Shares of Apple Inc fell as much as 2.9% in late trading on Tuesday, after it warned that sales growth may slow and supplies are tightening, curbing investor appetite after a record-breaking third quarter.
The company said in a conference call yesterday, that the supply restrictions will affect iPhone phones and iPad in the current quarter. The slowdown in demand for services will lead to a decline in its business. Apple refused to provide specific revenue forecasts.
The cautious comments came on the heels of a 36% increase in sales in the third quarter, to $81.4 billion in revenue, smashing Wall Street estimates of $73.8 billion. But investors are sticking to a wait-and-see attitude, as parts shortages and COVID-19 restrictions will continue to weigh on Apple’s business this year.
The warnings come despite sales of the iPhone, Apple’s core product, growing nearly 50% to $39.6 billion in the fourth quarter, topping expectations of $34.6 billion. The third quarter is usually Apple’s slowest period — consumers wait for new phones to launch around September — but the iPhone 12’s 5G technology appears to have helped the company reverse that trend.
The company reported net income for the third quarter of the fiscal year of $21.74 billion, or $1.30 a share, up from $11.25 billion, or 65 cents a share, a year earlier. Analysts tracked by FactSet had expected earnings per share of just $1.01.
The company also continues to expect “strong” double-digit growth in the fourth quarter.
“The record operating performance for the quarter ended June included new revenue in each of our geographical segments,” Chief Financial Officer Luca Maestri said in a statement. He added that Apple continues to make significant investments to support long-term growth, and generated $21 billion in operating cash flow, and returned $29 billion to shareholders during the third quarter.
Apple reported $7.37 billion, or 12% growth, in iPad revenue, beating expectations of $7.13 billion. Apple also introduced new models of the iPad Pro in April, but the line was restricted due to problems building new screens for the larger models.
For the Mac, Apple reported revenue of $8.24 billion, or 16% growth, topping Wall Street analysts’ estimates of $8 billion.
Apple has also previously warned that third-quarter revenue will be hit by the lack of chips affecting some components of iPads and Macs. Third-quarter earnings were $1.30 per share, compared with an estimate of $1.01 per share.
Services revenue was $17.5 billion, higher than estimates of $16.3 billion and a third higher than the same period last year.