Apple Sales Shrink as Pandemic Rally Ends

Apple Inc. reported disappointing quarterly results that ended its three-year streak of sales and profit records, capping an earnings season in which the world’s biggest technology companies mostly struggled to shake off a post-pandemic hangover.

The Wall Street Journal reports the iPhone maker announced its first quarterly revenue decline in nearly four years as manufacturing disruptions in China curbed its ability to deliver premium iPhones. Its results came the same day that Amazon.com Inc. reported growth that, while beating expectations, nonetheless moderated in its online shopping and cloud computing businesses, and Google parent Alphabet Inc. said it was hit by a broad slowdown in the digital ad market.

The results reflect how tech giants continue to struggle with wobbly consumer demand and weakness in business spending on areas like digital advertising—prompting company leaders to emphasize cost cutting and other measures to improve efficiency and stabilize their businesses.

The reports came a day after Facebook parent Meta Platforms Inc. issued results and guidance that—along with an expanded share-buyback plan—elated investors in a stock that was hammered last year. Meta’s stock soared 23% Thursday, its biggest one-day percentage gain since 2013, helping lift other tech shares.

Shares in Apple, Amazon and Alphabet gave back some or all of those increases in after-hours trading following their results. All three companies cited economic pressures as a challenge. Apple Chief Executive Tim Cook said in an interview that “the wind was in our face for the fourth quarter.” 

For the holiday quarter ended in December, Apple’s revenue fell 5% to $117.2 billion, well below analyst estimates of $121.4 billion, according to FactSet. Net income dropped 13% to $30 billion, also lagging behind expectations. 

So far, Apple has managed to avoid the layoffs rippling through the corporate ranks of its technology peers. The company hired at a slower pace during the pandemic. Over the past three years, Apple’s workforce grew about 20%, while competitors such as Meta and Amazon almost doubled their employee count in that same period.

 Cook said the company is managing costs very tightly and is curtailing hiring in certain areas, while continuing to hire in others. 

Sales in the company’s services business, which includes the App Store and streaming services such as Apple TV+, rose in the December quarter, with a 6% increase to $20.8 billion. Mr. Cook has sought to bolster the services unit as a way to strengthen the company’s earnings potential beyond iPhone sales.