In his first earnings report as CEO, John Ternus announced that Apple's gross margin for the December quarter is expected to be between 45% and 46%, falling short of the 46.3% average analyst estimate. This forecast comes despite better-than-expected earnings and revenue, particularly in the iPhone segment.
CFO Kevan Parekh attributed the margin decline to higher memory costs and expenses related to the ramp-up of Siri AI. Following this announcement, Apple shares dropped approximately 3% in after-hours trading, adding to a nearly 2% decline during regular trading.
This marks a continuing trend of margin contraction for Apple, which has seen its gross margin decrease for three consecutive quarters, from 50.1% in June to 47.9% in September. Ternus noted that the current memory pricing situation is unprecedented, with Apple paying more than earlier in the year.
The company anticipates supply constraints for iPhones and Macs in the holiday quarter due to memory shortages, exacerbated by high demand from AI server companies like Nvidia. To secure supply, Apple has significantly increased its purchase obligations by $33 billion from the June to September quarters.
Despite these challenges, analysts suggest that Apple may gain market share from competitors that lack the financial flexibility to absorb rising costs. Ternus reported that Apple gained global market share and achieved record Mac sales in the last fiscal year, indicating resilience in its product offerings despite the current market pressures