For tech, the euphoria of the pandemic is over

For tech, the euphoria of the pandemic is over

Amazon and Apple reassured the market somewhat on Thursday with better-than-expected sales, after many disappointing performances from other tech companies battling the economic downturn.

The e-commerce giant made more than $121 billion in revenue in the second quarter, up 7%, despite an unfavorable comparison with last year.

Its stock jumped more than 10% in electronic trading after the close of trading.

“Despite inflation, which is driving up the price of fuel, energy and transport, we are making progress on more controllable costs (…), in particular by improving the productivity of our network of sorting centers and logistics,” Andy Jassy, ​​Amazon boss, said in a statement.

Amazon did not disappoint on the cloud side (remote computing): its AWS service, the world leader in this market, garnered 19.55 billion in revenue, a result above analysts’ expectations.

But its operating profit – a key indicator of profitability – stood at 3.3 billion dollars, instead of 7.7 billion last year at the same period.

“It hasn’t been a golden quarter at all,” reacted Andrew Lipsman, analyst at insider Intelligence.

– The still popular iPhone –

“The e-commerce business is struggling to return to positive growth, and that of AWS and advertising are slowing down,” he notes.

The expert is nevertheless optimistic – Amazon forecasts a turnover of between 125 and 130 billion dollars for the current quarter.

Apple on Thursday released quarterly revenue above expectations (83 billion, up 2%), thanks to the still strong sales of the iPhone. Its net profit fell 10.5% to $19.4 billion.

Some analysts feared that, given the economic slowdown, demand for the fairly expensive smartphone would weaken.

The group had warned in April that the disruption caused by the resurgence of cases of coronavirus in China and the shortage of silicone necessary for the manufacture of chips were to deprive it of 4 to 8 billion dollars in turnover.

But ultimately, these logistical disruptions “were less significant than expected,” said group boss Tim Cook during a conference call.

Intel had a harder time weathering the turmoil.

The American semiconductor giant saw its turnover fall by 22%, to 15.3 billion dollars and has largely revised its annual forecast downwards.

– “Doing more with less” –

In a few months, the economic environment of the technology giants has deteriorated radically.

The health crisis and confinements have led to an explosion of online habits, from consumption to work and entertainment. The digital transition continues – most platforms are gaining new users – but at a slower pace, comparable to that before the Covid-19 pandemic.

Added to this phenomenon are numerous macroeconomic constraints, starting with inflation and difficulties in the supply chain.

Google, Meta (Facebook, Instagram), Snap and Twitter, which depend on advertising, are therefore suffering from cuts in advertisers’ marketing budgets.

Amazon and Apple are facing somewhat reduced consumer spending on certain products and rising costs.

The Seattle group, the second largest employer in the United States behind Walmart, doubled its workforce from 2019 to 2021.

But since the spring, Amazon has “gone from an understaffed situation to an overstaffed situation,” noted Brian Olsavsky, the group’s chief financial officer.

It now has 1.52 million people, about 100,000 less than at the end of the first quarter.

Other tech companies have moved to slow the pace of hiring, like Google, Microsoft, and Snap.

“We’re going to have to do more with less,” Meta boss Mark Zuckerberg said Wednesday after the social media giant saw its quarterly revenue decline for the first time in its history.

Netflix, which lost nearly a million subscribers between the end of March and the end of June, laid off more than 400 employees over the same period.

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