Water Damage

Image source: Karlis Dambrans - Shutterstock

What's going on?

Amazon and Apple both reported worse-than-expected results late on Thursday, and it’s going to take more than a bag of rice to fix this.

What does this mean?

Amazon finally has something to grumble about: revenue from the company’s ecommerce segment climbed by a weaker-than-expected 12% last quarter versus the same time last year. It has reservations about the next few months too: it’s not expecting labor shortages to go away, even as it offers tasty incentives to poach workers off smaller outfits. Investors, then, initially sent its stock down 5%.

Apple had better luck: revenue from its services segment – Apple TV, Music, and the like – grew by more than expected. But the company said it reckons the chip shortage has cost it as much as $6 billion, and iPhone sales – which represent the company’s biggest source of revenue – came in below expectations too. Investors noticed: they sent its shares down 5%.

Why should I care?

Zooming in: Apple doth protest too much.
If you followed Facebook and Snapchat’s earnings updates, you’ll know Apple’s new privacy settings have made it harder for advertisers to target would-be shoppers. And while Apple keeps waxing lyrical about how the move was in iOS users’ interests, that virtuousness looks a little threadbare considering that advertisers now have to pay Apple directly if they want to get noticed. It’s hardly a coincidence, after all, that the segment has more than tripled its market share in the six months since the changes were introduced…

The bigger picture: A very wary Christmas.
Amazon’s disappointing ecommerce update reflects a bigger problem: US consumer spending is dropping off, which is partly why the country’s economy grew just 2% last quarter versus the same time the year before. That’s the slowest growth since the beginning of the recovery. So while your mom might think it’s the thought that counts this Christmas, economists beg to differ…

Originally posted as part of the Finimize daily email.

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