Apple, Google profits squeezed on China, sluggish economies | Business and Economy News

Apple reported quarterly revenue decline for the first time since early 2019, as China’s no-COVID policy disrupted iPhone production.

Tech giants Apple and Google reported lower-than-expected revenue and profit for the last three months of 2022, as online retail giant Amazon warned of uncertainty in the coming months. .

Apple, the world’s largest company by market value, blames the decline in sales of its flagship iPhone on Production interruption in China.

Apple’s revenue was $117.1 billion for the three months ended December, down 5.4% from a year ago. Profit after tax was $30 billion, but both revenue and profit fell short of analyst expectations.

China is the main manufacturing hub for Apple’s iPhone, and strict restrictions are in place Beijing’s no-COVID policycausing some phone factories to close, seriously affecting the company’s ability to supply exports for the big holiday season at the end of the year.

China has now eased policy but worries about the state of the global economy remain.

Central banks in the United States and elsewhere have raised interest rates to rein in inflation driven by sky-high energy prices, but consumers are also tightening their belts as the cost of living rises and wages stagnate. .

With Google also revealing a decline in revenue and profit from October to December, analyst Jesse Cohen said it’s clear there are “a number of challenges facing the tech sector in light of the the current situation of slowing economic growth and rising inflation”.

Alphabet, Google’s parent company, blamed the drop in ad revenue for the disappointing performance, although, even with the drop, its profit still amounted to $13.6 billion. . This is only the second quarter of decline since the search engine giant went public in 2004.

“It is clear that after a period of significant acceleration in digital spending during the pandemic, the macroeconomic environment has become more difficult,” Google CEO Sundar Pichai said in an interview. Call analysts.

Tech companies including Google and Amazon have announced plans to lay off more than 50,000 people in recent weeks, blaming overstaffing during the COVID pandemic as more people go online for work and play.

Apple says it has no similar plans.

“We manage the long term,” Apple CEO Tim Cook told analysts on a conference call. “We invest in innovation and people.”

Amazon, recently said it would lay off more than 18,000 employeesreported revenue of $149.2 billion for the three months ended December but profits fell to near zero from $14.32 billion in the same period a year earlier.

“In the short term, we face an uncertain economy, but we remain fairly optimistic about the long-term opportunities for Amazon,” said CEO Andy Jassy.

Investors’ disappointment in tech earnings came a day after Meta, which owns Facebook and Instagram, reported a 1% year-over-year drop in sales for the last three months of 2022. last year, the first time since the company went public in 2012.

But when the social media giant announced that the number of daily users on Facebook had hit 2 billion for the first time, CEO and founder Mark Zuckerberg said he was optimistic about the future.

Apple also heralds brighter times ahead.

Cook indicated that Apple’s supply headache was over, saying that “production is now back where we want it to be.”

In another positive sign, Apple revealed that for the first time ever, it has more than 2 billion iPhones, iPads, Macs and other devices in use. That could potentially help the company sell more digital subscriptions and ads, helping to drive revenue growth in the long term.

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