Surging iPhone sales help Apple overcome global supply chain shortages

Apple CEO Tim Cook.
Apple CEO Tim Cook.

  • Apple smashed Wall Street estimates in its Q3, reporting a 50% YOY growth in iPhone sales.
  • Apple also reported strong Mac and iPad growth despite a supply chain shortage affecting both.
  • CEO Tim Cook said the firm was able to “mitigate” some of the shortage-related costs.
  • See more stories on Insider’s business page.

Apple on Tuesday reported fiscal third-quarter financials that easily surpassed Wall Street expectations.

The company reported $81.32 billion in revenue and adjusted earnings of $1.30 for the June quarter.

The iPhone giant’s report comes amid a global supply chain shortage, one that the company has said would not impact its iPhone production. However, CEO Tim Cook said earlier this year that the worldwide chip crisis could impact iPad and MacBook production.

Apple was able to “mitigate some of” the estimated $3 to $4 billion in expected shortage-related costs, Cook told CNBC

Here’s a look at the key numbers:

  • Q3 2021 revenue: $81.32 billion. Analysts were expecting $73.3 billion.
  • Q3 2021 earnings per share (EPS): $1.30, versus Wall Street estimates of $1.01.
  • iPhone revenue: $39.57 billion. Analysts were expecting $36.5 billion.
  • Services revenue: $17.48 billion. Analysts were expected $16.3 billion.

Apple’s growth in iPhone sales was up 50% from this time last year, and Cook attributed the surge in part to Android customers entering the Apple ecosystem.

“We saw a very strong double digit increases in both upgraders and switchers during the quarter,” Cook told CNBC.

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Chipotle soars 13% to an all-time high as digital ordering and return of dine-in customers push revenue to pre-pandemic levels

Chipotle Tesla
Chipotle is giving away a Tesla 3.

Shares in Chipotle soared as much as 12.95% to reach new highs on Wednesday as a bumper second-quarter earnings call showed the fast-casual chain returning to pre-pandemic activity.

Revenue came in at $1.89 billion, up 39% year-over-year and a hair above the analyst consensus of $1.88 billion. Chipotle opened up 56 new locations and closed five, capitalizing on a surge of digital sales, which grew nearly 11%, as well as a recovery in in-person dining. Almost half of all sales were digital.

The company also saw same-store sales, which excludes sales from new stores, jump 31% year-over-year. Same-store sales had tumbled at the start of the pandemic. Likewise, margins rebounded to 24.5%, driven by price increases and falling beef prices during the second quarter.

Chipotle made headlines in June for raising wages to an average of $15, in part to attract talent in a tight labor market. The company also raised menu prices across the board.

“We have had to move pricing in the delivery channel and on our menu,” CEO Brian Niccol told CNBC. “We’re very fortunate to have such a strong value proposition and to have this pricing power.”

Chipotle closed at $1,755.91 on Wednesday, up 11.5% on the day.

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FedEx slumps as the carrier beats earnings estimates but says costs tied to increased shipping demand and labor are soaring

FedEx
Boxes containing the Moderna COVID-19 vaccine are loaded into a truck for shipping at the McKesson distribution center in Olive Branch, Miss., Sunday, Dec. 20, 2020.

FedEx fell on Friday by as much as 5.6% after its latest earnings report revealed labor and logistical pressures eating away at margins, even as the company slightly beat analyst earnings expectations.

The stock slid as the market opened on Friday, immediately falling by over 3%. It continued to fall to an intraday low of $286.52 before paring some losses.

The US labor shortage has cost the courier on wages and shipping efficiency, pushing up labor costs and depressing on-time shipping rates. In response, FedEx said it would boost capex by 20% and open 16 new facilities by the end of the year. In spite of the reopening pressures, the company’s sales rose 30% in the fourth quarter of 2020, as delivery demand remained sturdy.

Thursday’s reported earnings came in just cents above expectations, leading some analysts – who had become accustomed to consistent overperformance – to describe the results as a disappointment.

FedEx CEO Fred Smith expressed optimism for future quarters, saying that continued strong sales in conjunction with ongoing investments in the firm’s delivery network would soon result in better margins.

Shares of FedEx were trading at $291.46 at 2:08 p.m. ET, down 3.79%.

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Zoom beats Wall Street expectations in its first-quarter earnings. Here’s how 8 insiders describe its whirlwind year.

eric yuan zoom
Zoom founder Eric Yuan speaks before the Nasdaq opening bell ceremony on April 18, 2019 in New York City.

  • Zoom had a chaotically extraordinary year in 2020, with usage and revenue skyrocketing.
  • Quarterly results reported Tuesday show it’s still expanding, but the growth rate is leveling out.
  • Now as the world reopens, Zoom faces new challenges to prove that it can adapt to a post-pandemic world.
  • See more stories on Insider’s business page.

The pandemic thrust Zoom into the global spotlight and made the video chat app a household name.

As the company scrambled to adapt to its newfound popularity, Zoom’s board started holding weekly – sometimes daily – briefings and on at least one occasion last year, CEO Eric Yuan personally held as many as 19 meetings in one day.

Zoom board member Santiago Subotovsky told Insider that Zoom’s experience was like if a “12-year-old had to go straight to college” as an influx of new users caused its annual revenue to skyrocket 326% between January 2020 and January 2021.

Now, its fiscal first-quarter results released Tuesday show its wild growth streak is leveling out.

Zoom reported Q1 revenue of $956.2 million, showing 191% year over year growth, which beat analyst estimates of $910.2 million compiled by Bloomberg. Earnings per share came in at $1.32, easily topping Wall Street predictions of $0.98.

Zoom also set full-year revenue guidance of $3.975 billion and $3.99 billion, a bit more than the $3.82 billion analysts forecasted. For comparison, last fiscal year it brought in $2.65 billion in revenue, so this represents continued growth even as pandemic restrictions are loosening, something analysts have been watching.

The stock initially dipped as much as 3% after hours before bouncing back and ticking up over 2%. Zoom’s guidance for its fiscal second quarter slightly missed the highest analyst estimates.

The results show how a slow-but-steady return to the office for many workers brings new challenges and opportunities. Zoom will have to show that its videoconferencing software can remain a foundational part of the modern workplace even when people can meet face-to-face.

To do so, the company will have to lean on strategies it developed during its period of whirlwind growth, which Subotovsky and seven other insiders and executives described to Insider earlier this year.

Click here to read the inside story of how Zoom navigated the pandemic and – what’s next for the video software giant.

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Chamath Palihapitiya-backed Clover Health climbs after earnings amid chatter from Wall Street Bets cheerleaders

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  • Clover Health rose Monday after posting a revenue beat in its first-quarter results.
  • Clover has been a Reddit darling after going public in a $3.7 billion SPAC deal in January.
  • Shares of the Chamath Palihapitiya-backed health insurer have plummeted since going public.
  • See more stories on Insider’s business page.

Clover Health, a Wall Streets Bets favorite, rose after the health insurer reported a revenue beat in its first-quarter earnings results.

Clover, which sells private health plans for seniors in the Medicare Advantage market, reported revenue of $200.3 million in the quarter, topping the $193 million average estimate from two analysts, Markets Insider data showed. It also reported a net loss of $48.4 million for the quarter, a widening from the $28.2 million loss from the same time last year.

Shares of the Nashville, Tennessee-based company rose 3% as of 10:20 a.m.

Before the company posted its results pre-market, Clover jumped 11%, Bloomberg reported, as Redditors cheered the stock. After the company posted its revenue beat, the shares pared their gains and eventually started dropping before rising again before the market opened.

Clover enthusiasts on the Wall Street Bets Reddit page continued to cheer the stock. One member on the Wall Street Bets thread said, “Rock solid baby! Let’s go clov!” Another said, “We mooning today,” implying the stock would jump on the results.

Read more: Wall Street analysts are raising fresh questions about the ambitious growth plans Clover laid out before going public in a Chamath-backed SPAC

Clover has been a Wall Street Bets darling and was listed as one of the “most anticipated earnings release” for the week, alongside other favorites. One teenager dumped thousands of dollars into the stock, once he saw it was backed by “SPAC king” and billionaire investor Chamath Palihapitiya, Bloomberg previously reported.

But shares of Clover had dropped 46.5% as of Friday close since the company went public in January in a $3.7 billion SPAC deal.

Shortly after going public, short-seller Hindenberg Research published a report accusing the company of misleading investors, customers, and the federal government, which caused shares to plummet. The company said it’s not in violation of any rules or regulations.

Not long after the report, Clover received a notice of investigation from the Securities and Exchange Commission, Reuters reported.

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‘Big Short’ investor Michael Burry predicted the inflation spike a year ago – and sounded the alarm multiple times in February

Michael Burry big short

  • Michael Burry predicted post-reopening inflation back in April 2020.
  • “The Big Short” investor warned prices could surge earlier this year too.
  • Burry trumpeted the value of profitable companies during inflationary periods.
  • See more stories on Insider’s business page.

Michael Burry warned the post-pandemic reopening could cause inflation to spike as early as April last year – mere weeks after the first lockdowns in the US. His prediction was proven right this week by data showing consumer prices jumped 4.2% year-on-year last month, the sharpest increase in 11 years.

“When we start working and playing again, inflation may be in store,” the investor told Bloomberg for a story published on April 7 last year.

Burry is best known for anticipating the collapse of the US housing market in the mid-2000s, and making a billion-dollar bet on that outcome. That episode of his career was immortalized in the book and movie “The Big Short.” He also helped lay the groundwork for the meme-stock frenzy earlier this year by investing in GameStop and pushing for changes at the retailer back in 2019.

The Scion Asset Management chief ramped up his inflation warnings in February of this year. He cautioned that stimulus checks, the Federal Reserve’s continued pumping of liquidity into markets, and the reopening of large parts of the economy were likely to drive prices higher.

“Prepare for #inflation,” Burry tweeted on February 19. “#Inflation pressure building. The Fed is monetizing $80 billion of Treasury debt per month, and now comes $Trillions in stimulus/debt + reopening,” he tweeted four days later.

Burry highlighted America’s inflation woes in the 1970s, as well as Weimar Germany’s hyperinflation in the 1920s, as cautionary tales about the risks of soaring prices. He also flagged Warren Buffett’s description of inflation as a “tax on capital,” as it discourages companies from investing by reducing their real returns, and acts as an implicit tax on investors by eating into their purchasing power.

Read more: The founders of a crypto-asset hedge fund break down how ether could overtake bitcoin in market cap – and why the second-largest cryptocurrency will go over at least $25,000 in the short- to medium-term

The Scion chief’s takeaway was that profitable companies shine during inflationary periods.

“Each $ of earnings today becomes important,” he tweeted on February 23. “Earnings 10 and 20 years from now, the corollary goes, may be worth substantially less tomorrow’s today.”

Burry didn’t only raise the alarm on inflation. He also warned the stock market was “dancing on a knife’s edge” in February, and called out Tesla, GameStop, bitcoin, and Robinhood as examples of dangerous speculation in markets.

The investor pledged to stop tweeting in mid-March, citing a visit from federal regulators. He deleted his Twitter profile in April.

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Uber drivers in some US cities are making more than $40 per hour, the company said

Uber driver
  • In some US cities, Uber drivers are making at least $40 per hour, the company’s CEO said.
  • Ride-hailing apps have been trying to get drivers back on the road amid rising demand.
  • Some drivers told Insider they’re holding out for higher pay or for more people to get vaccinated for COVID-19.
  • See more stories on Insider’s business page.

Uber drivers in some cities are making at least $40 an hour, the ride-hailing company said in its first-quarter earnings call.

Median earnings for drivers in New York City and Philadelphia is $37 per hour, before tips, Uber Chief Executive Officer Dara Khosrowshahi said on Wednesday’s call. In Chicago, it’s $36, and in Austin, it’s $33, he said.

“We know that drivers often work simultaneously on other apps, so their total earnings are likely even higher,” he said. “In other words, looking at the more appropriate measure of active time on Uber, median earnings are at or above $40 an hour in several US cities.”

Uber listed its median earnings per hour by city on April 7, but those earnings don’t include tips or incentives.

The company has spent hundreds of millions of dollars trying to incentivize drivers to come back or start driving for the ride-hailing app after about half of them left during the COVID-19 pandemic.

An Uber spokesperson told Insider that drivers’ “top two concerns about returning to the platform are COVID safety and the level of earnings. That’s why our driver stimulus announcement included info on how high earnings are before any money is spent on incentives and reiterated our commitment to safety, including the rider mask mandate.”

Read more: Uber and Lyft asked Congress to bail out their drivers. Now they can’t seem to get enough drivers to come back to work.

For the month of March, Uber reported its highest-ever bookings in its history. But even amid a ride-hailing rebound, Uber and its competitor Lyft are still struggling to get drivers back on the road amid a worker shortage.

Some drivers told Insider’s Tyler Sonnemaker they’re holding out for higher pay or for more Americans to get vaccinated.

Lyft said yesterday pay for its drivers is soaring amid high demand for rides and a low number of workers. The company has also incentivized workers by enhancing its app so that drivers can find more opportunities to maximize their earnings.

On the Uber earnings call, one analyst noted drivers have to spend money to rent a car or buy a used car. The CEO said the company has programs to help drivers get on the road, adding right now the biggest issue for workers is safety.

“We think that issue is being dealt with as it relates to vaccines,” Khosrowshahi said.

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Barclays profit almost triples in the first quarter as economic outlook turns positive and its COVID-related cash reserves fall

Barclays Trading Floor
  • Barclays’ first-quarter profit almost tripled to £1.7 billion ($2.37 billion) as the economy started to recover from COVID-19.
  • Loan loss reserves dropped significantly and the investment bank performed strongly, boosting the bank.
  • Profits exceeded analyst expectations by over 45%.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Barclays’ profit almost tripled in the first quarter of 2021 compared to the same time period in 2020, delivering a huge beat to analysts’ expectations, the bank reported on Friday.

The bank’s loan-loss reserves, which it bulked up during the worst of the COVID-19 pandemic, dropped sharply and its investment bank performed strongly as the global economy started to recover from the pandemic.

Profits rose to £1.7 billion ($2.37 billion) in the first three months of this year, compared with £605 million ($841 million) in the same quarter last year, marking an increase of over 180%. This performance exceeded analyst expectations for a result just below £1.2 billion ($1.7 billion).

Total group income fell by 6% to £5.9 billion ($8.2 billion), but beat the predicted £5.6 billion ($7.8 billion). The revenue drop was the product of falling interest rates and lower returns from loans in the UK, as well as a decline in card spending and balances globally, the bank said.

However, strong UK mortgage performance, where home sales rose sharply over the first three months of the year, and a decline of revenue generation of just 1% in the international corporate investment bank helped offset the broader fall. Equities and banking especially performed well and grew by 65% and 35% respectively.

Low demand for unsecured lending and continuously low interest rates are expected to cause headwinds for Barclays throughout 2021 despite the yield curve steepening, the bank’s report said.

“As we enter the next phase of this pandemic, we remain resolute in our commitment to support the economic recovery. From our spend data, which captures UK economic activity across our cards and acquiring businesses, we are already seeing encouraging early signs of recovery in some sectors, including those hit hardest by the crisis” James Staley, group chief executive officer, said, showing himself cautiously optimistic.

“While evidence of recovery is encouraging, we have continued to take a cautious view of the impact of the pandemic on the business,” he said.

Barclays shares fell by 5.84% on the London Stock Exchange on Friday. They were trading at around £177.58 ($247.16).

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Global stocks ease as investors take profit after record highs on the back of strong economic data and robust earnings

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Global stocks edged lower on Friday as investors digested a fusion of strong US economic data, continued Federal Reserve commitment, and better-than-expected earnings releases with caution.

Futures on the Dow Jones, S&P 500, and Nasdaq fell between 0.1% and 0.3%.

But the MSCI World Index, that tracks equity performance across 23 developed countries, rose 0.7% to its own record high.

The US economy grew at an annualized pace of 6.4% through the quarter that ended in March, versus 6.7% expected, leaving GDP less than 1% beneath its pre-COVID peak in the fourth-quarter of 2019. Adding to the recovery sentiment, US initial jobless claims dipped to 553,000 last week and marked a third straight decline.

The positive backdrop doesn’t mean that the current period of low volatility will persist, according to Mark Haefele, chief investment officer at UBS Global Wealth Management.

We expect bouts of market turbulence, as investors fret over rising inflation and the uneven global progress in combating the pandemic,” he said. “With global stocks close to record highs, the market is also likely to be vulnerable to disappointing news on the economy or COVID-19.”

On tech earnings, Amazon was the latest to post solid results on Thursday and saw shares rise 3.2% in after-market trading on a huge earnings beat in Jeff Bezos’ last quarter as CEO. Quarterly revenue rose 44% to $108.52 billion, and the company indicated that aspects of the pandemic bump in online sales may endure.

Twitter’s shares meanwhile slid 7% on its lower revenue outlook, even though quarterly revenue rose 28% to $1.04 billion. One issue for the company may be stronger ad revenues seen by rivals Google and Facebook earlier this week, Deutsche Bank strategists said.

Elsewhere in Europe, the French economy grew more than expected in the first three months of the year, with an expansion of 0.4% from the fourth quarter. Austria returned to growth after shrinking in the previous quarter, but Spain stagnated by 0.5% in the first three months of 2021.

London’s FTSE 100 rose 0.2%, the Euro Stoxx 50 rose 0.1%, and Germany’s DAX rose 0.5%.

Emerging markets such as Brazil and India continue to reel from a severe COVID-19 wave. Total fatalities in Brazil have topped 400,000, reporting more deaths so far in 2021 than in the whole of last year, as it struggles with vaccination.

India reported over 386,000 new cases in the past 24 hours, while related deaths rose by more than 3,400 in the same period. Several states have run out of vaccines ahead of a planned nationwide inoculation drive, according to Reuters.

More positively, BioNTech CEO Ugur Sahin said he’s confident the COVID-19 vaccine his company developed jointly with Pfizer will be effective against the variant found in India.

Asian shares traded lower against the backdrop of weak China data and a continued anti-trust crackdown on tech companies within the country. Growth in China’s services and manufacturing sectors fell short of expectations in April, signalling a drop in economic activity at the start of the second quarter.

China’s Shanghai Composite fell 0.8%, Japan’s Nikkei fell 0.8%, and Hong Kong’s Hang Seng fell 2.1%

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Apple reported $89.5 billion in revenue for the second quarter, smashing estimates as it continues its iPhone 12 high and stores return to normal operations

tim cook apple
Tim Cook in Cupertino in September 2019.

  • Apple kicked off 2021 with $47.9 billion in iPhone sales as the iPhone 12 lineup remains a hit.
  • iPhone production wasn’t impacted by the chip shortage, but MacBooks and iPads reportedly are.
  • All of Apple’s US stores were also open in March for the first time since last year.
  • See more stories on Insider’s business page.

Apple reported $89.5 billion in revenue during its 2021 fiscal second-quarter, which ran from January to March for the phone maker.

The company’s Q2 saw all of its stores open for the first time since the start of the pandemic. And while its iPhone production was unaffected by the sweeping global chip shortage, its MacBooks and iPad are reportedly postponed due to the semiconductor crisis.

Here’s a look at the key numbers. Analyst estimates are based on Yahoo Finance data.

Here are the key numbers to watch from Apple’s Q2 earnings:

  • Q2 2021 revenue: $89.5 billion. Analysts were expecting $77.3 billion.
  • Q2 2021 earnings per share (EPS): $1.40, versus Wall Street estimates of $0.56.
  • iPhone revenue: $47.94 billion. Analysts were expecting $41.49 billion.
  • Services Revenue: $16.9 billion, versus analyst estimates of $15.65 billion.
  • Wearables Revenue: $7.8 billion versus analysts’ estimates of $7.52 billion.

Apple’s fiscal second-quarter revenue is a dip from what was a record-breaking Q1 for the company when it reported more than $100 billion in sales, a first for the tech giant. The boom was in part driven by the holiday season and the company’s iPhone 12 line release in October. Some analysts called the lineup one of the most important launches that Apple has made in years.

Wall Street expects the company to deliver about 220 million iPhone units throughout 2021. iPhone production isn’t expected to be impacted by a global chip shortage that is slamming every industry. However, the production of some of Apple’s MacBooks and iPad has been delayed since the company pushed back some component orders for the devices to the back half of this year due to the shortage.

All of Apple’s 270 US stores were opened in March, marking the first time that the company’s retail presence in its entirety was open to customers since the start of the pandemic. However, stores will continue to observe limited capacity and other safety protocols.

Read more: The battle between Facebook and Apple over privacy is about more than just ads – it’s about the future of how we interact with tech

Apple faced mounting pressure in its fiscal second-quarter over a privacy crackdown that has begun rolling out. The iOS 14.5 software update, which became available Monday, requires app developers to ask for permission before they collect and track users’ data.

Facebook specifically has taken issue with the new feature since it directly impacts the company’s lucrative ad business, which is built upon data tracking.

Analysts estimate that Apple will pull in $68.67 billion in revenue for Q3. Apple’s fiscal third quarter, which runs from April to June, has already included a virtual event in which the company unveiled a new colorful line of iMac computers as well as a new purple-colored iPhone 12.

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