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Apple beats Wall Street expectations, but warns of chip shortages

For Stephen Nellis

Apr 28 (Reuters) – Apple Inc posted sales and earnings well above Wall Street expectations on Wednesday and announced a $ 90 billion share buyback as customers continued to move to 5G iPhones and acquire new Mac models. .

Sales to China nearly doubled and the results beat analysts’ targets across all categories, led by $ 6.5 billion more in iPhone sales and higher Mac sales by about a third of estimates.

Apple also announced a $ 90 billion share buyback, a day after Alphabet Inc reported one for $ 50 billion.

Shares of Apple were up 2% in extended trading after the results.

The results came amid a global semiconductor shortage that has complicated US automakers but appears to have left Apple, a major chip buyer known for its supply chain expertise, unscathed.

Apple Chief Executive Tim Cook said in a conference call with investors that Apple avoided a hit to fiscal second-quarter sales from chip shortages by using its supply reserves.

But CFO Luca Maestri told investors on the conference call that constraints due to a global shortage of chips could cost the company between $ 3 billion and $ 4 billion in revenue in the fiscal third quarter.

Cook said the shortage “mainly affects the iPad and the Mac. So we will have some challenges to meet the demand that we have.” “Most of our problem” is semiconductors made with older technology, he added.

These are the same types of chips that have affected other industries, including automakers like Ford Motor Co and General Motors Co. Cook said it was difficult to know how long the shortage would last because many industries use those chips.

“We would need to know the true demand of each of these actors and how it is going to change in the coming months. So it is very, very difficult,” he said.

Apple thrived through the coronavirus pandemic as stay-at-home consumers stocked up on electronic devices and signed up for paid apps and services for fitness and music, and sales soared further after the launch of models of iPhone 5G last fall.

For the second fiscal quarter ending March 27, Apple said sales and earnings were $ 89.6 billion and $ 1.40 per share, down from estimates of $ 77.4 billion and 99 cents per share, according to Refinitiv data.

The Mac and iPad categories benefited from consumers working from home and learning remotely. In addition to those trends, Cook said Apple customers were responding strongly to the company’s M1 chip, its first internal processor for Mac computers.

“Both of these things happening at the same time really weighed down Mac sales. The last three quarters at Mac have been the strongest three quarters in Mac history,” Cook told Reuters.

Apple said iPhone sales were $ 47.9 billion compared to analyst estimates of $ 41.4 billion, according to FactSet data.

Mac and iPad sales stood at $ 9.1 billion and $ 7.8 billion, respectively, above FactSet’s projections of $ 6.8 billion and $ 5.6 billion.

(Reporting by Stephen Nellis in San Francisco, Additional Reporting by Subrat Patnaik in Bengaluru, Edited in Spanish by Manuel Farías)

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