, and accessories category generated US$7.88 billion, marking a 6.5 percent increase year-over-year, aligning with estimates of US$7.87 billion.
Apple seeks to invigorate this segment in the months ahead with new smartwatches and a refreshed array of home devices, including a new home hub and revamped TV set-top box.
In a significant shift, Apple introduced the Apple Upgrade device leasing program on July 29, enabling users to effectively subscribe to iPhones, iPads, and Macs, with the option to trade them in at the end of the leasing period. This initiative may alleviate the recent price escalations faced by many consumers.
Ternus, a 25-year veteran of the company, is set to assume responsibility approximately two-thirds of the way into the current period. The fourth quarter is crucial for Apple, typically heralding the release of new iPhones and other substantial devices.
As Ternus steps into this leadership role, he will confront the imperative of modernizing Apple in the burgeoning AI era.
The Cupertino-based organization has struggled to gain traction in this domain, with its artificial intelligence services trailing behind those of competitors in Silicon Valley.
“There is so much opportunity for us, with everything that’s happening in this space, and we’re just really focused on our plans and very excited about it,” Ternus remarked during the call. Cook indicated that Ternus would henceforth lead earnings calls.
The incoming CEO will inherit a portfolio of innovative products poised for introduction, including Apple’s inaugural foldable iPhone, smart glasses, and other wearable technologies.
Nonetheless, challenges loom on the horizon. Ternus must address the need to replenish Apple’s executive ranks as many senior leaders approach retirement.
Additionally, he faces the prospect of reversing a talent drain, as the company has seen departures to competitors such as OpenAI and other AI-focused entities.
Source link: Straitstimes.com.
