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Apple and Amazon cited shortages for their disappointing earnings updates yesterday as yet more evidence that businesses are failing to respond to the consumer recovery following the coronavirus pandemic.
Sky-high energy prices, blockages at ports and labour shortages have all emerged as symptoms of a global economy coming back to life following the rapid shutdown last year.
Apple blamed a global shortage of chips for its earnings miss while Amazon said it struggled to find enough people to work in its warehouses to fulfil customer orders during the three months to the end of September.
Apple chief executive Tim Cook said “larger than expected supply constraints” had curbed the sales of iPhones, iPads and Mac computers and cost the company $6bn in the third quarter.
Brian Olsavsky, chief financial officer of Amazon, said the intense competition for staff had cost the ecommerce giant an additional $1bn in operating costs in the third quarter.
Both companies were equally gloomy ahead of the crucial holiday season. Olsavsky said extra operating costs would rise to $4bn in the current quarter, covering Thanksgiving and Christmas. Cook said supply constraints would cost Apple more in this quarter that the last one.
“We wish we had more supply (from) where we stand right now,” Luca Maestri, Apple’s chief financial officer, told the Financial Times, adding that “demand is very, very strong”.
Investors took note of the downbeat comments and sent shares in both of the tech giants down sharply in trading after the market closed, indicating the shares of Apple and Amazon will open lower when trading begins later today.
Thanks for reading FirstFT Americas. Here’s the rest of the news — Gordon.
Five more stories in the news
1. Biden unveils deal framework Joe Biden failed to reach agreement with his party on a $1.75tn package of measures to boost investment in climate action, education and healthcare before flying to Europe to attend the G20 summit and UN climate conference. Talks are expected to continue with progressive and moderate wings of the Democratic party today and over the weekend before the bill is put to a vote in Congress.
Go deeper: Cori Bush, the progressive lawmaker from Missouri, urged the White House to keep fighting for a larger domestic spending package in an interview with the Financial Times.
2. Facebook changes name to Meta The corporate rebranding reflects the company’s push to build a digital avatar-filled virtual world known as the metaverse as it battles a deepening public relations crisis and growing regulatory scrutiny.
3. Andrew Cuomo faces sex crime complaint The complaint against the former New York governor was filed in the Albany city court yesterday and accuses Cuomo of “forcible touching” by reaching under a woman’s blouse in December 2020 at his executive mansion “for the purposes of degrading and gratifying his sexual desires”.
4. Moldova calls for EU help in gas deal Natalia Gavrilita, Moldova’s prime minister, has warned that the country is on the brink of an economic crisis, calling on the EU to help it withstand pressure from Russian gas producer Gazprom. The “next two to three weeks” would be crucial, she said.
5. David Bowie’s songwriting catalogue put up for sale David Bowie’s estate is in talks to sell his songwriting catalogue and has attracted bids of about $200m, according to people familiar with the matter. The deal would span decades of albums including Let’s Dance, Heroes and The Rise and Fall of Ziggy Stardust and the Spiders from Mars.
The eurozone’s economic rebound from the pandemic gathered pace in the three months to September, with France and Italy rebounding strongest but supply chain bottlenecks leading to a slowdown in Germany.
US economic growth slowed considerably in the third quarter owing to supply-chain disruptions, Covid-19 caseload and slower spending on consumer goods.
A cheap antidepressant reduces the risk of hospitalisation in Covid-19 outpatients who are at higher risk of severe disease, a large study has found.
The last seven countries have been removed from England’s travel “red list” in line with a relaxation of pandemic-induced restrictions across the world.
The days ahead
Oil earnings ExxonMobil and Chevron report earnings a day after executives from the two oil majors were accused of decades-long efforts to spread disinformation over the role of fossil fuels in driving global warming.
G20 summit The gathering of world leaders in Rome this weekend marks the first in-person G20 summit since the start of the pandemic. Notable absences will include China’s Xi Jinping, Russia’s Vladimir Putin and Japan’s Fumio Kishida. All three are set to join remotely via video link.
Japan general election New Japanese prime minister Fumio Kishida is gambling on a quick election victory on Sunday to secure the public mandate and solid base to rejuvenate a stagnant economy still recovering from the pandemic.
COP26 kicks off The UN climate change summit will begin in Glasgow on Sunday. For in-depth analysis of the conference every weekday check out our Moral Money newsletter. Stay up to date on all our COP26 coverage on FT.com.
What else we’re reading
Can we defeat death? The quest to make death optional, or at least meaningfully defer it beyond current norms, is no longer a fringe pursuit. As tech titans invest in the quest to extend our lives, Anjana Ahuja asks if longer lifespans are at last possible — and at what cost.
The coming army of Wall St whistleblowers US banks should be braced for a wave of whistleblower complaints after the Commodity Futures Trading Commission offered a record $200m award to a former Deutsche Bank employee, offering a reminder that regulators can pay to expose corporate wrongdoing.
Are retail trading apps too easy to use? Confetti and colourful emojis may once have been strangers to the dry, colourless world of digital stock trading but now they are symbols of a debate within brokerages wrestling with just how simple apps should be.
Lessons for China from Japan’s 1990s collapse One of Chinese policymakers’ main goals is to avoid Japan’s 1990s fate, when the excesses from years of rapid growth culminated in the collapse of a spectacular asset price bubble. The longer Beijing takes to address its housing market bubble and accept a lower level of growth, the worse the pain will be.
Save more by working less Simon Kuper explains why a four-day work week would be an effective weapon in the fight against climate change. “Instead of more stuff, governments need to offer people more time,” he says, especially in developed countries.
Annie Clark, the rock star who performs as St Vincent, and longtime artist friend Carrie Brownstein have combined to explore life and fiction in The Nowhere Inn. “The weirdest, wittiest, most excruciatingly embarrassing tour movie I’ve ever seen,” says reviewer Helen Brown.
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