Presentation of financial reports of megatech companies (Amazon, Apple and Google) disappointed the market and negatively impacted Wall Street, accumulating a greater slowdown due to the declines these companies have experienced. While most businesses performed well, these companies failed to beat expectations due to the slowdown in the economy and weak consumer sentiment, which could be challenging in the coming months.
In Apple’s case, The Cupertino-based firm reported a 5% drop in sales this Thursday.highlights the slump in billing in their best-known product, the iPhone. The company recorded its first revenue decline since 2019. iPhone sales fell 8.1%, while Mac computer sales fell 28.7%. Services division’s revenues rose 6.4% and 29% more devices were sold, but these increases did not offset other declines. The company’s turnover came in at $117,154 million, a lower than expected result, which is why the company’s shares are down 3 percent this Thursday.
Note that in the fourth quarter the company struggled to impact shipments and production with the closure of a key ‘iPhoneCity’ factory in Zhengzhou, China. This affected the iPads less because they are made in Vietnam, which does not have as strict health policy as China.. On the other hand, with the Asian giant reopening after the end of the covid-zero era, China could become an increasingly important market for Apple.
“We are facing a very difficult macroeconomic situation, we are proud to have the best range of products and services and as always, we focus on the long-term and drive with our values in everything we do‘, explained Apple CEO Tim Cook.
Apple Results
● Income $117,150 million – $121,140 million estimated
● Earnings per share (EPS): $1.88 – $1.94 expected
● iPhone revenue: $65,780 million – versus $68.3 billion estimates
● MacBook revenue: Estimates of $7,740 million – $9,720 million
● iPad revenue: $9.4 billion against estimates of $7.78 billion
● Total product revenue: $96,390 million – $98,980 million estimated
● Income in China: $23,910 million against estimates of $21,800 million.
● House and accessories: $13,480 million – $15,320 million estimates.
a.Mazon reported losses of 2,449 million euros in 2022 after posting a record profit of 30,525 million in 2021.. Amazon Web Services cloud revenue slowed sharply, falling $365 million below expectations. The AWS business accounts for more than half of the company’s net income, if revenue drops to double digits in 2023, earnings per share could decline due to lower e-commerce sales. The company’s title deeds have depreciated by 19% in the last six months. Earnings were surprisingly weak for analysts.
Amazon
● Income: 136,513.57 million euros compared to $145,800 million
● Earnings per share (EPS): $0.03 and $0.17 estimates
● Cloud computing revenue (AWS): Estimated $21,380 million – $21,760 million
● Operating profit: $2.7 billion – $2.51 billion estimate
● Operating profit margin: 1.8% – 1.85% forecast
● E-commerce Sales: $64,530 million against estimates of $65,030 million
In the case of Google, the company reported weaker revenue due to the decline in the advertising industry. Alphabet, the parent company of the company, earned €54,673 million in 2022, 21% less. Over the past year as a whole, Alphabet, Income up to 9.8% 257,846 million euros, expenses and costs were 16.2% more, totaling 189,617 million euros. Recent research by investment bank Cowen showed that advertising spending will double in 2023 compared to 2022. and two-thirds of advertisers factor the recession into their budgets, meaning Google’s revenue could continue to decline until fears of a recession persist. Cloud computing revenues, on the other hand, are slowing, albeit slightly above market expectations.
Google (Alphabet)
● Income: $63,120 million against estimates of $63,240 million
● Earnings per share (EPS): $1.05 vs. $1.20
● Ad revenue: $59,040 million against estimates of $60,640 million.
● Google cloud revenue: $7,320 million – versus $7,300 million estimates.
● Youtube Revenue: $7,960 million against estimates of $8,270 million
● service revenues: $67,840 million – versus $68.9 billion estimates
● Other income: $8.8 billion against estimates of $8.14 billion.
“The context these results leave us with on market sentiment is negative. Considering the economic expectations of these mega-technology companies, which foresee a decrease in consumption and commercial activities. Echo, along with results from other major listed companies, set the path for the behavior of the technological selector Nasdaq in the coming weeks, XTB analysts said in a recent report.
Source: Informacion
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