Apple Drops 7.35% on Cook's 'Hundred-Year Flood' Supply Warning — SkimNews
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- Apple beat fiscal Q3 expectations with adjusted EPS of $1.91 (vs. $1.89 estimate) and revenue of $109.42 billion (vs. $108.65 billion consensus), yet shares dropped 7.35% on July 31 as weak guidance outweighed the beat.
- Tim Cook, delivering his final earnings call as CEO before John Ternus takes over, warned of "very significant constraints currently with limited flexibility in the supply chain" and labeled the memory shortage a "hundred-year flood."
- Apple guided for September-quarter revenue growth of 9% to 11%, below the 12%-plus FactSet consensus, and a gross margin of 47% to 48%, down from roughly 50% in June quarter, with iPhone revenue hitting $54.25 billion against $53.86 billion expected.
- Morgan Stanley maintained its Overweight rating but cut its Apple price target to $360 from $364, flagging "more pronounced margin pressure" from rising memory costs before expected iPhone price hikes, and calling Services — which grew just 12% year over year — the quarter's "biggest blemish."
- Apple's Services segment guided for below 10% September-quarter growth amid FX headwinds, weaker mobile gaming, and softer App Store trends, with management acknowledging unusually direct App Store headwinds including gaming weakness and country-level business model changes.
- Apple is preparing a redesigned Siri powered by Google technology to launch alongside its September iPhone lineup, while already raising Mac and iPad prices and analysts expect further iPhone price hikes this fall, with Morgan Stanley citing a potential foldable iPhone as a future offset.
Why it matters: Apple's 7.35% post-earnings drop — its worst in 13 years — wipes roughly $460 billion in market value and underscores that memory supply, not demand, is now the binding constraint on the world's largest smartphone company. With Services decelerating and margin compression arriving before any iPhone price increase can offset it, the quarter exposes Apple's vulnerability to commodity-style input shocks even as installed base and free cash flow hit record highs ahead of Ternus's September debut.
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