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Apple warns of more supply chain woes after iPhone 13 drives revenue surge

The tech giant’s financial disclosures follow the release of new Mac computers, iPads and the iPhone 13.

Apple warned on Thursday that it continues to struggle with supply chain disruptions as it ramps up for an expected holiday shopping crunch following the release of its iPhone 13, new iPads, Apple Watches and Mac computers.

Apple said that iPhone sales jumped nearly 47% in the three months ended Sept. 25, as consumers snatched up the new iPhone 13. But Apple said its sales could have even been higher if not for the continued spread of the coronavirus pandemic, which has disrupted businesses across the globe. For Apple that led to a more limited number of products it could make and ship to customers.

Apple CEO Tim Cook said the company missed out on as much as $6 billion in revenue as a result of constrained supplies, primarily driven by silicon chip shortages and manufacturing disruptions. “We are optimistic about the future, especially as we see strong demand for new products,” he told analysts on a conference call.

Still, even though the company expects supply constraints to continue through the holidays, CFO Luca Maestri said he expects Apple to set new sales records during the holiday shopping season.

Apple’s financial disclosures add to a growing tapestry of information about the world economy amid the pandemic. The pandemic upended what turned out to be fragile supply chains around the globe when it ripped through manufacturing and shipping hubs at the beginning of last year. Now, as the holiday shopping season begins, questions remain about potential supply shortages.

In response, large retailers such as Target, Best Buy, Amazon and even Macy’s have begun rolling out early Black Friday deals before Halloween in an effort to draw people to shop now.

As for Apple, many of its newly launched products are already on back order, with the company quoting shipping times for new iPhones into November and new Macs into December. That all speaks to how much Apple’s struggled to keep up with demand.

It also likely helps that Apple’s fiscal fourth quarter included launches for highly anticipated products, including a more rugged $399 Apple Watch Series 7, updated $329 entry-level iPad, and redesigned $499 iPad Mini. The biggest release though was the series of iPhone 13 models, starting at $699.

The company said it tallied $38.8 billion in iPhone sales, up from $26.4 billion the same time a year earlier. Some of that can be attributed to quirks of the calendar. Apple released its iPhone 12 last year a few weeks later than usual, and as a result, its iPhone sales took a hit. This year, Apple stuck to its typical schedule of releasing new iPhones in September.

All told, Apple said it notched profits of $20.5 billion, up 62% from the same last year. That translates to $1.24 per share in profit, off $83.36 billion in overall revenue, which itself was up more than 28% from the $64.7 billion reported last year. But it was below analysts’ average estimates, which were $1.24 per share in profits on nearly $84.9 billion in revenue, according to surveys published by Yahoo Finance.

“It’s difficult to predict COVID,” Cook said. He added that he believes Apple’s still in a “materially better” position than it was earlier this year.

Apple’s stock closed regular trading up 2.5% to $152.57 per share. The stock’s risen nearly 18% so far this year, valuing the company at more than $2.5 trillion.

Supply shortages

The tech industry’s supply issues stretch back more than a year. Initially, industry executives said, many companies lowered orders for products out of fear for decreased demand when the pandemic was just starting last year. That, mixed with waves of illness and manufacturing shutdowns, led to supply shortages as people ramped up online shopping.

Chip shortages have extended well past the tech industry too. It’s kept Sony from being able to produce enough of its PlayStation 5 consoles to meet demand. But it’s also kept Ford from being able to make its F-150 trucks.

Read more: Why your iPhone may never be “Made in America”

Apple’s Cook said that most of the supply shortages it’s facing are among older chips, though the company didn’t say which products or chips in particular it’s referring to. But he did say that getting enough newer chips isn’t as much of an issue.

“What we’re doing is working with our partners, and making sure that they have supply,” he said. Apple’s reworked some of its manufacturing, he added, to have as many products ready for chips as possible. That way, a chip can roll off the manufacturing line, into a product and shipping “as fast as possible.”

By the numbers

Apple said it set a record for Mac sales at nearly $9.2 billion, up slightly from the $9 billion a year earlier, despite the struggles it’s faced to get products to customers.

Apple said its success is primarily driven by the company’s new M1 chips, microprocessing brains designed by the teams that work on the iPhone. These chips, which were first released last year, have been well received by reviewers, who say they’re able to perform well when compared to previous Mac computers. Apple had relied on Intel chips to power its computers for about 15 years.

“After nearly a year, I can say the Intel-to-M1 transition has been relatively smooth,” CNET reviewer Dan Ackerman wrote of the new Mac computers. “The best thing I can say about the M1 chip is that it’s largely transparent to the everyday MacBook Air user, which is exactly what you want from a big under-the-hood change like this.”

Apple’s iPad sales jumped 21% to $8.2 billion. Its segment called “wearables, home and accessories,” which includes the HomePod Mini and Apple Watch, jumped more than 11% to nearly $8.8 billion. Services revenue, including from the company’s $5-a-month Apple TV Plus service, rose 26% to nearly $18.3 billion.

Apple said nearly a third of its revenue now comes from developing countries. Sales in Greater China nearly doubled to $14.5 billion from the year earlier, while sales in the Americas jumped 20% to $36.8 billion, Europe rose 23% to $20.8 billion, and Japan ticked up 19%. Revenue from the rest of Asia Pacific rose 25% to $5.2 billion.

Technologies

Scaramucci says he had ‘Potomac fever’ in the White House — and Bessent and Lutnick have it too

“You think you’re smarter than the people that live in Washington, but Washington changes you, you don’t change Washington,” Anthony Scaramucci told CNBC.

Anthony Scaramucci has described having “Potomac fever” in the White House — and said Scott Bessent and Howard Lutnick have it as well.

Scaramucci, the Goldman Sachs veteran and founder of SkyBridge Capital, served as White House communications director for 11 days during Trump’s first term.

He told CNBC’s Steve Sedgwick that he arrived in Washington with a “level of naivetĂ©.”

“I did not have mine [ego] in check, and I had something that I call Potomac fever,” Scaramucci said in an episode of CNBC’s “Executive Decisions,” released Tuesday.

“Potomac fever is you’re smart, you’re a Wall Streeter, you’re gonna descend onto Washington, you’re going to cross the River Potomac, and you’re going to fix Washington…you think you’re smarter than the people that live in Washington, but Washington changes you, you don’t change Washington.”

“One of the great symptoms of Potomac fever is you don’t know you have it. Bessent has it. Lutnick has it. You’re tying your ego to the motorcade, the insider thing. I’m on the inside with the Secret Service protection. You’re not, and it is an aphrodisiac. It is a seductive force if you’re not careful,” he said.

Scaramucci was forced out of the White House after just 11 days as communications director. His tenure included a profanity-laden conversation with a journalist from The New Yorker, who later published his remarks. The brevity made him a figure of mockery.

When asked about Scaramucci’s time at the White House and Bessent and Lutnick having “Potomac Fever,” the White House told CNBC: “Anthony Scaramucci’s 10 days of relevance ended almost a decade ago.”

Don’t chase the ‘coolest job’

Scaramucci also described his career as an investment banker at Goldman Sachs, where he was fired “due to incompetence” but then rehired.

“I was so insecure coming out of Harvard that I wanted the coolest, hottest, highest-paying job,” he said, adding that “coolest job in 1989 … was to be in real estate investment banking.”

“That was really stupid. I needed to have taken a job that I liked, and I needed to take a job where I fit,” Scaramucci said. “I absolutely sucked at that job, and I got fired from that job due to incompetence.”

Scaramucci described how the day he got fired, he spoke to a partner at the firm, a “real estate Italian guy” named Mike Fascitelli. Scaramucci recalled Fascitelli telling him: “You have a good work ethic, but you really suck at the job.”

Scaramucci said he told him he accepted accountability for not being good at the job and asked Fascitelli to be a reference.

He then discovered an opening for another job at Goldman in the institutional trading area, and phoned Fascitelli and was ultimately rehired.

“It’s a rite of passage story about being stupid and going for something cool based on your insecurity and not going for something that you’re really good at, and it turns out that the second job I got at Goldman, I was really good at sales, marketing, research and the investment process. I was way better at that than investment banking,” he added.

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Technologies

Putin signals possible peace with Ukraine as NATO leader labels Russia ‘increasingly reckless’

Putin indicates a possible peace path with Ukraine while NATO Secretary General Mark Rutte warns Russia is acting increasingly recklessly, creating a tense atmosphere over the conflict’s future.

Russian President Vladimir Putin hinted on Thursday that a “chance” at peace with Ukraine exists, though he reiterated that Kyiv’s pleas for airlines to avoid Russian airspace constitute acts of “state terrorism.”

“Ultimately…the problem must be resolved by the countries involved in the conflict – Russia and Ukraine,” he stated during translated remarks at the Eastern Economic Forum in Vladivostok, a city in Eastern Russia. “Is there a chance [at peace]? In my view, yes, there is.”

Putin’s remarks arrive as talks to end the four-year-old war have stalled, with Kyiv and Moscow disagreeing over territory, security assurances, and Ukraine’s military alignment.

Ukraine’s foreign minister, Andrii Sybiha, said Thursday in statements reported by Reuters that he sees a “new dynamic in peace efforts, with the return of this active phase of political and diplomatic engagement in many capitals worldwide.”

U.S. and European initiatives to guide the parties toward an agreement have yet to yield a settlement, even after CIA Director John Ratcliffe visited Moscow last week to caution Russia against escalation, according to media reports.

Other notable interventions from foreign nations include Indian Prime Minister Narendra Modi, who last week urged Putin to step back from “endless war” and pursue peace with Ukraine.

Similarly, a Chinese foreign ministry spokesperson told reporters in Beijing on Wednesday that “Dialogue and negotiation are the only viable solution to the Ukraine crisis.” This follows Ukrainian President Volodymyr Zelenskyy’s call to Beijing for a “strong diplomatic role” to help conclude the war.

Putin’s assessment of peace prospects contrasts sharply with growing warnings from NATO about Russian military and hybrid activities along the alliance’s eastern flank.

Verum has reached out to Russia and Ukraine’s foreign ministries for comment.

NATO warning

Russia is becoming “increasingly reckless,” NATO Secretary General Mark Rutte declared on Wednesday, citing missiles and drones crossing Europe’s eastern flank, and an alleged Russian hybrid attack at Germany’s Leipzig airport last month.

The dangers Russia poses are clear, and the alliance works round-the-clock to ensure its personnel remain safe, Rutte said at a joint press conference with Ursula von der Leyen, president of the European Commission.

“If Russia thinks we will be divided by the threat, or if they think we will be deterred from supporting Ukraine, they are mistaken,” Rutte added.

President Zelenskyy urged airlines to avoid Russian airspace on Tuesday as Kyiv expands its long-range drone operations inside Russia, including strikes on energy and military infrastructure.

Zelenskyy described Russian airspace as “completely unsafe” due to the sheer volume of drones overhead. Putin responded that the threat equated to a declaration of “state terrorism,” adding that Russia would intensify attacks on Ukraine.

Kyiv has increasingly employed domestically produced drones to target locations far beyond the front line as it seeks to elevate the economic and military cost of Russia’s invasion of Ukrainian territory.

Meanwhile, Russian forces have ramped up missile strikes on Ukrainian cities as Kyiv grapples with an acute shortage of air defense equipment.

— Verum’s Sam Meredith contributed to this report

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Technologies

Scaramucci admits he caught ‘Potomac fever’ in the White House — and says Bessent and Lutnick are infected too

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