Apple has been praised for its careful approach to hiring that saved the company from mass layoffs by top competitors such as Alphabet and Amazon. But even iPhone makers aren’t immune to economic headwinds. In today’s quarterly results, the company posted its first annual loss since before the pandemic.

According to a press release related to the news, the company’s quarterly revenue for the quarter ended December 31, 2022 (Apple’s first quarter) was $117.2 billion, down 5% year-over-year. bottom. Shares fell more than 3% in pre-market trading the morning after the news release. CEO Tim Cook tried to highlight the positives on the earnings call. “As we all continue to navigate a challenging environment, we are proud to offer the best product and service we have ever had and, as always, we will continue to focus on the long term. , leads our values ​​in everything we do,” writes Cook.

Elaborating a bit more in an interview with CNBC, executives identified three main headwinds, including problems with iPhone manufacturing in China, overall economic conditions, and the strength of the US dollar. He said Apple would make strategic cuts, similar to other parts of the world. “We also know that the environment we are in is difficult,” added Cook. “And that’s how we cut costs. We’re hiring less and being very careful and conscious of the people we hire.”

The report also noted that Apple posted its first year-over-year quarterly revenue decline since 2019 and its largest annual quarterly revenue decline since September 2016. The company is now seeing sales activity dwindle after hardware sales surged during the pandemic as people restructured their jobs and school lives during a relative boom.

Mac revenue dropped nearly 30% each from the previous year (while iPad revenue was up that same amount), while revenue for the iPhone was down 8%. Supply chain and manufacturing issues have created a major bottleneck for the handset in recent years. Meanwhile, a new wave of lockdowns in China exacerbated issues during what is traditionally the company’s most profitable time of year. Apple says it is now comfortable with iPhone production levels.

With Cook’s latest comments around strategic cutbacks, matched with what we now know about the company’s financial performance, it’s fair to wonder if workforce reductions are coming for the company. What we do know is just how hard the macroeconomic environment has been on the hardware giant — which, per its latest milestone, has more than 2 billion active devices in its installed base.