Apple's $6 billion blues and other earnings revelations | Cult of Mac

Apple’s $6 billion blues and other earnings revelations


Apple Q4 2021 earnings call: Supply chain woes cost Apple an estimated $6 billion in revenues last quarter.
Supply chain woes cost Apple an estimated $6 billion in revenues last quarter.
Photo: Alireza Khoddam/Unsplash CC/Cult of Mac

Apple made a record $20.6 billion in profits last quarter but is getting punished because $83.4 billion in revenue didn’t meet Wall Street analysts’ expectations. Turns out even the Cupertino juggernaut is not immune to supply chain problems — $6 billion worth of them.

Here’s the bad news — and the good — from Apple’s September 2021 earnings report and a Q&A session with analysts afterward.

Supply constraints wreak $6 billion havoc

“Larger than expected” supply constraints cost Apple around $6 billion last quarter, CEO Tim Cook said during Thursday’s earnings call. You can chalk up that huge hit to “industry-wide silicon shortages” and COVID-19-related manufacturing disruptions that continue to play out around the world.

That lost revenue soured Wall Street on Apple’s still pretty remarkable quarter because the stock market values growth above all else. But there’s worse news: Apple predicts next quarter’s supply constraints will pinch even harder!

“We estimate the impact from supply constraints will be larger during the December quarter,” Apple CFO Luca Maestri said, with iPad facing an especially tough time. Apple’s CFO once again declined to provide revenue guidance for the coming quarter due to “continued uncertainty around the world.” But Maestri predicted revenue from every product category except for iPad will grow on a year-over-year basis.

Still, much like the main character in Apple TV+ hit Ted Lasso, Cook remains eternally upbeat. “We are optimistic about the future especially as we see strong demand for new products,” he said before rattling off all the great new hardware Cupertino rolled out this year. — Lewis Wallace

iPhone 13 is barely included. New MacBooks not at all.

Apple’s numbers from the September quarter are impressive, whatever Wall Street thinks. But the crazy thing is, these numbers don’t even include some of the company’s most popular recent products!

The iPhone category, for example, saw fantastic 47% year-over-year growth during the quarter. But the iPhone 13 wasn’t really included. The iPhone 13 went on sale only a few days before the quarter’s books were closed.

Likewise the Mac numbers. The Mac category saw a modest 1.6% year-over-year uptick, but that doesn’t include the new MacBook Pro models, which Apple released in October. And the “Other” category, which includes the Apple Watch and AirPods, saw 11% growth without any new products, which also were released earlier this month.

Just imagine what the numbers will be like next quarter, if Apple’s supply chain can keep up. — Leander Kahney

Mac is on a serious roll

Remember when people fretted about the state of the Mac? Those days are clearly over.

“Our last five quarters for Mac have been the best five quarters ever for the category,” Maestri said during Thursday’s call.

That’s certainly fueled by the company’s shift to Apple Silicon. The first Macs powered by Apple’s proprietary M1 chips rolled out last November, astonishing everyone with their power and efficiency. And new MacBook Pros, launched just last week, upped the ante. These new Mac laptops deliver even better performance due to their M1 Pro and M1 Max chipsets.

COVID-19 — the main specter haunting Thursday’s earnings call — also played a positive role in the Mac’s recent success. The trend toward working from home drove sales throughout lockdowns around the world. With some level of WFH looking like the new normal, you can expect Mac sales to continue to climb. (We know Apple does.) — Lewis Wallace

So many new and happy Mac and iPad customers

Keeping a company going long-term requires new customers. And Cupertino’s got plenty of them — it’s not just Apple lifers snatching up all those powerful new machines.

Apple’s CFO was able to crow about Mac and iPad drawing in tons of first-time buyers. And people love these devices.

“For both Mac and iPad, we continue to see a combination of high levels of customer satisfaction and first-time buyers. Around half of the customers purchasing Mac and iPad during the quarter were new to that product,” said Maestri. “And in the most recent surveys of U.S. consumers from 451 Research, customer satisfaction was 97% for both Mac and iPad.” — Ed Hardy

Drive a train, become an iPad fan

Unexpected tidbit from the Apple earnings Q&A: All train drivers in France’s national railway company, SCNF, get an iPad to track their daily workflow. It apparently lowers maintenance and energy costs, according to Maestri. And they’re so popular with the train drivers that nine in 10 of them decide to buy the devices at the end of their corporate refresh cycle. — David Snow

Services continue to boom

Apple said its diverse portfolio of services businesses, like Apple Fitness+ and Apple Music, grew 26% year over year to $18.3 billion and set quarterly records in every geographic segment in 2021. The company said it hit all-time records for cloud services, music, video and Apple Card and payment services. The total number of paid accounts across Apple services reached 745 million.

Cupertino recently added a less-expensive Apple Music tier and will soon launch Apple Fitness+ in 15 new countries — potentially reaching millions of new subscribers. All that, plus Apple Card won a JD Power award for customer satisfaction in its first year of eligibility. — David Snow

Chinese restrictions on kids’ gaming apparently aren’t hurting App Store

New policies by the Chinese government to enormously restrict the amount of time children can spend playing games have made headlines around the world. Anyone under 18 is forbidden to play games on weekdays, and get a single hour of gaming on Friday, Saturday and Sunday.

Cook says this isn’t hurting the App Store in China. “It’s very difficult to see the impact of it on the App Store at this point.” — Ed Hardy