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Big Tech offered a generally gloomy outlook as companies released results yesterday, with both Apple and Google reporting a decline in sales while growth at Amazon’s cloud computing business slowed.
Apple posted a decline in quarterly revenues for the first time in three-and-a-half years after “significant” supply chain disruptions in China delayed iPhone deliveries. Chief executive Tim Cook signalled that revenues in the current quarter would also miss the prior year’s, with the company’s other products expected to be hard hit by lower demand.
Rival Google saw advertising revenue slip 4 per cent in the final quarter of last year, marking only the second quarterly contraction in its history and a sharper deceleration than analysts expected. Weaker economic growth and a receding of the pandemic-fuelled boom in digital services contributed to the drop, leaving parent Alphabet with overall revenue growth of only 1 per cent, compared with the 32 per cent surge the year before.
The slightly brighter spot was Amazon, which posted stronger than expected sales for the 2022 holiday shopping season. Overall, net sales for the ecommerce group were $142.2bn in the three months to December 31, up 9 per cent from 2021. But operating income for AWS, its cloud computing division and largest profit driver, dropped marginally on the prior year. Sales growth fell to 20 per cent, compared with 40 per cent a year earlier.
Shares of all three companies dipped in after-hours trading, with Alphabet and Amazon down 4 per cent and Apple falling 3 per cent.
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Five more stories in the news
1. Blinken to meet Xi Antony Blinken is expected to meet Xi Jinping in Beijing, making him the first US secretary of state to sit down with the Chinese leader in nearly six years and the first of Joe Biden’s cabinet secretaries to visit China. The visit comes after Xi and the US president agreed in November to find ways to stabilise the two countries’ turbulent relationship.
2. Ukraine allies push IMF to lend billions The EU and other major partners of Kyiv are pushing the IMF to finalise plans for a loan that could range from $14bn to $16bn as they seek to strengthen the war-torn country’s finances. The fund’s representatives plan to meet Ukrainian officials in Warsaw later this month and finish discussions by the spring.
3. BoE takes a newly pessimistic view The Bank of England’s monetary policy committee voted yesterday to raise interest rates, justifying the move as insurance against future price rises, despite its own forecast showing inflation falling well below its 2 per cent target by next year. The BoE now thinks the UK economy cannot sustain growth of 1 per cent or more each year without inflation.
Central banks diverge: While US Federal Reserve chair Jay Powell struck an optimistic note this week, European Central Bank chief Christine Lagarde was far gloomier, saying price pressures remained “alive and kicking”.
4. Britain’s new crypto plans step up EU rivalry The competition between the UK and EU to lure crypto business has stepped up a notch after Britain unveiled proposals that would pull large swaths of the crypto industry into mainstream regulation. The slate of new rules comes months after Brussels finalised its sweeping EU-wide Markets in Crypto-assets (Mica) regulation last summer.
5. Carlyle courts ex-Goldman veteran for top job Carlyle Group has spoken to former Goldman Sachs executive Harvey Schwartz about taking over as the private equity group’s chief executive, as the company tries to complete a protracted search for a new leader. Schwartz held top roles at Goldman, including chief financial officer and chief operating officer, before he left in 2018.
The days ahead
EU-Ukraine summit Ukrainian president Volodymyr Zelenskyy hosts his EU counterparts Ursula von der Leyen and Charles Michel today in Kyiv. The two sides will discuss Ukraine’s hopes for rapid entry into the bloc, as member states have raised concerns about Kyiv’s timeline. Brussels will implement another round of sanctions against Russia on Sunday, banning all seaborne imports of Russian refined oil and petroleum products.
US war aid The US is expected to announce today a nearly $2.2bn aid package that includes longer-range smart bombs which would double Ukraine’s strike range.
Economic data The US releases its non-farm payrolls report today, just two days after the Federal Reserve slowed its pace of interest rate increases. The EU has its producer price index for December, and S&P Global publishes its services purchasing managers’ index for the eurozone, France, Germany, Italy, Spain, the UK and the US.
Corporate results Insurers Aon and Cigna, Swedish developer Skanska and Japan’s Mitsubishi report.
UK strikes Train drivers will stage their second walkout of the week, and four days of strike action among legal advisers and court associates in the PCS union will begin in more than 80 courts across England and Wales.
What else we’re reading and watching
Opinion: Don’t count on CEOs to pick a side Nearly a year into Vladimir Putin’s war on Ukraine — and despite economic sanctions, activist pressure and lack of near-term resolution to the conflict — western companies that had established a presence in Russia have largely stayed put. Uncouple they simply won’t, writes Anne-Sylvaine Chassany.
‘No one remembers us’ During the pandemic, China mobilised millions of workers to enforce lockdowns, quarantines and mass testing. Once praised by President Xi Jinping for having “braved hardships and courageously persevered”, these workers have now been left jobless, disillusioned and angry by the abrupt end of China’s zero-Covid policy.
What chimpanzees tell us about how we see data Project Rosling, a Swiss Confederation initiative, launched a “beat the chimpanzees” metric last week in Geneva. The idea is that while chimps make completely random choices, there is a pattern to humanity’s collective ignorance — people routinely show a more pessimistic view of the world than the one described by our statistics.
Germany grapples with the limits of pacifism While the futility of war is by no means an exclusively German concept, few other nations give it such centrality in the commemoration of armed conflict. As Netflix’s adaptation of All Quiet on the Western Front is tipped for the Oscars, the country’s long antiwar tradition is being tested by Russian aggression.
‘Capture: Who’s looking after the children?’ An FT drama starring Jodie Whittaker (Dr Who), Paul Ready (Motherland) and Shaniqua Okwok (It’s a Sin), looks at online harm, regulation and responsibility. The search for their missing son leads a mother and father to a tech company, and a digital gatekeeper who seems to have all the answers.
Take a break from the news
Retiring at 62? The French have it absolutely right, writes Simon Kuper.
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This post is originally appeared on FT