first decline in results since the pandemic

first decline in results since the pandemic

The Californian giant reports a fall of 5% in its turnover and 13% in its quarterly profits. Gonzalo Fuentes / REUTERS

The apple group cannot resist three headwinds: the appreciation of the dollar, production problems in China and the loss of consumer purchasing power.

Even Apple is being hit by the slowdown in global demand. The Californian giant, for the first time since the pandemic, reports a drop of 5% in its turnover and 13% in its quarterly profits. This is the first time in seven years that Apple has failed to meet analysts’ expectations.

At the same time, Alphabet and Amazon are publishing results that are in many respects worse than expected. Profits at Google’s parent company plunge 34%, while sales are virtually unchanged. For their part, Amazon’s net profits have practically disappeared, despite an 8.6% gain in sales.

Apple, admired for its ability to offer innovative, high-margin products and services that are differentiated from those of its rivals, cannot withstand three headwinds: the appreciation of the dollar, production problems in China and the loss of power. consumer purchase. The first phenomenon affects all American multinationals, but particularly those which, like Apple, make a large part of their sales outside the United States. Their profits in foreign currencies are relatively lower when converted into dollars.

The second problem is linked to the restrictions imposed in recent months, but since lifted by the Chinese authorities, to combat the Covid pandemic. Apple’s supplier factories have not been able to produce as many late-model iPhones where the margins are highest. These are the iPhone 14 Pro and the iPhone 14 Prom Max. “If it weren’t for the production issues, we would have seen growth in iPhone sales“, Advance Tim Cook, the boss of Apple.

The third handicap is global: the general weakening of growth, the loss of purchasing power of billions of consumers due to soaring prices, also weigh on Apple fans, known for their loyalty and ability to make sacrifices to acquire the gadgets of the Californian giant.

The balance sheet is worse than expected, even if in the category of technology giants, Apple cannot claim to be far above the others with a quarterly turnover of more than 117 billion dollars and profits of $30 billion. We must nevertheless go back to 2019 to observe a drop in turnover for the company led by Tim Cook.

No imminent trend reversal

Even more disappointing: Luca Maestri, the group’s financial director, anticipates a continuation of the trend for the current quarter. Apple certainly no longer offers a range of anticipated results since 2020. If the company is counting on continued growth in its sales of services, on the other hand, it is preparing for a drop in its sales of Macs, iPads and even iPhone. This range, the group’s main driving force, posted an 8% contraction in sales in the last quarter. However, the decline looks less marked from January to March.

There are some positive points in this table which caused the price of Apple to fall by 3.2% on the over-the-counter market, Thursday evening, after the close of the Nasdaq. iPad sales still jumped 30%. As for sales of services, such as applications and music, they are approaching 21 billion dollars, which represents a gain of 6% in one year.

Of all the tech giants, Apple also stands out for not having announced any major workforce reductions. Microsoft, Google, Meta, Salesforce and Amazon on the contrary all announced social plans at the end of last year. This is primarily because Apple has been more disciplined in hiring than other digital giants since emerging from the pandemic. Over the past three years, Apple’s workforce has only increased by 20% while Meta and Amazon’s have nearly doubled…”I see layoffs as something of a last resort. You can never say never. We want to manage our costs using other ways to the extent that we can“Summarizes Tim Cook.

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