Apple stock swings to a loss after executives warn of billions in added costs

Apple Inc. exceeded earnings expectations and set a new March quarterly revenue record to begin in 2022, but executives expect to see stronger pressure and billions of additional costs due to challenges in the current period, making shares are lower in out-of-hours operations.

“Supply restrictions caused by interruptions related to COVID-19 and silicon shortages across the industry are affecting our ability to meet the demand for our products,” CFO Luca Maestri told a related conference. with the Apple AAPL.
+ 4.52%
earnings report Thursday.

The company expects it to have negative impacts of $ 4 billion to $ 8 billion related to the limitations in its June quarter, which Maestri added was “substantially greater” than what Apple experienced during its March quarter.

Although Apple fell slightly due to silicon shortages during the March period, it now faces new challenges posed by the temporary closure of factories in China related to COVID-19 outbreaks, the chief executive said. Tim Cook. He expects the pressures to affect “most product categories”, although some factories have now reopened.

Shares fell 2% in out-of-hours operations after initially rising with good results. Apple exceeded both earnings and revenue expectations thanks to the particular strength of its iPhone and Mac categories.

The company posted second-quarter net tax revenue of $ 25 billion, or $ 1.52 per share, compared to $ 23.6 billion, or $ 1.40 per share, in the previous quarter. Analysts followed by FactSet were anticipating $ 1.42 in earnings per share. Apple’s revenue rose to $ 97.3 billion from $ 89.6 billion, while analysts expected $ 94 billion.

Apple generated $ 50.6 billion in revenue from its iPhone business, more than $ 47.9 billion a year before and before the $ 48.4 billion FactSet consensus.

The company earned $ 7.6 billion in iPad revenue, down from $ 7.8 billion the year before, as well as $ 10.4 billion in Mac revenue, up $ 9.1 billion. The FactSet consensus was $ 7.2 billion for iPads and $ 9.1 billion for Macs.

Cook noted that Apple “continued to see such strong demand [the] iPad even as we navigate the major supply constraints we predicted at the beginning of the quarter. ”

Apple’s accessories, household items and accessories category generated revenue of $ 8.8 billion, up from $ 7.8 billion the previous year, while analysts had been looking for $ 8.9 billion.

The company’s services business grew $ 19.8 billion, compared to $ 16.9 billion the previous year. FactSet’s consensus was $ 19.7 billion.

Apple executives announced, along with their latest results, that they are adding $ 90 billion to their share repurchase authorization, while raising the quarterly dividend by 5% to 23 cents per share. The dividend will be paid on May 12 to registered shareholders from the close of business on May 9.

Apple typically offers updates on its return on capital plans with its March quarter report and has set out to become net cash neutral over time. When asked if Apple would consider making a large acquisition instead of just reducing its cash balance through dividends and repurchases, Cook replied that Apple “would only acquire something that was strategic,” but that the company “is always searching”.

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