Tech Brew Ride Home - Fri. 11/02 - Apple Earnings Up, Stock Down

Starting point is 00:00:00 On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the TechMeme Ride Home for Friday, November 2, 2018. I'm Chris Higgins in for Brian McCullough. Today, Apple makes a pile of money in their stock tanks.

Starting point is 00:00:45 Flickr ends its mega-free storage plan. A classic internet cartoon gets a 4K makeover. Browser extensions steal Facebook private messages. Testing the latest smartphones to see how their batteries hold up. And, of course, the weekend-long read suggestions. Let's go. Apple announced its quarterly early. earnings yesterday, and there were some surprises. Analyst Neil Seibart said on Twitter,

Starting point is 00:01:10 this might have been the weirdest Apple conference call in years. So the earnings revealed yet another record-breaking quarter. Apple revenue was $62.9 billion, with profit just over $14 billion. Their services business continues healthy growth, and for the first time, their revenue from services reached $10 billion. But then, why did the stock go down so much that today, Apple lost its status as a $1 trillion company. First, in the earnings call after releasing their financials, Apple executives announced that starting next quarter they would no longer release the number of units sold for iPhones, iPads, and Macs.

Starting point is 00:01:49 This was a real shocker for Apple analysts who have long enjoyed Apple being one of the only companies that releases these kinds of numbers. These numbers, when paired with overall revenue numbers by business segment, allow analysts to infer things like which iPhone models are selling well. But competitors like Samsung and Google and Amazon don't report those numbers. They just report overall revenue. And Apple is joining them. Asked to explain the decision, CEO Tim Cook said,

Starting point is 00:02:16 quote, This is a little bit like if you go to the market and you push your cart up to the cashier and they say, How many units do you have in there? It doesn't matter a lot how many units are in there in terms of the overall value of what's in the cart, end quote, and end conference call. Well, I guess, yeah, if the question, is how much you have to pay to leave the store, which in this analogy is the value that the company generated in the last quarter, he's right. But that's not a question any Apple analyst

Starting point is 00:02:44 actually cares about. It's frankly an inappropriate analogy. What Apple analysts and investors care about is really specific. They want to know if iPhone and iPad unit sales are growing or declining. And they already know that iPad sales are in decline and they have been for a long time. So this leads us right into our second problem. iPhone unit sales were flat compared to the year ago quarter, but iPhone revenue was up by 29%. Analysts were expecting the number of iPhones sold to grow, but instead what they saw was Apple selling the same number of more expensive iPhones. So why does that matter?

Starting point is 00:03:21 Well, it's about growth. If Apple's iPhone unit sales stop growing, then how are they really going to grow the biggest part of Apple's business? More on that in a moment. The third problem was that Apple's guidance for its upcoming holiday quarter, which is always Apple's biggest of the year, was lower than analysts expected. That further supports the narrative that maybe we've hit a plateau for iPhone unit sales, which are overwhelmingly the key driver for Apple's overall revenue. Analysts looked at this moment and basically said, you know, it sure looks like iPhone unit sales are not going to grow going forward, and that's why Apple isn't going to tell us those numbers anymore. So Apple's quarter was actually pretty good in absolute financial terms, but the stock is down.

Starting point is 00:04:04 As I write this, it's down about 7%. Okay, so what went right for Apple this quarter? The big thing is that Apple succeeded at selling more expensive versions of its core products. This is something Brian talked about yesterday, the idea that Apple is growing its average selling price, or ASP, for its various product lines. That ASP goes up when people opt for the more expensive models in the line, or when the entire lineup just gets more expensive. And here's the other bright spot. Apple is pushing the notion that its services business is where investors should look for growth in the near future.

Starting point is 00:04:37 That's all the revenue from iCloud, Apple Music, AppleCare, Apple Pay, and a bunch of other stuff, and it's going up steadily. Starting next quarter, Apple will start reporting on what their margin is on services revenue. That's a big new stat, and presumably we'll shift a little bit of a little bit of a little bit of. focus away from this unit number controversy. Apple also reported that there are over 330 million paid subscriptions across its ecosystem. That's a number Apple is still happy to talk about, for now. Flickr announced that it's getting rid of its one terabyte free photo storage plan. In an announcement, Flickr said that the previous free plan where users could store up to a

Starting point is 00:05:20 whole terabyte worth of photos on the service was going to be cut all the way back to 1,000 photos. Current users of that free plan have until January 8th, 2019, to upgrade to a $50 a year pro plan. By February 5th, Flickr will begin deleting content from free plans, starting with the oldest photos first. Now, this comes after Flickr was acquired by SmugMug earlier this year. Without the backing of Yahoo, SmugMug clearly had to figure out how to manage the enormity of the photo data that Flickr was bringing in without direct revenue to support it. In related news, Flickr says that by January next year, you will no longer have to sign into Flickr using your Yahoo account. Finally.

Starting point is 00:06:00 Over on Twitter, archivist Jason Scott wrote about the decision to cut way back on the free plan, saying that he basically agreed with it, except that Flickr doesn't have a way to export your old photos, and right now it really needs one. Here's a snippet of Jason's thread. Quote, thanks for at least writing something explaining your choices, even if they're going to get Tomatoes thrown. Most companies would just do it, or worse, explain that they just did it. Yahoo certainly would have, so you're a step up.

Starting point is 00:06:28 But export tool, fellas, and no, not just download the original uploaded images, any putts can do that. I'm talking about the comments, the tags, the stuff someone needs to rebuild. Where's that tool? It's criminal to expect people to know how to do this unless you're trying to trap them. End quote. In today's dose of internet nostalgia, Don Hertzfeldt has released its classic. animated short called Rejection in 4K resolution on YouTube. It's a promo for his new Blu-ray collection of animated shorts.

Starting point is 00:07:04 Now, if you've seen this cartoon before, it was probably in a grainy, horribly compressed video file scammed from some file sharing site in the early 2000s. But some of the lines may have stuck with you, like, my spoon is too big, or I live in a giant bucket, or the one where only silly hats are allowed and a normal hat gets you a beating. If all of this means nothing to you, that's fine. But if you have a vague memory of something that's a big memory of something called the Family Learning Channel and these ostensibly rejected cartoons for it,

Starting point is 00:07:30 hit the show notes and strap yourself in for a massive dose of surrealist cartoons, now remastered in 4K. Also today, Jeffrey Fowler at The Washington Post does a deep dive on what's up with smartphone battery life. As devices get bigger screens and new technology crammed inside, it sure seems like overall battery life for new smartphones is less than what it used to be. Fowler decided to test that notion, and now he's got data to prove his hunch. What he found was pretty simple.

Starting point is 00:08:05 Big, dense, power-hungry screens are a key culprit in battery drain. If you have a phone with a big, super-dense OLED screen, and you keep that thing cranked up to full brightness, you're going to get terrible battery life. But beyond that, the efficiency of the LTE radio is a factor too. So if you're using that cellular radio a lot instead of Wi-Fi, you're also going to use more juice. In tests published by the post,

Starting point is 00:08:28 phones like Google's Pixel 3 and Apple's iPhone 10S both had worse back. than their predecessors, the Pixel 2 and the iPhone 10. But on the bright side, two new devices came out with excellent battery performance, Apple's iPhone 10R and Samsung's Note 9. In Apple's case, the 10R gets great battery life in part because it uses a less dense LCD screen than the other iPhone 10 models which use OLED screens. In Samsung's case, it crammed in a much bigger battery to feed its big, hungry, OLED screen. Both of these approaches work well, and their signposts for smartphone makers planning their designs in the coming years. Yet more bad news related to Facebook and things you thought were private. BBC News reports that hackers have managed to steal private messages from at least 81,000 Facebook users' accounts,

Starting point is 00:09:24 and they've published some of those messages online. According to the report, the data was scraped from users' browsers by malicious browser extensions that the users had installed, rather than hackers actually compromising Facebook. So, public service announcement time, only install browser extensions that you really, really trust. Go through the list of what you have installed right now and remove anything that you don't use. Be aware that those extensions can be doing naughty stuff, like, oh, say, grabbing the contents of your private messages and sending them to a server in Russia, and you might never know about it. Interestingly, Facebook seems to know which browser extensions were to blame, but has not yet disclosed that information. Bummer.

Starting point is 00:10:04 Now it's time for the weekend long read this week brought to you by Betterment's Resource Center. Great articles in there about the future of the gig economy, how to think about retirement, and what goes into saving for your kids' education, buying a house, and much more. Check it out at betterment.com slash resources. First up this week, a long watch, courtesy of the PBS series Frontline. In a two-hour documentary called the Facebook Dilemma, Frontline investigates a series of warnings Facebook received about how its platform is being used for nefarious purposes around the world, to foment hate, to interfere with elections, to sow division among

Starting point is 00:10:45 people, and how the company dealt with those warnings, or, spoiler alert, failed to deal with them. A friend of mine watched this and said it seemed clear that Facebook's leadership was in way over its head, and maybe still is. Have a look for a very good history of Facebook, complete with interviews from former and current employees. And, yes, it covers that famous Mark Zuckerberg sweaty interview with Kara Swisher, including follow-up now from Swisher, on what she thinks happened there. Next, a good old American utopia story. The New York Times is a profile of Jeffrey Burns, a cryptocurrency millionaire who has bought up a huge chunk of Nevada real estate

Starting point is 00:11:22 and plans to create a community along the Truckee River powered by Ethereum. While there's nothing there today but an office building in a lot of desert, Burns plans to test the idea that a community can be powered by the blockchain, that voting and property ownership and perhaps other stuff can be encoded in a shared ledger. and that that will matter. So if you've ever dreamed about moving to the desert and going all in on the blockchain or wondered why somebody might dream about that stuff, read this. And now, CityLab brings us the man behind the microscooter,

Starting point is 00:11:54 that pervasive product that most in the U.S. first encountered as the Razor Scooter, and in beefed up versions is suddenly an everyday site on many city streets. This is a delightfully written story, and I just want to read the opening paragraph here. Quote, one night in 1990, Vim O'Booter, a Dutch Swiss banker and amateur craftsman, was in the mood for a St. Gowan Bratworth at the Sternan Grill in Zurich, or so the story goes. He wanted to get from his house to the Brat Place and then to a bar, stat. But the stops seemed too far apart to walk and too close to drive. What he really needed, O'Budor decided, was a mode of transportation that would let him

Starting point is 00:12:32 swiftly cover that microdistance. A bike seemed like too much trouble to take out of the garage. garage. What he wanted was a kick-scooter. End quote. This story goes on to detail how one man set out to transform urban transportation with a scooter, a Broughtwurst, and a dream. Next, a profile of the rental car company, Avis, the third biggest player in its market, and how it plans to rely on technology to counter disruption of its core business. The car rental market faces a ton of challenges, perhaps the worst being that everybody hates renting cars. It's hard to imagine having much brand affinity for any company engaged in such a painful, annoying,

Starting point is 00:13:10 and add-on-filled business. But this story from Fortune gives us a glimmer of hope that at least one company is trying to adopt technology and reduce pain in the hope that people will continue renting cars even in a post-ride-sharing world. And finally today, a profile of Megan Good, who runs an online database of people who've gone missing. It's called the Charlie Project, named for a four-year-old boy kidnapped way back in 1874 in Philadelphia. That abduction spawned America's first known ransom note, and Charlie was never found. He's one of 10,000 people in the database of cold cases that Good meticulously collects and manages. It's a database that feeds a community of true crime enthusiasts online,

Starting point is 00:13:51 who run the gamut from amateur investigators to people who just like reading true crime stories. It's also a testament to what one determined person can do working from home on a shoestring budget using the power of the internet. That's been the weekend long reads brought to you by Betterment. Investment involves risk, but tech meme ride home listeners can get up to one year of investment money managed free. For more information, visit betterment.com slash ride. That's betterment.com slash ride. Betterment. Outsmart average. Wrapping up this week, I want to thank Brian for bringing me in today. He is, of course, outdoing promotion for his book, how the internet happened. Now, I don't think he'll tell you this, so I will. Last night, the Wall Street Journal

Starting point is 00:14:36 published a really favorable review of the book. Link to that is in the show notes. It's a good read, but don't let the grainy banner image of Steve Jobs and Bill Gates fool you. The book is all about how the internet happened. And, spoiler alert, it wasn't either one of those guys. That's why you got to read the book. All right, have a great weekend, and we'll be back with you on Monday.

Tech Brew Ride Home - Fri. 11/02 - Apple Earnings Up, Stock Down

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.