Apple Inc.’s overwhelming fiscal third quarter was overshadowed by the company’s forecast for slowing growth Tuesday, dampening record results and equities to the south.
Tuesday reported its strongest-ever June quarter, with earnings nearly doubling and a huge iPhone beat — iPhone revenue surpassed Wall Street expectations by a staggering $5 billion. But the celebrations came to an abrupt halt when Apple’s chief financial officer Luca Maestri said in a conference call that the company’s revenue growth would slow in the current quarter due to foreign exchange rates, the semiconductor shortage and more difficult year-on-year comparisons. .
“We expect very strong double-digit year-over-year revenue growth in the September quarter,” Maestri said, as he continued to avoid exact revenue forecasts due to the uncertainty associated with the COVID-19 pandemic. “We expect revenue growth to be lower than our year-over-year growth of 36% in June.”
Shares of Apple had been up in after-hours trading up to that point, but immediately fell back, eventually ending the extended trading session with a 2% drop.
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In addition to total sales, Maestri also warned about one of Apple’s most popular companies and declined to hint at long-term declines in sales growth.
“We expect the growth rate of our services to return to more typical levels,” said Maestri, referring to Apple’s services business, which posted record revenue in the quarter, growing 33% to $17.5 billion.
That growth rate also benefited from a favorable comparison, as certain services were significantly impacted by the very beginning of the COVID-19 lockdowns a year ago, he added.
“We expect significant growth in services, but not at the level we saw in June,” he said in response to a question about the company’s guidelines.
When asked about the upcoming holiday season and whether the semiconductor and component shortages would impact what is typically Apple’s biggest quarter, Maestri said he wanted to talk about only one quarter at a time. Some analysts have questioned whether the second half of this year will be as strong as the first half among tech companies, especially the tech giants, and Apple’s June quarter seemed to reflect those fears.
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While it seems ridiculous to see stocks plummet after reporting such a stunning quarter — iPhone sales alone were nearly $40 billion and Chief Executive Tim Cook said 5G penetration is still “very, very low.” , and that’s why we feel really good about the future of the iPhone” – making sure we’re at a peak for tech is justified. And as the delta variant continues to create uncertainty about the path of the COVID-19 pandemic, there is even more uncertainty ahead
As Cook put it on Tuesday, “the road to recovery will be a winding one.”