Shares of United Parcel Service plunged more than 17% Thursday after the company issued weak revenue guidance for the year and said it planned to cut deliveries for Amazon, its largest customer, by more than half.

The shipping giant said in its fourth-quarter earnings report that it “reached an agreement in principle with its largest customer to lower its volume by more than 50% by the second half of 2026.”

At the same time, UPS said it’s reconfiguring its U.S. network and launching multi-year efficiency initiatives that it expects will result in savings of approximately $1 billion.

UPS CEO Carol Tome said on a call with investors that Amazon is UPS’ largest customer, but it’s not the company’s most profitable customer. “Its margin is very dilutive to the U.S. domestic business,” she added.

“We are making business and operational changes that, along with the foundational changes we’ve already made, will put us further down the path to become a more profitable, agile and differentiated UPS that is growing in the best parts of the market,” Tome said in a statement.

Amazon spokesperson Kelly Nantel told CNBC in a statement that UPS had requested a reduction in volume “due to their operational needs.”

“We certainly respect their decision,” Nantel said in a statement. “We’ll continue to partner with them and many other carriers to serve our customers.”

Amazon said before the UPS announcement that it had offered to increase UPS’ volumes.

UPS forecast 2025 revenue of $89 billion, down from revenue of $91.1 billion in 2024. That’s well below consensus estimates for 2025 revenue of $94.88 billion, according to analysts polled by LSEG.

For the fourth quarter, UPS missed on revenue, reporting $25.30 billion versus $25.42 billion analysts anticipated in a survey by LSEG.

Amazon has long relied on a mix of major carriers for deliveries, including UPS, FedEx and the U.S. Postal Service. But it has decreased the number of packages sent through UPS and other carriers in recent years as it looks to have more control over deliveries.

Amazon has rapidly built up its own logistics empire since a 2013 holiday fiasco left its packages stranded in the hands of outside carriers. The company now oversees thousands of last-mile delivery companies that deliver packages exclusively for Amazon, as well as a budding in-house network of planes, trucks and ships. By some estimates, Amazon’s in-house logistics operations have grown to rival or exceed the size of major carriers.

UPS has, for its part, taken more aggressive cost-control measures, including catering to more profitable delivery customers. In recent quarters, UPS has benefited from an influx of volume from bargain retailers Temu and Shein, which have rapidly gained popularity in the U.S.

Last January, UPS laid off 12,000 employees as part of a bid to realize $1 billion in cost savings.

Apple reports December-quarter earnings Thursday after the bell. 

The December quarter is Apple’s largest of the year, partially due to the holiday shopping season and also because it is the first full quarter of new iPhone sales.

While analysts are not worried about the company’s performance in the December quarter, many of them will look for what Apple signals about how its March quarter is shaking out.

Supply chain data points suggest Apple’s sales in China are weakening, and Apple Intelligence, the company’s suite of artificial intelligence features, is not available in Chinese yet.

“Specifically, iPhone 16 demand is not amplified by the introduction of iOS 18 and its Gen AI features. In fact, paradoxically, somehow demand is actually softer,” wrote Loop Capital analyst Ananda Baruah in a note earlier this month, downgrading Apple to hold. “We’re again looking for iPhone units to decline for the fourth consecutive year.”

Apple does not publish its unit sales, and does not give traditional guidance. New Chief Financial Officer Kevan Parekh, who assumed the role earlier this month, will likely give investors a few data points on Thursday’s call that analysts can use to estimate earnings per share and revenue for Apple’s March-quarter performance.

LSEG estimates Apple’s revenue will grow on an annual basis at about 3.8% to $124.13 billion. Apple said in October that it expected “low- to mid-single digit” sales growth during the quarter.

One of the biggest things analysts will be watching for is if Apple’s mainland China sales suggest that consumers in the country are shifting their preferences to locally made and designed devices.

“We believe that a major driver of growing competition within the smartphone market is due to growing preference for domestic brands within China,” wrote Goldman Sachs analyst Michael Ng in a Jan. 23 note.

One bright spot for Apple could be its services business, which includes products ranging from device warranties to the Apple TV+ streaming service. Barclays analysts said in a note earlier this month that services could grow as much as 14% on an annual basis, which could offset lower iPhone sales.

Apple is expected to be questioned over its plan for Trump’s proposed tariffs and its overall AI strategy.

Here is what to expect from Apple in the December quarter, per LSEG consensus estimates:

• Earnings per share: $2.35
• Revenue: $124.13 billion

Analysts are expecting guidance for the March quarter of $1.66 in earnings per share on $95.46 billion in revenue.

WATCH: Apple’s superficial problem is there’s not enough demand, says Jim Cramer

As thousands of homes started to burn across Los Angeles on Jan. 7, fire hydrants stopped working. The rapid spread of flames in winds up to 100 miles per hour was happening too quickly for water pumps to keep up. It shocked the system and those fleeing the flames.

“This area is known for having fire issues, so you would think that they would be prepared for this,” said Joan Zoloth, 70, who said she first moved to the area when she was 6 years old.

Zoloth’s childhood home burned down in the Palisades Fire. Her own home around the corner and her son’s home nearby were also lost. 

“My mother was a teacher,” Zoloth said. “What people don’t realize is how much Malibu is filled with those types of people — not just movie stars.”

CNBC went to the wreckage of the Palisades Fire to ask officials what happened to the water system in LA, and what other cities can do to be better prepared. As many as 1 in 6 Americans now live in areas with significant wildfire risk. 

“A firefight at this size, such an urban conflagration, any system is going to have its challenges in maintaining water pressure,” said State Fire Marshall Daniel Berlant, of the California Department of Forestry and Fire Protection, known as Cal Fire.

Water pressure was the primary problem, rather than a lack of supply, fire officials and water experts told CNBC. 

Much of the water in the Palisades is provided by three 1 million gallon tanks that sit up in the hills, using gravity to maintain water pressure in the hydrants and homes they supply below.

Pumps forcibly move water from main lines and surrounding reservoirs to those tanks. The tanks were full when the fires started, but the pumps couldn’t replenish water in the tanks as quickly as firefighters were using it below. As the tanks depleted, so did the water pressure, until some 20% of hydrants ran dry.

“The hydrants would have run dry anywhere in the world with a fire event like this in the topography where this occurred,” said Greg Pierce, director of the UCLA Human Right to Water Lab.

The closure of a 117 million gallon reservoir nearby complicated matters. Earlier this month, California Gov. Gavin Newsom and LA city council members called for investigations into why the Santa Ynez Reservoir hadn’t yet reopened after being drained almost a year ago to repair a tear in its cover.

“That would have made a difference,” Pierce said. “But even, by all accounts, if that reservoir was full, it wouldn’t have stopped the fire.”

Typically, fires are also fought by aircraft dropping water and fire retardant from above, but high winds kept them grounded for several hours on the first night of the fire.

Firefighters adapted with three tactics. They shuttled water through multiple engines connected to functional hydrants, drove it to locations in large water tenders, and pumped water directly from backyard swimming pools.

The LA Department of Water and Power said it quadrupled the water flow to the area and summoned 15 water tankers to directly refill fire trucks. It wasn’t enough.

As immediate danger calmed, misinformation ran wild. The Federal Emergency Management Agency, or FEMA, reactivated its rumor response site, and the LA Fire Department directly responded to inaccurate social media posts.

President Donald Trump, for instance, claimed that water ran out in LA because of policies meant to protect a small endangered fish called the Delta smelt.

“It’s just simply false. It’s nonsense,” said Peter Gleick, co-founder of the Pacific Institute, a global water think tank. Gleick has been researching water issues for four decades.

On his first day back in office, Trump signed an executive order titled “Putting People Over Fish: Stopping Radical Environmentalism to Provide Water to Southern California.” After visiting with Newsom in LA, Trump signed another executive order directing federal officials to find ways to override “disastrous” California water policies. 

“There’s lots of conversations about California water policy and how we allocate water to protect fish or ecosystems versus deliver water to different kinds of users, but that had no role whatsoever to play in water availability for firefighting,” Gleick said.

Southern California reservoirs are at above-average levels for this time of year because of two plentiful rainy seasons, he added.

“Misinformation about how if we just had more water from Northern California in Southern California, that would have made the difference, that’s not true,” UCLA’s Pierce said. “Even if you have water stored fairly close by in the region, you can’t just move it quickly up to an area like the Palisades.”

That’s why billionaires Lynda and Stewart Resnick are also not to blame for the Palisades Fire, the water experts who spoke with CNBC said. 

The Resnicks own the Wonderful Company, which includes brands such as Pom and Fiji Water, and have sprawling farmlands in the San Joaquin Valley that grow pistachios, oranges and pomegranates. They’ve been the subject of attacks on social media, some of which are antisemitic, that blame them for the water pressure problems in LA because of their investment in a public-private water bank that’s 100 miles north of LA and that has no ability to impact water pressure in the Palisades.

“There’s absolutely no connection between the two. This is a localized problem,” said Felicia Marcus, former chair of the California State Water Resources Control Board.

The fires also resurfaced criticism around state and local water decisions, from taking down dams to not building enough reservoirs.

The real culprit is extremely dry conditions, experts told CNBC. Before the fires, LA saw close to zero rain since May, and 2024 was the hottest year on record for the planet, Gleick said.

“Higher temperatures means more demand for water by soils and vegetation and people and agriculture,” he said. “Climate change is in many ways a water problem. It’s being manifested by drought and floods and wildfires.”

Similar water pressure problems plagued the 1991 Oakland Hills Fire, which destroyed more than 3,000 homes, and two Ventura County fires that each burned more than 1,000 homes in 2017 and 2018. 

The problem extends beyond California. Texas saw the largest fire in its history last February. As population booms, more people are moving to areas at high risk of fires between dense developments and wildland. 

California is home to the top six cities at highest wildfire risk in the U.S., but Texas, Colorado and Oregon also have cities in the top 15.

There are three key components to making water systems more resilient, Pierce said: increasing water supply, improving local infrastructure, and bolstering power.

After a 2008 fire that destroyed 280 homes, Yorba Linda Water District in California addressed all three. It added backup generators at water pump stations that had failed during the fire, added a long-planned underground reservoir, and installed a first-of-its-kind water tank called a Heli-Hydrant.

That $70,000 tank can automatically refill itself and is reserved for helicopters to dip from, reducing the length of flight times between water pickups and drops. It was used to quickly stop the Blue Ridge Fire in 2020.

“Cal Fire was able to jump on it and use our Heli-Hydrant, trigger it and keep the fire to five acres,” said John DeCriscio, who was operations manager at the Yorba Linda Water District at the time. “That was a huge success.”

San Francisco implemented a comprehensive solution after the city was almost completely destroyed in the 1906 earthquake and resulting fire, which also caused most hydrants to run dry. 

In 1913, the city developed a unique fire-suppression water system separate from the rest of the city’s water. Seawater enters the system from 52 suction connections along the waterfront, and it’s pumped in from fireboats and two high-pressure pumping stations. There are more than 200 underground cisterns to store backup water. A high-elevation reservoir and two large-capacity tanks use gravity, not pumps, to feed special high-pressure emergency hydrants that can be seen around the city with black, red and blue tops.

There are other solutions that cities can implement.

A company called Rain is working on autonomous, unmanned aircraft for dropping water on fires. In Japan, an autonomous system of water cannons protects a cultural heritage site with 200-year-old thatched roof houses.

Cost is the main reason these solutions haven’t been implemented widely. 

“There’s always this delicate balance of being afraid to go to your customers and raise their rates, but if you don’t raise their rates, you can’t do these extra things,” said Marcus, the former state water board chair. “It’s the kind of thing that keeps you up at night when you manage one of these agencies.”