Apple seems to have confirmed what we already knew: times are tough, and while the company will continue to invest in product development, it will freeze investment in some of its departments, according to Bloomberg.
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Showdown over slowdown
We don't know which parts of Apple's business will be affected. Bloomberg simply says that the company will no longer increase headcount in certain departments next year. Amazon, Google, Microsoft and other tech companies are also slowing recruiting in response to relentless economic headwinds.
It's not the same as cutting jobs, of course, and, at least in Apple's case, the freeze doesn't affect the entire company, it only affects parts of the larger company. Meanwhile, Tesla has laid off hundreds of workers and closed at least one research facility.
What parts of the business may be affected?
It stands to reason that in the context of the recession, Apple could slow down the rate at which it opens new stores. That said, it's worth remembering that Apple opened its first two retail stores in May 2001, just a year after the dot-com bubble burst in early 2000. In other words, Apple has been successful in the past with bets in the longer term. against headwinds in the market.
We'll find out what impact these headwinds have had on Apple's business in the current quarter on July 28, when the company will release its next financial results.
We know that sales are expected to decline as consumer demand weakens. In its latest tax call, Apple warned of a bumpy quarter with sales down €8 billion, quarter on quarter.
under the hype
Despite these possible weak points, there have been positive thoughts in the last 13 weeks. Macs are gaining market share in the declining PC market. iPhones remain popular in China: Apple's market share continues to grow. Some supply chain problems appear to be improving. But what isn't improving is consumer confidence as we face the real four horsemen of insecurity: disease, rising food and energy prices, environmental blight, and war.
Apple's reported actions simply confirm that when the bridges come out, things get tough. Credit Suisse chairman Axel Lehmann told CNBC that while some tech companies may not make it to the next chapter, "fundamental trends will remain, that technology and digitization will be important, new business models."
[Also read: Apple (almost) says, ‘If you want to collaborate, stay apart’]
While analysts have cut current targets on Apple stock in response to headwinds, the company appears well-positioned to continue to grow on these emerging new business models.
Where does the disk go?
Its move to Apple Silicon has not only given a big boost to the company's Mac sales in enterprise markets, it continues its focus on making technology that is both personalized and private (like its health care products). . become essential components of the connected future that Lehmann envisions.
This digital transformation is driving, and will likely continue to drive, strong growth for Apple in the business and for the companies that provide services to support such use.
In other words, even in a potentially recessionary market, Apple still has great growth opportunities. The Bloomberg report clearly indicates that Apple intends to continue this growth. It even specifically notes that the company has no plans to slow down its product announcement cycle, expecting it to launch a new family of AR glasses in 2023. Apple has innovated its way through the dot-com bust and will continue to use the same. strategy this time.
Meanwhile, Apple's installed base is driving additional services revenue opportunities. Apple's services business has now become a bigger business than IBM, showing how astute Apple's management has been in diversifying its business mix so that it is less reliant on pure hardware sales than before.
Evercore analysts recently predicted that Apple services will generate €100 billion in revenue by 2024.
“While the jittery market backdrop creates a chilly environment for tech stocks, we believe Apple's growth story remains intact despite the fragile macro. Apple remains our favorite tech name," wrote Daniel Ives, an analyst at Wedbush.
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