Amazon warns of slower sales as economy weakens

BBC: Apple and Amazon sales are being hit by the weakening global economy, the tech giants have warned, adding to fears about their upcoming profits.

Amazon shares tumbled more than 15 percent after the US stock market closed, as the firm forecast far weaker sales for the festive season than expected.

Apple shares also slipped after warning of a slowing demand for gaming and advertising.

Both cited the rising cost of living as a factor eroding consumer buying power.
“We’re very optimistic about the holiday but we’re realistic that there are various factors weighing on people’s wallets”, Amazon Chief Financial Officer Brian Olsavsky told analysts on a call to discuss the results.

Amazon founder Jeff Bezos, who remains Chairman of the company, recently warned about worrying signals coming from the economy, writing on Twitter that it was time to “batten down the hatches”.

Apple, seen as one of the steadiest of the tech giants, has not been immune.

In its update on Thursday, Apple reported that sales rose by 8 percent to US $ 90.1 billion in the three months to September compared with the same period the year before. That was a quarterly record, albeit one dented by weaker-than-expected iPhone sales and soft growth in China. 

But Apple executives warned investors that they were seeing weakness in digital advertising and gaming and expecting a sharp fall in Mac computer sales. They added that a strong dollar would hit business.

“Apple’s ability to sell highly priced hardware in the current environment defies all the rules,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.

“The key festive season is a crucial barometer for consumer sentiment and there’s a possibility Apple is going to lose some steam year-on-year when it comes to Christmas sales.”