Mark Gurman: Apple tightens ship for 2023

From "Apple Plans to Slow Hiring and Spending for Some Teams Next Year" posted Monday on the Bloomberg:

Apple Inc. plans to slow hiring and spending growth next year in some divisions to cope with a potential economic downturn, according to people with knowledge of the matter.

The decision stems from a move to be more careful during uncertain times, though it isn’t a companywide policy, said the people, who asked not to be identified because the deliberations are private. The changes won’t affect all teams, and Apple is still planning an aggressive product launch schedule in 2023 that includes a mixed-reality headset, its first major new category since 2015.

Still, the more cautious tone is notable for Apple, a company that has generally beat Wall Street predictions during the Covid-19 pandemic and has weathered past economic turmoil better than many peers.

Apple, based in Cupertino, California, allocates a certain amount of money to each major division annually for spending on research and development, resources and hiring. For 2023, it’s giving select teams a lower-than-expected budget.

For some groups, the company won’t increase headcount in 2023, whereas it might normally hire 5% to 10% more employees in a given year. It also plans to not fill roles of departing employees for some groups.

My take: With recession clouds brewing, this sounds prudent.

10 Comments

  1. Paul Brindze said:
    What a total BS article.

    “Some groups” … not clear what groups, what percentage of company affected … implies but doesn’t claim it is company wide policy. In fact, it even says, down in the middle, that overall corporate wage spending will be up (but says it’s due to inflation and difficult hiring).

    Some divisions got a haircut .. someone got mad and talked to Bloomberg … a reporter/editor at Bloomberg thought the market should be going down … so they ran with it.

    I want to hear the rest of the story.

    4
    July 18, 2022
    • John Butt said:
      I agree, this looks and smells like BS. Apple would be doing this in many divisions every year as the markets move in multiple directions and their focus on products and services changes.
      An easy headline based on no real data – but it got clicks and affected the market. The volume of AAPL buys/sales appears to have grown for an hour after their post. Was this an intentional post to enable a buy at a discount?

      2
      July 18, 2022
    • Mark Visnic said:
      Yes Paul. This was written:

      “Even as it prepares to rein in spending in some areas, Apple plans to boost its companywide compensation budget this year to cope with a tighter labor market.”

      And, Gurman also saw fit to throw in this:

      “The company has been spending billions of dollars annually on a troubled electric car effort, new content for its Apple TV+ streaming service and its mixed-reality headset.”

      A “troubled electric car effort?”

      1
      July 19, 2022
  2. Robert Paul Leitao said:
    Global economic growth is slowing and we will know soon if the US has already experienced two consecutive quarters of slightly negative GDP growth. This isn’t in any way “alarming.” It’s more an indication of smart and focused management. Apple’s operating expenses rose sharply during the pandemic period. Apple’s management is choosing to align spending with the realities of a challenging global economic environment. This isn’t so much “news” as it is an indication the company is smartly adjusting spending commitments in response to a dynamic product and services marketplace, the realities of a post-pandemic global economy and the planned introduction of new products and services. Apple is a dynamic and forward-looking enterprise. Strategic adjustments are not only necessary, they are beneficial for Apple, the company’s customers and the company’s shareholders.

    6
    July 18, 2022
    • Alan Trerise said:
      Totally agree. Seems prudent to pump the brakes. Plus engineering salaries have gotten out of wack. Time to take stock and see if they can achieve an appropriate E (of PE) with this work force in this macro environment. Then there is the whole work from home wild card as well.

      2
      July 18, 2022
  3. Fred Stein said:
    Table scraps masquerading as a meal.

    Surely Apple has recently started FY 20223 budgeting. Surely some groups will grow faster and some slower. Surely the people at BB understand this.

    5
    July 18, 2022
  4. Dung.
    Bloomberg derides Apple based “ decision stems from a move to be more careful during uncertain times, though it isn’t a companywide policy, said the people, who asked not to be identified because the deliberations are private.” Private, huh?
    So an Apple executive or other high-placed employee risked their career so Bloomberg could write fluff with no source identified? No matter, some inept editor approved the story and the market sucked it up like so much hot air. Bloomberg has shrunk into a relic, like their terminals in the Internet Age.
    “The changes won’t affect all teams, and Apple is still planning an aggressive product launch schedule in 2023 that includes a mixed-reality headset, its first major new category since 2015.” – further eroding a porous tale.
    I don’t doubt every HR manager is scrutinizing every new hire, selecting fewer blokes and maybe adjusting the skill sets but if you don’t have a real source you can quote you’ve written something the Grimm Brothers would be proud of.

    7
    July 18, 2022
    • Mark Visnic said:
      “ ….according to people with knowledge of the matter….”. “… said the people, who asked not to be identified because the deliberations ….”

      This didn’t come from Apple. It wasn’t a purposeful leak. It is pumped up, unsubstantiated journalism. The premise is Apple is preparing for a recession. The facts — there are no facts — don’t support it. There are hints that Apple is in the process of budgeting “deliberations” for 2023. At worst, in some segments of the company, robust hiring in the last couple of years will slow or stop because of robust hiring over the last couple of years. More likely, the company will increase employees company wide and this will be proven to be more clickbait negativity masquerading as journalism. The timing was curious. The S&P 500 tech sector had just reclaimed its 50 dma before the article was published and pushed the index back under.

      We’re choking on too much speculative negative information. Now, articles and CNBC talking heads are referencing the article as if it is an Apple press release and it is saying We, Apple, are preparing for a full blown recession, which is something we don’t do, so, look at us, we’re worried! The algos are profiting easily from it. Citadel and Goldman’s “trading” profits are up and hedge fund short is exposure is very high.

      1
      July 19, 2022
  5. Gregg Thurman said:
    Apple maintained workforces during the 2008 bank meltdown, saying it went to great expense to assemble it. Apple did the same thing during the Covid lockdowns: paying Store eoyees even though it’s stores were closed.

    That Apple would trim it workforces based n rumors of a slowdown is pure nonsense. Apple thinks much further out than 6 months to a year, unlike the media that only thinks in terms of today’s readership.

    On the other hand ALL firms adjust labor to where it is needed. Apple has a long history of moving staff from one project to another asdevelopment schedules demand.

    6
    July 18, 2022

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