The daily business briefing: May 5, 2023
Apple revenue declines less than expected, Biden discusses AI dangers with tech leaders, and more
Apple revenue declines but not as much as expected
Apple on Thursday reported declining revenue for the second straight quarter, although it said iPhone sales jumped thanks to high demand in emerging markets. The first-quarter report marked just the third time in 10 years that the tech giant has posted falling revenue for two straight quarters. Revenue in the first quarter came in at $94.8 billion, down three percent compared to the same period a year ago. Still, that was better than the $92.9 billion analysts had expected. Net income also fell three percent compared to a year ago to $24.2 billion, better than the $22.6 billion analysts expected.
Biden discusses AI concerns with tech leaders
President Biden met Thursday with CEOs of Microsoft, Google-parent Alphabet, and other tech companies to discuss the dangers of artificial intelligence technology. Companies are rushing to introduce apps like ChatGPT and exploring the potential of AI to do everything from making medical diagnoses to writing legal briefs. Biden told the executives that they need to address concerns about the risks AI poses to users and national security, the White House said. The participants in the meeting had a "frank and constructive discussion" about the importance of transparency and evaluating safety, the White House said. "We're surprisingly on the same page on what needs to happen," said Sam Altman, CEO of ChatGPT creator OpenAI.
Stock futures rise ahead of April jobs report
U.S. stock futures rose early Friday after Apple reported better-than-expected earnings and investors braced for an April jobs report expected to show continued cooling. Futures tied to the Dow Jones Industrial Average and the S&P 500 were up 0.5 percent and 0.6 percent, respectively, at 6:45 a.m. ET. Nasdaq futures were up 0.7 percent. The three main U.S. indexes fell on Thursday, but investor sentiment improved after Apple's results. Forecasters expect the Labor Department to report on Friday that the economy added 180,000 jobs in April, down from the 345,000-job monthly average in the first quarter due to an ongoing slowdown of sectors that boomed during the pandemic and the Federal Reserve's aggressive interest rate hikes to fight inflation.
Adidas sales hurt by Yeezy fiasco but fall less than feared
Adidas said Friday its first-quarter operating earnings took a hit from the German sportswear company's split with the rapper Ye, formerly known as Kanye West, over his antisemitic remarks, which left the company stuck with $1.3 billion worth of unsold Yeezy shoes. The Yeezy problem cost Adidas $441 million in lost sales. Adidas is "getting closer and closer to making a decision" on what to do with the leftover inventory, new CEO Bjorn Gulden said. He declined to say whether destroying the sneakers remained an option, but said Adidas was "trying to avoid that." Adidas shares jumped 6 percent after the company released its quarterly results. Sales fell 1 percent, but analysts had been expecting a 4 percent drop.
Labor Department finds child-labor violations in Kentucky McDonald's franchises
A Labor Department investigation released this week found that McDonald's franchises in Kentucky illegally employed 300 children, including two 10 year olds. Investigators determined that the 10-year-olds were paid very little or nothing at all for their work at a McDonald's in Louisville. The agency fined that restaurant and two other franchises a total of $212,000. Investigators said Louisville's Bauer Food LLC, which operates 10 McDonald's restaurants, had 24 employees under age 16 working more hours than legally permitted, including the 10 year olds, with some of them working as late as 2 a.m. "They prepared and distributed food orders, cleaned the store, worked at the drive-thru window and operated a register," the Labor Department said. The food companies made no immediate comment.