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Apple Sales Decline as Macroeconomic Factor Affects Earnings

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Giant tech company Apple has witnessed a decline in the overall sales for the holiday quarter, which is about 5% lower than last year’s, the first year-over-year sales decline since 2019.

The company posted a quarterly revenue of $117.2 falling short of estimated $121.10 billion, down from 5.4% year-over-year. The revenue of the iPhone was at $65.78 billion vs $68.29 billion estimated, down 8.17% year-over-year.

Speaking on the company’s poor performance, Apple’s CEO Tim Cook disclosed that three factors impacted the results; A strong dollar, production issues in China affecting the iPhone 14 pro and iPhone 14 pro max, and the overall macroeconomic environment.

He said,

As we all continue to navigate a challenging environment, we are proud to have our best lineup of products and services ever, and as always, we remain focused on the long term and are leading with our values in everything we do.

“During the December quarter, we achieved a major milestone and are excited to report that we now have more than 2 billion active devices as part of our growing installed base.”

Also commenting is the company’s CFO Luca Maestri who said,

We set an all-time revenue record of $20.8 billion in our Services business, and in spite of a difficult macroeconomic environment and significant supply constraints, we grew total company revenue on a constant currency basis.

“We generated $34 billion in operating cash flow and returned over $25 billion to shareholders during the quarter while continuing to invest in our long-term growth plans.”

The company also recorded its iPad revenue at $9.40 billion vs. $7.76 billion estimated, up 29.66% year-over-year. Other products revenue was at $13.48 billion vs. $15.23 billion estimated, down 8.3% year-over-year.

It posted services revenue at $20.77 billion vs. $20.67 billion estimated, up 6.4% year-over-year and Gross margin at 42.96% vs. 42.95% estimated.

The quarter result was a stunning miss by Apple, and its first earnings miss versus consensus expectations in almost seven years. In fact, it was only Apple’s second revenue miss since August 2017, with sales coming in more than 3% below consensus expectations.

One major impact that affected the sales of its iPhone 14 and iPhone 14 pro max was the shut down of one its biggest factory (Foxconn) in China due to restrictions.

The shut down of the company reduced the sales of  iPhones as there were only few to sell to customers, affecting the company’s revenue after production slumped as much as 30%.

Meanwhile, Apple will provide live streaming of its Q1 2023 financial results conference call beginning at 2:00 p.m. PT on February 2, 2023, but it did not provide guidance for the current quarter ending in March.

Apple has confirmed analysts’ fears, reporting its first year-over-year revenue drop since early 2019 and its biggest quarterly decline since 2016. The tech giant notched revenues of US$117.2 billion for the quarter ending Dec. 31, down 5% from a year earlier and missing Wall Street’s expectations by roughly $4 billion. That drop was partly a result of manufacturing problems in China, where COVID-related shutdowns hampered production of new iPhone models. But CEO Tim Cook said a strong dollar and the “challenging macroeconomic environment” also hurt revenue.

Revenue from iPhone slumped 8% compared with a year earlier. One bright spot was services — a segment that includes Apple Music and Apple Pay — which was up 6.4% year-on-year. Apple won’t replace Evans Hankey, vice president of industrial design, when she steps down this year, Bloomberg reports, citing anonymous sources. Hankey succeeded Jony Ive, the design chief behind some of Apple’s most iconic products.

Microsoft Opens A Huge Gap In Big Tech Race

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I do not know the add-on on Outlook which Johns Hopkins baked in; they provide that to all alumni, for life. What I like about that add-on is that it has the capacity to “parse” emails and come up with briefings and summaries for the day. People, Microsoft Viva which sends those notes with “Your daily briefing” is pretty cool – it has never missed any important issue from my emails.

Now, the news that Microsoft is baking OpenAI in Teams, its collaboration ecosystem, will take this to the next level. In other words, people can have discussions, meetings, etc and AI will send summaries with Action Plans:

“Microsoft has announced the incorporation of OpenAI’s GPT-3.5 into its Teams Premium, expanding the office tool’s features with AI-powered capabilities. The incorporation of the GPT-3.5 AI language model means the premium tier of Microsoft Teams now has an ‘intelligent recap’ feature that automatically generates notes, tasks, and highlights of meetings.

[..] “Built on the familiar, all-in-one collaborative experience of Microsoft Teams, Teams Premium brings the latest technologies, including Large Language Models powered by OpenAI’s GPT-3.5, to make meetings more intelligent, personalized, and protected—whether it’s one-on-one, large meetings, virtual appointments, or webinars,” the company said.”

Google, as Microsoft expands the powers of OpenAI across its products, if you do not reposition, what you did to Yahoo may suddenly happen to you. This is now an asymmetric attack on your core products, from search to collab systems.

Category-king companies create a new basis of competition, by providing orthogonal competitive paths, different from what any other firm does. In the world of search, Google unleashed one many years ago, taking Yahoo down in the process. For years, no other company has come to challenge the brilliance and absolute dominance of Google search.

But there is a redesign on the way – and Microsoft is part of it. When it provided truckloads of money to the guys in the OpenAI, I noted that Microsoft would possibly have the rights to first commercialize inventions out of the organization. Yes, it is called OpenAI but when it comes to money, not everything is “open”.

Meanwhile, ChatGPT has unveiled a subscription plan as it deepens it competitive and revenue playbooks: “ChatGPT is launching a paid subscription service, in which subscribers will get access to the AI at peak times. Parent company OpenAI announced that for $20 a month, subscribers will get an upgrade from the limited, free service provided during busy periods. The plan will initially roll out across the U.S., later expanding to other countries, with the company mulling business and lower-cost subscription options. The bot is already being used by many companies, including digital publisher Buzzfeed, which recently announced it would use ChatGPT to help generate content. However, there are also concerns around its safe use in business and education.”

As Microsoft rises, Google is having stress in its core advertising business: “Slowing YouTube advertising revenue and sluggish sales growth in other ad businesses led Google’s parent company Alphabet to log its first ad sales decline of the pandemic era. Alphabet reported a 1% dip from the year before, to $59 billion. ”

 The company’s latest quarterly results were also denoted by just its second decline in ad sales since 2004 and its fourth consecutive drop in quarterly profit. Alphabet has sought to rein in costs to mitigate an ad spending slowdown driven by rising interest rates and inflation. Net income plunged by 34% to $13.6 billion, well short of Wall Street expectations.  Alphabet is now planning “significant” work to improve its spending and growth, Alphabet and Google chief financial officer Ruth Porat told investors, just weeks after laying off 12,000 employees due to economic uncertainty.

Microsoft Incorporates OpenAI GPT-3.5 to Power Some Features of Teams Premium

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Microsoft has announced the incorporation of OpenAI’s GPT-3.5 into its Teams Premium, expanding the office tool’s features with AI-powered capabilities.

The incorporation of the GPT-3.5 AI language model means the premium tier of Microsoft Teams now has an ‘intelligent recap’ feature that automatically generates notes, tasks, and highlights of meetings.

Microsoft indicated that the move was spurred by the growing need for organizations to adapt to change, improve productivity, and reduce costs.

“Fortunately, modern tools powered by AI hold the promise to boost individual, team, and organizational-level productivity and fundamentally change how we work,” Microsoft said.

“This promise is rapidly becoming a reality. At Microsoft, we’re working to incorporate new, AI-powered capabilities across our consumer and enterprise products, including Microsoft Teams,” it added.

Microsoft Teams Premium, which was launched as a 30-day trial in December, is now available to everyone and has AI-enabled features such as branded meetings, custom meeting templates, and features like watermarking to better protect meeting contents.

“Built on the familiar, all-in-one collaborative experience of Microsoft Teams, Teams Premium brings the latest technologies, including Large Language Models powered by OpenAI’s GPT-3.5, to make meetings more intelligent, personalized, and protected—whether it’s one-on-one, large meetings, virtual appointments, or webinars,” the company said.

The biggest addition to Teams appears to be the ‘intelligent recap’, available in Teams Premium. Microsoft said customers can get these advanced meeting capabilities and more for one low cost of $10 per user per month. It added that “for a limited time, you can get Teams Premium for just $7 per user per month or 30 percent off the standard price.”

This move follows OpenAI’s decision to create and monetize a professional version of ChatGPT, a chatbot that Microsoft has invested billions of dollars in, and intends to incorporate into its web search engine Bing.

‘Intelligent recap’ offers several tools that make meetings easy. The feature uses OpenAI’s GPT-3.5 model to generate meeting notes and highlights even for those who weren’t present in a meeting.

“With intelligent recap in Teams premium, you’ll get automatically generated meeting notes, recommended tasks, and personalized highlights to help you get the information most important to you, even if you miss the meeting,” Microsoft said.

Other new features include the ability to review meeting recordings in shortest period, which is available for PowerPoint Live meeting recordings. AI-generated chapters divide the meeting into sections, making it easy for users to pick and choose the most relevant content. ‘Intelligent recap’ is designed to automatically generate meeting chapters based on the meeting transcript as well.

Another interesting feature is the ‘personalized timeline markers.’ It gives users the ability to privately catch up on the things they missed in a meeting using the ‘meeting recording.’ So you can quickly click and listen in on what you missed. Personalized timeline markers will expand to include when your name was mentioned and when a screen was shared.

“Soon, these personalized meeting highlights will expand to include speaker timeline markers that show you who spoke during the meeting, when they spoke, and allows you to jump to that moment,” Microsoft said, adding that “speaker timeline markers are intelligently organized by who you work most closely with, so you’ll never miss feedback shared from your manager in a meeting again.”

In addition, ‘intelligent recap’ helps users to focus on the meeting discussion itself and not on capturing notes. Microsoft said in the coming months, you’ll see key points and takeaways after the meeting, with AI-generated notes automatically created and powered by GPT-3.5. Follow-up is easy with AI-generated tasks and action items automatically suggested for you.

The company is also using the AI language model to solve one of the toughest collaboration challenges—working with people who natively speak different languages. With live translations, users can turn on live captions in Teams and see real-time captions in the spoken language.

“With live translations (for captions) now available in Teams Premium, you get AI-powered real-time translations from 40 spoken languages. Meeting participants can read captions in their own language, saving money and making meetings more productive and effortless,” Microsoft said, adding that only the meeting organizer needs to have Teams Premium for all meeting attendees to enjoy live translations.

Microsoft said the additional intelligent recap capabilities will be available in the second quarter of 2023. The company is keen on broadening its businesses with OpenAI. In addition to the Teams Premium’s AI incorporations, the company is reportedly moving to bring OpenAI technology to Word, PowerPoint, and Outlook.

India’s Largest Retail Chain to Accept Payments in Digital Rupee

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Reliance Retail, India’s largest retail chain, will start accepting retail payments in digital rupee in a move that could supercharge the adoption of the country’s recently launched CBDC initiatives. Cryptocurrency in India is going through a process of legal identification. There is little surety if the country will legalize the digital currency considering that the digital rupee has started circulating in the market.

The retail CBDC will be mainly used for retail payments just like “cash”. It will be a digital rupee signifying legal tender in the form of digital token and issued in the same denominations as paper currency and coins and will be distributed through intermediaries, i.e., banks

Reliance Retail is part of the Indian conglomerate Reliance, said it has rolled out the support for CBDC at its gourmet store line Freshpik and will extend the feature across all its properties eventually. Thursday’s move makes Reliance the largest Indian firm to adopt the digital rupee.

This historic initiative of pioneering the digital currency acceptance at our stores is in line with the company’s strategic vision of offering the power of choice to Indian consumers, said V Subramaniam, Director, Reliance Retail, in a statement. With more Indians willing to transact digitally, this initiative will help us provide yet another efficient and secure alternative payment method to customers at our stores.

India’s Public Debt is alarmingly high — at 84% of the GDP. See how 34% of the Budget or 1/3rd is from Borrowed Liabilities and how 20% of all expenditure is for Debt Repayments

20% of the India’s budget is spent on interest expenditure while 34% of the budget is funded from borrowings. That means of every 1 Rupee borrowed, 59 paise go to interest payments on previous debt.

India’s central bank started to pilot the e?-R in December for retail markets across select Indian cities. Through e?-R, the Reserve Bank of India hopes to lower the economy’s reliance on cash, enable cheaper and smoother international settlements and protect people from the volatility of private cryptocurrencies. Based on the test results of the ongoing pilot, the central bank plans to experiment with additional features and applications of the digital rupee.

The Mukesh Ambani-led firm said it has partnered with ICICI Bank, Kotak Mahindra Bank and fintech Innoviti Technologies to launch the in-store support for digital rupee. Customers who wish to pay with the country’s CBDC (Central Bank Digital Currency), called e?-R, will be provided with a dynamic digital rupee acceptance QR code for scanning at the store.

India’s central bank has spent the last few years largely pushing to make its citizens avoid crypto trading. Despite a ruling from the country’s apex court, the central bank continues to force the hand of banks from engaging with crypto platforms in India, a move that has made on-ramp a nightmare for the firms involved, people with direct knowledge of the matter said.

Similarly, IDFC FIRST Bank has partnered with ToneTag, a global proximity and voice tech solution provider, to enable acceptance of digital rupee at merchant outlets. This follows a pilot launch of Central Bank Digital Currency (CBDC) for retail users by the Reserve Bank of India (RBI).

Madhivanan Balkrishnan, COO, IDFC FIRST Bank said;

This solution will change how merchants transact, and IDFC FIRST Bank is a proud partner in this collaboration. Digitization of cash payments is one more step in making transactions easier for our customers. As a bank that firmly believes in ‘Customer First’ approach this initiative aligns well with the same.

Kumar Abhishek, founder and CEO ToneTag said;

We are glad to collaborate with IDFC First Bank and participate in the first phase of CBDC retail pilot. In this pilot ToneTag will provide solutions through which merchants will be enabled to accept digital currency. With this launch India becomes one of the only few countries Globally to take this leap of digitalizing cash and reap its great potential to reduce counterparty credit and liquidity concerns, as well as increase the efficiency of payments and securities settlement. This indeed is going to be India’s decade and many kudos to RBI.

Tech Layoffs – Social Media Company Pinterest Makes Organizational Change, Trims Workforce by 5%

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Image sharing and social media company Pinterest in a recent organizational change has trimmed its workforce by 5%, laying off almost 150 employees.

This is the company’s second round of layoffs after it carried out its first round in December last year. In the third quarter (Q3), the company had about 4,000 employees, with its recent layoffs, this will see the number significantly reduced.

Speaking on its recent layoffs of some members of its workforce, a spokesperson at the company said,

We’re making organizational changes to further set us up to deliver against our company priorities and our long-term strategy. Our employees are the heart of how we’re able to serve our Pinners around the world.

“All of the employees who were impacted contributed to Pinterest and as they transition, we’re committed to supporting them with separation packages, benefits, and other services.”

Recall last year November, also shut down its ‘creator rewards’ program which allowed content creators to earn money through monthly prompts and achieve certain engagement goals. According to them, this was to focus on other creator programs and features.

Also, due to the recent economic downturn, few other social media companies have been constantly tweaking their creator payment programs in recent times.

Companies such as Snapchat reduced its payouts to creators from millions of dollars per week to millions of dollars per year, Meta announced the closure of its Live Shopping program to focus on reels, also, Instagram closed its affiliate program, which allowed creators to get a commission if users purchased tagged products from their post

Pinterest joins the list of tech companies that have undertaken layoffs in the past few months as they seek to navigate the current economic downturn.

The image-sharing company witnessed a decline in its advertising budgets because of decades-high inflation that ravaged the earnings of online players from Alphabet, to Meta Platforms and Snap.

No doubt, the tech industry is reeling from a seemingly nonstop parade of layoffs across Silicon Valley and beyond. So far 256 tech companies have laid off 82769 employees in 2023.

According to a Crunchbase News tally, more than 58,000 workers in U.S.-based tech companies have been laid off in mass job cuts so far in 2023, with the tech sector making up 2.8% of total U.S. employment.

Big giant tech companies like Spotify, Intel Amazon, Meta, TikTok, Microsoft, IBM, Luno, Alphabet, and many others have also been affected by the economic downturn, causing them to cut down a big chunk of their workforce.