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Apple’s 1st sign of weakness – will there be much worse yet to come?

The timing from Apple seems ironic, but, as one door opens, another is closing

Apple showing signs of weakness in retail?

Let’s go shopping

Apple is on the verge of yet another first – this time, their first retail store in India.

The store is expected to open later this month in Mumbai. Ahead of that opening, the company released the above image of the store’s barricade, and even a special, commemorative wallpaper, which can be downloaded here.

The 22,000 square foot store will be named Apple BKC and is actually located in the highly premium Jio World Drive Mall, and will use familiar design styles from other flagship stores such as those found in Los Angeles, and Milan.

This store represents the next opening in Apple’s ambitious retail store expansion program, having just thrown open the doors to the new store in South Korea.

As promising as all this sounds though, is it possible, not everything is quite as peachy-perfect as it first appears within those Cupertino walls?

Last man standing

The tech headlines have been awash with the news of sweeping redundancies for the past six months.

10,000 here, 5000 there – the losses have been damaging both individually to those affected, and also to global economies. Twitter, Meta, Alphabet, Amazon, Microsoft, size and reputation has not mattered, the culling has been savage and widespread.

The reasons for these layoffs, can almost be directly linked back to COVID lockdowns, and vanity hiring. During those long days, we spent at home, tech companies experienced an almost once in a lifetime boom.

While those companies doubled their workforce through the pandemic to keep pace with that false growth, Apple only increased their workforce by twenty percent.

Ever cautious

It’s suggested that Apple has never completely recovered from events in the late 90s, when they nearly went out of business themselves.

Their products had become overpriced and uninspired, and units were not shifting. As we know, Jobs came back to the company, sprinkled some magic dust, and they have never looked back since. But, those dark days, left their battle scars. Apple is forever financially cautious, even now, with a valuation of around $2 trillion.

That caution meant that Apple, even though they too saw growth, refrained from going on a mass hiring-spree three years ago. Instead, they did what they do best. The ran a tight ship, focused on profit and bringing desirable products to market.

Apple had been the only big player not to make any redundancies – until this week, that is.

Winds of change

Only early last month, CEO Tim Cook, when asked, said that layoffs were “a last resort kind of thing”.

I view layoffs as a last-resort kind of thing. You can never say never. We want to manage costs in other ways to the degree that we can.

Tim Cook

But, no matter how tight Apple pulls the belt, the almost inevitable has struck. Mark Gurman, of Bloomberg, reported this week that Apple were “eliminating a small number of roles within its corporate retail teams”.

On first look, it appears that it is a fairly small number of corporate retail employees that are facing being shown the door. The employees who are part of the downsizing handle the construction and upkeep of Apple retail locations worldwide – so you’d imagine, directly linked to the store in India, and the rest of Apple’s retail expansion program. Whether these layoffs are the first signs of Apple possibly slowing down their retail opening plans due to the recession, is unclear.

It’s kept as quite a closely guarded number, as to how many people Apple employs in these teams, or how many will finally be laid-off. The terminology coming out of Apple HQ, is not layoffs, but rather, ‘streamlining’. The company has also promised to make every effort to support those affected. They will be encouraged to reapply for “roles similar to their prior jobs”. And, those choosing not to continue to work for the company, will be offered “as much as four months of pay”.

Last June saw Apple laying off 100 contractors that handled recruiting. But, crucially, they were contractors, and not full-time employees – there’s a big difference.

Timing

The announcement of these, admittedly, small number of layoffs, comes on the back of yesterday’s news, that the company is to announce their earnings results for the second fiscal quarter on Thursday 4th May.

That earnings report and investor call that will take place afterwards, will shed light on the companies performance between late December 2022 to March 2023.

As this period follows the holiday period, it’s historically, a slow quarter for Apple. This year may see a slight upturn for them, though, as they released a slew of new products this January.

Apple CFO Luca Maestri has warned, though, that year over year, revenue is expected to be similar to the December quarter. It’s forecast that services and iPhone revenue will continue to rise, but, it is possible, even with those new releases, that Mac and iPad revenue could dip by as much as double-digit’s year over year.

Wrapping up

As robust as Apple as a company, undeniably is, this is surely news that they would rather have avoided. And, as the world’s economies slip further in to a deep, and long-lasting recession, one can only wonder if more Apple job losses could yet occur.

As cautious as they are, even they cannot sail oblivious to the stormy waters we all find ourselves in. Make no mistake, if I was looking to work for a tech company, it would still be Apple, but it just goes to prove that no one company is impervious. Even the untouchable can be wounded.

And if they do announce good growth in May’s earning call, the timing of these job losses, no matter how minor, could look somewhat tasteless.

And all this comes as Apple is finally about to bring to market their mixed reality headset. They have already clarified, that this could initially run at a substantial loss, so the timing, really, could not be worse.

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