Verizon has announced that it is buying TracFone, the country’s largest prepaid wireless reseller, for $7 billion in cash and stock. Over 13 million TracFone subscribers currently use the Verizon cell network via a reseller deal. The acquisition expands Verizon’s offerings in the low-priced market segment, enabling it to upsell its premium products and services to a new set of customers. Verizon says that the “portfolio of Tracfone brands creates a platform for growth and innovation in Verizon’s support of the value and low-income segments. “
Verizon Chairman and CEO Hans Vestberg tweeted: “We are excited about the opportunity to bring Tracfone and its brands into the Verizon family where we can put the full support of Verizon behind this business and provide exciting and compelling products into this attractive segment of the market.” Tracfone is the largest reseller of wireless services in the US, serving 21 million subscribers through a network of over 90,000 retail locations nationwide.
“This transaction is aligned with what we do best: providing reliable wireless service alongside a best-in-class customer experience,” said Vestberg. “We are excited about the opportunity to bring Tracfone and its brands into the Verizon family where we can put the full support of Verizon behind this business and provide exciting and compelling products into this attractive segment of the market. We are pursuing this important strategic acquisition from a position of strength given our very strong and prudent financial profile.”
Ronan Dunne, Executive Vice President and Group CEO, Verizon Consumer Group added: “Since its launch, Tracfone has developed strong consumer brands and has established itself as a clear leader in the value mobile segment. This transaction firmly establishes Verizon, through the Tracfone brands, as the provider of choice in the value segment, which complements our clear leadership in the premium segment.”
“We’re looking forward to welcoming all of Tracfone’s customers and each of Tracfone’s nearly 850 valuable employees. We are excited to expand our relationship with Tracfone’s distribution partners, and when Tracfone’s customers become part of our family, they will get the best of both worlds – more choices, better services, and new features thanks to Verizon’s investment–but with the flexibility and control that they have come to value with its prepaid plans. Being connected is now more important than ever, and Tracfone customers will benefit from Verizon’s innovations–both now and in the future,” Dunne added.
Verizon is paying $3.125 billion in cash and $3.125 billion in Verizon common stock. The company will also pay up to an additional $650 million in future cash consideration related to the achievement of certain performance measures.
Twitter CFO Ned Segal says that Twitter’s work over the last couple of years designed to improve advertiser ROI and success on the platform is starting to resonate with advertisers.
Twitter CFO Ned Segal recently discussed Twitter’s advertising initiatives, how they are dealing with suspicious accounts and how they are working to improve the health of the conversation on the platform in a wide-ranging interview on Bloomberg:
Twitter Strategy of Increasing ROI for Advertisers is Paying Off
There are a couple of things at play here and you really have to go back to the strategy we rolled out a couple years ago; to have better ad formats, to drive better relevance for advertisers, to do a better job of measuring their success on Twitter and ultimately to get a better ROI for them on the platform than they were getting before.
Also, it’s been important to articulate why they should advertise on Twitter. Twitter is the place where you launch something new, Twitter is the place where you go to advertise to the most valuable audience when they are most receptive. We were just not clear about that a couple years ago as we are today and it’s really started to resonate.
We were pretty surprised at how quickly the business has turned around in the United States. It turned faster than we thought it would this quarter and in a bigger way than we expected it to and that was a big part of what drove the business this quarter.
More Sophisticated About Suspicious Accounts
We are challenging a ton more accounts than we used to so that 9 million number is something that Jack Dorsey talked about in front of Congress back in September. We have become more sophisticated in our understanding of how people create spammy and suspicious accounts so that we can detect or prevent their creation or stop them after they’ve been created. How many get through really depends on how many should get through.
We test far more accounts that are spammy and suspicious and that helps us understand the behavior. Just because an account is created on a web browser in a certain country with a certain IP address doesn’t necessarily mean that it shouldn’t be on the platform as another one might. There’s a lot that goes into it.
Twitter Prioritizing Safety Above All Else
We said that MAU (Monthly Average Users) would decline in the mid-seven digit millions in the 4th quarter because of GDPR, our ongoing health work, and decisions we might make around SMS contracts we have with carriers. We don’t forecast MAU out further than a quarter. We’ve done it each of the last two quarters because we could see a decline coming and we wanted to share it with people.
When we step back and think about our health work more broadly we don’t want to be constrained by the constrained metrics. We want to prioritize health above all else because we know it’s a critical growth factor for the company to make sure that Twitter is a safe place for you and me and for the people who should be on the platform and that removing spammy and suspicious behavior whenever we can.
Sometimes it affects the disclosed metrics and other times, such as in the 2nd quarter when we removed tens of millions of accounts and they were largely inactive, it doesn’t affect the disclosed metrics as much.
Still Work To Do to Improve the Health of the Conversation
We still have work to do to Improve the health of the conversation on Twitter. There are so many ways for us to address these challenges as people get more sophisticated in how they create the bad behavior on Twitter.
One of the great things about Twitter that we are able to benefit from is because it is public, open, and real-time, we often find things but frequently things are corrected by the platform itself. Other people on Twitter who say ‘that’s not true’ or ‘you may believe that but I believe something different and I want to tell you what I believe.’ The fact that the platform is open really makes a difference and allows us to take a different approach around policies and enforcement than others make.
Twitter is Public, Open, and Real-Time
Those are things that allow people to see what a public figure is going to say regardless of their party affiliation, regardless of where they are in the world. They can learn from it, they can respond to it, and they can observe how others might respond to it. We believe that allows for a healthy public conversation, that allows people to have more information than they otherwise might.
Whether it’s something here in the United States or it’s around the Brazillian or Mexican elections which were just completed, it’s an important part of our purpose to serve a public conversation which means people can see what other people are saying.
Health of the Conversation is Our Number One Priority
Health is our number one priority. We think about health, growing audience, improving our revenue product, and sales as our biggest priorities. I don’t expect those to change much as we move into next year and I think because Twitter is public, open, and real-time in nature we are able to leverage those characteristics and still accomplish a lot through our Twitter services team and through the machine learning that we use to amplify our policies and the Twitter services team.
We have been adding people. We are growing to grow our headcount by about 15 percent this year as we continue to invest against all of our priorities. It’s not against any one priority, but it’s against all of those priorities to be able to grow the business and execute against the opportunities that we see.
Delivering a Better Twitter During an Election
We have learned a lot from past elections, whether they are in the United States or in other parts of the world, and we’ve made a bunch of changes which we feel really good about. I will give you two examples. One is where we have the Ad Transparency Center, which is a place you can go on Twitter to see who is advertising around an election what it is that they are saying, to whom they are advertising, and how much they are paying for the impressions that they are getting. This is unprecedented transparency and to us, it’s critical to inform the public conversation.
Another thing we are doing is sometimes around elections you have people presenting themselves as somebody who they aren’t. Sometimes it’s parody, sometimes it’s very serious. The candidates will now have a stamp so that you know who they are and they really are the person they are presenting themselves to be. We see these as really important parts to delivering a better Twitter during an election.
“We saw very strong enterprise growth in the last quarter,” says Box CEO Aaron Levie. “We grew our number of big deals, which we measure as deals above $100,000 in transaction value, by 60 from Q1 to Q2 of this year. We’re happy about the momentum that we’re seeing in the business. Right now we are all hands on deck on supporting our customers and their digital transformation strategies and hopefully really enabling them to have a more secure and more seamless way to work in this environment.”
Aaron Levie, CEO of Box, discusses the company’s continued growth and progress in supporting customers with their push toward digital transformation:
Driving Better Balance Between Growth And Profitability
We’re very happy about the quarter that we just put up. We are stabilizing the growth rate with 11 percent revenue growth. We had nearly a 16 percent operating margin for the quarter. That’s been a trend that we’ve obviously been driving for the past year or so around really driving a better balance between growth and profitability. We improved our guidance on both revenue growth and profitability for the rest of the year. We guided to about 12 to 13 percent operating margin for the full year (FY21) and so we do think these results are sustainable.
Obviously, we want to be able to continue to drive them going into next year and beyond. We’re very happy about the efficiency of the business right now as well as our ability to go out and serve customers and help them power a new way to work in this very very you know dynamic landscape.
All Hands On Deck With Digital Transformation
The first couple quarters of the year we had to step back and figure out in this economy and in this market what could we do to best serve our customer base. In some segments, we had to lean in to make sure that we were better supporting our customers. In other segments, we saw more growth because in spaces like financial services, healthcare, life sciences, and the tech sector there’s still a tremendous amount of economic growth occurring. So we had to do a little bit of a reset in some of our segments, especially the SMB segment. and we’re seeing really healthy pipeline for the second half of the year.
At the same time, we saw very strong enterprise growth among these customers. We grew our number of big deals, which we measure as deals above $100,000 in transaction value, by 60 from Q1 to Q2 of this year. We’re happy about the momentum that we’re seeing in the business. We do expect that we’re going to continue to drive growth coming into the second half of the year. Right now we are all hands on deck on supporting our customers and their digital transformation strategies and hopefully really enabling them to have a more secure and more seamless way to work in this environment.
Need Better Interoperability Between Technologies
In the enterprise segment, you deal with similar questions (as consumer-facing companies do with anti-trust). How do we ensure long-term that you have interoperability between our technologies? If I put my data into one cloud platform will I have the ability to make that data work with other applications from other cloud technologies? Whether or not there needs to be oversight that’s obviously going to be a big question for the government.
What I do think across the industry we do need to continue to work on better standards. We need to drive better interoperability between our technologies. I can say confidently that companies like Microsoft and Google and others are working on making sure that we have greater interoperability between our technology stack. We work with companies like Slack, Zoom, Salesforce, and others to make sure that we have that interoperability as well. But there’s still a long way to go to really create a seamless experience for the broader customer base out there.
No Precedent For The Type of TikTok Deals Playing Out
Aaron Levie: I don’t understand business anymore, but this is very fun to watch.
This is obviously a very strange environment (in reference to TikTok deal rumors). I don’t think there’s been a precedent for this type of acquisition playing out ever. Especially in the back of the antitrust element, you don’t have the logical acquirers of this type of social media technology at play. All you really have are these interesting configurations of maybe not the most classic acquirers of a social tool. This is causing a lot of questions on what is the long-term strategic nature of these deals.
This is especially true for companies that don’t have a strong advertising business model or might not have some of the same demographic within their customer base. That being said, all of the players, whether it’s Larry Ellison or Satya or Doug at Walmart, these are all incredibly smart and savvy business people. I’m sure that behind the scenes there’s quite a deal of strategy going on but it’s certainly fun to watch play out.
Box CEO Aaron Levie: All Hands On Deck With Digital Transformation
In further evidence robot domination may yet be in our future, a study has shown robot stock analysts outperform their human counterparts, leading to better investments.
There has been a fair amount of hand-wringing about what role robots will play in the future, and whether mankind will be able to control a true artificial intelligence. World domination aside, the economic possibilities and threats robots pose are just beginning to be understood. While many have believed it would largely be physical jobs, such as manufacturing, that would be taken over by robots, recent studies have shown that high-paying, white collar jobs are also at risk.
Now a study by Indiana University professors Braiden Coleman, Kenneth J. Merkley and Joseph Pacelli has demonstrated that robots even make better stock analysts than humans.
“First, Robo-Analysts collectively produce a more balanced distribution of buy, hold, and sell recommendations than do human analysts, which suggests that they are less subject to behavioral biases and conflicts of interest,” reads the study abstract. “Second, consistent with automation facilitating a greater scale of research production, Robo-Analysts revise their reports more frequently than human analysts and also adopt different production processes. Their revisions rely less on earnings announcements, and more on the large, volumes of data released in firms’ annual reports. Third, Robo-Analysts’ reports exhibit weaker short-window return reactions, suggesting that investors do not trade on their signals. Importantly, portfolios formed based on the buy recommendations of Robo-Analysts appear to outperform those of human analysts, suggesting that their buy calls are more profitable. Overall, our results suggest that Robo-Analysts are a valuable, alternative information intermediary to traditional sell-side analysts.”
The study is a fascinating read on the potential of robots to help revolutionize another industry, and especially one that many may not think of as a candidate for robot takeover.
Amazon released its first quarter results, beating analysts revenue estimates while falling short of their earnings-per-share estimates.
Amazon has been at the center of the coronavirus pandemic, as the e-commerce giant has become a lifeline for many consumers sheltering in place. At the same time, Amazon has struggled to keep up with demand, initially hiring 100,000 extra warehouse workers, only to announce they would hire another 75,000 after that. The company also cut back fulfillment on non-essential items in an effort to keep up.
“From online shopping to AWS to Prime Video and Fire TV, the current crisis is demonstrating the adaptability and durability of Amazon’s business as never “before, but it’s also the hardest time we’ve ever faced,” said Jeff Bezos, Amazon founder and CEO.
With their earnings report, the dichotomy of Amazon’s position was made clear. The company reported $75.5 billion in revenue, up from analysts’ expectations of $73.61 billion. However, earnings-per-share were only $5.01, instead of the $6.25 analysts expected.
Even more significantly, the company expects to spend all of the operating profit it will earn next quarter in an effort to deal with the challenges it’s facing as a result of the pandemic.
“Under normal circumstances, in this coming Q2, we’d expect to make some $4 billion or more in operating profit,” Bezos continued. “But these aren’t normal circumstances. Instead, we expect to spend the entirety of that $4 billion, and perhaps a bit more, on COVID-related expenses getting products to customers and keeping employees safe. This includes investments in personal protective equipment, enhanced cleaning of our facilities, less efficient process paths that better allow for effective social distancing, higher wages for hourly teams, and hundreds of millions to develop our own COVID-19 testing capabilities.”
Many tech companies have expressed concern about the next quarter, in spite of doing reasonably well this quarter, and it appears Amazon is no exception, despite how important it has become during these times.
Verizon’s quarterly results were a mixed bag, offering both good and bad news for investors, according to Bloomberg.
On the one hand, Verizon added 1.25 million subscribers, beating analysts’ expectations of 1.23 million. The added growth was, at least in part, aided by Verizon’s deal with Walt Disney Co. to provide subscribers free access to Disney+ for a limited time. On the other hand, that deal ate into profits, as Verizon is essentially footing the bill for its subscribers, although the exact cost has not been disclosed.
The cost of 5G roll out has also been cited as a reason for the company missing estimates. A separate report by Bloomberg, however, highlights why the company is pushing as hard as it is on 5G. According to the report, analysts at LightShed Partners are saying that Verizon has used up most of its available airwaves in Miami, Chicago and other cities. The firm’s report is based on their own research, as well as data provided by mobile testing firm Opensignal.
“They have used spectrum to fuel capacity growth and improved speeds, and now they have a limited amount left,” said Walt Piecyk, LightShed analyst.
As a result, Verizon needs to roll out 5G as quickly as it can, especially in cities, to ease the strain on its network. If its 5G delivers on the promise, however, the company should have no trouble growing its customer base and revenue even more.
Investors hoping for a quick turnaround on Apple’s earnings may be in for a disappointment, as analysts are warning the epidemic may impact 2021.
The company is already feeling the effect of the coronavirus in the Chinese market, where it sold 494,000 iPhones last month, down from 1.27 million a year ago. According to The Street, Needham estimated normal supply and demand would resume by June 1.
The concern, however, is what will happen if supply and demand is not restored by then. Since Apple’s fiscal year begins October 1, if supply and demand remains impacted past June 1, financial results for fiscal 2021 will reflect that.
“The longer COVID-19 disruptions continue past June 1, the greater the threat to AAPL’s Sept new product launches (including its 5G phone) and Christmas selling season revenue, which represented about 32% of annual revs in each of the past 3 years,” said Needham analyst Laura Martin to investors and verified by The Street.
Should the coronavirus become a global pandemic, as the World Health Organization warns may happen, Needham’s fears will likely be realized.
Financial services firm Cantor Fitzgerald has initiated coverage of Zoom and Slack, giving both an Overweight rating.
Zoom and Slack have been the darlings of the work from home era. Zoom is widely considered to have one of, if not the, best videoconferencing platforms that works equally well for large and small groups. Similarly, Slack is one of the most widely used chat platforms and has seen significant growth.
According to Barron’s, Cantor analyst Drew Kootman set price targets of $150 and $30 for Zoom and Slack, respectively.
“We believe the current Covid-19 environment presents significant upside potential not currently assumed in the stock,” Kootman wrote in a research note. “Zoom provides a superior communication platform in a time where video and connectivity is becoming more important for all industries and business sizes. We expect the virus to provide upside to estimates and for the platform and its products to drive increased market penetration and future cross-selling opportunities. We expect these impacts to continue to drive multiple expansion.”
The coverage should be a boost to both companies and further reaffirms their status as the pandemic changes how Americans work.
Facebook is warning that its business is being “adversely affected” by the coronavirus pandemic that is sweeping the globe.
In a blog post, Alex Schultz, VP of Analytics, and Jay Parikh, VP of Engineering, lay out the challenges the company is facing. With unprecedented numbers of people quarantined, sheltering in place or practicing social distancing the company is experiencing a major uptick in usage. In many countries, especially the hardest hit, “total messaging has increased more than 50% over the last month.” Similarly, in those places “voice and video calling have more than doubled on Messenger and WhatsApp.” Italy has likewise “seen up to 70% more time spent across our apps since the crisis arrived in the country.”
Facebook previously warned its ad business was likely to take a hit, but today’s post highlights the additional issues the company is facing. Because the increased usage is on services that are free, Facebook is not benefiting monetarily by the uptick. At the same time, the company’s infrastructure still has to bear the burden of the increased load. The two executives laid out the challenges:
“We have received questions about revenue, so want to provide some context here too: Much of the increased traffic is happening on our messaging services, but we’ve also seen more people using our feed and stories products to get updates from their family and friends. At the same time, our business is being adversely affected like so many others around the world. We don’t monetize many of the services where we’re seeing increased engagement, and we’ve seen a weakening in our ads business in countries taking aggressive actions to reduce the spread of COVID-19.”
The executives did provide assurances Facebook is doing everything possible to make sure their infrastructure can deal with the days ahead.
“Maintaining stability throughout these spikes in usage is more challenging than usual now that most of our employees are working from home. We are working to keep our apps running smoothly while also prioritizing features such as our COVID-19 Information Center on Facebook as well as the World Health Organization’s Health Alert on WhatsApp. We’re monitoring usage patterns carefully, making our systems more efficient, and adding capacity as required. To help alleviate potential network congestion, we are temporarily reducing bit rates for videos on Facebook and Instagram in certain regions. Lastly, we’re conducting testing and further preparing so we can quickly respond to any problems that might arise with our services.”
Facebook is just the latest example of how companies, even those without traditional supply chains, are being negatively impacted by the pandemic.
According to a report on CNBC, startups may not get government money from the coronavirus relief bill if they have already taken venture capital or private equity money.
“So-called affiliation rules from the Small Business Administration could prevent startups from getting loans as part of that stimulus package,” says CNBC report Kate Rooney. “According to SBA rules, a startup should be affiliated with their investors. For example, if a VC backed company has 30 employees, it is grouped in with thousands of other employees at fellow portfolio companies.
“The head of the National Venture Capital Association tells me that startups don’t have access to emergency capital in the meantime and there could be waves of job losses for the countries 2.2 million startup employees,” says Rooney.
Apple has informed investors it will miss its quarterly guidance as a result of the coronavirus, COVID-19.
In a statement on the company’s website, Apple says its guidance on January 28 “reflected the best information available at the time as well as our best estimates about the pace of return to work following the end of the extended Chinese New Year holiday on February 10.” In the interim, however, COVID-19 has continued to challenge governments and medical personnel around the globe, especially in China where much of Apple’s production is.
According to the statement, Apple believes two factors will prevent it from meeting its guidance.
“The first is that worldwide iPhone supply will be temporarily constrained. While our iPhone manufacturing partner sites are located outside the Hubei province — and while all of these facilities have reopened — they are ramping up more slowly than we had anticipated. The health and well-being of every person who helps make these products possible is our paramount priority, and we are working in close consultation with our suppliers and public health experts as this ramp continues. These iPhone supply shortages will temporarily affect revenues worldwide.
“The second is that demand for our products within China has been affected. All of our stores in China and many of our partner stores have been closed. Additionally, stores that are open have been operating at reduced hours and with very low customer traffic. We are gradually reopening our retail stores and will continue to do so as steadily and safely as we can. Our corporate offices and contact centers in China are open, and our online stores have remained open throughout.”
While unfortunate, this news is not entirely unexpected. Analysts have been predicting iPhone production would be impacted as a result of the virus, and so far it shows no sign of abating.
Google Cloud is undergoing a reorganization and is eliminating some roles as it works to better compete with its rivals.
Google currently sits a distant third among U.S. cloud providers, but CEO Thomas Kurian has made no secret of his goal to become at least the number two provider within five years. While the company has a long way to go toward that goal, Google’s cloud business was a positive note in the company’s most recent quarterly results in which it missed projected revenue. One thing that was clear from the report was that, at $8.9 billion in 2019, its cloud business is increasingly important to Google.
In an effort to further streamline operations, as well as better align with international markets, Google is reorganizing its cloud business and eliminating some roles.
“We recently communicated organizational changes to a handful of teams that will improve how we market, partner, and engage with customers in every industry around the globe,” the company told CNBC on Friday. “We made the difficult, but necessary decision to notify a small number of employees that their roles will be eliminated.”
Google says less than 50 people are impacted by the change and is working to find them other roles within the company.
T-Mobile released its quarterly earnings report Thursday and, once again, turned in a record quarter that beat estimates.
The company posted $11.9 billion in revenue in Q4 2019, up 4% from the year-ago quarter, and beating analysts’ estimates. The company also added 1 million net total subscribers, the 27th quarter in a row the company has added at least 1 million subscribers.
CEO John Legere touted the fact that the company was able to report such positive results, all the while investing in its 5G network. To put that in perspective, Verizon recently missed earnings estimates in large part because of its own 5G rollout.
“T-Mobile continues to deliver incredible results quarter after quarter! In Q4 we set new financial records across the board and recorded our 27th consecutive quarter with over 1 million total net customer additions,” said John Legere, CEO of T-Mobile. “We achieved these spectacular results all while launching the first and only nationwide 5G network, announcing Un-carrier 1.0 for New T-Mobile, and delivering a compelling and fact-based argument in court to support our pending merger. Our results continue to show that the Un-carrier strategy works, and it delivers for both customers and shareholders. I couldn’t be more confident and excited about our future and We Won’t Stop!”
Facebook released its quarterly results Wednesday and it was not good news for investors, according to ABC News.
The company posted ongoing growth, slightly beating analyst predictions, but its earnings were plagued by high expenses and legal settlements. In particular, the company has tentatively agreed to a $550 million settlement in an Illinois class-action lawsuit.
According to ABC News, CFO David Wehner said the expenses were “largely driven by higher legal fees and settlements.”
“This includes charges related to a $550M settlement in principle we reached this month in connection with the Illinois Biometric Information Privacy Act litigation,” he continued.
The Illinois Biometric Information Privacy Act stipulates that users must be informed when their data is stored, why it is being stored and for how long. Facebook was sued because accusers say its photo tagging feature violates the law.
The stock price was down approximately 7% in Thursday morning trading following the revelations.
According to Reuters, Google’s parent Alphabet will stop using a tax strategy known as the “Double Irish, Dutch Sandwich” to minimize U.S. taxes.
The tax practice involved using a subsidiary in the Netherlands “to shift revenue from royalties earned outside the United States to Google Ireland Holdings, an affiliate based in Bermuda, where companies pay no income tax.” As a result of the practice, Google was able to pay taxes in the single digits on non-U.S. profits. This is roughly a quarter of the average rate for overseas markets.
While legal, the practice was highly controversial, causing Ireland to eliminate the loophole in 2014, with it taking effect in 2020. According to a Dutch filing, Google has not confirmed a termination date for the practice, but says it will take place by the end of 2019 or in 2020.
Another motivation for ending the practice is the Tax Cuts and Jobs Act, passed by the Trump administration in January 2018. Under the law, “profits that have been made and taxed abroad are not subject to taxation when returned to the U.S.”
With the Irish loophole closing and motivation to look for other loopholes no longer a factor, it’s likely Google will be joined by a number of other U.S. companies.
Yahoo is reporting that Dell is increasingly looking to AMD in response to Intel’s chip shortages.
Intel has experienced significant supply issues in 2019, even penning an open letter to customers and partners apologizing for the chip shortages. In the letter, executive vice president Michelle Johnston Holthaus wrote:
“I’d like to acknowledge and sincerely apologize for the impact recent PC CPU shipment delays are having on your business and to thank you for your continued partnership. I also want to update you on our actions and investments to improve supply-demand balance and support you with performance-leading Intel products. Despite our best efforts, we have not yet resolved this challenge.”
It appears that at least one major customer is not waiting for the challenge to be resolved. According to Yahoo, Dell is looking to source chips from AMD to make up for Intel’s shortages.
“We are evaluating AMD chips,” Tom Sweet, Dell’s CFO, said on Yahoo Finance’s The First Trade in response to a question about what the company planned to do in view of Intel’s struggles.
The move is particularly significant, as Dell has predominantly used Intel’s chips for 35 years. That focused reliance on the chip giant, however, is largely to blame for Dell’s 6 percent decline in consumer PCs during its most recent quarter.
With Intel not expected to have their supply issues resolved until the second half of 2020, Dell appears to be adopting the philosophy ‘don’t have all your eggs in one basket.’
IBM has announced it is developing the “world’s first financial services-ready public cloud,” and Bank of America has joined the effort.
While software companies have a long track record of making software tailored to a specific industry, it is a relatively new trend among cloud providers. Nonetheless, the financial industry is a good candidate for customized cloud offerings, given the privacy, security and regulatory concerns the industry must contend with.
IBM touted Bank of America’s collaboration and contribution to the effort, noting that it marked “the next step in Bank of America’s seven-year cloud journey and reflects the Bank’s unwavering commitment to the security and privacy of banking customers while also creating an opportunity to address the unique regulatory and compliance requirements of the financial services industry.”
“This is one of the most important collaborations in the financial services industry cloud space,” said Cathy Bessant, chief operations and technology officer, Bank of America. “This industry-first platform will allow Bank of America to use the public cloud, putting data security, resiliency, privacy and customer information safety needs at the forefront of decision making. By setting a standard that addresses the concern of hosting highly-confidential information, we aim to drive the public cloud to a safety level that is unmatched.”
While IBM has not committed to creating other industry-specific clouds, the company will no doubt be gauging the success of this endeavor and using it as a guide for the future.
The Trump administration has been involved in a protracted and costly trade war with China. Among the casualties have been telecommunications companies such as Huawei and ZTE, both of whom have found themselves on U.S. blacklists.
Now, according to a report in The Washington Post, the administration is considering blacklisting Chinese companies that repeatedly steal intellectual property. Companies that repeatedly violate U.S. patent and copyright laws could be placed on the Commerce Department’s “entity list,” meaning they would not be able to do business within the U.S. without a special license. This extreme measure is usually reserved for companies that pose a military or terrorist threat.
Peter Navarro, the Trump advisor reportedly investigating what recourse the administration has, has long been a proponent of cracking down on Chinese companies. With the administration repeatedly making the case that economic security makes up a significant part of national security as a whole, it seems likely it is moving forward despite repeated claims to the contrary.
While few argue that something needs to be done to address intellectual property theft by Chinese companies, not everyone is happy with this possible solution. Mark Cohen, director of the Berkeley Center for Law and Technology told The Washington Post: “Everybody wants to put companies on the entity list now. This is Pandora’s box. In my opinion, this is hopelessly stupid. When did Peter Navarro become a federal judge?”
Should the entity list be used as the latest weapon in the trade war, it will be interesting to see if it has the desired effect, or backfires and costs consumers even more.
“It was the best quarter in the company’s 51-year history,” says Intel CEO Bob Swan. “Everything was stronger than we expected this quarter. If you think about where we were simply 90 days ago we had a view that the quarter would be roughly $18 billion but we closed at $19.2 billion. That’s $1.2 billion higher than we expected.”
Bob Swan, CEO of Intel, discusses in an interview on CNBC how the company was able to end the third quarter better than any other quarter in its 51-year history:
Best Quarter In the Company’s 51-Year History
Everything was stronger than we expected this quarter. If you think about where we were simply 90 days ago we had a view that the quarter would be roughly $18 billion but we closed at $19.2 billion. That’s $1.2 billion higher than we expected. We saw strength across the board. It was the best quarter in the company’s 51-year history.
The data-centric collection of businesses, which is a very important part of our growth story, set records. DCG was a record quarter. Our memory business had a record quarter. Our IoT business had a record quarter. Our Mobileye business had a record quarter. We really saw very strong growth across the board as we went from Q2 to Q3.
Because of that, we raised our full-year outlook by $1.2 billion. We took earnings up and we raised our cashflow outlook by a billion dollars as well. We’re on pace for our fourth record year in a row. We feel good momentum going to the second half of the year.
Intel Just Had Its Best Quarter In History, Says Intel CEO Bob Swan
Following the departure of several major backers of Facebook’s Libra cryptocurrency, Reuters is reporting the social media giant is considering a compromise.
Initially, Facebook proposed a synthetic unit for the cryptocurrency. The company’s efforts have been met with widespread suspicion and criticism from governments around the world. In what is no doubt an effort to ease the concerns of regulators, not to mention attract other backers, Facebook has voiced an openness to using cryptocurrencies based on national currencies.
According to Reuters, Libra project head David Marcus, told a banking seminar that the group was looking at alternative approaches.
“We could do it differently,” he said. “Instead of having a synthetic unit … we could have a series of stablecoins, a dollar stablecoin, a euro stablecoin, a sterling pound stable coin, etc.”
Whether a Libra cryptocurrency based on stablecoins would be enough to satisfy concerned regulators and legislators remains to be seen. Either way, Facebook is still shooting for a June 2020 launch, although Marcus acknowledged that government concerns could delay it.
When Reuters asked if the departure of prominent backers would impact the launch date, Marcus said: “We’ll see. That’s still the goal. We’ve always said that we wouldn’t go forward unless we have addressed all legitimate concerns and get proper regulatory approval. So it’s not entirely up to us,” he said.”
In its proxy statement, Microsoft announced a significant raise for CEO Satya Nadella.
Citing his ‘strategic leadership,’ Microsoft’s independent board awarded Nadella $42.9 million in compensation, much of it in stock awards. Nadella has been instrumental in helping Microsoft transition from a company primarily focused on operating systems and office software to one whose cloud services are front-and-center. This has enabled Microsoft to adapt to a changing landscape dominated by fast-moving, upstart companies. The success of Nadella’s leadership is shown in the numbers.
“Under Mr. Nadella’s leadership and ongoing commitment to long-term success, the Company saw a strong finish to a record fiscal year delivering more than $125 billion in revenue for the full year with double-digit revenue and net income growth in 2019.
“The commercial cloud business led the way, surpassing $38 billion in revenue, growing over 40% for the year. The strength in commercial cloud growth was across Azure, Microsoft 365, Dynamics 365, and LinkedIn. The commitment to customer success resulted in deeper partnerships and larger, longer-term cloud agreements. Microsoft continued to make investments across the key strategic areas to build new platforms and enhance and differentiate Microsoft’s technology stack, including application infrastructure, data and artificial intelligence (“AI”) business process, productivity, collaboration, and hardware. Microsoft Teams had a very successful year, with more than 13 million daily active users and 19 million weekly active users.
“Further, the closing of the GitHub acquisition in October 2018 and its successful integration has created new opportunities to build the developer community. With GitHub, Microsoft now has the opportunity to bring all its resources to better serve this very important community of developers around the world. Microsoft also invested in building a developer toolchain independent of language, framework, or cloud. Visual Studio and Visual Studio Code are now the most popular code-editing tools in the world, and TypeScript is the fastest-growing programming language.
“Windows 10 momentum was very strong this past year as well, reaching 800 million active devices. While opportunities remain for the Company with consumers, the Company’s Gaming business made new investments to empower the world’s gaming community. However, the Company needs to make progress to strengthen our consumer business and additional work is needed in consumer-facing strategies.”
