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Big Tech earnings have herd immunity

Tech companies worth a combined $5.5tn will reports their earnings within minutes of each other after the closing bell in New York today.

Analysts and journalists have the unenviable task of making quick assessments of how Alphabet, Amazon, Apple and Facebook are faring, as the Big Four seek herd immunity from close scrutiny of their financials.

It’s unprecedented and really shouldn’t be allowed. It’s like staging four major sporting events all at the same time, with investors having no way of knowing which is the best to watch.

Elaine Moore describes it as unnecessary and annoying in her Lex letter, but says it will at least provide a collective snapshot of the US tech industry as the pandemic rolls on.

The current mindset of the big companies seems to be safety in numbers as they come under pressure over their dominance of advertising, ecommerce, web services and social media. Yesterday, the heads of Alphabet, Facebook and Twitter all agreed to talk to a Senate panel at the same time about how they moderate content.

We have a breakdown of what to expect from the four companies reporting today. Alphabet is expected to show a return to growth that bucks a wider downturn in global advertising markets. Analysts predict 30 per cent year-on-year revenue growth for Amazon as the boom in ordering online continues. With the iPhone 12 launch delayed, Apple may report $64bn of revenue — the same as a year ago, with lower iPhone sales offset by growing momentum in services and other hardware. For Facebook, increased ad sales are expected to boost revenues by 12 per cent, although user numbers may decline.

Oh, and we also have results to ponder from the likes of Twitter and Activision Blizzard, while Shopify and Spotify reported pre-market (see below) on this Super Thursday for tech earnings in the US and beyond.

The Internet of (Five) Things

1. Shopify, eBay and Etsy extend pandemic boom
As a pointer to Amazon’s earnings, its three biggest rivals in North America have all reported the lift to ecommerce from the pandemic is continuing, with revenues and users growing and the sector expected to expand by about a third this year to levels not expected before at least 2022.

2. Spotify gets back to normal
The music streaming leader added 4m subscribers in the September quarter, as listening recovered from lockdowns during the pandemic, when fewer people were driving and commuting. “All regions have fully recovered” to normal usage, Spotify said in a letter to investors. The company had reached 144m paying subscribers by the end of September, on the high end of its forecast and Wall Street estimates. Advertising also improved and total revenues climbed 14 per cent.

3. Huawei gets a break on US sanctions
The US is allowing a growing number of chip companies to supply Huawei with components as long as these are not used for its 5G business, we’ve discovered, offering the Chinese group a potential lifeline. Meanwhile, Nokia’s new chief has told the FT the network equipment supplier will catch up on 5G next year. The UK’s BT said today that orders for the 5G iPhone 12 were “very, very strong”.

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4. Samsung warns on iPhone competition
The iPhone news is not good for Samsung Electronics, which cautioned today that its earnings could weaken in the fourth quarter due to lower chip prices and stiffer competition in smartphones following the launch of Apple’s latest handset. Taiwanese contract chipmaker UMC has pleaded guilty to a US criminal charge of stealing trade secrets and been fined $60m, the second-largest penalty for such cases.

5. Google’s EU strategy leaked
Google is planning an aggressive campaign targeted against French commissioner Thierry Breton and other regulators in Brussels over their plans to introduce a Digital Services Act to curb the power of Big Tech, according to a leaked presentation. Other tactics outlined were to “undermine the idea DSA has no cost to Europeans” and “show how the DSA limits the potential of the internet . . . just as people need it the most”.

Forwarded from Sifted — the European start-up week

Start-ups have developed a reputation for unusual approaches to employee motivation, from office ping-pong tables to zany away days. But here is a new one, with Barcelona-based survey company Typeform introducing its very own merit-based currency, for employees to trade among themselves. It works like this: employees are given a fresh batch of ‘Typecoins’ at the beginning of each month, which they are then encouraged to award to colleagues who have helped them in some way. The Typecoins you’re given by colleagues can then be cashed in to be spent on things like Amazon vouchers, Starbucks coffees or Uber rides. But is it motivating?

Elsewhere this week, Sifted looks at the European start-ups that are breaking boundaries in neurotechnology and beating Elon Musk’s Neuralink at its own game. And in other Musk in Europe news, there is brewing opposition to Tesla’s massive battery gigafactory in Berlin from local politicians and activists. Meanwhile, France’s junior minister for digital affairs Cedric O spies an opportunity from Brexit and figures this week also showed that the third quarter of this year was one of the best periods on record for venture capital investment in Europe.

Tech tools — Dash Smart Shelf

Apparently, Amazon’s smart shelf was only piloted with businesses when we mentioned it a year ago. Now it’s available to everyone, according to a blog post today. In these panicky pandemic times, “Dash Smart Shelf can give families peace of mind that they’ll never run out of household essentials like toilet paper, paper towels, laundry and dishwashing detergent, or other vital items like baby supplies and pet food.” The shelf is a small flat Wi-Fi-enabled scale in three sizes. Place items on it and when it senses you’re running out, it can place a replenishment order or send you a notification that supplies are low. All sizes cost just $19.99.


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