Apple is cutting costs in an attempt to streamline operations during uncertain times, according to a new report. The company is reducing the frequency of some employee bonuses, limiting hiring, and choosing not to replace some employees who have left.
Bloomberg reporter Mark Gurman, citing people with knowledge of the situation … (who) asked not to be identified because the plan hasn't been announced publicly, writes that a belt-tightening operation began last July in response to rising inflation and fears of recession, but that this is now expanding and deepening.
Not without reason: Apple's revenues were down 5 per cent year-on-year over the holiday period amid iPhone production problems and soft Mac demand, and are forecast to be down again in the current period.
We're being very prudent and thoughtful on spending, CEO Tim Cook said at a shareholder meeting last week, and we continue to be very deliberate when it comes to hiring.
Gurman notes that cost-cutting measures at Cupertino have included a reduction in travel budgets, an increase in executive spending oversight, and some layoffs of contract workers; even Cook himself has taken a pay cut.
It's worth emphasising that Apple has generally avoided the severe cuts seen at other tech companies: as the Macalope reported earlier this year, Google, Microsoft, Amazon, Facebook, Spotify and many other tech giants have recently resorted to mass layoffs.
Partly this may be because of Cook's cautious tendencies as a CEO: Apple rarely extends itself as much as rivals during sales booms, which means less need for retrenchment during lean times. But it's also fair to say that lean times is a relative term.
During that supposedly disappointing quarterly report, Apple noted that its services division alone, big enough to be a high-ranking Fortune 500 company in its own right, broke the $20 billion mark in revenues for the first time. (Intel as a whole made US$14 billion in its most recent quarter; Netflix made less than US$8 billion.) The iPad division was up by 30 per cent, and the company was still wildly profitable.
So while Apple is clearly taking matters seriously, it would be a mistake to think the company is in trouble.