NEWSLETTER
Big tech’s A-team (Apple, Amazon and Alphabet) returned disappointing results on Thursday, a day after Facebook owner Meta bucked the gloomy trend in tech, delivering better-than-expected results.
Apple shares fell more than 4% on Thursday after the company released a disappointing first-quarter earnings report, which includes rare losses in revenue, profit and sales.
The iPhone maker missed analysts’ earnings expectations for the first time in seven years, after strict Covid-19 lockdowns and related protests in China shifted iPhone production at its biggest supplier.
The company also posted its biggest quarterly revenue drop in nearly seven years, posting $117.2 billion, down 5.49% from last year when it reported record holiday sales. The figure was below analysts’ median estimate of $121.1 billion.
Apple alluded to the ongoing headwinds in a press release accompanying the report, which observers call shocking. Strict lockdowns in China, which produces 90% of its devices sold globally, costs approximately $4 billion in lost sales in 2022. In a call with investors on Thursday, Cook said iPhone revenue would have grown in the quarter if not for these supply issues, but he said production is back to previous targets. at the closure.
For years, Apple has been seen as a safe haven for investment in the increasingly volatile tech space, but analysts say this report shows the tide may be turning. The company had warned in its October earnings call that it was anticipating a slowdown, with chief financial officer Luca Maestri citing “continued uncertainty around the world.”
“Apple’s bad quarter demonstrates that even the most valuable US-listed company is not immune to the challenges facing the broader tech industry,” said Jesse Cohen, a senior analyst at Apple. invest.comadding that the report was “surprisingly weak”.
Amazon reported worse-than-anticipated earnings on Thursday, while at Google parent Alphabet, a pullback from advertisers hurt the search giant’s revenue.
Amazon is facing a rocky restart after its pandemic boom and recently announced 18,000 job cuts. The tech and retail giant reported a net loss of $2.7 billion for 2022, compared with net income of $33.4 billion a year earlier. The loss included a $12.7 billion pre-tax loss on its investment in electric vehicle maker Rivian. Net sales increased 9% to $514 billion, compared to $469.8 billion in 2021.
The company’s most trusted division, Amazon Web Services, reported sales of $21.4 billion, up 20% from a year earlier but below analyst estimates.
Alphabet narrowly missed analysts’ expectations, indicating lower demand for its search advertising during a slowing economy. The company’s sales reached $63.1 billion in the quarter, slightly below the $63.2 billion projected.
Last month, Alphabet cut 12,000 jobs, or 6% of its global workforce, and vowed to create a leaner, more efficient company.
It was then hit with a lawsuit from the US Department of Justice accusing the company of abusing its dominance in the digital advertising business.
Both earnings results will be compared to a change at Meta, Facebook’s parent company. Meta shares rose as much as 26% on Thursday, their biggest one-day jump in nearly a decade.
Meta’s stock price surge came after CEO Mark Zuckerberg vowed to make the social media company more agile. Analysts welcomed the move, with many upgrading their recommendations on the stock.
Apple has so far avoided the mass layoffs seen by its peers in the tech space. On Thursday’s call with investors, Cook did not mention the layoffs, but said the company would closely monitor its labor expenses.
“We are cutting costs,” he said. “We are cutting back on hiring, we are being very prudent and deliberate with the people we hire.”
