Tech’s Terrible Week, in 10 Charts

Thought

It’s been a terrible, terrible, bad and bad week for tech. From semiconductors and the Internet to computing and the cloud, the world’s largest companies that have easily reported earnings show the number of challenges they face. With so many bad numbers coming in, investors take the news and sell.

Most of the big tech names recovered on Friday, boosted by Apple’s good performance. But the overall pattern remained the same.

Hundreds of different data are shared with the market. Taken together, they tell a story of businesses hit by strong greenbacks, chain-chain snarls extending for a third year, inflation to be controlled and economic growth figures to be overwhelming. done. We’ve packed all of this into 10 documents – be sure to tell us what we missed.

The malaise in the semiconductor industry can best be summed up by the disaster reported at Intel Corp., the largest US chipmaker. As a supplier of components for computers and servers, Intel has been hit hard by the slowdown and is scrambling to fix it as it vows to catch up with rival Taiwan Semiconductor Manufacturing Co. . and Samsung Electronics Corp. in time to contribute four quarter points.

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A year ago, the world was short of chips and consumers were rushing to buy supplies and increase productivity. Last month, they reduced 2022 costs by more than $16 billion and are preparing to reduce spending next year.

A theme found this season is the result of the rise of the American dollar against each partner. Few companies are immune, including Amazon.com Inc. among the most difficult ones.

Apple Inc. looks strong. compared to others. His iPhone has done very well, although a press under the idea and increased by a few days of availability. Services, the division that includes Apple Music and Apple + TV is the second largest group in terms of revenue, continues to post solid growth, albeit at a slower pace in first of the first quarters.

Meta Platforms Inc. is sued. from all sides. The owner of Facebook, Instagram and WhatsApp has been seriously damaged by changes in Apple’s privacy rules, which make it difficult to track users on the apps and therefore reduce advertising costs. A global recession, along with high inflation, only adds to the problems. While user numbers are steadily increasing — there are 3.7 billion monthly active users across its family of apps — revenue per capita is declining.

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However, the social media company is blowing money on its Reality Labs division – founder Mark Zuckerberg’s creation of virtual reality and the metaverse that inspired last year’s name change . That company has lost more than $20 billion to date, and Zuckerberg told investors to expect the shortfall to continue for some time.

Alphabet Inc. isn’t doing well, but at least it’s growing. The 6.1% increase in income in the third quarter was the slowest since June 2020 after the Covid-19 pandemic. Its Google advertising divisions outpace its social media business and YouTube video service, while cloud services remain intact.

At Microsoft Corp., a decade-long transition away from consumer data — where revenue is directly linked to sales of computer hardware and software — helps I hope he can handle the storm better than most. Revenue for the September period rose just 11%, the slowest in five years, but better than most tech peers. Its footprint and product offerings are the main source of this relative strength. Customers – both consumers and businesses – are married to its suite of Office products, while those who subscribe to its Azure services have not been able to run in difficult times.

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The last two charts show how investors reacted negatively to this news. Downsizing the market is a global, cross-industry phenomenon. But the tech has been better, with the Nasdaq 30% lower than a year ago.

The biggest pain is the companies with a heavy reliance on advertising or short-term sales. It appears that the money is moving towards what is known as the screen protection technology, and Netflix Inc. will shine brightly among them.

If there’s any relief, investors should no longer worry about Twitter Inc.’s stock. That’s Elon Musk’s problem right now.

More from other Bloomberg Opinion writers:

• The Chips Act will not work without each part of the chips: Thomas Black

• Airbnb hosts have three options for money: Teresa Ghilarducci

• Tech investors like shouting at the cloud: Tim Culpan

This column does not reflect the views of the editorial board or Bloomberg LP or its owners.

Tim Culpan is a Bloomberg Opinion columnist covering technology in Asia. Previously, he was a technology reporter for Bloomberg News.

More stories like this are available at bloomberg.com/opinion

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