Apple claims that Covit-19 lockdowns are higher than sales in China

Apple Inc.

APL 4.52%

China warned on Thursday that the revival of Covid-19 would prevent sales of up to $ 8 billion in the current quarter – a setback that saw supply chain improvements in the first three months of the year.

The guidance came Thursday from an iPhone maker shortly after the company posted one of the best quarters in its 46-year history. Shares of the company in post-market trading Vipcha — news that sent for a shocking ride — first rose 2% and then fell more than 5%.

Many investors expected the January-March quarter to explode and focused more on any signs of CEO Tim Tim in his view on high inflation, epidemic locks in China and the future. War in Ukraine.

“I would like to acknowledge the challenges we face, from supply-chain disruptions driven by Govt and silicon shortages to the catastrophe caused by the war in Ukraine,” he said. Cook told investors. “We are not immune to these challenges.”

The new hiccups for the California-based California-based company have come to areas around Shanghai, where Apple has multiple suppliers, facing government locks aimed at controlling the Govt-19 infection.

“Distribution disruptions caused by Govt-related disruptions and silicon shortages across the industry are affecting our ability to meet customer demand for our products,” said Luca Maistry, Apple’s Chief Financial Officer.

In the three months to June, these restrictions could affect revenues of $ 4 billion to $ 8 billion. Said the maestro. Locks are expected to reduce demand in China.

Apple’s new $ 1,599 monitor guarantees better screen quality, sharper webcam and surround sound. But does it live up to its price? Jonah Stern of WSJ compared it to other shots from LG, Samsung and Dell on her own March Monitor Madness. Photo caption: Alex Kuzoyan for The Wall Street Journal.

Challenges come after the blockbuster quarter. Apple’s revenue rose 9% to $ 97.3 billion in the most recent period, surpassing analysts’ expectations of $ 94 billion. Earnings per share rose to $ 1.52 from $ 1.40 a year earlier — a record high of $ 1.42 in the second quarter of Apple’s fiscal year.

The results reflected the company’s ability to lead the supply-chain challenges that rocked the technology and automotive industries, allowing it to sell more iPhones than Wall Street expected. “Distribution restrictions were significantly lower than we experienced in the December quarter,” he said. Cook said in an interview Thursday.

“Kovid is hard to predict,” Mr. Cook added during the conference call. “All the affected final assembly factories have now been reopened,” he noted.

Apple’s outlook added to the turbulent afternoon as investors worried about the economy as a whole.

Amazon.com Inc.

Shares plunged more than 10% after the e-commerce company posted Its first quarter loss Sales growth has been declining since 2015.

Apple’s results are consistent with this Guidance from January, When the company forecasts a record for March compared to the previous quarter, the company boosted all-time earnings and profits with the latest iPhones, Mac computers and iPads – including the Christmas holidays. Tablets.

Apple’s third-best quarter in history in terms of gross revenue of $ 97 billion, but it’s been very slow in its growth since the outbreak began two years ago. The company has seen double-digit year-on-year growth every quarter since its inception The first iPhone with 5G capability In October 2020.

Daniel Morgan, Synovus Trust Co. A senior portfolio manager focusing on technology at, which considers Apple to be one of its largest stocks, supply-chain concerns, Covid-19 and inflation have been called the “biggest concerns on the street” in the current quarter. Bernstein Research analyst Toni Sacconaghi echoed that sentiment in a note this week, predicting solid quarterly results, “but then what?”

In January, Mr. Cook said he expects consequences Distribution chain challenges Apple estimates it will lose more than $ 6 billion in sales due to inventory restrictions in March, compared to the last three months of 2021.

But his hope came before the outbreak of the disease in Asia and the outbreak of war in Europe. Apple suppliers in China Attacked this month Through strict government locks aimed at curbing the spread of Govt-19. Loup Funds estimates that 85% of Apple’s products are assembled in China, while the region accounts for approximately 20% of the company’s annual sales.

In January, Mr. Maistry warned that the March quarter would face an unusual year earlier comparison. In the comparable period of 2021 iPhone sales were stronger than normal because epidemic-related delays disrupted regular fall output and pushed those sales backwards. Total sales increased by 54% over the previous year.

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IPhone sales rose 5% to $ 50.6 billion in the last quarter. Analysts expected 1% growth. The company will no longer release unit sales for smartphones, which is half of Apple’s annual revenue.

Analysts said that sales may have benefited from the strong demand in China for the latest iPhones echoing consumers. They have attributed the expected drop in iPad sales to the fact that Apple has prioritized iPhone production during this period. iPad sales fell 2.1% to $ 7.6 billion. Mac computer sales are up 15% to $ 10.4 billion, well above analysts’ expectations for flat results.

In an interview on Thursday, Mr. Cook said the iPad’s results were hampered by “significant distribution restrictions.”

As device sales decline, so does the focus on digital content sales. The so-called services segment, which includes the iTunes and App Store, grew by 17% to $ 19.8 billion in the three months to March. Analysts expected 17% growth.

Write to Tim Higgins at Tim.Higgins@WSJ.com

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