Wired’s Levy on Apple’s sales miss: it’s alarming that even Apple can’t get chips

Apple Inc’s (NASDAQ: AAPL) sales fell shy of Wall Street estimates in the fiscal fourth quarter as supply chain constraints resulted in a $6 billion hit to the iPhone maker. Shares were down about 5.0% in after-hours trading.

A larger message for the economy

On CNBC’s “Closing Bell”, Steven Levy, editor-in-chief at Wired, said it was alarming that even Apple doesn’t have a sufficient supply of semiconductor chips.

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I think it’s a larger message for the whole economy because Apple has long-term relationships in China for chip delivery, and if they can’t deliver them, what about the other companies that aren’t as well connected? I feel it’s disturbing that Tim Cook says it’ll be worse in Apple’s biggest quarter, the holiday quarter.

During the same interview, Wedbush Securities’ Dan Ives, however, reiterated his bullish stance on Apple, citing continued strong demand and dismissing supply chain issues as only “transitory”.

Q4 financial performance

According to Refinitiv, experts had forecast Apple to report $1.24 of per-share earnings on $84.85 billion in revenue. In its earnings report on Thursday, the tech giant matched estimates for EPS, but revenue came in lower at $83.36 billion, still representing an annualised growth of 29%.

Apple generated $38.87 billion in revenue from iPhone, $18.28 billion from services, $9.18 billion from Mac, $8.25 billion from iPad, and $8.79 billion from its “other” segment. All numbers were up on a year-over-year basis, but iPhone, Mac, and other revenue came in lower-than-expected.

Chip shortage to persist in the holiday quarter

CEO Tim Cook warned supply chain issues will get worse in the holiday quarter but said revenue was still expected to grow sharply compared to last year on the back of the newly launched iPhone 13. He, however, refrained from giving specific guidance for the future.

At $366 billion, Apple’s revenue for the full financial 2021 was up 33%, with “services” contributing the most after iPhone. Its gross margin in Q4 stood at 42.2% versus 42% expected.