Posts with «company earnings» label

Apple’s record service revenue couldn’t make up for falling hardware sales

As many Apple watchers have predicted, the company's financial results this quarter are a break from the last few years of nonstop growth. The iPhone maker reported a revenue of $117.2 billion for its first fiscal quarter (ended December 2022), which is five percent down year over year, marking the first time Apple's revenue is down since 2019. 

There are a couple of bright spots in the company's performance, namely in its setting a revenue record of $20.8 billion in its Services business and hitting more than 2 billion active devices in its installed base. 

In a statement, CEO Tim Cook said "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's decline in revenue is in line with a general slump in the tech industry, with Meta having just reported revenues that are 4 percent down from the previous year. Alphabet is also seeing a slowdown in growth this quarter, and while Microsoft saw its revenue climb, its earnings missed expectations and profits fell by 12 percent. Amid the economic downturn, tech companies havebeenlaying off significant portions of their workforce, though Apple doesn't appear to have made similar moves at the moment.

The company is holding a call to go into detail about its financial results at 5pm ET / 2pm PT today, and we will update this post with any additional news and insight.

Alphabet's revenues are still growing, but just barely

It's no secret that the huge tech companies are still making money hand over fist, but there's also a noticeable slowdown going on. Google's parent company Alphabet is not immune — the company just reported its earnings results for Q4 of 2022, and just barely grew revenue year over year. The $76 billion the company pulled in during the quarter is up only one percent from Q4 of 2021. 

Google's ad business is the backbone of the company, and revenue slipped there by about 3.5 percent compared to a year ago. But eight percent growth in the "other" category (which includes products like Google and Nest hardware and revenue from the Play Store) and 32 percent yearly growth in in Google Cloud made up for those ad losses. Overall profits, meanwhile, dropped significantly: Quarterly net income of $13.6 billion is down 34 percent year-over-year.

Of course, the backdrop for all this is that Google announced a few weeks ago that it is laying off about 12,000 employees; that makes up about six percent of the company's overall workforce. At the time those layoffs were announced, we didn't yet know what Google's financials for last quarter looked like, but now we can see that things are slowing down. 

That's all relatively speaking, though. Net income of $60 billion for 2022 as a whole was down significantly compared to the $76 billion in profit Alphabet made in 2021 — but it's still far ahead of the $40 billion the company pulled in for 2020. It looks like the big numbers Alphabet posted in 2021 weren't exactly sustainable, and obviously we don't yet know what 2023 will bring. But we'll be tuning into the company's call with investors, which starts at 4:30PM ET, to see what additional details CEO Sundar Pichai can share about the state of Alphabet in the year to come.

Samsung's profits plunged in 2022 due to weak chip and smartphone demand

Samsung has revealed a sharp decline in profit for 2022, mainly due to the weak demand for its chips and smartphones, which are the company's main moneymakers. The Korean tech giant has posted KRW 302.23 trillion (US$245.4 billion) in annual revenue, which is a new record high for the company, in its latest earnings report. But it has also reported an operating profit of KRW 43.38 trillion (US$35 billion) for all of 2022, down KRW 8.5 trillion (US$6.9 billion) from the year before

"The business environment deteriorated significantly in the fourth quarter due to weak demand amid a global economic slowdown," the company explained. While the tech giant's Foundry business posted an increase in profit due to customer and application diversification, its semiconductor business performed poorly as a whole. There was weak demand for its chips overall, as customers adjust and reduce their inventory in the face of economic uncertainties. Its chips' prices also dropped, mostly likely due to a surplus in unsold inventory, contributing to the business' decline in earnings for the year. 

In the fourth quarter of 2022, Samsung's semiconductor business earned KRW 20.07 trillion (US$16.3 billion) in consolidated revenue but only KRW 0.27 trillion (US$219 million) in operating profit. For comparison, it posted a consolidated revenue of KRW 26.01 trillion (US$21.6 billion in early 2022's conversion rates) and an operating profit of KRW 8.84 trillion (US$7.35 billion) for Q4 2021. Samsung is bracing for this downward trend to persist throughout the next few months, though it expects demand for its semiconductors to pick up in the second half of the year. 

Similarly, the demand for smartphones remained weak in the fourth quarter of 2022. Sales for Samsung's more affordable phones went down, and while flagship sales held up to market expectations, they're still lower than previous quarters'. The company expects demand for mass market smartphones to weaken even further in 2023 "due to persistent macroeconomic conditions." But since it also expects demand for premium devices to stay solid, it vows to strengthen "the competitiveness of its premium flagship products." To note, Samsung will hold its first Unpacked event of 2023 on February 1st where it will most likely unveil its next flagship phone, the Galaxy S23. 

Nintendo lowers Switch sales forecasts but still expects a healthy year

Nintendo has announced a solid quarter of earnings, with revenue for the quarter at 349.5 million yen ($2.38 billion) and a 118.7 million yen ($809.6 million) operating profit. That's up by 15.9 and 18.5 percent over last year, largely in part due to a weaker yen, sales outside Japan and the launch of Splatoon 3.

The company is less bullish on Switch console sales, however, lowering its forecast from 21 million to 19 million for 2022. However, it doesn't think that will affect earnings much, with revenue forecast to be 50 billion yen higher at 1.65 trillion yen ($11.25 billion) and operating profit remaining the same at 500 billion yen ($3.4 billion). 

Nintendo said that it has seen a gradual improvement in the supply of semiconductors and other components, along with a "recovery trend in hardware manufacturing for the Switch." However, it lowered the forecast based on sales to date, with the weak yen making up the difference in revenue and profit. 

It also detailed what that might mean for consumers who want to buy a Switch for the holidays. "By continually working to front-load production and selecting appropriate transportation methods in preparation for the holiday season, we will work to deliver as many consoles as possible to consumers in every region of the world."

That'll be helped by the launch of a bunch of new games, as well. On top of Splatoon 3, it released Bayonetta 3 in October, Pokémon Scarlet and Pokémon Violet in November, Fire Emblem Engage coming in January 2023, and Kirby’s Return to Dream Land Deluxe arriving in February 2023.

Sony has sold over 25 million PS5s

In its latest earnings drop, Sony said it sold 3.3 million PlayStation 5s this quarter, matching exactly what it did last year and bringing total units sold since launch to 25 million. Its numbers this quarter are far short of what it needs to hit the 18 million PS5 sales target for fiscal year 2022, though. Sales halfway through the fiscal year (ending March 31st) are now at 5.7 million, which is also nearly the same as 2021 at this point (5.6 million). 

Despite the equal number of PS5s sold, revenue was up significantly over last year (12 percent) to 727 billion yen ($4.92 billion), thanks in part to a PS5 price increase earlier this year. However, profit was down by 49 percent due to the company's recent acquisition of Bungie, along with game developer cost increases. 

Sony sold 11.5 million consoles last year, so it's a good bet that 2022 sales will be about the same . However, a lot depends on holiday sales and whether it can keep production up with demand. That's a problem that has plagued the PS5 since it arrived, due to the pandemic and other issues. In May, Sony said that it will finally be able to ramp up production to meet PS5 demand as supply chain issues ease. While it hasn't given any numbers in that regard, anecdotally it appears that the console has been easier to find in recent months. 

Meanwhile, software sales fell to 62.5 million units from 76.4 million this time last year. Digital downloads accounted for 63 percent of that, up slightly from last year. PlayStation Plus subscriber numbers declined for the second consecutive quarter. 

Sony has revised its revenue projection for next quarter downward to due an expected drop in first-party game sales. However, it's bullish on the next fiscal year, aiming to ship 23 million PS5 units in that time. Interestingly, it also still expects to 18 million units by the end of the fiscal year (March 2023), so it may still have something up its sleeve. 

Apple turns healthy profit despite weak iPad sales

Apple seems to be weathering the financial storm, albeit with a few hitches. The company reported a record high revenue of $90.1 billion in its fiscal fourth quarter, with a net profit of $20.7 billion. While those were only slight increases versus the same period last year (revenue was up 'just' 8 percent), they came despite a rough economic climate and near-flat revenue growth in the previous quarter.

The issues mainly stem from mixed performance across Apple's lineup. It won't surprise you to hear that the iPhone 14 debut helped fuel the company's mobile revenue ($42.6 billion versus last summer's $38.9 billion), but other segments were volatile. While the MacBook Air M2 helped Mac revenue jump 25 percent to $11.5 billion, iPad sales dropped sharply — they fell to just under $7.2 billion versus nearly $8.3 billion a year earlier. And while services like Apple Music and TV+ set a new record of $19.2 billion, that's only a mediocre bump versus the $18.3 billion from a year ago. Sales for the Apple Watch and smart home devices grew solidly from $8.8 billion to $9.7 billion.

The customer base appears to be strong, at least. During Apple's earnings call, CFO Luca Maestri noted that roughly half of Mac and iPad buyers were new to the platform. The company also touted an all-time (but unspecified) high for the number of active devices. CEO Tim Cook added that phone sales were strong despite tight supply constraints for the iPhone 14 Pro and Pro Max.

The fall (Apple's first fiscal quarter of 2023) could be rosier. Apple introduced new iPads in October this year where it released updated models in September last year, so we'd expect a bump in sales for the tablet lineup. Cook added that last year was "unusually strong" thanks to the iPad Pro M1 launch. The iPhone 14 family had also been available for just eight days during the fourth quarter, so overall iPhone sales should improve.

Apple isn't out of trouble yet. It's still hiring more cautiously, and supply issues (including for the Apple Watch Ultra, Cook says) may dog the company for a while. It's also unclear how people will take to devices like the iPhone 14 Plus, which didn't ship until this month. All the same, Apple may be happy. The computer market tanked 19.5 percent during the quarter, according to Gartner estimates, while Canalys believes smartphone shipments dropped 9 percent. If those figures are reasonably accurate, Apple is thriving simply by avoiding sharp declines in most categories.

Samsung posts a 23 percent profit decline due to weak demand

Samsung has reported a record consolidated revenue of 76.78 trillion Korean won (US$54 billion) for the third quarter of 2022, but it has also posted a decline in profit from the previous quarter and year-over-year. The tech giant's operating profit (KRW 10.85 trillion or US$7.6 billion) has declined 23 percent from the second quarter and around 31.4 percent from the same period last year. Samsung's operating profit from July to September 2021 was KRW 15.82 trillion, which was 26 percent higher than the quarter prior to that. In its earnings report, the company said its various divisions have been grappling with weak demand in the midst of global economic instability. 

Weak demand for consumer products and customers' inventory adjustments caused its Memory business' earnings to shrink. Its LSI business' earnings fell due to weak demand for phones and TVs, as well, though revenue from SoCs grew due to an increased portion of 5G. Samsung's Visual Display Business was also affected by low demand and increased costs.

Samsung's Mobile eXperience (MX) business was its bright spot last quarter. Together with the company's Networks business, it posted KRW 32.21 trillion (US$22.6 billion) in consolidated revenue and KRW 3.24 trillion (US$2.27 billion) in operating profit, which are both higher than the previous quarter's. The company attributes the MX business' success to sales of the Galaxy Z Fold 4 and Z Flip 4, both of which showed stronger growth than their predecessors. Further, the Galaxy S22 series was able to maintain "solid sales momentum." 

The tech giant expects its mobile business to perform even better in the fourth quarter as demand for smartphones and wearables increases due to year-end seasonality. And since the smartphone and wearable markets are expected to grow as a whole next year, Samsung's mobile business might continue bringing in solid profits. Another division that did well in the third quarter is the tech giant's Foundry business, which delivered record earnings (KRW 23.02 trillion or US$16 billion in consolidated revenue and KRW 5.12 trillion or US$3.6 billion in operating profit) thanks to solid demand from global customers.

On the same day that it released its third quarter earnings, Samsung has also formally named Jay Y. Lee as its executive chairman. It's mostly a symbolic move, seeing as Lee is the company's de-facto leader anyway. But as Bloomberg notes, the title could help make things smoother for Lee as he closes deals with other companies around the world in an effort to expand Samsung's semiconductor and biotechnology businesses. Lee, who was sentenced to five years in prison in 2017 after being found guilty of bribing public officials, received a presidential pardon in August so he could help South Korea overcome the economic crisis. 

Meta says it will lose even more money on the metaverse in 2023

A year later, Meta’s pivot to the metaverse is proving even more expensive. Reality Labs is losing more money than ever, Facebook’s parent company disclosed in its latest earnings report.

Reality Labs, the unit that oversees the company’s virtual and augmented reality projects, lost $3.7 billion in the third-quarter of 2022, a jump from a $2.6 billion loss a year ago and $2.8 billion last quarter. Reality Labs has lost more than $9 billion so far in 2022. And the company’s finance chief said the trend is unlikely to reverse anytime soon. “We do anticipate that Reality Labs operating losses in 2023 will grow significantly year-over-year,” outgoing CFO Dave Whener said in a statement.

That’s significant because Meta’s massive investment in Reality labs has already proved costly for the company. Meta reported earlier this year that it lost $10 billion on Reality labs in 2021. The company also confirmed that the “next generation of our consumer Quest headset” is expected to launch “later next year,” an apparent reference to a Meta Quest 3.

CEO Mark Zuckerberg also warned that the company could face “near-term challenges on revenue.” The company reported $28 billion in revenue for the quarter, which was in line with analyst expectations, but “still behind where I think we should be,” according to Zuckerberg.

Zuckerberg also confirmed that Meta would continue to slash hiring as it deals with slowing revenue growth. “Some teams will grow meaningfully but most other teams will stay flat or shrink over the next year,” he said. “In aggregate, we expect to end 2023 as either roughly the same size or even a slightly smaller organization than we are today.”


DJI unveils Avata, a cinewhoop-style FPV drone

DJI has launched a new cinematic drone called Avata, which was made to work with the new DJI Goggles 2 video headset. While it's in the same category as the brand's previous first-person view (FPV) cinematic model, it takes on a more usual "cinewhoop" form factor with prop guards protecting its quad propellers. Since it's a cinewhoop, the Avata was designed to have the speed and agility of racers but with the stabilization technology needed to be able to capture smooth and vivid footage. 

It can hover, accelerate like a racer and zoom in and out of tight spaces while shooting videos, and its battery can last for up to 18 minutes before needing a recharge. The Avata is equipped with a stabilized camera that has a 1/1.7-inch CMOS sensor with 48 million effective pixels, an f/2.8 aperture and an ultra wide-angle lens. That camera is capable of shooting 4K videos in 60fps and 2.7K videos in 50, 60, 100 or 120 fps. And users can shoot quite a bit of footage before worrying about space, since it has 20GB of internal storage.

While it can be controlled using the existing DJI FPV Remote Controller 2 and the DJI FPV Goggles V2, it was designed to be used with the company's newer models. DJI Goggles 2 is the brand's next-gen video headset with a clearer micro-OLED screen than its predecessor and an adjustable diopter, so that people who wear glasses wouldn't need them while using the device. It can wirelessly stream the drone's live footage from the user's phone or computer for an immersive first-person viewing experience. Meanwhile, the DJI Motion Controller gives pilots the power to perform complex flight maneuvers with one hand. 

The DJI Avata is available starting today from the company's website and various retailers. On its own, the drone costs €579, £499 or $629, while a set with the DJI Goggles 2 and a DJI Motion Controller costs €1,429, £1,229 or $1,388.


Apple's Mac and wearables revenue stumbles as tech sector recedes

After a strong quarter earlier this year, Apple is continuing to break records. According to the company's financial results posted today, it's reporting a revenue record of $83 billion, an increase of 2 percent from the same period last year. Apple also said it reached an all-time high for its installed base of active devices "in every geographic segment and product category." However, the company's profits are down by a whole 11 percent, and while it continued to see growth in its iPhone sales, revenue from Macs and wearables dropped.

It's worth noting that Apple's recently announced MacBook Air with M2 chip only started shipping this month, so the numbers for Macs are likely to increase next quarter. Considering the devices the company is expected to launch in the fall, it's also possible consumers are holding out for new products and waiting out the ongoing inflation. 

Apple CEO Tim Cook said in a press release “This quarter’s record results speak to Apple’s constant efforts to innovate, to advance new possibilities, and to enrich the lives of our customers.” The company's CFO Luca Maestri added “Our June quarter results continued to demonstrate our ability to manage our business effectively despite the challenging operating environment."

The company is holding a call at 5pm ET to shed light on its results and answer questions from the investor community, and we'll update this post with any newsworthy findings.