The world’s biggest tech companies just had one of their most tumultuous earnings periods in years, highlighting the breadth of the economic slowdown and how business conditions have rapidly deteriorated in recent months.
Amazon.com Inc. posted a loss for a second straight quarter on Thursday, the same day Intel Corp. shocked investors with a net loss in the second quarter as it suffered its biggest drop in quarterly revenue in more than a decade. Facebook parent Meta Platforms Inc., a day earlier, reported its first-ever quarterly sales retreat, and Microsoft Corp. earlier in the week disclosed its slowest earnings growth in two years.some of the factors that left their imprint on this quarter’s results for the big tech companies that have shown resilience to some prior market upheaval. Tech companies are seeing the effects in everything from lower online retail activity and slumping sales of wearable devices, to small businesses investing more cautiously in their IT.
“We are in a very difficult macroeconomic state,” Amazon’s Chief Financial Officer Brian Olsavsky said Thursday, though the online-retail juggernaut delivered 7.2% sales growth. “We are cognizant that things can change quickly and we will see and monitor,” he said on a call with analysts and investorsDespite all the tumult, tech companies have shown signs that their size built up over years, and particularly during the pandemic, means they might be better-positioned than many other businesses to withstand the economic shock.
Meta’s quarterly results retreated, but they were still the fourth-highest on record for the company. Amazon’s cloud-computing business, known as AWS, grew by 33%. And Microsoft this week said it still expected to post a double-digit revenue increase in the year through June, largely on the strength of its cloud operations.
Even so, the big tech companies are becoming more careful in how they handle their money. Meta this week said it expected its total expenses for 2022 to be between $85 billion and $88 billion, down from an earlier outlook of $87 billion to $92 billion, while Intel slashed about $4 billion from its capital-investment budget for the year. Microsoft said it would depreciate its servers and network equipment more slowly, securing a $3.7 billion operating income fillip for the current fiscal year.
Many of the tech companies are reacting to the turmoil of recent weeks by streamlining their operations. Intel said it shed some nonessential businesses. Meta said it would reduce head count over the next year, with some teams shrinking as the company adjusts priorities. Google said earlier this month that it would slow hiring for the rest of the year.
“As a company, when you’re in growth mode, it’s tough to always take the time to do all the readjustments you need to do,” Google and Alphabet CEO Sundar Pichai said on an earnings call. “Moments like this give us a chance,” he added.More broadly, though, executives had to parry analysts’ questions about weaknesses in their business, even as they went out of their way to talk up long-term prospects for their respective products and services. Combined, Apple, Microsoft, Alphabet, Amazon and Meta still reported higher quarterly sales than in the year-earlier period, but they were more than 1% lower than in the year’s first quarter.
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