Apple’s Challenge in the Holiday Season

In the world of tech giants, Apple is facing a significant challenge this holiday season. The company’s recent performance indicates a lack of a clear growth path after four consecutive quarters of shrinkage. In this detailed analysis, we will delve into the financial aspects, the perspectives of Apple’s executives, and the expectations of Wall Street regarding Apple’s performance in the upcoming holiday season.

Apple’s Fiscal Fourth-Quarter Report

Apple’s fiscal fourth-quarter earnings report revealed some intriguing insights. While the company managed to surpass analyst expectations, it’s important to note that revenue fell approximately 1% from the previous year to $89.5 billion, marking the fourth straight quarter of decline. This is a situation Apple hasn’t encountered since before the iconic iPhone was introduced in 2007.

Challenges and Weaknesses

CFO Luca Maestri, in a commentary on Apple’s performance, pointed to areas of continued weakness in the Mac, iPad, and Wearables businesses. Despite a relatively positive outlook for iPhone sales, these segments of Apple’s business have not been performing as expected.

Guidance and Wall Street Expectations

Apple no longer provides official hard number guidance, and Maestri stated that revenue for the current quarter will be “similar” to last year, despite having one less week in the holiday season compared to the previous year. Wall Street had higher expectations, with analysts projecting sales of approximately $123 billion, representing about 5% growth. Maestri also mentioned that the iPhone is expected to see year-over-year growth in absolute terms.

Challenges in the Mac Business

Apple’s Mac business faced a significant challenge as year-over-year Mac revenue fell by nearly 34% in the September quarter. While Maestri suggested a significant acceleration from the previous quarter, it still implies a decline compared to last year. Last year’s supply constraints contributed to a shift in sales from one period to another, affecting the comparison.

Declines in iPad and Wearables

Both the iPad and wearables businesses at Apple reported annual declines in the September quarter, and Apple anticipates further decreases in this quarter. The decline in iPad revenue was notable, with a 10% decrease. Maestri noted that the introduction of new iPad models in October 2022 temporarily boosted sales, which hasn’t happened this year.

Bright Spot: Services Business

Amidst these challenges, one bright spot for Apple this holiday season is its services business. This segment encompasses App Store sales, online cloud storage, AppleCare warranties, advertising, licensing deals with Google, and subscriptions like Apple Music. Maestri expressed optimism about the strong double-digit growth in the average revenue per week in the Services business.

Takeaway

In conclusion, Apple’s holiday season outlook is marked by challenges in key hardware segments but a more optimistic perspective in its services division. The absence of hard number guidance from the company and the expectations set by Wall Street make this holiday season a crucial period for Apple’s growth. Investors and tech enthusiasts will be closely watching to see how the tech giant navigates this unique holiday season challenge.

Apple’s Groundbreaking M3 Chips and Revamped MacBook Pro Lineup

Apple’s recent midnight launch event illuminated the tech world with the unveiling of several exciting products poised to rejuvenate its Mac lineup. Among these revelations, the spotlight undeniably belonged to the revolutionary M3 chips, promising exceptional performance enhancements, extended battery life, and formidable capabilities for the development of artificial intelligence applications. Alongside these game-changing chips, Apple also surprised consumers by reducing the price of the entry-level 14-inch MacBook Pro, making high-quality computing more accessible to tech aficionados.

Apple’s Spooktacular Announcement Event:

  • The Mighty M3 Chips: Apple introduced an impressive trio of chips, all neatly nestled under the expansive M3 product umbrella. Significantly outperforming their M2 predecessors, these chips encompass an entry-level M3, a substantially faster M3 Pro, and a mind-bogglingly speedy M3 Max chip, tailor-made for AI developers and 3D artists.
  • Unparalleled Battery Life: Apple claims that all M3 chips can deliver an astounding 22 hours of battery life on a laptop, redefining what it means to work on the move.
  • Processing Prowess: The M3 chip boasts an 8-core central processing unit, complemented by support for up to a 10-core graphics processing unit. For those demanding even more power, the M3 Pro steps up with a 12-core CPU and an 18-core GPU. However, the true juggernaut is the M3 Max, flaunting a 16-core CPU and the potential for a staggering 40 cores on its GPU, purpose-built for crafting intricate artificial intelligence software.
  • Performance Milestones: Apple’s latest chips are engineered for speed. The M3 processor’s CPU cores outpace their M2 counterparts by a remarkable 15% when tackling heavyweight workloads. Moreover, the M3 chip takes a giant leap forward, boasting a staggering 60% improvement over its predecessor, the M1.
  • Cutting-Edge Semiconductor Technology: These cutting-edge chips are meticulously crafted using a 3-nanometer process, representing the pinnacle of semiconductor manufacturing technology from the renowned Taiwan Semiconductor Manufacturing Company.
  • Release Schedule: While most of the new MacBook and iMac models are set to grace the market next week, devices featuring the M3 Max chip are expected to make their debut a little later, arriving on the scene in November.

MacBook Pro and iMac Marvels:

  • 14-inch MacBook Pro: Apple introduced an updated 14-inch MacBook Pro, with an entry-level model now available at the enticing price point of $1599, equipped with the M3 processor. This marks a substantial reduction in price compared to last year’s model, which began at $1999 but featured a faster “Pro” level processor.
  • Embrace the M3 Pro: For power-hungry consumers seeking even greater capabilities, the 14-inch MacBook Pro with the M3 Pro option starts at $1999 and offers the opportunity for a further upgrade to the M3 Max, ensuring exceptional performance.
  • The 16-inch Marvel: Positioned as Apple’s most powerful laptop, the 16-inch MacBook Pro starts at $2499 with the M3 Pro, with the option to elevate your experience with the M3 Max chip for an additional cost.
  • Connectivity Reinvented: Notably, the MacBook Pros now boast an HDMI port and an SD card slot alongside the versatile USB-C ports, setting them apart from the MacBook Air models, which exclusively offer USB-C connectivity.
  • The Unsung Hero: Surprisingly, the 13-inch MacBook Pro with the touchscreen Touch Bar keyboard did not receive an update with the new M3 chips.
  • “Space Black” Elegance: The higher-end MacBook Pros, equipped with the Pro and Max chips, emerge in a striking new dark aluminum color christened “Space Black.” This aluminum finish is ingeniously designed to reduce fingerprint smudges, ensuring your device maintains a sleek and immaculate appearance.
  • An Updated iMac: Finally, Apple revealed an updated 24-inch iMac desktop computer starting at $1299. Unlike its predecessor, which featured an M1 chip, this model now incorporates the M3 chip, promising improved performance and efficiency.

Exploring the Exciting Features of iOS 17 for iPhone Users

Introduction to iOS 17 Release

Are you an iPhone user eagerly awaiting the latest updates to enhance your device’s functionality? Well, you’re in for a treat! Apple’s iOS 17 is here, and it brings a slew of exciting features that promise to revolutionize your iPhone experience. In this article, we’ll dive into the details of what iOS 17 has to offer and how it can make your iPhone more personal and intuitive.

Unveiling iOS 17: A Recap from Apple’s WWDC

Apple gave us a sneak peek of iOS 17 during its annual Worldwide Developer Conference (WWDC) in June. However, with all the buzz surrounding the event, you might have missed some of the key details. Not only did Apple showcase iOS 17, but it also unveiled its highly anticipated mixed-reality Vision Pro headset on the same day. Let’s catch up on what you might have missed.

Updating to iOS 17: A Step-by-Step Guide

For iPhone users, the exciting part is getting your hands on iOS 17. Starting Monday, you can update your device by simply navigating to the Software Update section in your phone’s Settings app. However, before taking the plunge, many users prefer to take precautions, such as backing up important photos and files. Some even wait for the second version to roll out, just in case there are any initial bugs to be ironed out. We’ll guide you through the update process and help you decide when it’s the right time for you.

The Buzzworthy Features of iOS 17

Now, let’s delve into the features that have iPhone users buzzing with excitement. iOS 17 introduces some game-changing additions that will redefine how you interact with your device.

Live Voicemail and Enhanced FaceTime

One of the standout features is Live Voicemail, which transcribes caller messages in real-time, allowing you to decide whether to take the call or let it go to voicemail. Additionally, unknown numbers can be directed to Live Voicemail if you enable the “Silence Unknown Callers” setting. FaceTime also gets a facelift, offering video messages and fun effects to make your conversations more expressive.

“Siri” Gets a Makeover

Say goodbye to “Hey Siri” and hello to a more natural interaction. With iOS 17, activating Siri is as simple as saying “Siri.” This update also enhances Siri’s ability to process back-to-back requests seamlessly, making your interactions smoother than ever.

NameDrop: Sharing Made Effortless

iOS 17 introduces the NameDrop feature, making it a breeze to exchange contact information with new acquaintances. By bringing your iPhones close to each other, you can quickly share names and Contact Posters. Customizing your caller ID photo with Contact Poster adds a personal touch to your calls.

Autocorrect Revolutionized

Autocorrect gets a comprehensive makeover with a state-of-the-art on-device machine learning language model. Expect improved typing support, sentence-level autocorrections, and in-line predictive text recommendations. The keyboard adapts to your writing habits, learning your preferences and improving accuracy.

StandBy Mode, Journal App, and More

iOS 17 introduces StandBy mode, providing a full-screen display for glanceable information when your iPhone is charging on its side. Customize it with a clock, favorite photos, or widgets. Apple’s Journal app, aimed at fostering reflection and gratitude through daily journaling, is also on the horizon in a future software update.

Takeaway

In conclusion, iOS 17 is a game-changer for iPhone users, offering an array of features designed to enhance your device’s functionality and user experience. Whether it’s the convenience of Live Voicemail, the natural interaction with Siri, or the seamless sharing of contact information with NameDrop, iOS 17 has something for everyone. Stay tuned for the latest updates and make the most of your iPhone with these exciting new features.

Apple Addresses Overheating Concerns in iPhone 15 with Software Update

Apple’s Response to Customer Complaints

In a recent announcement, Apple has taken proactive measures to address customer complaints regarding the overheating issues reported by users of the newly released iPhone 15 models. These complaints have emerged just over a week after the highly anticipated launch of the iPhone 15 series, stirring concerns among the tech-savvy community.

Causes of Overheating

Apple’s exhaustive investigation into the overheating problem has led to the identification of multiple contributing factors. Chief among these is the presence of software bugs within the iOS 17 operating system, which powers the latest iPhone models. Additionally, issues within specific apps have been pinpointed as exacerbating the temperature rise, further compounded by a temporary set-up period that users go through when configuring their devices for the first time.

User Experiences and Concerns

As the news of overheating concerns spread like wildfire across the digital landscape, iPhone 15 users from various corners of the internet voiced their apprehensions. Some users reported that all four iPhone 15 models exhibited higher temperatures during use than expected, leading to discomfort and even user dissatisfaction. Notably, CNBC’s comprehensive review of the iPhone 15 Pro Max also acknowledged the existence of overheating issues, validating user concerns.

Apple’s Clarification on Design

In an effort to alleviate any misconceptions, Apple has explicitly clarified that the overheating issue is not attributed to the physical design of the new models. The iPhone 15 Pro and iPhone 15 Pro Max boast a redesigned titanium enclosure with an aluminum frame, introduced with the dual purpose of enhancing both durability and repairability. Apple emphatically stated that the overheating problem lies primarily in the realm of software-related bugs rather than any inherent flaw in the physical construction of the devices.

Software Solution

To tackle the overheating problem head-on, Apple has officially announced the impending release of an iOS 17 update. This forthcoming update is specifically designed to resolve the identified bugs within the operating system and address issues within specific apps that contribute to the temperature rise. Notably, Apple emphasizes that applying this software update will not compromise the overall performance and functionality of these cutting-edge devices, assuaging concerns among users.

Common Scenarios for Warmth

Apple’s official website provides valuable insights into the circumstances that may lead to users perceiving their phones as warmer than usual. These scenarios include the initial setup of the device from a backup, engaging in wireless charging, running graphics-intensive apps or games, or streaming high-quality video content. Apple’s clarification underscores the point that it is normal for devices to exhibit a degree of warmth during periods of intensive usage. Importantly, Apple emphasizes that as long as users do not receive a temperature warning, their iPhones remain perfectly safe to use.

Continued Demand Despite Issues

Intriguingly, despite the reported overheating concerns, demand for the new iPhones continues to surge. Ship times for these devices sometimes extend for weeks, and customers continue to form long lines outside Apple stores on launch days, demonstrating unwavering enthusiasm for Apple’s latest offerings.

Analyst Insights

Delving deeper into the market dynamics, JPMorgan analysts have observed that lead times for the iPhone 15 Pro Max, iPhone 15 Plus, and iPhone 15 are tracking at notably higher levels compared to their predecessors. This data suggests a robust and enduring demand for the latest models, underscoring the resilience of Apple’s brand and consumer loyalty.

Potential Impact on Sales

However, it’s worth noting that Apple supply chain analyst Ming-Chi Kuo has expressed concerns in a recent blog post, suggesting that the overheating issue might have a negative impact on iPhone 15 sales in the coming months. While Apple has weathered high-profile launch issues in the past, such as antenna problems with the iPhone 4 and issues with Apple Maps with the iPhone 5, these incidents did not significantly dampen the long-term outlook of the company.

Apple thieves target passcodes before snatching iPhones

Apple No other firm comes close to Apple’s renown when it comes to premium goods.

Apple iPhones have been among the most popular products on the market.

As a result, if left unprotected, it might be the focus of numerous robbers eager to steal one from its owners.

But, thieves nowadays have adopted a new strategy to their criminal activities.

According to reports, iPhone thieves are increasingly looking for a victim’s passcode before making their move.

The news

According to The Wall Street Journal, iPhone thieves are eavesdropping on their victims’ passcodes before stealing the Apple gadget.

They will then reset the settings, denying access to the owners.

Victims have reported having their Apple iPhones snatched from their hands in public places such as pubs, only to find themselves locked out.

Thieves who are familiar with passcodes can quickly reset the victim’s Apple ID password.

They can also disable the Find My iPhone function, leaving users in the dark and unable to monitor their iPhones.

Users are also unable to erase additional devices linked to their Apple account.

Furthermore, criminals can add a recovery key, removing the victim’s access to account recovery.

More than an isolated case

There were waves of reports, all claiming the same problem.

For example, one victim stated that a thief used the last four digits of their Social Security number in images to obtain an Apple Card.

Meanwhile, another woman permanently lost all of her family photographs.

The vast majority of victims have already made police reports.

In one example, a victim filed an identity theft claim with the Federal Trade Commission, citing their loss.

Apple acknowledges the situation

With so many victims reporting the same issue, Apple is scurrying to devise backup strategies.

According to a spokeswoman, the iPhone is the most secure consumer mobile device on the market.

They went on to say that the company is working “tirelessly” to protect against new and emerging threats.

“We sympathize with users who have had this experience, and we take all attacks on our users very seriously, no matter how rare,” said the spokeswoman.

“We will continue to advance the protections to help keep user accounts secure.”

According to an Apple spokeswoman, the recent round of thefts is unusual since it involves the theft of both the device and the password or passcode.

Read also: Why Cybersecurity has become more important than ever

Preventing theft

When generating passwords for devices and accounts, most systems advocate using a strong, unique password.

The passcode, on the other hand, represents a distinct weak link, especially when users choose a short string of numbers for convenience.

Despite recent Apple upgrades, the problem persists.

Apple announced additional means of protecting the Apple ID, such as hardware security keys.

While entering a passcode, Apple recommends using Face ID and putting your palm over the screen.

When Face ID (or Touch ID for previous models) fails, the phone demands a password.

The passcode appears when unlocking the device, enabling Apple Pay, and activating the iCloud Keychain password manager.

Course of actions

It is tough to avoid theft, but Apple device owners may make it more difficult for those who choose to do it.

Screen cover

According to law enforcement, criminals frequently develop ways to get people’s passcodes.

Others would even go so far as to videotape their targets from a safe distance.

Users should utilize Face ID or Touch ID in public to prevent criminals from adding them to their list.

When a password or passcode is necessary, it is advised that they enter them in like ATM pins.

Passcode strength

Using six digits is a recommended practice, according to Adam Aviv, an associate professor of computer science at George Washington University.

Longer, more complicated passcodes will be more difficult to “shoulder surf,” according to Aviv.

Apple device owners should utilize alphanumeric passcodes.

Adding a brief auto-lock is also recommended, making it more difficult for thieves to modify anything.

Additional protection

Most online banking applications require passcodes, and experts advise creating one that is distinct from the iPhone.

Users may also set up a Screen Time passcode to enable account limits, similar to how parents do with their children’s gadgets.

Third-party password manager

Although Apple’s built-in iCloud Keychain password manager is useful, passwords saved with the passcode may also be viewed.

As a result, fraudsters can gain access to bank accounts on the iPhones of their victims.

Users can, however, utilize a third-party password manager that supports biometric identification, such as 1Password or Dashlane.

Delete traces of sensitive information

Some users are forgetful and may utilize images of sensitive information, such as forms including their Social Security number.

As a result, it is prudent to erase copies of such papers.

Users can also employ secure file storage in third-party password managers as an option.

Act quickly if phone is stolen

If an iPhone is stolen, the owner must act swiftly by signing in to iCloud from another device in order to locate their device and wipe it clean.

To prevent criminals from obtaining verification codes, they can simply phone their carrier or go to a retail location and have the sim disabled.

MacBook updated chips coming in 2023

MacBook: When Apple disclosed that buyers could choose between the M2 Pro and M2 Max CPUs for the new Macs on Tuesday, it was a momentous revelation.

For the Mac and MacBook, the two CPUs are Apple’s most powerful processors.

The M2 chips

Apple’s next-generation systems on the chips (SoCs), the M2 Pro and M2 Max elevate the performance.

With over 32GB of quick, unified memory, a 12-core CPU, and a 19-core GPU, the Pro expands the M2 architecture.

The M2 Pro features a 38-core GPU to double the unified memory bandwidth and 96GB of unified memory, while the Max expands on those features.

The CPUs include improved proprietary technologies such as a speedier 16-core Neural Engine and Apple’s powerful media engine.

The M2 Pro makes its debut in the Mac mini, while the M2 Max substantially enhances the performance and functionality of the 14-inch and 16-inch MacBook Pro.

“Only Apple is building SoCs like M2 Pro and M2 Max,” said Johny Srouji, the senior vice president of Apple’s Hardware Technologies.

“They deliver incredible pro performance along with industry-leading power efficiency.”

“With an even more powerful CPU and GPU, support for a larger unified memory system, and an advanced media engine, M2 Pro and M2 Max represent astonishing advancements in Apple silicon.”

The Mac mini

Faster speed, more unified memory, and cutting-edge networking are all features of the new Mac mini, which is more powerful and competent at an accessible price.

Additionally, the M2 model and the M2 Pro variant both support up to three monitors.

The Studio Display, Magic access, and the power and simplicity of MacOS Ventura are all included with the Mac mini.

Senior Vice President of Worldwide Marketing at Apple, Greg Joswiak, said:

“With incredible capabilities and a wide array of connectivity in its compact design, Mac mini is used in so many places, in so many different ways.”

“Bringing even more performance and a lower starting price, Mac mini with M2 is a tremendous value.”

“And for users who need powerful pro performance, Mac mini with M2 Pro is unlike any other desktop in its class.”

Additionally, Apple no longer manufactures or markets Mac minis with Intel processors.

The Mac Pro is the final computer with an Intel CPU installed.

Read also: Copyright violations catch up to Midjourney AI as lawsuit looms

Launch

Following Luca Maestri’s October caution, the M2 Pro and M2 Max chips, as well as the Mac mini, were released.

The revenues of the corporation will decrease yearly in the December quarter, according to Apple’s chief financial officer.

The reduction, meanwhile, may be the result of Apple not shipping the MacBooks in time for the holiday shopping season.

Apple released its fiscal fourth-quarter results in October, and both its earnings and sales per share exceeded Wall Street forecasts.

The tech giant fell short of revenue projections in key product categories, including the iPhone business and services.

As many buyers continue to struggle with inflation, the upgraded Macs will be introduced into an unpredictable economic environment.

Given the continued recessionary anxieties, most consumers have likewise grown more thrifty with their spending.

Earnings report

Apple will release its earnings report at the end of the month.

The tech titan posted December quarter sales of $10.85 billion in the last year, a 25% increase over the same period the previous year.

The firm at the time declared its highest quarterly revenue ever as sales increased over 11% despite pandemic-related consequences and supply chain interruptions.

Pricing

On Tuesday, prospective buyers can place pre-orders for Apple’s updated goods, which will go on sale on January 24.

The M2 chip-equipped Mac mini will cost $100 less than the $599 pricing of the last model.

The M2 Pro model, however, will cost $1,299.

The price of the new 14-inch MacBook Pro is $1,999.

Last but not least, the 16-inch MacBook Pro variant will cost roughly $2,499.

References:

Apple announces new Mac mini, MacBook Pro with M2 Pro and M2 Max chips

Apple introduces new Mac mini with M2 and M2 Pro – more powerful, capable, and versatile than ever

Apple unveils M2 Pro and M2 Max: new-generation chips for next-level workflows

Pandemic led tech companies into error of judgment; how they’re coping

Pandemic: Microsoft CEO Satya Nadella explained how the pandemic’s arrival shifted the scales in the company’s favor two years ago.

Microsoft prospered as a result of its online services.

“What we have witnessed over the past year is the dawn of a second wave of digital transformation sweeping every company and every industry,” said Nadella.

Starting in 2023, the scenario is drastically different from how it was two years before.

Microsoft made the decision to fire 10,000 employees public this week.

The corporation said that as it deals with economic uncertainty, it is reevaluating its digital spending from the pandemic era.

Microsoft users are attempting to do “more with less,” according to Nadella.

The tech space

Microsoft has not been the only business to change course; other businesses have also been laying off employees.

Alphabet, the parent company of Google, has announced its intention to lay off 6% of its workforce (around 12,000 jobs).

Major corporations including Amazon, Google, Meta, and Microsoft have started posting news about letting go of more than 50,000 employees since October.

The decisions run contrary to the pandemic’s early stages, when tech giants were growing to satisfy soaring demand.

Many people in the sector at the time believed the expansion would last for many more years.

However, compared to September 2019, Amazon more than doubled the corporate workforce of the company.

While building new warehouses, they employed over 500,000 people.

Between March 2020 and September of last year, the employment of the massive social media company Meta was doubled.

Other businesses that increased their employee count include:

  • Google
  • Microsoft
  • Salesforce
  • Snap
  • Twitter

In the past several weeks, the aforementioned businesses have also announced layoffs.

Read also: Copyright violations catch up to Midjourney AI as lawsuit looms

Error in judgment

Most tech leaders underestimated the pandemic’s expansion, particularly in light of the number of individuals who returned to their offices and routine.

Consumer spending and advertising have decreased recently due to a number of issues, including:

  • Recessionary fears
  • Inflation
  • Increasing interest rates

In the middle of the crucial December quarter, Wall Street analysts are now forecasting single-digit profit growth for a number of corporations.

Apple and Meta are anticipated to experience declines, according to Refinitiv forecasts.

Recent headcount reductions often refer to a tiny portion of the total workforce.

While they eliminate gains from the prior year for some, they leave tens of thousands (or perhaps hundreds of thousands) of employees for others.

However, it disrupts the lives of employees who are now looking for new employment due to their company’s seemingly endless development.

Pandemic growth

Investment company Third Bridge’s worldwide sector lead, Scott Kessler, offered his thoughts on the tech industry’s recent decisions and early development.

“They went from being on top of the world to having to make some really tough decisions,” said Kessler.

“To see this dramatic reversal of fortunes… it’s not just the magnitude of these moves, but the speed that they’ve played out.”

“You’ve seen companies make the wrong strategic decisions at the wrong times.”

Apple is still the only major player in technology to have not disclosed layoffs.

With the exception of research and development, the corporation apparently placed a hiring freeze.

Apple increased their employment by 20% over the past four years, which is far less than other businesses.

“They’ve taken a more seemingly thoughtful approach to hiring and overall managing the company,” noted Kessler.

Meanwhile, tecg CEOs have admitted that they made a mistake by hiring too many people at the start of the pandemic and by failing to predict the surge in demand when the pandemic’s restrictions were lifted.

Pichai admitted responsibility for Alphabet’s layoffs on Friday and vowed to return the company’s attention to its core activities.

He wrote an email to the staff on Friday, and it ended up on the business website.

“The face that these changes will impact the lives of Googlers weighs heavily on me,” Pichai wrote.

“I take full responsibility for the decisions that led us here.”

Aftermath

None of the CEOs of the large corporations appear to have had their title or compensation changed as a result of the layoffs.

With all the economic warnings, according to Scott Kessler, the tech layoff announcements will probably continue over the forthcoming earnings season.

Companies that haven’t seen such repercussions may soon decide to reduce their workforces in response.

Kessler observed:

“I think there is an element of [some companies], saying ‘We might not see this right now but all these other big companies, these companies that we compete with, that we know, that we respect, are taking these kinds of actions, so maybe we should be thinking and acting accordingly.”

Apple and Tesla stocks drop in 4th quarter

Apple: Apple and Tesla are two of the biggest tech entities in the United States, but they are currently dealing with problems with their stocks.

The two companies face significant headwinds in China, which concerns investors.

Apple’s shares fell more than 3% when concerns about the iPhone lineup in the December quarter grew louder.

Meanwhile, Tesla fell by 12% on Tuesday when the company reported that deliveries were below analyst expectations.

China’s influence

The two tech giants’ stock decline can be attributed to challenges occurring in China.

The country accounts for 17% of Apple’s sales and 23% of Tesla’s revenue, which makes it a significant market for the two firms.

Daniel Ives, the senior equity analyst at Wedbush Securities, addressed the companies’ woes, saying:

“China is the heart and lungs of both demand and supply for both Apple and Tesla.”

“The biggest worry for the Street is that the China economy and consumer are reining in spending, and this is an ominous sign.”

He continued:

“In 2022, the worry was supply chain issues and zero Covid-related issues, 2023 is the demand worry and this has cast a major overhang on both Apple and Tesla, which heavily relied on the Chinese consumer.”

iPhone factory problems

Investors are keeping an eye on Apple’s fiscal first-quarter results, which will likely be released later this month and cover the December holiday period.

In October, the largest iPhone factory in Zhengzhou, China, suffered a Covid outbreak.

Foxconn, which runs the factory, set restrictions.

By November, workers protested over a pay dispute, and many employees walked out.

Foxconn attempted to entice them back with bonuses.

Since then, things have settled down.

Reuters reported that the factory was almost back at full operations on Tuesday.

The situation highlighted Apple’s dependence on China for iPhone production.

Following the Covid restriction, the tech giants announced that the factory was operating at a significantly reduced capacity.

Read also: Retailers have Grim Expectations with the 2023 Market

Fears

Evercore ISI analysts estimate Apple’s December quarter endured a $5 to $8 billion revenue shortfall.

However, Refinitiv consensus estimates the company could report a 1% annual revenue decline in the December quarter.

As a result, investors who expected a strong showing for the iPhone 14 have grown worried.

However, Apple faces more than just supply chain issues.

China recently overturned its zero-Covid policy in an effort to reopen its economy.

However, there have been Covid-19 outbreaks in large parts of the country, which could influence the demand for iPhones.

IDC research manager Will Wong addressed the issue, saying:

“The key challenge is expected to be on the demand side, especially since resilient high-end consumers may have started to shift their spending to travel while some may have shifted their focus to medical supplies.”

“The shift in spending will pose a key challenge in the short term.”

Tesla delivery

The Tesla share price drop occurred due to a miss in vehicle deliveries.

405,278 cars delivered in the fourth quarter fell below the expectation of 427,000 deliveries.

Demand in China and the supply chain played a role in the decline.

Throughout 2022, Tesla’s Shanghai Gigafactory endured Covid disruptions.

However, analysts also pointed out concern over Chinese consumer demand.

“Tesla will point to supply disruptions and lockdowns as the main problem in China in 2022,” said Bill Russo, the CEO of Shanghai-based Automobility.

“While these are real headwinds, it cannot hide the fact that demand has softened for a variety of reasons, and their order backlog is 70% smaller than it was prior to the Shanghai lockdown.”

Shanghai underwent lockdowns in late March 2022 as the government attempted to control a Covid outbreak.

Read also: Apply For Car Title Loan Using Your Vehicle

Headwinds

Investors have grown concerned that Tesla would decide to cut prices to entice buyers, pressuring margins.

In October, Tesla slashed Model 3 and Model Y prices in China, going back on the prices it made earlier in 2022.

However, another hurdle Tesla faces in China is rising competition from domestic rivals, including Nio and Li Auto.

In addition, there are lower-priced competitors which will launch new models this year.

“Tesla’s models have been in the market for a while and are not as fresh to the Chinese consumer as other alternatives,” offered Russo.

“What we are learning is, EV product life cycles are short as they are shopped for their technology features.”

“Buying an older EV is like buying last year’s smartphone,” he continued.”

“They need new or refreshed models to reignite the market. Just pricing lower can damage their brand in the long run.”

Reference:

China risks loom over US tech giants Tesla and Apple as share prices plunge