Apple stock falls on rare Q4 earnings miss

Apple has so far been praised for a deliberate hiring approach that has saved the company from massive layoffs by top competitors like Alphabet and Amazon. But even the iPhone maker isn't immune to economic headwinds. In quarterly results released today, the company posted its first year-over-year loss since before the pandemic.

The company's quarterly revenue, for the quarter ending Dec. 31, 2022, was $117.2 billion, down 5% year-over-year, according to news release.

CEO Tim Cook tried to accentuate the positive side of the earnings report. "As we all continue to navigate a challenging environment, we are proud to have our best range of products and services yet, and as always, we remain focused on the long term and lead with our values ​​in all that we do,” Cook wrote. .

The executive opened up a little more in an interview with CNBC, noting a trio of key headwinds, including iPhone production issues in China, the broader economic climate, and the strength of the U.S. dollar . He noted that Apple, like the rest of the world, will be making strategic cuts. "We also recognize that the environment we find ourselves in is challenging," Cook added. “And so we reduce costs. We're cutting back on hiring, we're very careful and deliberate about who we hire."

After benefiting from an increase in hardware sales during the pandemic as people restructured their work and school lives during a period of relative economic boom, the company is now seeing declining sales activity. The latest quarter represented the company's largest quarterly revenue decline since 2016.

Mac and iPad revenues fell nearly 30% each from a year earlier, while iPhone revenues were down 8%. Supply chain and manufacturing issues have created a major bottleneck for the handset in recent years. Meanwhile, a new wave of lockdowns in China has exacerbated the problems during what is traditionally the company's most profitable time of year. Apple now says it is comfortable with iPhone production levels.

Last month, the company announced that Cook would take a nearly 50% pay cut for the year, bringing him an annual salary of just $49 million.

With Cook's latest comments regarding strategic cuts, coupled with what we now know about the company's financial performance, it's fair to wonder if any downsizing is ahead for the company. What we do know is how challenging the macro environment has been for the hardware giant, which according to its latest milestone has more than 2 billion active devices in its installed base.