Google and Apple disappoint in gloomy tech earnings

Google and Apple reported disappointing results for the fourth quarter of 2022, while Amazon exceeded expectations, but warned that the coming months would be uncertain in a difficult time for Big Tech. 

The tech titans reported earnings as Meta shares skyrocketed a day after it reported better-than-expected results and signaled increased spending and job cuts. 
The results come after weeks of unprecedented layoffs in the usually untouchable tech sector amid concerns about the economy. 

The gloomy mood came after a period of rapid growth during the peak Covid-19 period, when consumers went online for work, shopping, and entertainment. 

"Big Tech calls from Apple, Amazon, and Alphabet painting a much different picture of demand environment than the tech bears were hoping for," Wedbush analyst Dan Ives tweeted, referring to investors who believe stocks are on the decline. 

While earnings reports show "caution in the air," there are signs that companies may be heading for a soft landing, according to the analyst. 

Alphabet's fourth-quarter revenue of $76 billion and profit of $13.6 billion were both lower than the same period a year ago, with share prices falling more than 3% in after-market trade. 

According to Factset data, Google saw a drop in its crucial advertising sales, which were slightly better than analysts had predicted. 

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

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

The sudden rise of user-friendly AI such as ChatGPT, which is seen as a potential rival to Google's popular search engine, caught Google off guard. 

Apple is the only major US technology company that has not announced significant layoffs in recent weeks. 

The world's most valuable company reported a drop in quarterly revenue and profits for the final three months of last year, owing to a drop in sales of its flagship iPhones. 

Apple sales were hurt by factory production cuts caused by China's zero-Covid policy, which was only recently lifted. 

"COVID-19-related challenges" that "significantly" reduced Apple's supply of iPhone 14 Pro and iPhone 14 Pro Max lasted most of December, according to Apple CEO Tim Cook on an earnings call. 

- 'Unprecedented circumstances' - Apple's revenue was $117.1 billion, 5.4 percent lower than a year ago for the same quarter, falling short of analysts' expectations. 

"The world continues to face unprecedented circumstances, from inflation to war in Eastern Europe, to the lingering effects of the pandemic," Cook said. 

Meanwhile, Amazon reported an inflation-fueled increase in sales, despite the company announcing a massive round of layoffs to compensate for a hiring binge during the pandemic when business growth accelerated. 

"During periods of economic uncertainty, consumers are very careful about how they allocate their resources and where they choose to spend their money," said Amazon CFO Brian Olsavsky during an earnings call. 

"We observed them spending less on discretionary items and shifting to lower priced items in value brands in categories such as electronics." 

The company announced last month that it would lay off more than 18,000 employees after the workforce grew by 800,000 during the pandemic's peak years. 

Amazon's sales of $149.2 billion in the third quarter were higher than analysts polled by Factset had predicted, but its profit fell to near zero. 

"We face an uncertain economy in the short term, but we remain quite optimistic about Amazon's long-term opportunities," said CEO Andy Jassy. 

The Big Tech earnings dump came a day after Meta announced that quarterly sales fell 1%, exceeding expectations, and that Facebook's daily user base surpassed two billion for the first time. 

Meta's stock finished the formal trading day up 23%.

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