Apple Miss Profit Targets for First Time in Seven Years

Image Credit: Apple

On Thursday Apple shares dropped more than 4% after the tech giant released quarterly figures that show the first decline since 2016. Apple are down 5% over the same period last year due to a difficult macroeconomic environment and significant supply constraints.

Apple were not the only big tech company to show poor results. Amazon also had worse than anticipated earnings and Alphabet saw a significant drop in revenue from advertisers.

Tim Cook, Apple CEO focused on more positive aspects of the report, During the December quarter, we achieved a major milestone and are excited to report that we now have more than 2 billion active devices as part of our growing installed base," he went on to say, As we all continue to navigate a challenging environment, we are proud to have our best lineup of products and services ever, and as always, we remain focused on the long term and are leading with our values in everything we do."

Apple Lose $4 Billion from Chinese Covid Lockdowns

According to Cook, the main reason for the loss in profit is due to the strict Covid lockdown in China where approximately 90% of Apple devices are manufactured. The lockdowns disrupted manufacturing that translated to a $4 billion loss in sales.

It wasn't all bad news for the tech industry. Meta has a better than forecast quarter by exceeding revenue estimates. The higher revenue likely comes from more daily active users, more monthly active users and better average revenue per user. Good signs, although the revenue was still down 4% from a year earlier.

Unlike Meta and Amazon, Apple have managed to not layoff huge amounts of staff. However, Cook hinted towards tightening the belt. He said, We're cutting costs. We're cutting hiring, we're being very prudent and deliberate on people that we hire."

Meta, which has had to cut costs by laying off thousands of employees had a better quarter. Meta had fourth-quarter earnings that beat forecasts and announced a $40 billion stock buy-back. It is good news for that company that has considerably declined in value since investing heavily in the meta-verse.

Mark Zukerburg Meta CEO said Our community continues to grow and I'm pleased with the strong engagement across our apps. Our management theme for 2023 is the Year of Efficiency' and we're focused on becoming a stronger and more nimble organization."

While we could blame Apple's under estimated earnings only on Chinese supply issues, it meets the growing trend for the tech industry in 2023. There are some silver linings to the clouds but the sun is still not in sight.

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