Due to disruptions caused by China’s zero-COVID regulation, Apple reported its first quarterly revenue decline since the beginning of 2019.
For the last three months of 2022, tech behemoths Apple and Google revealed lower-than-anticipated revenue and profits, while online retail juggernaut Amazon issued a cautionary statement about the months to come.
Apple, the most valuable firm in the world, attributed the decline in sales of its flagship iPhone to production problems in China. The three months that concluded in December saw a 5.4 percent decline in Apple’s revenue to $117.1 billion. Sales and earnings fell short of expert projections, although the net profit was $30 billion.
The majority of Apple’s iPhones are made in China, and the company’s ability to provide exports for the crucial year-end Christmas season was severely hampered by the rigorous restrictions enforced in accordance with Beijing’s zero-COVID policy, which locked down several phone-making factories.
Despite China’s recent policy relaxation, concern over the status of the world economy persists.
The cost of living is rising while earnings are stagnant, and while central banks around the world have been hiking interest rates to combat the inflation brought on by sky-high oil prices, consumers are also making cuts to their spending.
Investing.com analyst Jesse Cohen stated that it was evident there were “many issues the tech sector faces amid the present economic context of sluggish growth and high inflation” in light of Google also seeing a fall in October-December sales and earnings.
The dismal performance was attributed by Alphabet, Google’s parent company, to a fall in advertising sales, but despite the decline, the firm still made $13.6 billion in profit. Since the dominant search engine company went public in 2004, it had only fallen twice in a quarter.
Google CEO Sundar Pichai stated in a conference call with investors that “it’s apparent that the macroeconomic situation has gotten more challenging after a period of strong acceleration in digital spending during the pandemic.”
Since the COVID pandemic, when many people turned to the internet for employment and amusement, tech corporations like Google and Amazon have revealed intentions to lay off more than 50,000 people collectively. Apple proclaimed that it has no similar ambitions.
Tim Cook, the CEO of Apple, said to analysts on a conference call, “We manage for the long term.” We make investments in people and innovation.
Amazon, which recently said it would lay off more than 18,000 employees, recorded sales of $149.2 billion for the three months that ended in December, while earnings fell to almost nothing from $14.32 billion in the same time the previous year.
Although the economy is unclear in the short term, CEO Andy Jassy remarked, “We remain fairly bullish about the potential for Amazon in the long run.”
Investors’ dissatisfaction with tech profits came a day after Meta, the company that owns Facebook and Instagram, revealed a 1% year-over-year decline in sales for the final three months of 2022, marking the first time since the business went public in 2012.
Mark Zuckerberg, the company’s CEO and creator, expressed optimism about the future as the social media giant announced that Facebook had reached two billion daily users for the first time. Apple also hinted to better days to come.
“Production is now back where we want it to be,” Cook said, indicating that Apple’s supply issues were resolved.
Another encouraging development is the announcement by Apple that for the first time, more than 2 billion iPhones, iPads, Macs, and other gadgets are currently in use. The corporation will probably be able to offer more digital advertising and subscriptions as a result, resulting in long-term revenue growth.
