Apple, one of the world’s most valuable companies, is reportedly taking steps to cut costs in response to the uncertain economic climate.
Despite revenue challenges, Apple takes thoughtful approach to cost-cutting
According to a new report, the tech giant is reducing some employee bonuses, limiting hiring, and opting not to replace some workers who have left. Bloomberg reporter Mark Gurman, citing anonymous sources, notes that these measures were first implemented in July 2022 in response to concerns about rising inflation and a possible recession. However, these measures are now reportedly expanding and deepening.
Despite Apple’s reputation for being one of the wealthiest companies in the world, the company’s revenues were down 5 percent year-on-year over the holiday period due to iPhone production problems and soft Mac demand. The company is also forecasted to have a decrease in revenue in the current period. In response to these challenges, CEO Tim Cook has emphasized the need for prudence and thoughtfulness when it comes to spending. The company is also being cautious about hiring new employees.
Cost-cutting measures at Apple reportedly include a reduction in travel budgets, increased executive spending oversight, and some layoffs of contract workers. Even CEO Tim Cook himself has taken a pay cut. However, it’s worth noting that Apple has generally avoided the severe cuts seen at other tech companies such as Snapchat, Meta, and others.
It’s possible that Cook’s cautious tendencies as CEO have contributed to this approach. Unlike some of its rivals, Apple tends to avoid extending itself too far during sales booms, which means there is less need for retrenchment during lean times. That said, it’s worth emphasizing that “lean times” is a relative term for Apple. Despite disappointing quarterly earnings reports, Apple’s services division alone generated over $20 billion in revenue, making it a high-ranking Fortune 500 company in its own right.
Furthermore, the iPad division saw a 30 percent increase in sales, and the company remains profitable overall. While Apple is clearly taking measures to address the current economic climate, it’s important to remember that the company is not in trouble. Rather, it’s taking a prudent and measured approach to cost-cutting in response to the current uncertainty.