Amazon and Apple warn of supply chain issues
CNN, CNNBUSINESS
By Clare Duffy and Rishi Iyengar, CNN Business
Even Amazon and Apple are grappling with the global supply chain crunch.
Both companies reported revenue results on Thursday that fell short of Wall Street analysts’ expectations and warned that supply chain issues could weigh on business in the December quarter.
Amazon missed Wall Street projections for both sales and profit for the three months ended September 30 — a rare miss for the internet giant. It posted net sales of $110.8 billion, up 15% from the same period a year earlier, but below analyst projections of $111.6 billion. Net income for the quarter decreased from the prior year to $3.2 billion, well short of the $4.6 billion analysts expected.
Amazon CEO Andy Jassy warned in a statement that, in the upcoming fourth quarter, the company’s consumer business expects to incur several billion dollars of additional costs. Those costs, he said, come “as we manage through labor supply shortages, increased wage costs, global supply chain issues, and increased freight and shipping costs — all while doing whatever it takes to minimize the impact on customers and selling partners this holiday season.”
Apple posted quarterly sales of $83.4 billion, slightly lower than analysts had anticipated. iPhone sales were lower than analyst forecasts, too, coming in at $38.9 billion.
In a conference call with analysts after reporting the results, CEO Tim Cook focused on the fact that Apple managed to post a quarterly sales record despite the supply constraints. “Demand was very robust,” he said, but he also noted that “larger-than-expected supply constraints,” including silicon shortages and a “related manufacturing disruption,” had a $6 billion negative impact on the business.
Amazon’s stock fell as much as 5% and Apple shares fell more than 4% in after-hours trading Thursday.
Supply chain disruptions and staffing issues caused by the pandemic have escalated in recent months, hitting a wide range of industries. Several retailers, manufacturers and economists have warned that global supply chain constraints will lead to not only fewer discounts during the holidays this year but also result in a potential dearth of products on store shelves.
Apple has built up a sophisticated supply chain over the years for its various hardware products, and Amazon has developed an advanced logistics operation for deliveries. The supply concerns are also dragging into important periods for both companies: for Amazon, the all-important holiday shopping season, and for Apple, the launch of several new products, including its iPhone 13 lineup.
Amazon previously warned that the second half of 2021 could bring slower growth compared to last year because more people were returning to in-person shopping versus online ordering as vaccines rolled out. And things don’t appear to be looking up just yet. Amazon is now projecting much slower-than-usual growth for the final three months of the year.
Apple declined to provide revenue guidance for the December quarter, “given the continued uncertainty around the world in the near term,” CFO Luca Maestri said during the company’s earnings call Thursday. “We estimate the impact from supply constraints will be larger during the December quarter. Despite this challenge, we are seeing high demand for our products,” he said.
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