Saturday, October 16

Apple Forecasts Record Revenue of $ 90 Billion Amid Increase in Covid Purchases | Apple

Apple executives announced record revenue on Wednesday, with earnings far exceeding analyst expectations.

Revenue increased 54% year-over-year to nearly $ 90 billion. Sales in China doubled. Mac sales were a third higher than forecast and iPhone sales reached $ 48 billion, roughly $ 6.5 billion more than initial estimates.

“This quarter reflects both the enduring ways our products have helped our users cope with this moment in their own lives, and the optimism consumers seem to feel about the better days ahead for all of us,” said Tim Cook, Apple chief executive in a statement.

The company continued to make breakneck profits in the last quarter, building on its successes in the last two quarters to make $ 23.6 billion in profit.

Apple also announced a $ 90 billion share buyback and eased investors’ anxiety about how it would handle a severe semiconductor shortage that has hampered other companies and the auto industry.

“There was no material problem with our results due to the offer,” Cook told Reuters.

Apple was one of several companies that thrived during the Covid-19 pandemic, as consumers bought more products and spent more time online through lengthy blackouts and social distancing requirements. An increase in sales was also driven by demand for Apple products, including laptops, desktops and iPads, which grew as people moved to remote work and education.

After more than a month of delays, Apple introduced its iPhone 12 line last fall, which exceeded the expectations of its predecessors and analysts. With 5G-equipped devices, the new iPhone helped Apple end 2020 with its most profitable quarter, generated a 21% increase in revenue in the first quarter of 2021, and carried those successes into the second quarter.

This week, Apple also announced that it was increasing investments in the US, with more than $ 430 billion in direct spending on US providers and data centers, and Apple TV + productions, with 20,000 new jobs added in the coming. five years.

“In this time of recovery and rebuilding, Apple is redoubling our commitment to innovation and US manufacturing with generational investment reaching communities in all 50 states,” Cook said in a statement.

While the outlook certainly looks encouraging, some analysts have doubts whether demand can be sustained as economies begin to emerge from the Covid crisis.

“The current high levels of iPad and Mac demand are unlikely to be sustainable as the world reopens, so yet another pace driven by these areas may not be enough to drive stocks,” Goldman’s Rod Hall wrote. Sachs in an investigation. note before the call.

Cook argued, however, that demand felt strong. “Where this pandemic will end, it appears that many companies will operate in a hybrid mode,” Cook said..

Apple is also facing increased scrutiny from US lawmakers, along with other big tech companies like Google and Facebook, over potential antitrust violations. At a Senate antitrust hearing last week, smaller tech companies criticized the company, saying it acts as a gatekeeper and uses its giant platform to crush competition. The day before the hearing, Apple unveiled its new AirTags, which allowed users to track items with their iPhone’s “Find My” software, a device that some believe was copied from a similar Samsung product.

Sen. Amy Klobuchar, Democratic chair of the antitrust subcommittee, criticized companies for using their market dominance to “exclude or suppress applications that compete with their own products” and “charge excessive fees that affect competition.”

Along with these problems, Apple will continue to have to navigate the uncertainties surrounding a microchip shortage that is expected to last into next year. Computer chips, which are essential to Apple’s product lines, have been in short supply since last summer after chip factories closed early in the pandemic. The backlog was complicated by increases in demand, former President Trump’s trade war and the switch to 5G. Joe Biden’s $ 2 trillion infrastructure plan includes roughly $ 50 billion to invest in domestic chip production, but it can take years to get the complex factories up and running.

It appears that Apple has not been hit hard by the crisis, but shortages have caused production delays and raised prices, which could stifle growth in demand for Apple products in the future.

“There are no signs that supply is picking up or that demand is declining, while prices are increasing across the chain,” Neil Campling, a media and technology analyst at Mirabaud, told The Guardian in March. “This will happen to the people on the street. Expect cars to cost more, phones cost more. This year’s iPhone is not going to be cheaper than last year’s. “

Cook acknowledged that there had been challenges meeting demand, but expressed only optimism about the future.

“It’s worth remembering how we felt at this time last year when everything we knew had to change,” Cook said during the call, listing examples of the difficult changes people around the world made in their daily lives to limit the spread of Covid. . “We have reached new days of hopeful resolution,” he said, adding: “Our work is not done.”

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