iPhone 13 lifts Apple to highest quarterly earnings ever, but supply woes hit iPad sales

Apple sales reached US$123.9 billion in the fourth quarter, allaying concerns about a supply chain crunch the company previously said cost it US$6 billion

iPhone and Mac sales beat estimates as iPads fell short, and CEO Tim Cook said the company was also investing in augmented reality

Reading Time:4 minutes

Published: 10:03am, 28 Jan 2022Updated: 7:13pm, 10 Feb 2022

Apple rallied in late trading after its quarterly revenue sailed past Wall Street estimates, marking a victory against a supply-chain crunch fuelled by the Covid-19 pandemic and chip shortages.

Sales climbed 11 per cent to a record US$123.9 billion in the company's fiscal first quarter, Apple said on Thursday. Analysts had predicted US$119.1 billion on average. Profit also beat projections, and the company predicted that sales would grow by a double-digit percentage in the March quarter.

The surprisingly strong results suggest that fears of supply upheaval were overblown. Apple chief executive Tim Cook had warned late last year that shortages could cost the company more than US$6 billion in sales during the all-important holiday period. But the tech giant navigated the crisis and benefited from a flood of new products, including the iPhone 13, Apple Watch Series 7 and updated Macs.

Apple shares gained as much as 5.8 per cent to US$168.38 in extended trading. Before the report, they had fallen 10 per cent this year, hurt by a broader downturn. The stock gained 34 per cent in 2021.

Investors have been looking to Apple for reassurance after a recent rout battered technology stocks. Concerns about a sales slowdown and looming interest rates hikes have made the sector less appealing in the past month, with Apple itself suffering from the retreat. After topping a market value of US$3 trillion in early January, Apple is now worth US$2.6 trillion.

Earnings for the Cupertino, California-based company rose to US$2.10 a share in the first quarter, which ended December 25, well above the US$1.90 estimated by analysts.

On a conference call, Apple executives said supply-chain constraints would ease further in the March quarter, though its rate of growth would decelerate for both the overall business and the services segment. Apple did not give a specific sales target, beyond saying it would be a record for the period. Analysts are predicting that revenue will top US$90 billion. Gross margin will be 42.5 per cent to 43.5 per cent, Apple said.

The company also said there are now 1.8 billion Apple devices currently in use, up 300 million from two years ago. And it has 785 million paid Apple and third-party subscriptions on its platform, up from 745 million reported in the previous quarter.