At the end of 2022, Apple sales went down because people had less money to spend because the cost of living was going up.
In the three months before December, sales at the company that makes the iPhone were 5% lower than they were at the same time in 2021.
It was the biggest drop since 2019 and worse than anyone had expected.
Many businesses are warning of a sharp slowdown in the economy, especially in the tech sector, which grew quickly during the pandemic.
Tim Cook, who is in charge of running Apple, said that the company is in a “challenging environment.”
He said that the drop in sales was caused by a lack of supplies because of Covid-19 in China, where its phones are made, and a strong dollar, as well as a weaker economy in general because of rising prices, the war in Ukraine, and the effects of the pandemic that are still being felt.
Apple said that its sales dropped everywhere and that most of its products were affected.
Sales of Apple’s popular iPhones dropped by more than 8%, and sales of Apple’s Mac computers dropped by 29%.
The company’s profits fell 13% to $30 billion (£24 billion).
Roger McNamee, who started Elevation Partners, said on the BBC show “Today” that Apple’s biggest problem was its supply chain in China.
Paolo Pescatore, an analyst at PP Foresight, said that Apple and many other electronics companies were having trouble getting people to upgrade because of “what is seen as incremental improvements on previous models.”
He said, “Even more so now that everyone is trying to save money.”
According to the market research firm Canalys, the number of smartphones shipped worldwide fell by 12% in 2016.
Executives at Apple said that their services business, which includes Apple Pay and Apple News, would continue to be a growth driver. In addition, they said that more than 2 billion Apple devices are now in use worldwide.
Other big tech companies also told their investors they were under great pressure.
Amazon needs help to get its online business up and running again. In the last three months of 2022, sales at Amazon’s online stores were down 2% compared to the same time last year.
Overall, Amazon’s sales for the three months were up 9% to $149.2 billion. This was helped by the fact that its business in cloud computing grew faster than expected.
But its profits went from $14.3 billion a year ago to almost nothing. Brian Olsavsky, the company’s chief financial officer, told investors that this change was likely to continue in the coming months.
Google and YouTube are both owned by Alphabet, which is a company. But in the three months before December, sales were only up 1% from the same time in 2021. Because the economy is unstable, companies have cut back on advertising, which is their main source of income.
The CEO of Apple will take a massive 40% pay cut
Tim Cook, the CEO of Apple, will make more than 40% less this year than he did last year.
The technology giant says that Mr. Cook asked for the pay cut after shareholders were critical of him.
The compensation committee at Apple set his “target compensation” for the year 2023 at $49 million (£45.1 million).
Last year, the shares of the company that makes the iPhone dropped sharply because of problems in the supply chain and a slowdown in the world economy.
With this change, Mr. Cook’s base salary will stay at $3 million a year and get a bonus of up to $6 million.
The most important difference in his pay is how he will get company shares.
In 2022, the company gave him $75 million worth of shares, of which half were tied to how well Apple did on the stock market.
This year, his stock award goal has been lowered to $40 million. Three-quarters of that amount will depend on how well his shares do.
Mr. Cook was supposed to make $84 million by 2022, but he made $99.4 million last year. This number includes the $630,600 he paid for security and the $712,500 he paid to use a private jet.
Last year, a top group that advises investors told Apple shareholders to vote against Mr. Cook’s pay package.
In a letter to investors, Institutional Shareholder Services (ISS) said there are “significant concerns” about the “design and size” of the package.
The ISS said Mr. Cook made 1,447 times as much as the average Apple employee.
Mr. Cook became CEO of Apple in August 2011, just a few weeks before co-founder Steve Jobs died.
Apple was the first company to have a market value of $3tn under Mr. Cook’s leadership. During a tough year for the tech industry, the company’s value fell to about $2.1tn.
In the past year, lockdowns at factories in China, delays in the supply chain, and a slowing global economy have caused Apple’s share price to drop by more than 20%.
Forbes magazine says the 62-year-old person has about $1.7 billion in assets. Mr. Cook has said that he will give away all of his money while he is still alive.