Apple is clearly concerned about the effect the strong US dollar will have on its substantial overseas dealings. In recent weeks it has announced price rises in Australia for many of its products, including iPads, Apple TV+ subscriptions and Apple Music.
Overall Microsoft’s quarterly revenue was up 11 per cent to $US50.1 billion, representing the company’s slowest growth since 2017. Chief executive Satya Nadella said the strong US dollar had taken a toll but also indicated that the global uncertainty could be an opportunity for cloud computing to grow.
Revenue from Azure, Microsoft’s cloud business, increased 35 per cent for the quarter. Like Apple, Microsoft has raised the costs of its online subscriptions, including Office, the revenue for which was up 11 per cent.
However, unlike Apple Microsoft did not enjoy a boom in laptop and computer sales. The company primarily makes money from licensing Windows to manufacturers of new laptops, and that revenue was down 15 per cent.
In its Xbox business, revenue from games sales was down 3 per cent overall, but Nadella said the company’s Game Pass subscription service was substantially up. Console sales rose 13 per cent, indicating the hardware shortage affecting console production is easing.
Google’s quarterly growth was once a sure thing, but with ad spend plummeting its parent Alphabet posted a revenue of $US69.1 billion for this quarter, missing estimates. Though still an increase of 6 per cent from the same time last year, it’s the first time since 2020 that Alphabet’s growth has been less than 10 per cent.
Ad sales for Google made up $US54.5 billion of revenue, representing a 2.5 per cent growth. Revenue from YouTube ads was expected by analysts to slightly increase, but instead it decreased by almost 2 per cent to $US7.1 billion.
Alphabet said advertising spend was falling at YouTube, specifically calling out the insurance, loans, mortgage and cryptocurrency sectors as pulling back.
But the elephant in the room was its fast-growing competitor TikTok, which posted $4 billion in revenue for 2021 and is expected to hit $12 billion this year.
Alphabet stock fell nearly 7 per cent after the announcement, and has wiped off around $US600 billion in shareholder wealth so far this year.
On an investor call chief executive Sundar Pichai said the company would be “optimising” for the tough times ahead, including slowing its hiring. Alphabet currently employs almost 187,000 people.
A strong US dollar has taken a bite out of the international online retailer, but the overriding concern for Amazon.com is overall sales starting to slow on the platform as consumers tighten their belts.
Amazon has forecast holiday sales of as low as $140 billion, which would be the slowest quarterly growth in the company’s history. The forecast sent Amazon stock plummeting more than 20 per cent, wiping billions from its market capitalisation and threatening its $US1 trillion market capitalisation.
For the September quarter the company posted revenue of $127.1 billion, a 15 per cent increase that fell just short of expectations.
Amazon said the shift in international currency was responsible for around a $US5 billion loss. The company’s cloud and advertising revenue were both up by around 25 per cent, though in both cases this represents far lower growth than usual.
The Facebook parent was the hardest hit of all, with total revenue down 4 per cent for the quarter, to $US27.7 billion. The company put the blame on foreign exchange rates, but on a call following the results it was clear investors were concerned about the dwindling ad market, and the company’s ongoing spend on metaverse, virtual reality and AI.
Meta stock plunged 25 per cent after the market call, during which Zuckerberg urged investors to be patient as its areas of focus matured, in the company’s biggest one day drop since February.
Meta’s big swings are what separates it from the other companies also hit by stalling advertising revenue. The company has touted big engagement numbers for its short form video platform Reels, but that engagement seems to have cannibalised its existing platforms.
Meanwhile, it’s just introduced a brand augmented reality headset designed for business use and continues to pour money into metaverse development, despite the sector not yet taking off in any meaningful way.
Meta said it expects expenses for 2023 may exceed $US100 billion.
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