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The tech industry was already big before the COVID-19 pandemic started turning life around the world upside down three years ago. But it kept growing as we all became more and more dependent on our smartphones, computers and video conferencing calls.
Now Apple is the latest tech giant to signal that this period of growth may be coming to an end.
The company reported that sales of its flagship product, the iPhone, fell more than 8% to nearly $65.8 billion. The reason, according to Apple, are several factors, such as the fluctuating price of the US dollar around the world and particularly strong sales of its products in the previous year. But the real crisis came with the COVID-19 shutdowns across China late last year Manufacturing centers that Apple relies on. The results led to protests in Chinaand supply shortages for Apple’s iPhones, particularly those for $999 iPhone 14 pro Series.
Apple CEO Tim Cook said many of those manufacturing issues have been resolved for now.
All in all, Apple said it had nearly $30 billion in profit, down 13% from the same period last year. That translates to earnings of $1.88 per share on total revenue of nearly $117.2 billion, down more than 5% from the $123.9 billion reported last year. It also fell short of the median analysts’ estimate of $1.94 in earnings per share on sales of $121.1 billion, according to polls released by Yahoo Finance.
“I am proud of how we have weathered both seen and unforeseen circumstances over the past several years,” Cook said in a conference call following the company’s financial report on Thursday. “I remain incredibly confident in our team and our mission and in the work we do every day.”
Apple shares fell nearly 2% to $148.15 a share after ending regular trading on the day up more than 3%. Investors pushed the company’s shares over $3 trillion for a short period of time over the past year, and even though Apple’s value has fallen to about $2.39 trillion, it’s still the highest-valued company in the world.
Part of a larger trend
Apple’s financial reports, which cover the three months of its fiscal first quarter ending in December, are the latest in a series of reports increasingly giving a picture of how the tech world is weathering this period of economic uncertainty. The biggest tech giants have sounded the alarm about a difficult phase after years seemingly unstoppable growth during the pandemic. Apple, in particular, was reporting record sales and profits around this time last year The iPhone 13 was a hit of the 2021 holiday shopping season.
But a mix of ongoing parts shortages, COVID lockdowns in China’s manufacturing centers, and people cutting back on spending amid fears of a recession have stumped many tech companies. Amazon, Facebook parent Meta, and Google parent Alphabet all have them gone through dramatic layoffs, citing falling ad revenue. Other companies such as Microsoft also initiated layoffs.
For its part, Apple has frozen hiring in some areas, and Cook has volunteered to do so reduce his potential future compensation.
One reason for this approach might be that Apple’s iPhone division wasn’t the only product segment facing challenges. His Mac computer team, including his MacBook laptops
, reported that revenue fell nearly 29% to $7.7 billion. The company’s wearables and accessories business also saw sales decline, falling more than 8% to about $13.5 billion, despite Apple launching a new $799 extreme-sports-focused deal Apple Watch Ultra and revised Second generation AirPods Pro earbuds.
Still, Cook tried to maintain a positive tone, saying the company is “focused on the long term.” He also noted that the company counted more than 2 billion active devices across all of its product categories, a new “all-time high.”
“We’re looking forward to the coming year,” he told analysts. “At Apple, we’re always looking ahead, always focused on the next challenge.”
