The recent fiscal fourth quarter report from Apple showed that the company had failed to beat its earnings expectations for the first time in five years. While there are many reasons for this, it seems that Apple is still struggling with supply chain issues that have dogged the rollout of high-profile new products like the latest iPhone.
Following the financial report, Apple’s stock dipped by just short of 3%. It wasn’t a damning report on Apple’s performance as the tech giant was still up nearly 30% over last year. However, the fact that Apple has yet to provide any official guidance over how it will deal with worse supply constraints means that investors will understandably be concerned.
The supply chain issues have hit the tech world hard in recent months. This is because there are chip shortages that have affected all sectors in the industry. When coupled with ongoing Covid-19 pandemic concerns in major manufacturing sectors, it’s painting a bleak picture for what should be a bumper time of year.
Apple has already experienced a $6 billion hit to its revenues as a result of the supply problems, and there are fears that the worst is yet to come. In particular, it looks like iPad sales could be hit hardest as a result of limitations over components. However, it’s worth noting that the chip shortages seem to be hitting older products rather than the latest range of Apple flagship products such as the iPhone 13.
Despite this, there are still real fears that Apple won’t be able to keep up with the demand for the latest iPhone. Plus the sales of certain other products such as the Mac computers showed an annual sales growth of less than 2%. Sales of items like the Apple Watch and AirPods grew satisfactorily at just over 10%.
Reasons for Apple to be optimistic
While the ongoing supply chain issues have yet to be resolved, Apple is still hoping that the final quarter will produce some of the company’s largest-ever revenue figures. This is on top of an exceptional year that saw revenues rising 33% in comparison with 2020.
The areas for growth continued to be on flagship tech such as the endlessly popular iPhones, although the brand has successfully expanded other areas such as the App Store alongside its entertainment platforms. Subscription based services such as Apple Music have seen over 160 new subscribers in the past year and it’ll help Apple tide over any unexpected dips.
All of which has meant that many investors have speculated that Apple stock could bounce back to all-time highs. Apple isn’t the only tech giant to have been afflicted by the supply chain crisis, with other major brands like Amazon experiencing big problems in meeting demand. With the all-important holiday sales quarter just around the corner, it’s going to be a difficult call to know exactly how these tech giants will start the new year.
