Tuesday, April 26, 2016
Apple's revenue drops, first time in 13 years; Twitter earnings fall, shares plunge; Power crisis forces two-day work week in Venezuela
1 Apple’s revenue drops first time in 13 years (Sam Thielman, Rupert Neate & Alex Hern in The Guardian) Apple shares dropped after the company reported a nearly 13% fall in quarterly sales, the first time revenue at the world’s most valuable publicly traded company has declined in 13 years.
Revenue was predicted by Apple itself to fall between $50bn and $53bn – it came in on the low end of that range, with a final tally of $50.6bn, a 13% drop. Apple said the decline would continue, predicting revenue between $41bn and $43bn for the June quarter.
The company had warned investors to brace for impact. The iPhone accounts for nearly 2/3 of Apple’s revenue and the company sold 16% fewer iPhones than it had during the same period in 2015 and made 18% less money from them. The total tally for the device was $32.9bn from 51.2m phones sold – the year previous Apple brought in $40.3bn from 61.2m phones.
Much of the falloff was attributable to the struggling Chinese economy. The nation’s consumer technology sector is in flux, as is the yuan. Still the second-largest market in the world for Apple products behind the US, the Chinese segment of Apple’s dismal report declined by more than a quarter of its value.
It is the first time Apple’s sales have fallen since 2003. Back then, the iPhone didn’t exist. Apple was still selling Power Mac computers and had sold only 600,000 iPods. It was the year iTunes was launched, which revolutionized the music business. The iPhone came out in 2007, followed by the iPad, and both were constantly updated, sending the company’s sales to ever higher levels.
But Apple does have big projects underway. It’s probably the worst-kept secret in Silicon Valley that the company is working on an electric car, poaching engineers from Tesla and scouting for test locations in California. And it’s also been hiring engineers and filing patents that also suggest it’s working on a virtual reality device of some sort.
In the meantime it is still piling up cash. It now has a cash mountain of $233bn; more than all the foreign currency reserves across the world and more than the Czech Republic, Peru and New Zealand make in gross domestic product (GDP) a year.
2 Twitter earnings drop, shares plunge (BBC) Twitter's latest earnings results have disappointed investors, coming in below expectations as the firm struggles with weak growth in users and advertising. Shares in Twitter plunged 13.6% after the results were out.
Twitter had 310 million monthly users in the first quarter while revenue was $594.5m, which missed analyst expectations. The company has for years struggled to generate profits from its large base of users. Twitter's revenue forecast for the current quarter was given as between $590m and $610m, also short of what investors had been hoping for.
To boost its stagnant user growth, Twitter has over the past months introduced a new user interface and emphasized its live video offerings. Yet with Facebook launching a similar product, Facebook Live, Twitter still has to prove that its turnaround plan will work.
3 Power crisis forces two-day work week in Venezuela (San Francisco Chronicle) Venezuela's public employees will work only on Monday and Tuesday as the country grapples with an electricity crisis. President Nicolas Maduro announced that the government was slashing working hours for at least two weeks in a bid to save energy.
He said the water level behind the nation's largest dam has fallen to near its minimum operating level thanks to a severe drought. Experts say lack of planning and maintenance is also to blame. The country's socialist administration already gave nearly 3 million public workers Fridays off earlier this month, and initiated daily four-hour blackouts around the country.
The government is now extending the Friday holidays to grade school teachers, though it appears employees of public hospitals and state-run supermarkets will still have to work. Venezuelans reacted with disbelief to the news that most public workers would hardly be going into the office.
Workers will be paid for the days they're sent home. Some have been using their Fridays off to wait in lines to buy groceries and other goods. Others have been going home to watch TV and run the air conditioning, leading critics to say the furlough is not an effective energy-saving measure.
Power outages have been a chronic problem in this oil country. Maduro's predecessor President Hugo Chavez promised to solve the problem in 2010, but little has improved.