Paresh David, Danielle Kaye, and Nivedita Baliu

(Reuters) – Apple Inc reported Thursday record holiday quarter sales. This was due to growing iPhone subscribers and high iPhone demand. However, Apple Inc said that a chip shortage, which it claimed has started easing, cost Apple over $6 billion in revenues.

Apple shares (NASDAQ 🙂 rose more than 5% after-hours trading. They have fallen 10% in the past year as investors consider stocks that soared during pandemics and move funds to safer investments.

According to analysts, Apple is taking advantage its enormous size and recording record quarter-end results. The market has over 1.8 billion devices. Apple has managed to get suppliers and manufacturers to make large quantities of iPhones, and other devices, despite the shortages caused by the Omicron virus and the pandemic.

Ryan Reith from industry tracker IDC, said that the iPhone market is a “better than everyone” and that they have mastered the supply chain.

Apple’s next major product is augmented reality (AR), which investors are speculating on.

Tim Cook, CEO of Investing in the Future said that he saw a lot potential for this area and is investing accordingly.

Chief Financial Officer Luca Maestri indicated that revenue growth in this quarter will be slower than the December quarter. The reason is mainly because of lower foreign exchange rates, and different product launch dates.

Maestri said in an interview to Reuters, that supply restrictions would fall in the current quarter which ends in March.

The level of constraints will vary based on the other companies. What will happen to demand for chips in other industries and companies? We can’t predict the future so we tend to look at the immediate,” he stated.

There were few other phones that came out in the holiday season. The iPhone 13 shipped days before quarter started. This resulted in worldwide iPhone sales revenues of $71.6 billion. That’s a 9.9% increase over 2020, which beat Wall Street expectations, Refinitiv data shows.

Counterpoint Research reports that Apple’s market share for smartphones in China was a record 23 percent in the holiday quarter. It also became China’s top-selling seller there, the firm reported Wednesday.

Revenue for fiscal the first quarter of this year was $123.9billion, which is 11% higher than last year. Analysts had an average estimate at $118.7billion. 34.6 billion profit, $2.10 per Share, was achieved against analysts’ predictions of $31 billion or $1.89 per Share.

This pandemic has driven adoption of digital tools to communicate, learn, and entertain, enabling Apple to explode sales in all segments of its business, including tablets, accessories, and computers.

Apple’s service business which includes paid apps like Apple TV+ and Apple Music, has also seen an increase. The revenue for services rose 24 percent to $19.5 billion surpassing analysts’ estimate of $18.6 trillion. There are 785 million subscribers to its various services. This is an increase of 620 million and 745 millions respectively last quarter.

iPad sales dropped 14%, to $7.25billion, compared with $8.2billion analyst estimates. These figures seem to confirm industry predictions about iPads having low priority for scarce parts.

The Mac sales rose 25 percent to $10.9billion compared to estimates of $9.5billion. Sales of accessories rose 13%, to $14.7billion, compared to estimates of $14.6billion.

Investors will be pleased to see the growth of services, which is helping reduce production problems. Apple’s expected earnings for the next twelve months are currently 27 times. It is down by as high as 35 percent from a year earlier, but it still exceeds the five-year average expected earnings of 20x, according to Refinitiv.

Apple may be subject to antitrust in America and Europe, which could mean new regulations that will impact its revenue from services.

The Dutch Authority for Consumers and Markets ordered Apple to amend apps in its Apple App Store by January 15th or risk fines. This was after it discovered that Apple had used market dominance to require dating app developers only to use Apple’s In-App Payment System.