• Tech - News - Tech Companies
  • Updated: February 03, 2023

Google, Apple Suffer Setback As Tech Earnings Drop

Amid a challenging year for Big Tech, Google and Apple on Thursday released disappointing numbers for the last quarter of 2022, while Amazon outperformed expectations.

The day after Meta reported better-than-expected results and hinted at expenditure and employment layoffs, the stock soared and the tech titans reported earnings.

The results come after weeks of unheard-of layoff rounds in the often impregnable tech sector amid unfavourable economic forecasts.

The downward trend came after a protracted period of disproportionate growth during the peak Covid-19 period when consumers turned to the internet for work, shopping, and pleasure.

“Big Tech calls from Apple, Amazon, and Alphabet painting a much different picture of demand environment than the tech bears were hoping for,” said Wedbush analyst Dan Ives, referring to investors who believe shares are on a downward path.

Although there is "caution in the air," according to earnings reports, there are indications that the corporations may be headed for soft landings, the expert continued.

With share prices down more than 3% in after-market trading, Alphabet's fourth-quarter sales of $76 billion and profit of $13.6 billion were both lower than they were at the same time a year earlier.

According to data gathered by Factset, Google experienced a decline in its critical advertising revenues, which were somewhat better than analysts had predicted.

“It’s clear that after a period of significant acceleration in digital spending during the pandemic, the macroeconomic climate has become more challenging,” Google CEO Sundar Pichai said in an earnings call.

Pichai last month disclosed a plan to fire 12,000 workers in an effort to stop the pandemic overhiring trend and concentrate on new fields, namely artificial intelligence.

The quick emergence of user-friendly AI like ChatGPT, which is viewed as a potential competitor to Google's well-known search engine, took Google by surprise.

The only US technology behemoth without significant layoffs revealed in recent weeks is Apple.

Due to a decline in sales of its premium iPhones, the largest firm in the world by market value announced a decline in quarterly revenue and profits for the final three months of 2017.

Apple sales suffered as factories reduced output as a result of China's newly lifted zero-Covid policy.

“COVID-19 related challenges” that “significantly” reduced Apple’s supply of iPhone 14 Pro and iPhone 14 Pro Max lasted through most of December, Apple chief executive Tim Cook said on an earnings call.

Apple's sales for the same quarter a year ago were $117.1 billion, a decline of 5.4 per cent, falling short of experts' expectations.

“The world continues to face unprecedented circumstances, from inflation to war in Eastern Europe, to the enduring impacts of the pandemic and we know that Apple is not immune to it,” Cook said.

Even though the company announced a significant round of layoffs to make up for a recruiting frenzy during the pandemic when business growth accelerated, Amazon nonetheless recorded an increase in sales driven by inflation.

“During periods of economic uncertainty, consumers are very careful about how they allocate their resources and where they choose to spend their money,” Amazon Chief Financial Officer Brian Olsavsky said on an earnings call.

“We saw them spend less on discretionary categories and shift to lower priced items in value brands in categories like electronics.”

The corporation announced last month that it would lay off more than 18,000 workers after the epidemic peak years added 800,000 more workers to the workforce.

Amazon's quarterly sales of $149.2 billion were above the initial projections of the analysts surveyed by Factset, but the company's profit plunged to almost nothing.

The CEO of Amazon, Andy Jassy, said, "In the short term, we face an uncertain environment, but we remain pretty confident about the long-term potential for Amazon."

The Big Tech earnings deluge followed Meta's announcement that quarterly sales dipped one per cent, above estimates, and that Facebook's daily user base had finally surpassed two billion.

The price of Meta's shares increased by 23% by the close of business.

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Lawrence Agbo
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