Apple’s Earnings Beat Is Being Swallowed by a Memory-Cost Squeeze
Apple’s Earnings Beat Is Being Swallowed by a Memory-Cost Squeeze
John Ternus opened his tenure as Apple chief executive on Sept. 1 and delivered an early win: the company’s fiscal fourth-quarter revenue outperformed expectations, standing apart from a tougher reporting season for several major technology peers.
On Monday, Ternus told analysts Apple had just completed “one of the most prolific launch periods in our history.” Revenue reached $114.5 billion, above the $113.46 billion Wall Street forecast, while earnings per share of $2.10 also beat estimates. iPhone revenue came in at $57.58 billion and Mac sales of $10.79 billion topped forecasts, providing the backbone of the beat.
But the report’s celebratory tone quickly met a harder reality. Greater China revenue was $17.54 billion, below the $18.75 billion expected, while iPad sales also missed. Jesse Cohen of Investing.com called the China shortfall “not a rounding error,” arguing that weakness in wearables, home products and accessories showed the pressure extended beyond one market.
The sharper warning came with Apple’s holiday-quarter margin outlook. CFO Kevan Parekh forecast gross margin of 45% to 46%, below the 46.3% analyst consensus, citing higher memory costs and expenses tied to the Siri AI ramp. Shares fell 3% in Tuesday morning trading after the forecast.
Ternus said memory pricing was “unprecedented” and warned costs would keep rising beyond December. Apple is responding by raising purchase obligations—up $33 billion from June to September—to secure components, even as it expects iPhone and Mac supply constraints through the holiday season.
That leaves Apple with a split verdict: it has the financial muscle to absorb some of the industry-wide shortage, and says it gained global share, but its first quarter under Ternus shows how quickly a sales beat can be overshadowed by the cost of keeping products on shelves.
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