In the biggest week of the holiday season, big tech results take center stage amid thousands of layoffs that are just the beginning.
After tech stocks fell sharply in 2022, investors are looking for signs of an upturn in holiday reports and potential forecasts for the year ahead from three of the top five companies by market value in 2022. : Amazon.com Inc. AMZN,
Apple AAPL
Meta Platforms, Inc. META
Two other stocks on that list — Microsoft Corp. MSFT
and Tesla Inc. TSLA
— Microsoft’s results following mass layoffs announcements reported last week didn’t bode well for its Big Tech brothers.
See also: Microsoft could be the ‘canary in the coal mine’ for the cloud sector
Those companies — with Alphabet Inc. GOOGL, Google’s parent company
goog
— After finding yourself in unfamiliar territory, it delivers results: demand for core products such as digital advertising, electronics and e-commerce after two years of pandemic surge and more than 20 years of honeymoon with investors Layoffs on the backdrop of a slowdown in economic growth.
The only big tech company that didn’t use a sword in its payroll was Apple, which saw the least staff increase of any group during the COVID-19 pandemic. , is now reporting that its core products had the smartphone industry’s worst year since 2013, after the holiday season’s worst slump on record. The iPhone maker could also face questions from Wall Street about changes to product sourcing that rely heavily on China, a country where COVID-19 restrictions have restricted the production of some phones. .
Tech industry layoffs haven’t hit Apple yet, but some analysts believe Apple will continue to do so, even though CEO Tim Cook has demanded and received a significant pay cut. said to be unlikely to escape.
DA Davidson analyst Tom Forte said in a research note on Tuesday, “Like other big tech companies, Apple will adjust its workforce numbers to reflect the increasingly challenging global macroeconomic environment. I anticipate it,” he said.
Rivals who are already cutting may face more if profits continue to decline along with revenue growth. Alphabet, for example, is cutting its 12,000 employees, but activist investors say that given how much the company has grown during the pandemic and the difficulties it’s currently facing in its online advertising sector, We have already said that it is not enough.
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Analysts say Meta’s “darkest days” are still ahead as it navigates over 11,000 layoffs, competition from TikTok, and early setbacks in the metaverse. CEO Mark Zuckerberg has pledged to continue spending on developing the Metaverse, even as the effort slashes Facebook’s parent company’s previously healthy earnings.
“We expect Meta to remain embroiled in an uphill battle within the Octagon in 2023,” Monness Crespi Hardt analyst Brian White said in a research note on Thursday. “Long term, we believe Meta will benefit from long-term digital advertising trends and bring innovation in the Metaverse. However, regulatory scrutiny continues, internal headwinds remain and this We believe the darkest days of the recession are ahead of us.”
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Online retailer Amazon AMZN
was the first big tech company to publicly declare that cost cutting was in order a year ago, earning $834 billion in market value in 2022. , when inflation siphoned more consumer dollars into necessities.
Amazon’s own AWS cloud infrastructure unit has contributed to increased sales over the past few years as companies build out their technology infrastructure. But his third-largest market capitalization loss in 2022 and a big barometer of overall technology spending, his Microsoft executives’ remarks and outlook haven’t always been promising for cloud growth. Own cloud business.
Further details: A company can determine whether 2023 will see record profits for U.S. companies.
Oppenheimer analyst Jason Helfstein said in a note on Wednesday, “Investors are calling for a slowdown in earnings over the next three quarters, and sentiment for AWS was already bearish. After conversations with industry checks, it was largely confirmed: “On a positive note, e-commerce revenues are stable and margins should improve from organic scale and announced job cuts. am.”
Over the past decade or so, big tech earnings have been a remedy to other problems in the market, but with layoffs already underway and questions about their trajectory going forward, expect relief from this week’s results. You can not.
Earnings this week
A week ahead the S&P 500 SPX is 107
Companies including 6 members of the Dow Jones Industrial Average DJIA,
According to FactSet, results are expected to be reported within the next week. More Dow components were reported last week, but it will be the busiest week for S&P 500 holiday earnings this season, FactSet senior earnings analyst John Butters confirmed to MarketWatch. bottom.
Home appliance manufacturer Whirlpool WHR
It was reported on Monday after forecasting lower-than-expected fourth-quarter sales.
On Tuesday, package delivery company United Parcel Service’s UPS
Among questions about demand for the holiday season, the report. The same goes for streaming service Spotify Technology, SPOT.
Following its own layoffs and possible price increase proposals, similar to McDonald’s Corporation MCD,
Amid concerns that rising prices are deterring people from eating out.ExxonMobil XOM,
Caterpillar CAT,
SNAP Co., Ltd.
Pfizer PFE
I will report back on Tuesday.
Earnings outlook: McDonald’s earnings unaffected by price increases
On Wednesday, T-Mobile US Inc. TMUS
Coffee chain Starbucks SBUX following data breach and volatile demand for mobile phones, according to reports.
In Thursday’s report, analysts are likely to focus on US demand and China’s reopening.
Thursday is also a big day for big tech companies, with Apple, Amazon and Alphabet reporting later that afternoon after Meta reported the previous day.
phone on calendar
WWE Upheaval: World Wrestling Entertainment Inc. WWE
Vince McMahon, who returned to the professional wrestling organization this month following sexual misconduct allegations, will report earnings on Thursday as he seeks a buyer or other so-called “strategic alternatives.”
Analysts have speculated how the company’s backlog of wrestling events and media content will be repurposed, with some suggesting potential interest from Amazon and Netflix Inc..
However, WWE has been struggling with storytelling that viewers can relate to and has cut back on the number of wrestlers.
The Wall Street Journal reported earlier this month that McMahon would pay a multi-million dollar settlement to a former referee who accused him of raping her. There was the retirement of my daughter who was promoted to co-CEO.
It’s not too clear as to whether Vince McMahon will attend Thursday’s earnings call.
Numbers to watch
GM and Ford car sales: Automaker General Motors GM
and Ford Motor F
It plans to release results on Tuesday and Thursday, respectively, as weaker demand and signs of rising interest rates make auto loans more expensive. According to the Associated Press, GM was able to maintain its own sales figures despite lower new car sales in the third quarter.
GM Chief Executive Mary Barry touted cars like the Escalade, Chevrolet Volt EV, and some pickups and SUVs at the automaker’s third-quarter earnings call in October. GM said it completed and shipped about 75% of the unfinished vehicles it held in inventory in June during the quarter. She said supply chains were reopening, but “short-term disruptions will continue to occur,” she added.
Auto makers report chip shortages and other production constraints are on the backburner. However, some forecasts suggest that 2022 will see the weakest car sales or unit sales in about a decade. Electric car maker Tesla’s recent price cuts could also affect GM and Ford’s own EV sales.
