BUSINESS

Apple and Amazon hit by supply chain issues

Share The Knowledge

Apple and Amazon both disappointed investors with their earnings reports last night as they warned of continuing disruption to their supply chains.

Shortages knocked Apple’s sales by $6 billion in the latest three-month period and it said that the impact could get worse in the remainder of the year.

CRYPTO LEVERAGE TRADING

Tim Cook, its chief executive, described “larger than expected supply constraints” in the latest quarter. The technology group is one of the world’s leading buyers of semiconductors. Although it unveiled a 47 per cent rise in iPhone sales, it said that the chip shortage was disrupting production of most of its products.

Total revenue rose from $65.7 billion to $83.4 billion in the three months to September 30. Net income of $20.6 billion was up from $12.7 billion.

Apple, which is based in Cupertino, California, is one of the world’s most valuable companies, with a market value above $2.5 trillion. It makes iPhones — which typically comprise half of Apple’s sales — iPad tablets and Mac computers and provides services such as the iCloud storage library and App Store.

Shares in the business dropped $7.17, or 4.7 per cent, to $145.31 during out-of-hours trading on Wall Street last night.

In addition to the chip shortage, the company is facing mounting scrutiny from regulators. This week the Information technology website reported that an investigation by the US Department of Justice, which has been running for two years, was likely to lead to a lawsuit.

The impact of Apple’s own software updates materialised in the earnings of some of its Big Tech peers in recent days. Facebook, the world’s largest social media company, fell short of revenue forecasts this week after privacy changes on iPhones prevented some digital advertisers from tracking users without their consent.

Amazon disappointed its investors with a forecast that holiday-quarter sales would be well below expectations, as a tightening jobs market and supply shortages make it difficult for retailers to keep their shelves stocked.

Shares in the ecommerce powerhouse fell by $131.46, or nearly 4 per cent, to $3,317.33 in late trading on Wall Street after the company warned that fourth-quarter sales were likely to be between $130 billion and $140 billion, against expectations of $142.05 billion.

Amazon also fell shy of forecasts for third-quarter sales, which grew at their slowest pace since Covid struck, as consumers returned to stores after shopping online for more than a year. Total net sales rose to $110.81 billion in the three months to the end of September.

Andy Jassy, the chief executive who took over from Jeff Bezos, the company’s founder, in July, said: “In the fourth quarter, we expect to incur several billion dollars of additional costs in our consumer business as we manage through labour supply shortages, increased wage costs, global supply chain issues and increased freight and shipping costs . . . It’ll be expensive for us in the short term.”

The $1.7 trillion technology group has interests spanning groceries, internet advertising and video and music streaming, as well as cloud computing.

Business Matters Magazine

Tagged with:

Similar Posts