Apple (NASDAQ:AAPL) will announce first-quarter earnings for fiscal 2022 on Jan. 27. The company has been one of the main beneficiaries of the coronavirus pandemic, with people spending more time at home than usual.
Sales and profits have been rising, but now Apple faces a new challenge from the pandemic - constrained supply chains.
Apple is finding it difficult to meet demand
For the fourth quarter of the fiscal year ended September 25, Apple reported $83.4 billion in revenue. This was up 28.9% from $64.7 in sales for the same quarter last year. But that doesn't tell the full story of how strong customer demand was for Apple products and services in the fourth quarter. Management indicated that it could have sold an additional $6 billion worth of products if there were no shortage of supplies. Despite Apple's sales being strong in the fourth quarter, it could have been up 7.2%.
Limitations are felt in the products of the Apple family. It wasn't like a popular new product sold out, everything else was available in abundance. This has been the case for Apple since the start of the pandemic - customers buy all of its products. Last quarter and last fiscal year, sales grew across all four product categories (iPhone, Mac, iPad and wearables).
The first quarter of Apple's fiscal year 2022 will include its most lucrative holiday selling season. Unfortunately, Apple is not expected to solve the supply shortage problem in a timely manner. Chief Financial Officer Luca Maestri discussed the blow from supply restrictions on a conference call following Apple's fourth-quarter earnings release: "As previously reported, during the September quarter, supply restrictions reduced our revenue by approximately $6 billion. We expect the impact of supply restrictions to be greater during the January quarter. December 1. Despite this challenge, we continue to see growth in demand for our products and we expect year-on-year revenue growth Will be very strong and set a new revenue record during the December quarter.
What this could mean for Apple investors
Wall Street analysts expect Apple to report first-quarter revenue of $118 billion and earnings per share (EPS) of $1.89. If Apple reaches its EPS forecast, it will be 12.5% higher than the same quarter last year.
The year-over-year growth forecast for Apple is the lowest in the past four quarters. Investors are already anticipating a setback from supply chain constraints and have cut the cap for the first quarter. Therefore, management's grip on supply chain impacts for the next few quarters is likely to move Apple's shares.
If management says something akin to CFO Luca Maestri -- the problem is getting worse -- Apple's stock could fall in the near term. Regardless, Apple is a great company that keeps up with the demand of customers through innovation. Short-term issues like supply chain restrictions due to the pandemic are no reason to sell Apple stock.
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