At the end of 2022, Apple sales went down because people had less money to spend because of the rising cost of living.
The sales of the iPhone’s manufacturer fell 5% in the three months before December compared to the same period in 2021.
It was the biggest drop since 2019 and worse than anyone had thought it would be.
Many companies are warning about a sharp slowdown in the economy, especially in the tech sector, which grew quickly during the pandemic.
Tim Cook, the CEO of Apple, said that the company was in a “challenging environment.”
He said that the drop in sales was caused by a lack of supplies because of Covid-19 in China, where its phones are made, and a strong dollar, as well as a weaker economy in general because of rising prices, the war in Ukraine, and the effects of the pandemic that are still being felt.
In a call with investors, he told them, “As the world continues to face things that have never happened before, we know that Apple is not immune to this.”
Apple said that the sales drop happened all over the world and affected most of its products.
Sales of its popular iPhones fell by more than 8%, and sales of Mac computers fell by 29%.
The company’s profits fell by 13% to $30 billion (£24 billion).
Roger McNamee, the founder of Elevation Partners, said on the BBC show “Today” that Apple’s supply chain in China was its biggest problem.
“China’s attitude toward Western economies has hardened over the past year and a half. I attribute this in part to their zero-tolerance stance about Covid, but I also believe that other geopolitical factors are at play. Apple, which has outsourced much of its manufacturing to China for a very long time, has also experienced supply chain issues “This is what he had to say, he explained.
“It is not clear how much Apple may have problems with demand. It’s very clear that they can’t get all of the supplies they want.”
Paolo Pescatore, an analyst at PP Foresight, said that Apple, like many other electronics companies, was having trouble convincing people to upgrade because of “what is seen as incremental improvements on previous models.”
“Even more so now that everyone is trying to save money,” he said.
Market research firm Canalys says that the number of smartphones shipped around the world dropped by 12% in 2016.
Apple executives said they thought their services business, which includes Apple Pay and Apple News, would continue to drive growth. They pointed out that there are now more than 2 billion Apple devices in use around the world.
“When we look at how our installed base is acting, we think it’s very promising,” said the company’s chief financial officer, Luca Maestri. However, he warned investors that the company expected sales to keep falling in the coming months.
In updates to investors, other big tech companies also said they were under a lot of pressure.
Amazon’s e-commerce has been sputtering recently. Online sales at Amazon fell 2% in the last quarter of 2022 compared to the same period in 2021.
Overall, Amazon’s sales for the three-month period went up 9% to $149.2 billion. This was helped by the fact that its cloud computing business grew faster than expected.
But its profits fell sharply, from $14.3 billion a year ago to near zero. Its chief financial officer, Brian Olsavsky, told investors that this change was likely to continue in the coming months.
You may thank Alphabet, the parent company, for the existence of both Google and YouTube. From the last three months of the previous year to December, sales went up by only 1%. Due to the uncertain state of the economy, many businesses have cut back on advertising, which is a big part of their bottom line.
“Google and Amazon have a lot of the same problems,” said Mr McNamee.
“During the pandemic, people stayed home to work and have fun, which was great for both companies and other web companies like Meta. But now that we’re back at work, things are back to normal.”