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Apple results hit by supply chain woes, Cook says holiday quarter impact will be worse

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October 28, 2021

By Stephen Nellis

(Reuters) -Supply chain woes cost Apple Inc $6 billion in sales during the company’s fiscal fourth quarter, which missed Wall Street expectations, and Chief Executive Tim Cook said that the impact will be even worse during the current holiday sales quarter.

Cook told Reuters on Thursday the quarter ended Sept. 25 had “larger than expected supply constraints” as well as pandemic-related manufacturing disruptions in Southeast Asia. While Apple had seen “significant improvement” by late October in those Southeast Asian facilities, the chip shortage has persisted and is now affecting “most of our products,” Cook said.

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“We’re doing everything we can do to get more (chips) and also everything we can do operationally to make sure we’re moving just as fast as possible,” Cook said.

Cook said the company expects year-over-growth for its quarter ending in December. Analysts expect growth of 7.4% to $119.7 billion.

“We’re projecting very solid demand growth year over year. But we are also predicting that we’re going to be short of demand by larger than $6 billion,” Cook said.

Shares of the Cupertino, California-based company, which had risen nearly 15% this year, fell 3.4% in extended trading on Thursday. The dip could make Microsoft Corp the world’s most valuable company after a run-up in Microsoft shares on the strength of its cloud computing business.

Apple’s results were mixed in a fiscal fourth quarter seen as a lull before the high-sales holiday end of year.

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Apple said revenues and profits for the fiscal fourth quarter were $83.4 billion and $1.24 per share, compared with analyst estimates of $84.8 billion and $1.24 per share, according to IBES data from Refinitiv.

The results were a rocky end to a fiscal year of above-expectations sales led by its iPhone 12 models and strong sales of Mac computers and iPads for working and learning from home during the COVID-19 pandemic.

Apple told investors in July that chip constraints would start to hit its iPhone and iPad lineups for the first time in the fourth quarter.

Apple posted its results shortly after retailer Amazon.com forecast holiday-quarter sales well below Wall Street expectations, citing labor supply shortages and global supply chain issues in part.

Apple has “managed to navigate the problems fairly well, but hasn’t escaped unscathed, and an extended duration of these problems will spell trouble, especially because the market is unforgiving when it comes to Apple’s performance,” said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.

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MISSES

Apple missed expectations in two key categories.

Apple said fourth-quarter iPhone sales were $38.9 billion, short of estimates of $41.5 billion, according to Refinitiv data.

Cook said that chips made with older technology remain the key supply constraint. He said that Apple remains unsure whether the shortages will ease after the holiday shopping season.

“It’s very difficult to call,” Cook told Reuters.

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The company’s accessories segment, which contains fast-growing categories like its AirPods wireless headphones, came in at $8.8 billion, half a billion dollars lower than analyst expectations of $9.3 billion, according to Refinitiv data.

Other segments fared better. Sales for iPads and Macs were $8.3 billion and $9.2 billion, compared with analyst estimates of $7.2 billion and $9.2 billion, according to Refinitiv data.

The company’s services segment – which contains its App Store business – had sales of $18.3 billion in revenue, up 26%, compared with analyst expectations of $17.6 billion. Cook told Reuters that Apple now has 745 million paid subscribers to its platform, up from the 700 million it disclosed a quarter ago.

“Services were strong, and it shows the beauty and durability of software and services, as there are better margins and no supply issues, since software doesn’t arrive on a container ship,” said Hal Eddins, chief economist at Apple shareholder Capital Investment Companies.

Another bright spot in the company’s results were its sales in China, which were up 83% to $14.6 billion.

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The company said it returned $24 billion to shareholders during the quarter.

(Reporting by Stephen Nellis in San Francisco; Additional reporting by Subrat Patnaik in BangaloreEditing by Sonya Hepinstall)

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Tesla sold 52,859 China-made vehicles in November – CPCA

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December 8, 2021

BEIJING (Reuters) – U.S. electric vehicle maker Tesla Inc sold 52,859 China-made vehicles in November, including 21,127 for export, the China Passenger Car Association (CPCA) said on Wednesday.

Tesla, which is making Model 3 sedans and Model Y sport-utility vehicles in Shanghai, sold 54,391 China-made vehicles in October, including 40,666 that were exported.

Chinese EV makers Nio Inc 10,878 cars last month, a monthly record high, and Xpeng Inc delivered 15,613 vehicles. Volkswagen AG said it sold over 14,000 ID. series EVs in China in November.

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CPCA said passenger car sales in November in China totalled 1.85 million, down 12.5% from a year earlier.

(Reporting by Sophie Yu, Brenda Goh; editing by Jason Neely)

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Renault Zoe goes from hero to zero in European safety agency rating

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December 8, 2021

By Nick Carey

LONDON (Reuters) – French carmaker Renault on Wednesday received a blow for its popular Zoe electric model, as the European New Car Assessment Programme (NCAP) gave it a zero-star safety rating in tests that are standards for Europe.

The carmaker, which is cutting costs and working to turn around its performance after overstretching itself over years of ambitious global expansion, also received a one-star rating for its electric Dacia Spring model.

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Euro NCAP said the latest Zoe had a worse seat-mounted side airbag than earlier versions. Euro NCAP noted the Renault Laguna had been the first car ever to receive a five-star rating in 2001.

“Renault was once synonymous with safety,” Euro NCAP secretary general Michiel van Ratingen said in a statement. “But these disappointing results for the ZOE and the Dacia Spring show that safety has now become collateral damage in the group’s transition to electric cars.”

In the year through October, the Zoe was the third top-selling fully-electric car in Europe, behind Tesla’s Model 3 in top place and Volkswagen’s ID.3.

In a press release titled “Hero to Zero,” UK insurance group Thatcham Research noted the Zoe had initially received a five-star rating back in 2013.

“It’s a shame to see Renault threaten a safety pedigree built from the inception of the rating,” said Matthew Avery, Thatcham’s chief research strategy officer and a Euro NCAP board member.

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Eleven cars received ratings in Euro NCAP’s final round of tests for 2021, which did not include Tesla models.

A number of other vehicles received five-star ratings, including BMW’s electric iX, Daimler’s electric Mercedes-Benz EQS, Nissan’s Qashqai and Volkswagen’s VW Caddy.

(Reporting By Nick Carey; Editing by Bernadette Baum)

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Weibo shares close down 7.2% in Hong Kong debut

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December 8, 2021

By Scott Murdoch

HONG KONG (Reuters) -Chinese social media giant Weibo Corp’s shares closed 7.2% below their issue price in Hong Kong on Wednesday, as it became the latest U.S.-listed China stock to seek out a secondary listing closer to home.

The Hong Kong debut was in line with a fall in Weibo’s primary listing in New York after a torrid week for U.S.-listed China shares, which are facing greater U.S. regulatory scrutiny and also under pressure from Chinese authorities.

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Weibo, which raised $385 million for its Hong Kong listing, opened at $256.20 and closed at HK$253.2 after a volatile debut session.

The stock had been priced at HK$272.80 each in its secondary listing in which 11 million shares were sold.

“For Weibo, it’s a matter of timing. The Hong Kong market had started to rebound this week and now we are seeing some softness emerging in the market,” said Louis Tse, Wealthy Securities director in Hong Kong.

Weibo’s fall came as Hong Kong’s Hang Seng Index closed Wednesday up 0.06% while the Tech Index was 0.03% higher.

Some major stocks such as Alibaba Group Holdings, down 4.35%, were off sharply as sentiment towards tech majors remains fragile.

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“The listing market in Hong Kong is very lukewarm right now,” said Dickie Wong, Kingston Securities executive director.

“Plus, there is regulatory pressure from the (U.S. Securities and Exchange Commission) on Chinese companies to disclose basically everything within three years.

“So there is a major trend that most of the U.S.-listed Chinese companies will seek secondary or dual primary in Hong Kong so they can exit the U.S. market if they need to.”

Ride-hailing giant Didi Global decided last week to delist from New York https://www.reuters.com/technology/didi-global-start-work-delisting-new-york-pursue-ipo-hong-kong-2021-12-03, succumbing to pressure from Chinese regulators concerned about data security and denting sentiment toward Chinese stocks.

Hong Kong and China’s mainland STAR Market have attracted $15.2 billion worth of secondary listings from U.S. listed Chinese companies so far this year, according to Refinitiv data.

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“The moves are probably based on the increasing recognition that the U.S.-China decoupling will not stop and will proceed steadily,” said LightStream Research analyst Mio Kato, who publishes on Smartkarma.

“I would expect a continuous flow of listings from New York to Hong Kong over the next year or two.”

The U.S administration is progressing plans to delist Chinese companies if they do not meet the country’s auditing rules, which could affect more than 200 companies.

Chinese companies https://www.reuters.com/business/us-sec-mandates-foreign-companies-spell-out-ownership-structure-disclose-2021-12-02 that list on U.S. stock exchanges must disclose whether they are owned or controlled by a government entity, and provide evidence of their auditing inspections, the Securities and Exchange Commission (SEC) said last week.

(Reporting by Scott Murdoch and Donny Kwok; editing by Richard Pullin and Louise Heavens)

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