Friday, October 29, 2021 4:33 pm4 Comments

• News

Apple stock is trading lower after the company posted revenue that fell short of consensus estimates by about $1.5 billion. But analysts see this as a temporary issue, tied to supply chain issues from COVID disruptions, a short term concern, not one for the long run.

Eric J. Savitz for Barron’s:

At the root of the issue is Apple’s disclosure that sales for the September quarter were reduced by about $6 billion due to a combination of chip shortages and Covid-related manufacturing issues in Southeast Asia.

In recent weeks, there have been widespread reports that the company has been having trouble getting enough camera modules

for high-end versions of the iPhone 13 from its supplier in Vietnam, where travel restrictions hampered factory operations. CEO Tim Cook told investors that the manufacturing issues have been resolved, but he declined to guess when the parts situation would improve. The company said the hit to revenue from supply issues would be higher this quarter than in the September quarter.

Analysts can do arithmetic, and they conclude that Apple would have crushed revenue and profit estimates for the quarter if it had had the goods to sell

Given that there generally aren’t good substitutes for most Apple products—it is hard to imagine many people buying Android phones rather than waiting a few extra weeks to get an iPhone 13 Pro Max—the view on the Street is that Apple is dealing with delayed sales, not demand destroyed. That sets the stage for strong quarters in March and beyond.

MacDailyNews Take: Exactly.

As we wrote this morning, “Profit from irrational overreaction. This too shall pass.”

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