Apple, Amazon and Alphabet all posted disappointing quarterly results this week, while Facebook parent Meta bucked the gloomy trend in technology with better-than-expected revenue.
Apple reported its first revenue drop in nearly four years after COVID-19 restrictions on its factories in China curtailed iPhone sales during the crucial Christmas holiday season.
The company's sales of $117 billion (€107 billion) for the October-December period represented a 5 per cent decline from the same time a year ago, a sharper downturn than analysts had projected.
Apple’s quarterly profit also declined to $30 billion (€27.5 billion), a 13 per cent year-on-year decrease. This is the first time in nearly seven years that its earnings fell short of market expectations.
However, Apple hasn’t signaled any intention to resort to mass layoffs like its rivals. “We manage for the long term," Apple CEO Tim Cook told analysts in a conference call on Thursday. “We invest in innovation and people”.
Google hit by advertising downturn
Google's parent company Alphabet also posted lower quarterly profit and a small revenue increase, as a decline in online ad spending and competition from rivals weigh on the search giant.
While overall revenue grew, advertising revenue fell by nearly 4 per cent and revenue at YouTube declined 8 per cent year-on-year. That appeared to spook investors, who sent the company's stock lower in after-hours trading.
Alphabet said it earned $13.62 billion (€12.5 billion) in the October-December quarter, a 34 per cent from the same period a year earlier. Revenue inched 1 per cent higher to $76.05 billion (€69.7 billion).
Google is facing competition in artificial intelligence from Microsoft, which last month announced it is making a “multiyear, multibillion dollar investment” in OpenAI, the maker of the wildly popular ChatGPT and other tools that can write readable text and generate new images.
Alphabet announced last month it was cutting 12,000 jobs, or about 6 per cent of its workforce, in its biggest ever round of layoffs. Tens of thousands of jobs have been axed across the tech industry as Microsoft, Amazon, Meta and other companies tighten their belts in the face of a darkening economic outlook.
Amazon and Meta slash costs
Amazon also reported worse-than-expected fourth-quarter profits and warned its operating profit could fall to zero in the current quarter as savings from layoffs do not make up for the financial impact of customers clamping down on spending amid high inflation.
However, its revenue beat expectations, boosted by sales in its cloud-computing unit AWS
The online retailer is cutting costs and said last month that more than 18,000 employees, particularly in its commerce and human resources divisions, would lose their jobs.
Meta, which reported its results on Wednesday, was also hurt by a downturn in the online advertising market and competition from rivals such as TikTok. But its quarterly revenue beat analysts' muted expectations and investors welcomed the company's move to slash its spending forecast this year.
Meta's move to rein in costs marked a dramatic shift for a company that has spent billions to turn its vision of the futuristic metaverse into a reality, even while its core business reeled from stiff competition and a weak advertising market.
The savings are set to come from the 11,000 job cuts Meta announced in November, as well as plans for lower data-center construction expenses and moves to drop non-crucial projects.
Shares in Meta closed about 23 per cent higher on Thursday.
"Promising that 2023 will be a year of efficiency was always likely to go down well with investors concerned about the largesse in spending directed towards the unproven potential of the metaverse," said Russ Mould, investment director at AJ Bell.