iPhone sales shoot Apple’s profit above $20bn in Q3 but share price falls due to chip shortage
Apple just reported the best third fiscal quarter in its 45-year history. The company made record-breaking sales and profits for the three-month period ended June 26, 2021.
The report shows that the smartphone maker made a $21.7bn profit during the period, thanks to a 50% growth in iPhones sales and an increase in its services business.
Apple’s strong fiscal third-quarter earnings beat Wall Street expectations.
The strong sales led to a record 36% year-over-year revenue growth to hit $81.43 billion for the third quarter, beating analyst expectations of $73.30 billion.
A breakdown shows that a bulk of the revenue still comes from iPhone sales. iPhone revenue was pegged at $39.57 billion for the quarter, up 49.78% year-over-year.
Mac and iPad generated a revenue of $8.24 billion and $7.37 billion respectively while Service which covers Apple’s music, video, cloud services, advertising and payments generated $17.48 billion in revenue.
Under services, Apple now has 700 million paid subscribers, up 150 million year-over-year.
Every one of Apple’s major product lines grew over 12% on an annual basis
Unsurprisingly, the company spent more during the quarter. The smartphone giant’s expense rose 16% to $11.12 billion from the $9.58 billion spent during the same period last year.
According to the report, expenses on research and development were among the major spending that drove costs up.
Apple continues to benefit from the pandemic
Revenue during last year’s Q3 was impressive for the company despite lockdowns around the world. This year, the number above shows that Apple is even stronger compared to last year with both sales and profits hitting milestones.
Apple CEO, Tim Cook says the growth wasn’t just from phone upgrades, but also from Android customers buying their first iPhone.
“We saw very strong double-digit increases in both upgraders and switchers during the quarter,”Apple CEO, Tim Cook
Another major growth point is Apple’s 5G iPhone 12. It encouraged people to keep buying during a period where sales generally slowed down as consumers prepare for new phone launches around September.
However, the profits during the quarter could have been higher without the global chip shortages which mostly affected its Mac and iPad sales. Cook says that the shortages were predicted to be within the range of $3 to $4 billion.
“The shortage primarily affected Mac and iPad. We had predicted the shortages to total $3 to $4 billion. But we were actually able to mitigate some of that, and we came in at the lower than the low-end part of that range.”Apple CEO Tim Cook
More shortages expected
Going into the next quarter, Apple warned that the supply constraints which is likely linked to the global chip shortage could affect its September quarter iPhone and iPad sales.
The forecasted slow growth in the next quarter made investors lose excitement despite the strong third quarter.
Apple stock was down over 2% in extended trading on Tuesday. Currently, it’s at $146.77 down about 1.5% as of the time of writing.
The company declared a dividend of $0.22 per share of stock and spent $29 billion on shareholder return for the quarter.
Apple has made so much money over the past eight years it has bought back $421 billion worth of shares and still has about $80 billion in cash.
The latest record-breaking quarter shows that the world’s most valuable company is on track to break the $3 trillion barrier.
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