Apple Reports Massive iPhone Sales Increase but Warns on Chip Supply

Apple CEO Tim Cook waves as he arrives for the Economic Summit held for the China Development Forum in Beijing on March 23, 2019. (Photo by Ng Han Guan / POOL / AFP) (Photo credit should read NG HAN GUAN/AFP via Getty Images)
NG HAN GUAN/AFP via Getty Images

Apple reported extremely strong third-quarter earnings this week beating analyst expectations, but despite strong results, the company’s stock price fell after executives warned that chip supply constraints could impact iPhones and iPads this quarter.

CNBC reports that Apple reported strong third-quarter earnings this week, beating Wall Street expectations. Apple’s major product lines grew over 12 percent on an annual basis while the company’s overall sales were up 36 percent from June last year. iPhone sales increased nearly 50 percent on an annual basis.

However, despite these promising numbers Apple’s stock was down over 2 percent in extended trading after the company warned on an earnings call that growth in the September quarter would not be as strong as the recently reported numbers.

CNBC provided the following figures comparing Apple’s reports versus Wall Street estimates:

  • EPS: $1.30 vs. $1.01 estimated
  • Revenue: $81.41 billion vs. $73.30 billion estimated, up 36% year-over-year
  • iPhone revenue: $39.57 billion vs. $34.01 billion estimated, up 49.78% year-over-year
  • Services revenue: $17.48 billion vs. $16.33 billion estimated, up 33% year-over-year
  • Other Products revenue: $8.76 billion vs. $7.80 billion estimated, up 40% year-over-year
  • Mac revenue:$8.24 billion vs. $8.07 billion estimated, up 16% year-over-year
  • iPad revenue: $7.37 billion vs. $7.15 billion estimated, up 12% year-over-year
  • Gross margin: 43.3% vs. 41.9% estimated

Apple CFO Luca Maestri said that the company expects double-digit, year-over-year growth in the current quarter. Maestri said that Apple expected less than 36 percent growth in the September quarter because of foreign exchange rates, less growth in the company’s services business, and supply constraint for iPhones and iPads.

Apple CEO Tim Cook said in a call with analysts that the company is seeing supply constraints related to “silicon,” which is a general term referring to computer chips, that could affect the company’s iPhone and iPad sales in the September quarter.

Apple also had a strong quarter in the Greater China region, including Taiwan and Hong Kong. Apple reported $14.76 billion in sales in the region, an increase of 58 percent from the same quarter last year. American sales were up nearly 33 percent year-over-year to $39.57 billion.

Apple has focused heavily on the Chinese market in recent years, in June Apple stated that its new Private Relay feature which masks user’s identity and browsing history will not be available in China and some other countries such as Saudi Arabia, Egypt, Belarus, and Uganda. Apple stated that the feature could not be offered in these countries due to local laws.

In China, it is illegal to use unauthorized VPNs to access blocked websites and while Apple’s Private Relay is not a VPN, it operates in a similar manner. In 2017, Apple removed a number of VPN services from its China App Store to comply with local regulations.

Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship. Follow him on Twitter @LucasNolan or contact via secure email at the address lucasnolan@protonmail.com

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