Apple reports its first quarterly revenue decline since early 2019, when China’s zero-COVID-19 policy disrupted iPhone production.
Tech giants Apple and Google reported lower-than-expected earnings in the last three months of 2022, as online retailer Amazon warned of uncertainty in the coming months.
Apple, the world’s largest company by market value, has blamed the drop in sales of its iPhone brand on production disruptions in China.
Apple’s revenue was $117.1bn for the three months ended December, down 5.4 percent from a year ago. Profit after tax was $30bn, but both sales and profits were below analysts’ expectations.
China is the manufacturing hub for Apple’s iPhones and the austerity measures following Beijing’s zero-COVID policy, which left mobile factories closed, had a major impact on the company’s ability to export for the last major holiday season.
China has now eased the policy but worries about the state of the global economy.
Central banks in the United States and elsewhere have been raising interest rates to curb inflation fueled by high energy prices, but consumers are also tightening their belts as the cost of living rises and wages shrink.
With Google also showing a decline in sales and profits for October-December, Investing.com analyst Jesse Cohen said it was clear that there are “several challenges facing the tech sector amid a slowing economy and rising inflation”.
Alphabet, Google’s parent company, blamed a drop in ad sales for the disappointment, although, despite the decline, its profit was $13.6bn. It was only the second quarterly decline since the search engine giant’s announcement in 2004.
“It is clear that after a long period of digital currency use during the pandemic, the economic climate has become very difficult,” Google CEO Sundar Pichai said in a call with analysts.
Tech companies including Google and Amazon have announced plans to lay off more than 50,000 people in recent weeks, blaming over-hiring during the COVID-19 pandemic as more people have gone online for work and leisure.
Apple said it had no similar plans.
“We’re going to last a long time,” Apple CEO Tim Cook told analysts at the event. “We invest in innovation and people.”
Amazon, which recently said it would lay off more than 18,000 workers, said it had sales of $149.2bn for the three months ended December but profits fell to zero from $14.32bn in the same period last year.
“In the short term, we are facing financial challenges, but we still look forward to the long-term opportunities for Amazon,” said CEO Andy Jassy.
The disappointment among traders in the tech industry came a day after Meta, which owns Facebook and Instagram, reported a 1 percent annual decline for the last three months of 2022, the first since the company went public in 2012.
But as the social giant announced that the number of daily users on Facebook has hit two billion for the first time, CEO and founder Mark Zuckerberg said that he has a bright future.
Apple also showed the future times.
Cook indicated that Apple’s headwind is over, saying “production is back to where we want it”.
In another positive sign, Apple revealed that it now has more than 2 billion iPhones, iPads, Macs and other devices in use for the first time. This will help the company to sell digital subscriptions and advertising, which will support long-term financial growth.
