Apple executives warned that the group could sustain a hit of up to $8bn in the current quarter from headwinds including supply chain shortages and factory shutdowns in China, underscoring how the challenges posed by the pandemic are far from over for the world’s most valuable company.
“Supply constraints caused by Covid-related disruptions and industry-wide silicon shortages are impacting our ability to meet customer demand for our products,” Apple’s finance chief Luca Maestri told analysts on Thursday.
“We expect these constraints to be in the range of $4bn to $8bn, which is substantially larger than what we experienced during the March quarter,” he said, adding that “Covid-related disruptions are also having some impact on customer demand in China”.
Apple’s stock, which rose 4-5 percent in Thursday’s trading session, initially gained 2 percent in after-hours trading following the earnings report, which showed the iPhone maker’s revenues had risen 9 percent from a year ago to $97-3bn in the first three months of 2022. That was well above the $94.1bn expected by analysts.
But shares subsequently reversed course to fall more than 4 per cent after the call during which executives detailed the challenges ahead for the company.
“Covid is difficult to predict,” said Apple’s chief executive Tim Cook. “And I think we’re doing a reasonable job currently navigating what is a challenging environment. ”
The comments highlighted that the tech giant, known for the sophistication of its supply chain, was bracing itself for a period of prolonged uncertainty this year.
Pre-pandemic, Apple routinely offered quarterly revenue guidance, but it stopped doing so as coronavirus spread. The projected $4bn to $8bn hit for the
June quarter compared with a more than $6bn dent in its revenue in the
December quarter, and was the starkest warning Apple has offered since February 2020, when it signalled “a slower return to normal conditions than we had anticipated”.