Apple’s three-year streak of record-setting sales and profit came to an end with the company’s fiscal first quarter for 2023. The three-month period ending December 31, 2022 produced revenue of $117.2 billion, down 5 percent year-over-year. Apple said the results capped an earnings season “in which the world’s biggest technology companies mostly struggled to shake off a postpandemic hangover.” It was the Cupertino-based company’s first quarterly revenue decline in almost four years, attributable largely to supply chain disruptions in China causing a holiday sales season shortage of the high-end iPhone 14 Pro and 14 Pro Max.

There were some bright spots. The company’s Services business set an all-time revenue record of $20.8 billion, and said revenue actually grew on a constant currency basis.

“As we all continue to navigate a challenging environment, we are proud to have our best lineup of products and services ever, and as always, we remain focused on the long term and are leading with our values in everything we do,” Apple CEO Tim Cook said in the earnings release, citing a benchmark of 2 billion active devices as a quarterly milestone.

In an interview with The Wall Street Journal, Cook put it more bluntly, suggesting that “the wind was in our face for the fourth quarter.” Apple’s Q1 2023 net income dropped 13 percent to $30 billion, also falling short of expectations.

Apple’s quarterly results were announced “the same day that Amazon reported growth that, while beating expectations, nonetheless concerned investors, because of slowdowns in its online shopping and cloud computing businesses,” and Google parent Alphabet unveiled Q4 earnings that indicated it was “hit by a broad slowdown in the digital ad market,” reported WSJ.

“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,” WSJ explains. Even Meta Platforms, which saw its stock spike as much as 23 percent on Thursday as a result of its Q4 performance and a strong Q1 forecast, was emphasizing austerity and cutbacks.

While Business Insider points out that Apple is the only tech giant that has managed to avoid major layoffs or cost cutting measures in recent years, WSJ emphasized that the company is managing costs, including hiring, “very tightly.” Overall, Apple grew its workforce by about 20 percent in the past three years, compared to a near doubling by Amazon and Meta. “I view layoffs as a last-resort kind of thing,” Cook told WSJ.

As part of a larger trend, “consumer spending is also starting to sputter in the U.S., which could have an impact on the extent to which iPhone demand picks up in the March quarter,” WSJ wrote. CNET points out that “Apple’s iPhone division wasn’t the only product segment facing challenges,” citing sales of iMac computers and MacBook laptops, down by almost 29 percent, to $7.7 billion. Sales of Apple wearables and accessories also dropped by more than 8 percent, to roughly $13.5 billion.

Related:
Apple Talks Up High-End iPhones in Sign Ultra Model May Be Coming, Bloomberg, 2/5/23
Apple Says It Now Has 935 Million Paid Subscriptions, TechCrunch, 2/3/23