Apple profit exceeds $20 bn in Q3 as a result of iPhone sales, but the stock price falls as a result of a chip shortage
Apple's profit exceeds $20 bn in Q3 as a result of iPhone sales, but the stock price falls as a result of a chip shortage
Apple recently announced its best third fiscal quarter in the company's 45-year history. For the three months ended June 26, 2021, the company achieved record sales and profits.
According to the report, the smartphone maker earned $21.7 billion during the period, owing to a 50% increase in iPhone sales and an increase in its services business.
Strong sales drove record year-over-year revenue growth of 36% to $81.43 billion in the third quarter, exceeding analyst expectations of $73.30 billion.
A breakdown reveals that the majority of revenue continues to come from iPhone sales. For the quarter, iPhone revenue was estimated to be $39.57 billion, up 49.78 percent year over year.
Mac and iPad generated $8.24 billion and $7.37 billion in revenue, respectively, while Service generated $17.48 billion in revenue, which includes Apple's music, video, cloud services, advertising, and payments.
Apple now has 700 million paid subscribers, an increase of 150 million year over year.
As expected, the company increased its spending during the quarter. The smartphone giant's expenses increased by 16 percent to $11.12 billion from $9.58 billion in the prior year's same period.
According to the report, research and development expenses were a significant driver of cost increases.
Apple continues to benefit from the pandemic
Despite global lockdowns in the third quarter of last year, revenue for the company was impressive. This year, the figure above indicates that Apple is even stronger than last year, with both sales and profits reaching new heights.
Tim Cook, Apple's CEO, says the growth was driven not only by phone upgrades, but also by Android customers purchasing their first iPhone.
Apple's 5G iPhone 12 is another significant growth driver. It enticed consumers to continue purchasing during a period when sales generally slowed as consumers prepared for the launch of new phones in September.
However, profits could have been higher during the quarter if not for global chip shortages, which primarily impacted Apple's Mac and iPad sales. Cook estimates that the shortages will cost between $3 and $4 billion.
More shortages expected
Apple warned that supply constraints, which are likely related to the global chip shortage, could have an impact on its September quarter iPhone and iPad sales.
Despite the strong third quarter, investors were disappointed by the forecasted slow growth in the fourth quarter.
Apple's stock fell more than 2% in extended trading on Tuesday. It is currently trading at $146.77, down about 1.5 percent as of this writing.
For the quarter, the company declared a dividend of $0.22 per share and spent $29 billion on shareholder returns.
In Summary
Apple has made so much money over the last eight years that it has repurchased $421 billion in stock and retained approximately $80 billion in cash.
According to the most recent record-breaking quarter, the world's most valuable company is on track to surpass the $3 trillion mark.
