Google, Apple Disappoint as Tech Earnings Hit by Gloom

A customer stands underneath an illuminated Apple logo as he looks out the window of the Apple store located in central Sydney, Australia, May 28, 2018. (Reuters)
A customer stands underneath an illuminated Apple logo as he looks out the window of the Apple store located in central Sydney, Australia, May 28, 2018. (Reuters)
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Google, Apple Disappoint as Tech Earnings Hit by Gloom

A customer stands underneath an illuminated Apple logo as he looks out the window of the Apple store located in central Sydney, Australia, May 28, 2018. (Reuters)
A customer stands underneath an illuminated Apple logo as he looks out the window of the Apple store located in central Sydney, Australia, May 28, 2018. (Reuters)

Google and Apple on Thursday reported downbeat results for the last quarter of 2022 as Amazon beat expectations, but warned that the coming months would be uncertain in a difficult moment for Big Tech.

The tech titans posted earnings as shares in Meta skyrocketed a day after it reported better results than expected and signaled spending and job cuts, AFP said.

The results follow weeks of unprecedented layoff rounds in the usually unassailable tech sector amid pessimism about the economic outlook.

The souring mood followed a long spell of outsized growth during the peak Covid-19 period when consumers went online for work, shopping and entertainment.

"Big Tech calls from Apple, Amazon, and Alphabet painting a much different picture of demand environment than the tech bears were hoping for," tweeted Wedbush analyst Dan Ives, referring to investors who believe shares are on a downward path.

While earnings reports show there is "caution in the air" there are signs that the companies could be heading for soft landings, the analyst added.

Google parent Alphabet's revenue of $76 billion in its fourth quarter and profit of $13.6 billion were below what it made in the same period a year earlier, with share prices falling more than 3 percent in after-market trade.

Google saw a slump in its crucial advertising sales, which were slightly better than analysts had projected, according to data compiled by Factset.

"It's clear that after a period of significant acceleration in digital spending during the pandemic, the macro economic climate has become more challenging," Google CEO Sundar Pichai said in an earnings call.

Pichai last month announced a plan to lay off 12,000 employees in order to reverse pandemic over-hiring and focus on new areas, especially artificial intelligence.

Google was caught off guard by the sudden rise of user-friendly AI such as ChatGPT, which is seen as a potential rival to Google's popular search engine.

Apple is the only US tech giant that has not announced major layoffs in recent weeks.

The world's biggest company in terms of market value reported a fall in quarterly revenue and profits for the final three months last year, hit by a drop in sales of its flagship iPhones.

Apple sales were hit by curtailed production at factories due to China's zero-Covid policy that was only recently lifted.

"COVID-19 related challenges" that "significantly" reduced Apple's supply of iPhone 14 Pro and iPhone 14 Pro Max lasted through most of December, Apple chief executive Tim Cook said on an earnings call.

- 'Unprecedented circumstances' -
Apple's revenue was $117.1 billion, down 5.4 percent from a year ago for the same quarter a year earlier, missing what analysts had forecast.

"The world continues to face unprecedented circumstances, from inflation to war in Eastern Europe, to the enduring impacts of the pandemic and we know that Apple is not immune to it," Cook said.

Amazon meanwhile reported an inflation-fueled increase in sales despite the company announcing a massive round of layoffs to correct for a hiring binge during the pandemic when business growth ramped up.

"During periods of economic uncertainty, consumers are very careful about how they allocate their resources and where they choose to spend their money," Amazon chief financial officer Brian Olsavsky said on an earnings call.

"We saw them spend less on discretionary categories and shift to lower priced items in value brands in categories like electronics."

Last month, the company said it would let go more than 18,000 employees after the workforce swelled by 800,000 employees during the peak years of the pandemic period.

Amazon's sales figures of $149.2 billion in the quarter were better than initial forecasts by analysts polled by Factset, but its profit took a massive hit, falling to near zero.

"In the short term, we face an uncertain economy, but we remain quite optimistic about the long-term opportunities for Amazon," said CEO Andy Jassy.

The Big Tech earnings dump came a day after Meta said quarterly sales dropped one percent, which beat expectations, and announced that the number of daily users on Facebook hit two billion for the first time.

Shares in Meta ended the formal trading day up 23 percent.



Ubisoft Faces Make-Or-Break Moment with ‘Assassin’s Creed Shadows’ 

Visitors stand at the “Assassin's Creed Shadows” video game booth by Ubisoft during the media day at the Gamescom video games trade fair in Cologne, western Germany on August 21, 2024. (AFP)
Visitors stand at the “Assassin's Creed Shadows” video game booth by Ubisoft during the media day at the Gamescom video games trade fair in Cologne, western Germany on August 21, 2024. (AFP)
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Ubisoft Faces Make-Or-Break Moment with ‘Assassin’s Creed Shadows’ 

Visitors stand at the “Assassin's Creed Shadows” video game booth by Ubisoft during the media day at the Gamescom video games trade fair in Cologne, western Germany on August 21, 2024. (AFP)
Visitors stand at the “Assassin's Creed Shadows” video game booth by Ubisoft during the media day at the Gamescom video games trade fair in Cologne, western Germany on August 21, 2024. (AFP)

Ubisoft is banking on the success of "Assassin's Creed Shadows" to fight its way out of financial troubles as the French videogame publisher grapples with falling revenue, a sinking stock price and takeover speculation.

The title, which will be launched on Thursday, marks a return to the company's best-selling franchise after a string of high-profile flops including "Avatar: Frontiers of Pandora" and "Star Wars Outlaws" cast doubts on its strategy of licensing new intellectual property to create games.

Ubisoft's stock took a beating last year, falling more than 40% last year and drawing interest from an activist investor. The company's founding Guillemot family, its largest shareholder, has also been exploring talks with Tencent and other investors on a buyout deal that would let them preserve control.

Ubisoft declined to comment on speculation of selling the company's intellectual property.

The launch of the latest game, however, has been marred by criticism on social media including from Elon Musk over its diverse set of characters, as backlash against diversity efforts gains momentum in the US following President Donald Trump's election.

"The release of Assassin's Creed Shadows is a bit of an existential moment for Ubisoft," said Joost Van Dreunen, a lecturer at NYU's Stern School of Business.

"If it does really well, it could go a long way toward repairing its financial position."

After two delays and multiple leaks, the newest entry in the best-selling franchise transports players to feudal Japan, a fan-favorite setting for gamers. It features two protagonists: Naoe, a stealthy female assassin, and Yasuke, a heavily armored African samurai inspired by the real-life eponymous figure.

Ubisoft has refined the series' core mechanics of parkour and stealth to enhance the dual-character system. "They're not trying to reinvent the wheel, but they really hope that what they tried with the previous games still works right now," said Jordan Van Andel, who has played the game and whose YouTube channel JorRaptor has over 1 million subscribers.

Van Andel, whose content has in the past been sponsored by Ubisoft, said the game offered a more polished experience than recent titles in the franchise but its story was disappointing.

He added that the game needs to attract a player base beyond core fans to match the financial success of "Assassin's Creed Valhalla," the last big release in the series that came out in 2020 and the first game in the franchise to make over $1 billion in revenue.

DIVERSITY CONUNDRUM

Wedbush Securities analyst Michael Pachter believes the current US political climate could also pose challenges to the game, saying that Trump "has made it okay to be anti-DEI."

Since its reveal more than two years ago, "Assassin's Creed Shadows" has faced criticism from groups over its creative choices such as having a black samurai and a female assassin.

"We could argue that the people that voted for him (Trump)... they would have hated the game anyway, but I think that they would have been less vocal," Pachter said.

North America accounted for over 53% of Ubisoft's total videogame bookings in its fiscal year 2024, as many of the company's franchises such as "Far Cry" have a broad appeal to the American audience.

Van Dreunen believes the controversy could work in Ubisoft's favor. "It's free press this only makes the game more interesting to a lot of players, I'm sure," he said.