Technology

Pandemic euphoria is over for technology

“We’re going to have to do more with less,” Meta boss Mark Zuckerberg said on Wednesday after the social media giant faced a quarterly decline in revenue for the first time in its history. (Photo: 123RF)

San Francisco. After two glorious years, the economic crisis has finally caught up with technology companies, especially social networks and large platforms, which are experiencing the beginning of saturation.

Only Amazon and Apple calmed the market a bit on Thursday with higher-than-expected sales, thanks in part to the success of their stellar products.

The e-commerce giant posted more than $121 billion in Q2 revenue, up 7%.

“While inflation drives up the price of fuel, energy and transportation, we are making progress on more controllable spending,” Amazon CEO Andy Jassi said Thursday.

AWS, its cloud computing service, the global leader in remote computing, earned $19.55 billion in revenue (up 33% year on year), but online sales fell 4% to $50.9 billion.

And its operating income — a key indicator of profitability — was $3.3 billion in half of last year.

“It wasn’t a golden quarter at all,” said Insider Intelligence analyst Andrew Lipsman. “The e-commerce business is struggling to return to positive growth, while AWS and advertising are slowing down.”

Still popular iPhone

On Thursday, Apple reported better-than-expected quarterly revenue ($83 billion, up 2%), thanks to continued strong iPhone demand.

On the other hand, sales of Mac computers, iPads, and connected objects have fallen.

In April, the Apple brand warned that the closure of factories in China due to COVID and a shortage of silicone needed to make chips would deprive it of between $4 billion and $8 billion in turnover.

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

In the current quarter, Amazon and Apple expect higher sales figures, despite the negative impact of the impact of the exchange rate.

Intel had a harder time surviving the turmoil.

The US semiconductor giant’s turnover fell 22% to $15.3 billion and has largely revised down its full-year guidance.

It is, in the words of boss Pat Gelsinger, a “sudden and rapid decline in economic activity.” He also mentioned “execution issues” during the conference call, especially regarding product design.

In just a few months, the economic environment for the tech giants has drastically deteriorated.

The health crisis and self-isolation have led to an explosion in online habits, from consumption to work and play.

Today, the digital transition continues, with most platforms gaining new users, but at a slower pace than before the COVID-19 pandemic.

“Do more with less”

Added to this phenomenon are numerous macroeconomic constraints, starting with inflation.

Google, Meta (Facebook, Instagram), Snap and Twitter, which depend on advertising, are suffering from reductions in advertiser marketing budgets.

Amazon and Apple are struggling with somewhat reduced demand for certain products and supply chain difficulties.

The Seattle Group, the second-largest employer in the United States after Walmart, doubled its workforce from 2019 to 2021. It now employs 1.52 million people, about 100,000 fewer than at the end of the first quarter.

Other tech companies like Google, Microsoft, and Snap have slowed their hiring pace. E-commerce platform Shopify laid off 1,000 people, or 10% of its staff.

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

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

“The meta is losing control of its huge audience,” Intelligence analyst Debra Aho Williamson told Insider.

Social platforms are trying to get ahead of the fierce competition from the TikTok app, which is very popular among teens and young adults.

Google posted its lowest year-over-year revenue growth since the second quarter of 2020, when advertisers abruptly closed the floodgates at the start of the pandemic.

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