Apple tops Q3 forecasts, but shares sink on weak Q4 guidance

(Sharecast News) - Shares in Apple dropped sharply after the opening bell on Friday after the iPhone maker beat forecasts with its third-quarter results but disappointed investors with guidance for the current quarter. Citing "supply constraints", as the tech giant contends with chip and memory shortages, revenues for the fourth quarter are now expected to grow by just 9-11% year-on-year, below the current consensus forecast of 12%.

The news overshadowed an otherwise strong earnings report, with revenues rising 16% to $109.4bn, topping the $108.7bn consensus estimate on the back of a 22% jump in iPhone sales to $54.3bn. Mac and Wearables revenues also topped estimates, though iPad revenues came up short.

Gross margins improved to a record 50.06%, helped by a 2 percentage point favourable impact from tariff refunds.

That helped drive net income to $29.8bn from $23.4bn a year earlier. Earnings per share rose 29% to $2.02, more or less in line with estimates when excluding the 11 cents-a-share tariff refund boost.

"Today, Apple is proud to report our strongest June quarter ever, with double-digit revenue growth across iPhone, Mac and Services, and in every geographic segment," said Apple boss Tim Cook.

In a broker note following the results after the close on Thursday, Barclays maintained an 'underweight' rating on the stock and cut its target price to $245 from $253. Both Goldman Sachs and Morgan Stanley lowered their target prices to $360, but reiterated positive recommendations on the stock.

Apple shares were down 9.3% at $302.53 by 1520 BST, pulling back after having gained nearly a quarter so far this year.