Technologies

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.

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

CNBC Daily Open: Nvidia carries world of AI on its shoulders

Investors wait for Nvidia to set the scene of the biggest market trend in a generation, as its earnings look set to determine the direction of the AI trade.

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Hello, this is Leonie Kidd coming to you from London.

Nvidia is carrying the weight of the AI world on its shoulders. But, with sky-high earnings expectations, can the group led by CEO Jensen Huang actually impress investors?

Read on.

What you need to know today

Nvidia will report earnings after the bell on Wall Street on Wednesday. The AI darling’s blockbuster performance over the last year has driven earnings forecasts higher, adding to the so-called “expectations premium” Nvidia now needs to surpass.

The Street is projecting an eye-watering set of second-quarter sales at over $92 billion, according to FactSet. Cantor Fitzgerald highlighted consensus third-quarter sales expectations of $103.7 billion in a Saturday report.

Over the last year, Nvidia has beaten expectations across all topline metrics, but shares have been sold down the following trading day, according to Bespoke Data.

Hyperscaling test

This quarter, there is one persistent concern among investors: Nvidia’s dependence on the hyperscalers. The company now reports earnings in a way that separates these hyperscalers into its AI cloud, industrial and enterprise pack. Investors have voiced worries about this concentrated dependence on Amazon

Nvidia fell 2.9% on Monday, dropping for a seventh straight day, the longest losing streak since 2022. Shares ended the day 2.2% higher on Tuesday.

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Crude in the red

Oil prices were sharply lower in early trade on Wednesday.

A combination of factors is playing into the session today. Iran and Oman are discussing a joint temporary shipping route through the Strait of Hormuz in an effort to increase traffic through the chokepoint.

This comes as the U.S. administration forges ahead with its plan to use economic sanctions to escalate its war with Tehran.

Meanwhile, U.S. President Donald Trump has submitted a proposed agreement with Saudi Arabia to develop civil nuclear energy. This accord has now been submitted to Congress. A U.S. official told MS NOW that this will only move forward if Saudi Arabia joins the Abraham Accords.

Retaliation time

Canada has outlined “dollar-for-dollar” retaliatory tariffs that it will impose on over $20 billion of U.S. goods, after trade talks broke down with the Trump administration.

The counter-tariffs range from 15% to 50% and target a wide array of Canadian imports from the U.S., including dairy, seafood, appliances, wood and paper products, and clothes.

Among the most significant are 50% tariffs on American steel and aluminum, doubling the current rate.

The Bessent Bid

The so-called “debasement trade” has found a second wind following Treasury Secretary Scott Bessent’s intervention in the bond market.

In this environment, assets like crypto and precious metals gain as investors look to hedge against the weaker U.S. dollar and Treasury debt.

— Leonie Kidd

And Finally…

Dolly Parton, queen of country music, dies at 80

Dolly Parton was around six when she wrote her first song: “Little Tiny Tasseltop,” an ode to her corncob doll with corn-silk hair. Her mother stored it preciously in a shoebox.

“I loved that little doll,” Parton wrote decades later. “I expressed myself and my feelings through writing – I’m sure what I was thinking was, ‘Well, Tasseltop has to have a song about her.’”

Parton never stopped making music after that. The irrepressible country music singer, songwriter and actress whose charisma, heartfelt lyrics and business acumen captured the public’s imagination for nearly six decades, died on Tuesday aged 80, her family said in a statement.

— Reuters

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Technologies

Verum Exchange Launches a $10 Bonus for Online Mining of Verum Coin and Bitcoin

Verum Exchange is expanding its online mining capabilities, allowing users to earn a $10 bonus while continuing to mine cryptocurrency directly from their smartphones. The feature is available not only in the currency converter app but also within Verum Messenger.

Online mining has long been part of the Verum ecosystem. Now, the company has added a new incentive to the existing feature — a bonus for participating in online mining.

The concept of online mining is changing the traditional perception of cryptocurrency mining. Users do not need to set up specialized mining equipment at home or deal with complex technical configurations. The feature can be accessed directly through the Verum digital ecosystem.

Verum Exchange: https://exchange.verum.im
Verum Messenger: https://ios.verum.im

Technologies

Supreme Court permits certain Trump mail-in voting restrictions before midterm elections

The Supreme Court has temporarily blocked a lower court ruling that prevented the Trump administration from implementing new restrictions on mail-in voting, allowing the administration to proceed with its plan to impose new requirements on states ahead of the midterm elections.

The Supreme Court on Monday sided with President Donald Trump for now in his effort to impose sweeping new restrictions on distributing mail ballots, putting on hold a lower-court ruling that had blocked key parts of the plan ahead of November’s midterm elections.

The justices, over three dissents, paused a ruling by U.S. District Judge Indira Talwani in Boston that prevented the Trump administration from carrying out portions of a March executive order involving the U.S. Postal Service and voter eligibility lists. The court’s three liberal justices dissented.

But the decision does not immediately allow the Postal Service to put its new mail-ballot system into effect.

A separate nationwide injunction issued Aug. 11 by U.S. District Judge Indira Talwani in Boston still blocks USPS from implementing the new procedures for the Nov. 3 elections. The administration would have to overcome that order as well.

The distinction was central to the Supreme Court’s decision.

The majority said Trump’s executive order itself does not require states to change how they conduct elections. Instead, it directs federal agencies to develop policies that could later impose requirements on states. Because those policies had not yet been implemented when 23 states and Washington, D.C., challenged the order, the court said the challenge was premature.

The justices stressed they were not deciding whether Trump’s order or the policies developed under it are ultimately legal.

“The Court’s disposition of this application does not mean that any measure taken by the Government to implement the Order will necessarily be lawful,” the majority wrote. “On that score, time will tell.”

The Postal Service last week finalized rules intended to carry out part of Trump’s order, including new requirements involving ballot envelopes, barcodes and information states must provide USPS. Those rules remain blocked by Talwani’s separate injunction.

The case now returns to the 1st U.S. Circuit Court of Appeals as the underlying legal fight continues. Some states have already started preparing to send ballots to military and overseas voters in early September.