Apple Inc on Thursday forecast more significant supply problems as COVID-19 lockdowns weighed on handset production and demand in China.
The firm’s Chief Financial Officer Luca Maestri warned that the war in Ukraine would cut sales more deeply in the fiscal third quarter. In addition, the ongoing geopolitical crisis initially led the iPhone maker to stop sales in Russia.
Maestri emphasized that these persisting challenges could hurt sales by between $4.00 billion and $8.00 billion. Accordingly, this projection is substantially more significant than the hit in the second quarter.
Apple CEO Tim Cook explained that almost all Chinese factories had restarted operations after recent coronavirus shutdowns. But, then, the firm did not release a forecast on when the chip shortage would end. Cook added that the company was not immune to supply chain challenges.
This dampened outlook overshadowed the record fiscal second-quarter earnings of the tech giant. Its overall revenue rose 8.60% year-over-year to $97.30 billion, higher than analysts’ average estimate of $93.89 billion.
Subsequently, worldwide phone sales were $50.60 billion, representing a 5.50% increase from a year ago. Likewise, services sales edged up 17.00% to $19.80 billion. Then, both segments are ahead of market forecasts.
Nevertheless, Maestri cited that services growth would decline from the March quarter while remaining in double-digits. He noted several factors in this downward projection, including unfavorable currency exchange rates.
Meanwhile, Apple’s total profit was $25.00 billion, or $1.52 per share. It easily topped expectations of $23.20 billion and $1.43 per share. The tech giant also raised its dividend by 5.00% to $0.23 per share.
Consequently, the board approved a buyback for an added $90.00 billion in shares. This move maintains its pace as the public company that spends the most buying its own shares.
Apple loses top spot in China
Apple has fallen back behind its rivals in China after suffering more than others from a first-quarter slump in sales.
Previously, the iPhone maker became the top-selling smartphone brand in Beijing for the first time in six years.
However, reports revealed that that firm slipped to the third spot, behind Chinese Android handset brands.
Apple’s sales in the country plummeted 23.00% in the three months to March, compared with the previous quarter. The company initially benefited from rapid growth in the region last year, right after releasing the iPhone 13.
As a result, its share in the world’s largest smartphone market now stands at 17.90%. The figure waned from 21.70% in the quarter ended December.
Experts attributed the company’s decline partly to the economic slowdown in the area that has affected consumer spending.