US Leading Companies Divided by COVID-19... Boeing 'Worst' vs Apple 'Best'

[Asia Economy Reporter Yujin Cho] Boeing and Apple, representing the US aviation and information technology (IT) sectors respectively, posted their worst and best-ever performances.

According to the Wall Street Journal (WSJ) and others on the 27th (local time), Boeing announced after the market closed that it recorded a net loss of $11.94 billion (approximately 13.2 trillion KRW) for the entire last year, marking the worst deficit in its history. Revenue plunged 24% year-on-year to $58.2 billion (approximately 64.3 trillion KRW).

The production halt caused by structural defects in its flagship '737 Max' passenger aircraft and the sharp decline in commercial aircraft sales, the main growth driver, due to the COVID-19 pandemic led to the deterioration in performance.

In the fourth quarter alone, Boeing posted a net loss of $8.4 billion (approximately 9.3 trillion KRW), with revenue falling 15% year-on-year to $15.3 billion (approximately 16.9 trillion KRW). The loss per share was $15.25, far below market expectations of $1.80, marking an earnings shock level performance.

The production of the 737 Max passenger aircraft was halted following two crash accidents, and the prolonged impact of the global COVID-19 pandemic severely affected performance. Due to the pandemic, countries worldwide suspended aircraft operations, causing new aircraft deliveries and orders to fall to their lowest levels in decades. Last year, the number of aircraft deliveries dropped by more than half, resulting in losses amounting to $12 billion for Boeing.

Boeing's commercial aircraft division revenue in the fourth quarter alone was $4.73 billion (approximately 5.2 trillion KRW), a 37% plunge compared to the same period last year. With aircraft deliveries reduced to half of the previous year and the added burden of development costs for the 777X, Boeing reportedly burned through $18.4 billion (approximately 20.3 trillion KRW) in cash last year.

David Calhoun, Boeing's Chief Executive Officer (CEO), said, "Last year was a year of great turmoil as the global aviation industry contracted significantly," adding, "With the grounding of the 737 Max and the impact of COVID-19 on commercial aircraft demand, we are facing unprecedented challenges."

Boeing, which directly employs over 100,000 people, plans to cut 31,000 jobs due to worsening management caused by accumulated losses. Boeing posted profits in its defense and aircraft maintenance businesses but lost its position as the industry's top company by revenue due to the sharp performance decline. According to WSJ, by revenue, Boeing fell to fourth place among defense contractors behind Raytheon, Lockheed Martin, and Airbus.

Tim Cook, Apple CEO

On the other hand, Apple’s fourth-quarter revenue last year surpassed $100 billion for the first time on a quarterly basis, driven by increased sales of its new product, the 'iPhone 12.' This marked a 21% increase compared to the same period last year.

Apple announced in its earnings report that it posted $111.4 billion (approximately 124 trillion KRW) in revenue for the fourth quarter (Apple’s fiscal first quarter) last year. Net income rose 29% to $28.76 billion (approximately 32 trillion KRW). Earnings per share (EPS) were $1.68, significantly exceeding Wall Street expectations of $1.41 compiled by financial data provider FactSet.

The fourth quarter, which includes Black Friday and the Christmas holiday season, is Apple’s peak season, accounting for 30% of its annual revenue. This year, with the launch of Apple’s first 5G iPhone and replacement demand for devices, there were expectations that iPhone sales would enter a supercycle (a period of exceptional growth).

iPhone revenue in the fourth quarter rose 17% year-on-year to $65.6 billion. Sales in China, where 5G networks have been deployed, also contributed to a 57% increase in revenue. The COVID-19 pandemic, which increased remote work and online classes, boosted IT device sales, positively impacting performance. The Mac lineup, including desktops and laptops, saw a 21% revenue increase, while the iPad tablet sales rose 41%.

Apple CEO Tim Cook said about the company’s product lineup, "We couldn’t be more optimistic." Cook also noted that the introduction of the in-house designed chip 'M1' helped boost laptop sales.