Brian Stukes / Contributor Getty
- Apple took a beating in the holiday quarter, posting its first yearly sales drop since 2019.
- Every tech company is suffering right now, with almost every one doing layoffs and cost cuts.
- But Apple hasn’t, and CEO Tim Cook says it still plans to invest “in innovation, in people.”
The mood in Silicon Valley has been nothing but doom-and-gloom, and this week’s marathon session of financial reports didn’t help matters.
Facebook’s parent company Meta and Google’s parent company Alphabet both used their earnings calls to raise the possibility of more cost-cuts to come even beyond their recent major layoffs, even as Amazon earnings fell short of expectations.
There’s been one port in this particular storm, however. Apple has weathered the perfect storm of swelling inflation, pandemic-related supply chain issues, and the war in Ukraine without having to perform any significant reduction in its workforce.
On Apple’s quarterly earnings call on Thursday afternoon, CEO Tim Cook acknowledged the hurdles facing the company. But conspicuous by its absence was any mention of cost-cutting, layoffs, or strategy shifts. In fact, quite the opposite, Cook told the Wall Street analysts on the call that “whatever challenges we face, our strategy is always the same,” including its investments “in innovation, in people.”
To be clear, the company’s earnings report was not all sunshine and rainbows. As CNBC noted, Apple posted sales during the holiday quarter that were 5% lower than the same period then the year before — its first such sales decline since 2019. Overall, it posted earnings of $1.88 per share on $117.5 billion in revenue for the quarter, both of which were below Wall Street expectations.
But Cook took an optimistic tone on the earnings call. He spotlighted that there are now 2 billion active Apple devices, and shared that the supply chain issues that hampered availability of the iPhone 14 and iPhone 14 Pro Max through the end of last year are now alleviated.
Cook also said if it weren’t for the shortage of those models, the company forecasts that iPhone demand overall would have remained consistent through the quarter. To that point, the company forecasts that revenues during the current quarter will be about the same as they were in the holiday quarter, rather than any kind of precipitous drop.
Wall Street seems to be half-convinced by Cook’s sunnier outlook, at least. While shares dipped over 4% immediately after Apple released the report, that went down to only an approximately 2% drop following the conclusion of the call.
While that’s not to the lofty heights of Meta, which closed up over 23% on Thursday after announcing cost-cutting and raising the possibility of more layoffs on Wednesday evening, it’s also not the kind of dramatic roller-coaster ride that generally results in management deciding to take drastic action, like layoffs, to appease investors.
Ultimately, things can move fast in the tech industry, and today’s sure thing can be tomorrow’s massive flop. Just because Tim Cook didn’t announce layoffs today doesn’t mean it’ll automatically be able to avoid that fate forever.
At the same time, credit where credit is due, and Cook’s slow and steady approach — which has sometimes been called “boring,” in both a positive and negative way — has kept Apple afloat with minimal turbulence, even while its peers scramble to keep up.