U.S. high-tech companies report weak quarterly results with drastic net income decline

Customers select products at an Apple store in New York, the United States, Aug. 2, 2018. (Xinhua/Wang Ying)

Industry analysts said the collective setback of U.S. high-tech giants is not accidental. The impact of multiple adverse macroeconomic factors, misjudgment of the industry's development prospects and radical expansions have significantly contributed to those corporates' worsening performance.

SAN FRANCISCO, Feb. 5 (Xinhua) -- U.S. high-tech giants have suffered sharp declines in net incomes in the quarter ending Dec. 31, 2022, compared to the rapid progress they made in recent years, according to their latest quarterly financial reports.

The net profit of Meta, Facebook's parent company, in the fourth quarter of 2022 was 4.65 billion U.S. dollars, plunging 55 percent year on year. The quarterly net income of Alphabet, Google's parent company, was approximately 13.6 billion dollars, down 34 percent. Amazon reported a net loss of 2.7 billion dollars for the full-year 2022, the worst result in the company's history.

Chip industry giant Intel's quarterly revenue fell about 32 percent compared to the same period of 2021, with a net loss of 661 million dollars. Microsoft's quarterly net profit fell 12 percent year on year, lower than market expectations. Apple's revenue in the quarter dropped 5 percent, the first year-over-year decline since 2019, with shrinking revenue in all regions.

Industry analysts said the collective setback of U.S. high-tech giants is not accidental. The impact of multiple adverse macroeconomic factors, misjudgment of the industry's development prospects and radical expansions have significantly contributed to those corporates' worsening performance.

Specifically, long-term demand is weakening due to the strong U.S. dollar, persistent inflation, further hikes in interest rates, heightened recession risks and macroeconomic uncertainty. All these factors weighed on the decisions of consumers and businesses to hunker down in preparation for a possible recession.

For instance, global personal computer shipments decreased 16.2 percent on a yearly basis in 2022. In the fourth quarter, it dropped 28.5 percent year on year, dealing a heavy blow to PC manufacturers, chip-makers and software companies.

The U.S. dollar also hurt companies' performance. Most of Apple's revenue and nearly half of Microsoft's revenue come from markets outside the United States. According to Apple, foreign exchange headwinds had a nearly-800-basis-point impact on the revenue.

Some high-tech companies, especially Internet companies, have recruited more employees than they need, bringing heavy cost burdens. In the face of more macroeconomic uncertainties and shareholders' pressure to reduce costs, most of high-tech giants laid off employees on a large scale, forming a "phenomenal" wave of layoffs across the entire industry.

Photo taken on Nov. 13, 2021 shows the logo of Microsoft in London, Britain. (Photo by Tim Ireland/Xinhua)

Microsoft CEO Satya Nadella has called for "doing more with less" as the company prepared for a prolonged downturn.

Mark Zuckerberg, Meta founder and CEO, said that the theme of the company's management in 2023 is "Year of Efficiency," and it is committed to be stronger and more agile.

After announcing a cut of 18,000 jobs, Amazon CEO Andy Jassy said the move would allow his company to pursue long-term opportunities with a stronger cost structure.

Sundar Pichai, CEO of Alphabet, said that the company is facing challenges in the macroeconomic environment and is improving its cost structure to achieve sustainable business growth.

Apple CEO Tim Cook said the company is "not immune" to the current challenging macroeconomic environment, such as inflation, regional conflict (war in Eastern Europe), and the enduring impacts of the pandemic, adding the company will continue to focus on long-term growth.

Yet there were some highlights in those newly-released quarterly financial reports. Analysts estimated that the overall weak performance of the U.S. high-tech industry will continue in 2023, and the road back to rapid growth will be zigzagged and bumpy.

Apple's service revenue hit a record high, beating analyst expectations with 6 percent growth year over year. Its active device installations exceeded 2 billion for the first time.

Facebook's daily active users exceeded 2 billion for the first time, a positive grounding for further development.

While reducing the workforce to increase efficiency and carry out structural adjustments, those companies are also committed to brewing breakthrough in the industry, as well as investing more to explore new potential and promising opportunities.

Reality Lab, on which Meta places high hopes, suffered a loss of 4.3 billion dollars in the quarter and lost 13.7 billion dollars for the whole year. However, the company did not give up on the metaverse vision, saying that in 2023, the investment of the company will increase significantly.

Microsoft continues to invest in strategic areas expected to have long-term growth competitiveness, such as cloud services and artificial intelligence. The company recently announced a new multi-year, multi-billion-dollar investment with ChatGPT-maker OpenAI.