Apple delivers strong quarter, but warns of trouble ahead

Apr 28, 2022, 1:46 PM | Updated: May 2, 2022, 1:46 am

FIE - This May 21, 2021, photo shows the Apple logo displayed on a Mac Pro desktop computer in New ...

FIE - This May 21, 2021, photo shows the Apple logo displayed on a Mac Pro desktop computer in New York. Apple on Thursday, April 28, 2022, reported quarterly results that topped analysts' projections despite supply shortages, economic fallout from the Russia-Ukraine war and a growth comedown from the huge sales lift that technology products and service got from pandemic restrictions. (AP Photo/Mark Lennihan, File)

(AP Photo/Mark Lennihan, File)

SAN RAMON, Calif. (AP) — Apple on Thursday reported strong quarterly results despite supply shortages, but warned that its growth slowdown is likely to deepen. The company said it’s still struggling to get enough chips to meet demand and contending with COVID-related shutdowns at factories in China that make iPhones and other products.

Although initial results for the January-March period topped analysts’ projections, the good news was quickly eclipsed when management warned of trouble ahead during a conference call.

The main takeaway: Apple’s sales will be squeezed by the supply problems much harder in the current April-June quarter than in its previous one. The company estimated it would take a hit to revenue of $4 billion to $8 billion as a result.

“It will affect most of the product categories,” Apple CEO Tim Cook told analysts.

Apple’s stock price fell 4% in extended trading, reversing a positive response after the Apple report initially came out. Before the sobering forecast lowered the shares even further, Apple’s stock had fallen 10% from its peak in early January.

“It was a solid quarter, but it looks like COVID has reared its ugly head,” said Edward Jones analyst Logan Purk. “It looks like it’s two steps forward, one step back.”

Like a wide gamut of companies ranging from automakers to health care providers, Apple has been grappling with shortages of computer chips and other key technology components required in modern products.

Apple had expected the crunch to ease as this year progressed, but recent COVIDs outbreaks are starting to curtail production in Chinese factories that the company relies on.

Despite those headwinds, the results for the January-March period drew a picture of a still-expanding empire generating massive profits that have yielded the firm a $2.7 trillion market value — the largest among U.S. companies.

Apple announced a 5% increase in its quarterly dividend, which has been steadily rising since the company revived the payment a decade ago. Effective May 12, Apple’s new quarterly dividend will stand at 23 cents per share — more than doubling from 10 years ago.

Even without that supply issues, Apple would still be facing some of the same challenges confronting many other major technology companies. After enjoying a pandemic-driven boom, it’s becoming tougher to deliver the same levels of spectacular growth that drove tech-company stock prices to record highs. The crisis continues to fade away and growth on a year-to-year basis has become harder to maintain.

Apple’s most recent quarter illustrated the high hurdles the Cupertino, California, company is now trying to clear. Revenue for the period totaled $97.3 billion, yet it was only 9% higher than the same time last year. It marked the first time in the past six quarters that Apple hasn’t produced double-digit gains in year-over-year revenue. That number, however, exceeded the average revenue estimate of $94 billion among analysts surveyed by FactSet Research, indicating that Apple’s growth slowdown hasn’t been quite as severe as investors were anticipating.

Quarterly profit came in at $25 billion, or $1.52 per share, a 6% increase from the same time last year. Analysts had predicted earnings per share of $1.42.

As usual, the iPhone remains Apple’s marquee product with sales of $50.6 billion in the past quarter — a 5% uptick from the same time last year. Apple has been trying to keep its iPhones sales growing while chips remain in short supply by siphoning some components from the iPad, which saw its sales fall 2% from last year to $7.6 billion.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

This photo provided by Robert Wilkes, owner of a house boat management company, shows smoke rising ...

Associated Press

Houseboats catch fire while docked at Wahweap Marina on Lake Powell

More than half a dozen house boats momentarily caught fire at a popular boating destination on the Utah-Arizona line on Friday.

22 hours ago

File - Women work in a restaurant kitchen in Chicago, Thursday, March 23, 2023. On Friday, the U.S....

Associated Press

US hiring, unemployment jump in May and what that says about the economy

The nation’s employers stepped up their hiring in May, adding a robust 339,000 jobs, well above expectations.

22 hours ago

(Pixabay Photo)...

Associated Press

Oath Keeper from Arizona sentenced for role in Jan. 6 riot at US Capitol

Edward Vallejo, a U.S. Army veteran from Phoenix, oversaw a “Quick Reaction Force” at a Virginia hotel that was prepared to deploy an arsenal of weapons into Washington if needed, authorities say.

2 days ago

FILE - U.S. Border Patrol Chief Raul Ortiz listens during a news conference, Jan. 5, 2023, in Washi...

Associated Press

US Border Patrol chief is retiring after seeing through end of Title 42 immigration restrictions

The head of the U.S. Border Patrol announced Tuesday that he was retiring, after seeing through a major policy shift that seeks to clamp down on illegal crossings at the U.S.-Mexico border following the end of Title 42 pandemic restrictions.

3 days ago

FILE - President Joe Biden talks with House Speaker Kevin McCarthy of Calif., on the House steps as...

Associated Press

House OKs debt ceiling bill to avoid default, sends Biden-McCarthy deal to Senate

The House approved a debt ceiling and budget cuts package late Wednesday, as President Joe Biden and Speaker Kevin McCarthy assembled a bipartisan coalition of centrist Democrats and Republicans against fierce conservative blowback and progressive dissent.

3 days ago

Sean Bickings (Family Photo via city of Tempe)...

Associated Press

Family of man who drowned last year in Tempe Town Lake files wrongful death lawsuit

The family of a man who drowned in Tempe Town Lake a year ago filed a wrongful death lawsuit against the city Wednesday, noting that its police department doesn't have a policy requiring officers to go into the water to save someone.

3 days ago

Sponsored Articles

...

Desert Institute for Spine Care

Spinal fusion surgery has come a long way, despite misconceptions

As Dr. Justin Field of the Desert Institute for Spine Care explained, “we've come a long way over the last couple of decades.”

(Desert Institute for Spine Care in Arizona Photo)...

Desert Institute for Spine Care in Arizona

5 common causes for chronic neck pain

Neck pain can debilitate one’s daily routine, yet 80% of people experience it in their lives and 20%-50% deal with it annually.

(Photo by Michael Matthey/picture alliance via Getty Images)...

Cox Communications

Valley Boys & Girls Club uses esports to help kids make healthy choices

KTAR’s Community Spotlight focuses on the Boys & Girls Club of the Valley and the work to incorporate esports into children's lives.

Apple delivers strong quarter, but warns of trouble ahead