Key facts
- Apple's inventory rose 31.1% to $14.54 billion in its fiscal fourth quarter from $11.09 billion in the prior quarter.
- Apple forecast a 45% to 46% gross margin for the December quarter, citing higher memory costs, down from 47.9% in the September quarter.
- CEO John Ternus said memory pricing was unprecedented and expected even higher memory costs in the December quarter.
- Apple said manufacturing purchase obligations rose by $33 billion from the June quarter to the September quarter.
- iPad revenue was $6.2 billion, below analysts' expectations of $6.7 billion and down 10% from the prior year.
Apple reported on Monday that its inventory rose to $14.54 billion in its fiscal fourth quarter, up 31.1% from $11.09 billion in the prior quarter and 154.3% from $5.72 billion a year earlier. The company attributed the increase to stockpiling, particularly of computer memory.
Apple forecast a gross margin of 45% to 46% for the December quarter, down from 47.9% in the September quarter, citing higher memory costs. CEO John Ternus told analysts on the call that memory pricing was unprecedented and that the company expected even higher memory costs in the December quarter, partly offset by price increases implemented earlier in the year on some Mac, iPad and iPhone devices.
Ternus said Apple expected memory costs to continue increasing beyond December and that the benefit from carry-in inventory would decrease over time. He said manufacturing purchase obligations rose by $33 billion from the June quarter to the September quarter, a figure he said would appear in the annual filing expected the following day.
COO Sabih Khan, who oversees supply chain and manufacturing, also addressed questions on memory and did not rule out future price increases on Apple devices. The company blamed supply constraints for weak iPad sales, with revenue of $6.2 billion below analysts' expectations of $6.7 billion and down 10% from the prior year, even as iPhone and Mac sales beat estimates.