11 July 2024

Google and Apple on Thursday reported downbeat results for the last quarter of 2022 as Amazon beat expectations, but warned that the coming months would be uncertain in a difficult moment for Big Tech.

The world’s biggest tech companies posted their earnings as shares in Meta skyrocketed a day after it reported better results than expected and signaled spending and job cuts.

The results follow several weeks of unprecedented layoff rounds in the usually unassailable tech sector amid pessimism about the economic outlook.

The souring mood followed a long spell of outsized growth during the peak Covid-19 period when consumers went online for work, shopping and entertainment.

Google parent Alphabet’s revenue of $76 billion in its fourth quarter and profit of $13.6 billion were below what it made in the same period a year earlier, with share prices falling more than 6 percent in after-market trade.

Google saw a slump in its crucial advertising sales to $63.1 billion in the fourth quarter, though this was slightly better than what analysts had projected, according to data compiled by Factset.

This was only the second quarterly fall since the search engine giant went public in 2004.

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

Pichai last month announced a plan to lay off 12,000 people in order to reverse pandemic over-hiring and focus on new areas, especially artificial intelligence.

In another setback, Google, which has long seen itself as an innovation leader, was caught off guard by the sudden rise of user-friendly AI such as ChatGPT, which is seen as a potential rival to Google’s all-powerful search engine.

Apple is the only tech giant that has yet to announce major layoffs in recent weeks and investors were taking a hard look at how its sales have been affected by China’s zero-Covid policy that was only recently lifted.

The world’s biggest company in terms of market value reported a fall in quarterly revenue and profits for the final three months last year, hit by a drop in sales of its flagship iPhones.

Apple’s revenue was $117.1 billion, down 5.4 percent from a year ago for the October to December period, the first quarter of its fiscal year.

Analysts forecasted quarterly sales of $121.5 billion down from $123.9 billion a year ago.

The sales trouble was linked to China, which remains the key manufacturing hub for iPhones and the drastic restrictions adversely affected Apple’s ability to export the iPhone 14 during the key holiday season.

Amazon meanwhile reported an inflation-fueled increase in sales despite the company announcing a massive round of layoffs to correct for a hiring binge during the pandemic when business growth ramped up.

Last month, the company said it would let go more than 18,000 employees after the workforce swelled by 800,000 employees during the peak years of the pandemic period.

But its sales figures of $149.2 billion in the fourth quarter were better than initial forecasts by analysts polled by Factset that said sales would rise to $145.7 billion.

Net profit at Amazon however took a massive hit, falling to near zero from $14.32 billion a year ago.

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

The Big Tech earnings dump came a day after Meta as expected said sales fell last year, the first time that occurred on an annual basis since the company went public in 2012.

The social media giant said sales dropped one percent to $116.6 billion, which still beat expectations, while it also announced that the number of daily users on Facebook hit two billion for the first time.

But CEO and founder Mark Zuckerberg said he was upbeat about the future.

Shares in Meta jumped as much as 25 percent on Thursday, setting the bar high for the earnings announcements by the other tech giants.