Speaker 1: This is Bloomberg Business Week with Carol Masser and Bloomberg
Speaker 1: Quick Takes Tim Stinovic from Bloomberg Radio Facebook. As you know,
Speaker 1: we just broke down there earning stock still up about
Speaker 1: four point seven percent in the after I was for
Speaker 1: some inside as only he can do, is Bloomberg Radio
Speaker 1: host Paul Sweeney, who hosts like, I don't know what
Speaker 1: twenty shows here at Bloomberg the Ken I know, and
Speaker 1: you do it. Well, Um, this feels like a blockbuster quarter.
Speaker 1: We knew though the comparisons were going to be somewhat easy, right, yeah,
Speaker 1: we we did it. This is that. This really is,
Speaker 1: you know, as the analysts like to say, a blowout
Speaker 1: quarter and me, you think about a company that's got
Speaker 1: twenty six billion dollars of quarterly revenues of growth. It's
Speaker 1: just extraordinary. And they did it the old fashioned way.
Speaker 1: They raised prices by about and they sold at twelve
Speaker 1: percent more D units and so that'll add up to
Speaker 1: a really good top line. And then the profit margins
Speaker 1: were so much better than the street had been forecasting,
Speaker 1: which led to a big epspat as well. Did you
Speaker 1: feel like after you saw Google's numbers yesterday you knew
Speaker 1: that Facebook was probable we're gonna have a pretty good
Speaker 1: quarter as well. I did, I really did, because these
Speaker 1: are the two players, and maybe along with the Amazon
Speaker 1: now that really dominates. Did your advertising to look at
Speaker 1: some of the smaller companies like Pinterest, who reported and
Speaker 1: disappointing numbers yesterday, and you know Snapchat and Twitter, they
Speaker 1: you know, they kind of play with the crumbs that
Speaker 1: are loved by the Googles and the Facebook and the
Speaker 1: Amazon's here. So you saw some really strong numbers, really
Speaker 1: strong metrics out of Google and Facebook saw you know,
Speaker 1: experienced a similar type of marketplace. So walk us through
Speaker 1: some of the other metrics, because I think one of
Speaker 1: the concerns is, well, I don't know where should we go,
Speaker 1: Like first quarter daily active users, there's so many headlines
Speaker 1: that come across the Bloomberg. Tell me what else you
Speaker 1: think are our audience needs to know about, Paul, I'll
Speaker 1: tell you what that what advertisers look at, they look
Speaker 1: at the size of the audience and and for uh,
Speaker 1: you know Facebook, that's monthly active users, average users that
Speaker 1: grew and that was better than a forecast. And then
Speaker 1: the second question is how engaged are is that audience
Speaker 1: with your products, because the more engaged they are, the
Speaker 1: more they are likely to be influenced by advertisement. And
Speaker 1: for Facebook that's daily active users UM and the daily
Speaker 1: active users also came in a very strong relative to expectations.
Speaker 1: So Fama ad salesman for Facebook, it's a pretty easy
Speaker 1: sell for me. That's it. Like, so I do think
Speaker 1: about kind of in this world, right, people are constantly
Speaker 1: trying to get our attention and sell us stuff. And
Speaker 1: I said earlier when it comes to something like Facebook,
Speaker 1: you know, Instagram, what'sapp, I mean, they are very much
Speaker 1: aggressively looking to use those channels right to sell stuff.
Speaker 1: I know my eighteen year old it's often how she shops.
Speaker 1: She's following influencers and she's on Instagram and she sees
Speaker 1: something and then she finds out where you know, it's sold.
Speaker 1: Everything you know has a tag on it. I mean
Speaker 1: that they're looking to boost right in terms of their business. Yeah,
Speaker 1: that's the one one area that they'd really like to develop,
Speaker 1: and that's kind of the shopping aspect, shopping shopping mechanism
Speaker 1: on Facebook. It's got such a big audience, it's such
Speaker 1: an engaged audience, and and there's and you write the
Speaker 1: influence influencers are such a big part of the retail
Speaker 1: landscape these days. You don't want to lose those people
Speaker 1: to as they you know, close your wrap and open
Speaker 1: up the Amazon app. So you want to try to
Speaker 1: build that e commerce business. And so they did launch
Speaker 1: a business called shop about a year ago, but it
Speaker 1: really hasn't done that much. So I think that's gonna
Speaker 1: be one of the areas on the conference call um
Speaker 1: that investors are gonna want to get some more clarity. Okay,
Speaker 1: so are there is there anything in this quarter that
Speaker 1: bothers you at all? Well, I mean the comparisons are
Speaker 1: gonna get tougher, which they kind of called out for
Speaker 1: the third and fourth quarter of this year, so you're
Speaker 1: not got And so they said, kind of the revenue
Speaker 1: outlook in terms of growth rates is similar in the
Speaker 1: second quarter then when they saw in the first course.
Speaker 1: So that's good. Then the comparisons get tougher, and I said,
Speaker 1: sequentially the growth rates will slow. So that's that's an issue.
Speaker 1: The other issue, which well in that's will they be
Speaker 1: hip to that? Do you think at that point? Because
Speaker 1: you know, yeah, we'll see that. That's that's why they're
Speaker 1: calling it out so early here you know. Um, if
Speaker 1: you didn't already know it, now you do, um and UM.
Speaker 1: So the other thing is Apple computers changing the way
Speaker 1: their apps target users. Right out, you have you opt out.
Speaker 1: You have to physicality to say opt out. I don't
Speaker 1: want you to track me Facebook when I go to
Speaker 1: other apps. Now Apple saying we're going to change that.
Speaker 1: Now you have to opt in to say yes, Facebook, Yes,
Speaker 1: and all these other apps, I want you to follow me,
Speaker 1: uh as I traverse all around the Internet. Now, the
Speaker 1: question is that could be a real issue for digital
Speaker 1: advertising dollars um if people start, you know, failing to
Speaker 1: opt in. Um. So we'll have to see how that
Speaker 1: plays out. We have to see how Facebook reacts. But
Speaker 1: typically when those things kind of happen, and we saw
Speaker 1: something similar in Europe, what it does is actually benefits
Speaker 1: of the incumbent players because advertises feel like I'm just
Speaker 1: gonna go where I know the audience is, you know.
Speaker 1: So we'll have to see how that plays out. Listen
Speaker 1: to our Kurt Wagner tech reporter here a Bloomberg News
Speaker 1: his boy Facebook is he is great is big these days?
Speaker 1: Head count as at the end of March with sixty
Speaker 1: four employees up over a year ago. That's a lot
Speaker 1: of new employees to add during a pandemic. But it
Speaker 1: says something. I guess they're busy and they're growing. Yeah,
Speaker 1: and I've got two sons graduating from college in a
Speaker 1: matter of a week or so. So I'm like, call
Speaker 1: up Google, they're hiring, go to Silico, to Stilson Valley
Speaker 1: because those books that they're hiring, Well, it's funny that
Speaker 1: you say that. Kurt's wig Ken swig if Swig Equities
Speaker 1: was on with us and he's a real estate investor
Speaker 1: in entrepreneur and he said, you know, look at who
Speaker 1: is tapping into real estate, Like in New York. It's
Speaker 1: the Amazon's, it's the Googles, it's the Facebook. You know,
Speaker 1: they're not running to shut down offices or have everybody
Speaker 1: work from home. They're tapping into office space big time.
Speaker 1: They are. And that's it's good to see. And uh,
Speaker 1: you know, it's good for the city of New York.
Speaker 1: And because it's prime real estate and it's a lot
Speaker 1: of it, and we see it from all these companies,
Speaker 1: whether it's an Amazon or Facebook or Google. They are
Speaker 1: still so much in the investment mode. You look at
Speaker 1: their R and D, you look at their investments and
Speaker 1: property plan equipment in terms of you know, new real
Speaker 1: estate all around the country. Uh, they are still very
Speaker 1: much in the growth mode, still very much in the
Speaker 1: investment mode. So um and when they make this much
Speaker 1: cash it, I guess it's easy to see why. Yeah,
Speaker 1: it's interesting. I was just passing something about UM. You
Speaker 1: mentioned earlier about Apple and having to opt in, and
Speaker 1: it looks like Facebook had made some comments about that.
Speaker 1: Here it is, Facebook listed ad targeting as a head
Speaker 1: wind again primarily because of changes to Apple iOS fourteen,
Speaker 1: but that was listed as a headway in last quarter
Speaker 1: as well. So you know, as an investor, the regulatory environment.
Speaker 1: You know, Paul, we talked about this a lot. It
Speaker 1: does feel like these big tech companies are increasingly under
Speaker 1: the gun when it comes to lawmakers and policymakers. A
Speaker 1: lot of times it's just talk. I don't know, it
Speaker 1: feels a little different what's on your radar when it
Speaker 1: comes to possible, uh, things that might be a drag
Speaker 1: on a company like Facebook going forward. When I talked
Speaker 1: to tech investment bankers that that I know, they say
Speaker 1: that Google and Facebook are really on the sidelines right now.
Speaker 1: It feels that way in terms of M and A
Speaker 1: because UH and sizeable leminary because they know that they're
Speaker 1: being targeted by the regulators. UM So I think the
Speaker 1: risk is very low that they would ever be broken up,
Speaker 1: for example, but they know that the regulatory bar for
Speaker 1: making any kind of acquisitions uh is really high, and
Speaker 1: so they're just kind of staying on the sidelines, keeping
Speaker 1: their heads down, trying to stay out of, you know,
Speaker 1: the cross hairs. And then we'll see what happens going forward.
Speaker 1: But um it is an issue, and we've talked about
Speaker 1: it a lot that you know, the US regulators and
Speaker 1: even the folks in Congress, they've taken a very light
Speaker 1: hand really over the last fifty or sixty years towards
Speaker 1: US technology and allowed the Silicon Valley to grow and
Speaker 1: make all these great innovations. But that feels like it
Speaker 1: might be changing a little bit because you've got these
Speaker 1: mega mega companies like Amazon, like Google, like Apple, like
Speaker 1: Facebook that are just so pervasive across all of our lives.
Speaker 1: It's just not some industrial company or railroad company out
Speaker 1: in the Midwest. These are the companies that that we
Speaker 1: touch every single day, and it goes to data privacy,
Speaker 1: data integrity. UM. So there's a lot of issues and
Speaker 1: a lot of layers, and uh, it's definitely a risk
Speaker 1: out there, I think for a lot of investors in
Speaker 1: Silicon Valley. Hey, listen, since I have you, because you know,
Speaker 1: we've been following, you know, some of these big tech
Speaker 1: names and we're waiting Apple. Uh, they should cross and
Speaker 1: about I don't know about eight minutes from now here,
Speaker 1: and just you know, it's a little bit of a
Speaker 1: mixed bag Microsoft versus Google. You know what we're getting
Speaker 1: with Facebook, We'll see what we get with Apple. How
Speaker 1: do you do you see any consistent themes or anything
Speaker 1: as we go from report to report. Well, it's interesting.
Speaker 1: I think the you know, for the software side of
Speaker 1: the technology space, UM, it's really all about the cloud. Um.
Speaker 1: And there's lots of applications for the cloud, and there's
Speaker 1: lots of different layers of it that the you know,
Speaker 1: the on arack Ranas and the man deep things of
Speaker 1: the world, Bloomberg Intelligence they know really well. But but
Speaker 1: what we do know is that cloud computing and all
Speaker 1: its applications is probably one of the it's probably the
Speaker 1: biggest growth in tech spending, and that theme is still
Speaker 1: very strong, and it's a very competitive race between Amazon
Speaker 1: and Amazon Web Service, Microsoft with it as your Play.
Speaker 1: Google's in there as well, IBM has a place, So
Speaker 1: there's a lot of big competitors there, but it is
Speaker 1: growing very quickly and the pandemic just accelerated that. Again
Speaker 1: as more and more companies we're looking to put more
Speaker 1: and more of their data distributed on the clouds, so
Speaker 1: all of us working for home could have better use
Speaker 1: of it and we could use our applications on it.
Speaker 1: So big, big growth area there. And then the second
Speaker 1: area that we're seeing from these consumer technology companies who
Speaker 1: like the um you know, the facebooks of the world,
Speaker 1: is that advertising dollars continue to flow to these digital platforms.
Speaker 1: And again the pandemic probably played a role as an
Speaker 1: accelerant there. As we're all spending more and more time
Speaker 1: on our devices here, right, and I would assume that
Speaker 1: we're going to continue. I mean, sure, we're gonna go
Speaker 1: back out and we're gonna travel and we're gonna live,
Speaker 1: but we have gotten so much increasingly used to doing
Speaker 1: everything on our phone right and online, that that that
Speaker 1: stuff doesn't go away. No, it doesn't. And you know,
Speaker 1: another big area because we're spending so much more time
Speaker 1: on our digital appliances is security. And we hear that
Speaker 1: a lot from the technology investors is that that is
Speaker 1: a great growth area with the technology spend, which is
Speaker 1: sixth security. The more time we spend, the more data
Speaker 1: we put up on the cloud or put store on
Speaker 1: our devices, um, the security has got to be a
Speaker 1: lot better because we know there are a lot of
Speaker 1: bad people out there with you know, you know, really
Speaker 1: looking to hack into a lot of these systems. So
Speaker 1: that's gonna another growth story as well. I hear a
Speaker 1: lot of people who are saying, I keep getting messages
Speaker 1: change my password. They're not, it's not complicated enough, or
Speaker 1: you've got to you know, you've got security concerns. Paul Sweeney,
Speaker 1: love you, Love you. That was so great. Paul Sweeney,
Speaker 1: co host of Bloomberg Surveillance and Bloomberg Markets. Catch him
Speaker 1: on Bloomberg Radio with Tom Keane from nine to ten
Speaker 1: and of course Matt Miller from ten to noon. Shares
Speaker 1: a Facebook by the way up four point eight percent.
Speaker 1: We are awaiting Apple earnings. They're going to cross in
Speaker 1: any minute. This is Bloomberg Radio. So definitely our top
Speaker 1: story right at this moment is Apple. Charlie breaking down
Speaker 1: the numbers the quarter. The stock is up about three
Speaker 1: percent in the after hours. Big headlines Apple authorizing an
Speaker 1: increase of nine d billion dollars to its existing buyback program.
Speaker 1: Second quarter revenue big beat, huge beatty eight billion versu
Speaker 1: an estimate of seventy seven point three bill billion. If
Speaker 1: you go through all of their product lines and business sectors,
Speaker 1: big beats in those as well. Let's get to it though,
Speaker 1: and what you need to know about the quarter from
Speaker 1: Bob O'Donnell. He's president chief analyst at Technolysis Research. He's
Speaker 1: based in Foster City, California, and that's where we find
Speaker 1: him on this Wednesday. Bob, nice to have you here.
Speaker 1: We've said a lot I feel like today, but it
Speaker 1: looks like a blowout, blockbuster quarter. Yeah. Absolutely, And you
Speaker 1: know what's fascinating when you look through is there was
Speaker 1: a lot of focus on what services we're gonna do.
Speaker 1: It looks like services did okay, but really the big
Speaker 1: stuff was good old iPhones and Max and that you know,
Speaker 1: those are the things that are really crushing it for him,
Speaker 1: and you know from a regional perspective. Again, obviously we're
Speaker 1: just going through this live here, but the China numbers
Speaker 1: are also looking really good, almost double from a year ago.
Speaker 1: So that's that's a clear sign of the fact that
Speaker 1: the iPhone twelve having five G that's what was critical
Speaker 1: for China because five G networks are very widely available
Speaker 1: in China and without a five G phone, Apple was
Speaker 1: at a real disadvantage. So the iPhone twelve selling through
Speaker 1: China and clearly in big numbers, that's got to be
Speaker 1: a big person of the reason there. And then Max
Speaker 1: the M one, that's Apple's custom chip that they created
Speaker 1: based on ARM architectures. Um, they've done this for the iPhone,
Speaker 1: but they introduced that last fall for the Mac and clearly, uh,
Speaker 1: they had a lot of success with that. And of
Speaker 1: course just last week we saw them introduce M one
Speaker 1: based Imax and even brought the M one to the iPad.
Speaker 1: So you know, we've got this custom silicon story that
Speaker 1: Apple's telling. Um, we've got the five G story that
Speaker 1: Apple's telling. And look, the service businesses, all these other
Speaker 1: things are also doing well. Not that they're doing they're
Speaker 1: not doing as well, um, but those that's kind of
Speaker 1: those traditional Apple businesses that the one seemed to seem
Speaker 1: to be the shouts. Hey, hang on for a second.
Speaker 1: Just got um. It's been talking about an overflow of newsday,
Speaker 1: but it's all good stuff. Amazon just crossing the Bloomberg
Speaker 1: terminal to boost pay by at least fifty cents to
Speaker 1: three dollars an hour to over five hundred thousand of
Speaker 1: its staff members, rolling out pay boosts from mid May
Speaker 1: through early June. Uh to invest over a billion dollars
Speaker 1: in incremental pay for certain staff. We probably will hear
Speaker 1: a little bit more about that tomorrow when the company
Speaker 1: reports its latest quarterly results. Amazon shares let me just
Speaker 1: take a quick check here in the after hours up
Speaker 1: about eight tens of a percent, and just quickly want
Speaker 1: to mention Verizon exploring a sale of its media assets,
Speaker 1: including A O, L and Yahoo. This is coming from
Speaker 1: Dow Jones. Uh. Yeah, could value Verizon meeting media assets
Speaker 1: at four to five billion dollars, so a lot going on.
Speaker 1: Quick check though of the stock here in the after
Speaker 1: hours shares a Verizon just down a hair down about
Speaker 1: one tenth of one percent um and it thoughts on
Speaker 1: Amazon and Verizon there Bob, Well, you know the interesting
Speaker 1: Amazon they've been. They've caught a lot of grief lately
Speaker 1: in terms of you know, their worn't place standards and
Speaker 1: and everything else. But another interesting data point just came
Speaker 1: out today is that Amazon was ranked as the number
Speaker 1: one place to work by linked In. Linked into a
Speaker 1: huge study of the top fifty companies to work at
Speaker 1: in America, and Amazon came out number one. Interesting, was
Speaker 1: also in the top ten. Um A, T and T
Speaker 1: was in the top ten, IBM an alphabet. Verizon was
Speaker 1: also I believe in the top twenty. But anyway, you
Speaker 1: know that, I think it's interesting segment. And we'll see
Speaker 1: what happens with Amazon's earnings tomorrow. Yeah, exactly. And I
Speaker 1: know we've been here at Bloomberg Business Week doing a
Speaker 1: lot of reporting about and Bloomberg News just Jeff Bezos
Speaker 1: thinking about his legacy, you know, uh, and what's to come,
Speaker 1: and so thinking a little bit more broadly about that. Bob,
Speaker 1: thank you so much, really appreciate you breaking down Apple
Speaker 1: with us. Bob o'donnald, President, chief Analyst. I took analysis
Speaker 1: research on the phone from Foster City, California,