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The tech giants that make iPhones, iPads and Mac computers are used to slow summers. The fiscal third quarter ending in June is typically the company’s weakest quarter in terms of sales, largely thanks to the fall pattern of new iPhone launches. And the June quarter of this year could be even weaker, as Covid-led shutdowns in China have forced some factories that make Apple products to close.
The company warn investors in its second-quarter earnings report late Thursday that such constraints could slash revenue for the June period by $4 billion to $8 billion. Apple still hasn’t released actual revenue forecasts — a practice that seems to have died out in the wake of the pandemic — but analysts have averaged about 3 percent cut their forecasts for the June quarter. expects revenue of about $83.5 billion this quarter, up 2.5% year-over-year.
It was a bit of disappointing news after another strong report. Apple’s revenue and operating income for the third quarter were both up 9% year over year – beating Wall Street targets. The latest iPhone 13 models are still selling well – despite challenging comparisons with last year’s massive upgrade cycle. And Mac is exploding, fueled by a strong upgrade cycle for machines with new in-house chips from Apple. Mac revenue surpassed $10 billion for the second straight quarter and beat analyst forecasts by 14%. Analysts now expect the Mac to hit nearly $40 billion in sales this fiscal year — a significant increase for a segment that previously averaged around $25 billion in annual revenue.
However, the warning for the current quarter is a stark reminder that the world’s most valuable public company is not immune to negative impacts on the world. And Apple is still high leverage for China, which manufactures the majority of its products. Chief Executive Officer Tim Cook said on Thursday’s earnings call that “nearly all of the assembly plants that were ultimately affected have now restarted.” More shutdowns could pose some risk to this year’s new iPhone models expected to launch in the fall. But Chris Caso of Raymond James said construction on new models usually doesn’t begin until August, which gives Apple some breathing room in getting its factories back up and running.
It also helps that Apple has been here before. The lockdown during the pandemic has delayed the launch of the iPhone 12 models in late 2020 by about a month. But those devices still managed to create a very strong upgrade cycle, with iPhone revenue growing 39% for the fiscal year ending September 2021. Projections are inherently much more modest for the year. now and next year, in line with longer replacement cycles for more expensive iPhones. . Apple’s slow summer could still have a bright ending.
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