Tech Brew Ride Home - Thu. 01/30 - Tesla's Earnings Home Run

Episode Date: January 30, 2020

Its Earnings Bonanza Day! Tesla, Facebook, Microsoft, Samsung… Facebook pays a record fine to Illinois, the Switch has outsold the SNES, three interesting Apple stories, Avast changes its business model and the new Fantastical app. Sponsors: Metalab.co BelovedRobot.com/nolowcode Links: Tesla’s record 2019 has bought it some breathing room (The Verge) We’re about to enter a world where Tesla is the cheaper electric car (Quartz) Facebook plunges, wiping out more than $50 billion in market value (CNBC) Xbox revenue falls 21% as Microsoft gears up for Xbox Series X debut (GeekWire) Samsung Posts Lower Profit, Anticipates End of Chip Slump (WSJ) Facebook to Pay $550 Million to Settle Facial Recognition Suit (NYTimes) Avast winds down Jumpshot, cites user data sale privacy concerns (ZDNet) Nintendo upgrades fiscal-year forecast as Switch hits 52.5 million consoles sold (VentureBeat) Apple Hires Key Netflix Engineer in Bid to Boost Subscription Services (WSJ) Apple Ends AI Startup’s Work on ‘Project Maven’ After Acquisition (The Information) Kuo: Apple to Launch AirTags, Small Charging Mat, New iPads and Macs, High-End Headphones, and More in First Half of 2020 (MacRumors) Say hello to the new Fantastical: one robust calendar for iPhone, iPad, Apple Watch, and Mac (9to5Mac) Learn more about your ad choices. Visit megaphone.fm/adchoices

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 right home for Thursday, January 30th, 2020. I'm Brian McCullough. Today, it's earnings bonanza day, Tesla, Facebook, Microsoft, Samsung. Facebook also has to pay a record fine to Illinois. The Switch has outsold the S-NES, three interesting Apple stories, Avast changes its business model,

and the new fantastical app. Here's what you miss today in the world of tech. Today is that day that comes every quarter where everybody releases their earnings numbers all at once. Actually, they all did it yesterday. And looking at my rundown, it's also been a busy news day generally, and we might actually have 11 segments today. That's, of course, of no more news breaks today. So anyway, all I can say is buckle in, everybody. First up, Tesla's stock is up over 11% at the time of writing this morning after the company reported record revenue, beating analyst estimates and projecting that it will deliver half a million vehicles this year. Oh, and Tesla reported its second consecutive profitable quarter. Oh, and cash flow topped $1 billion.

Tesla has produced positive free cash flow in four of the last five quarters. Tesla's debt is now trading above par. Basically, Tesla is just firing on all cylinders, if you will. Profits are becoming a habit. Marins are good, costs are going down, and Elon Musk hasn't caused any controversies lately. in case you weren't aware, just since the start of the year, Tesla's stock has shot up 39% and that was before today. What's going on here? As the Verge puts it, Tesla's 2019 has been such an unmitigated success in the sense that it has bought the company some breathing room and thus the stock is reacting accordingly. And with Elon Musk saying that Tesla is going to be delivering its first model wise ahead of schedule, it seems the wind is really at Tesla's back right now. And listen to this analysis from Quartz, quote, Tesla could find itself in a

Goldilocks situation. Its luxury rivals are still too expensive, while the entry-level competitors aren't attractive enough. The average price for the luxury Audi E-Tron is $75,000, and the Jaguar I-Pace is $77,000. Standard EVs, such as the Chevy Bolt sell for about $38,000. Even the cheapest offering, the Nissan Leaf lists for $32,000. Meanwhile, the Model 3 is now selling for $39,000 before incentives, and Tesla's Model Y is expected to start at $48,000. At that price, luxury brands will feel the pinch and cheaper offerings risk being overlooked. Tesla has already proved it can take over the premium sedan market, beating out rivals such as Mercedes, Lexus, and BMW 6 and 7 series, with its Model S and Model X starting at $75,000. If it can offer most of the technology in its premium cars at a fraction of the price,

Tesla's Model Y and Model S may have a lucrative EV market segment all to themselves for years to come, end quote. For all the controversy, it turns out that Facebook had a pretty good 2019. Q4 revenues came in at $21.1 billion, up 25% year over year, net income came in at $7.4 billion, up 7% year over year. Daily active users were up 9% to 1.66 billion. Monthly active users were up 8% to 2.5 billion. And across its family of apps, including Instagram, WhatsApp and the rest, it reported 2.89 billion users in total. For the year, Facebook had total revenue of $70.6 billion, up from $55.8 billion, and yearly profits were up 16%.

So why is Facebook stock down as much as 8% this morning? Well, it turns out that the quarterly profits this time were only up 7% year over year. A year ago, they were growing at 61%. Operating margins were down as well, and expenses were up a whopping 34% year over year, thanks to a 26% growth in headcount. And all that hiring is probably due to this. The drop comes after Facebook reported a 51% rise in expenses compared to its total in 2018. The expenses were largely related to the company's privacy and security improvements.

That coincides with a drop in the company's operating margin, which fell from 45% in 2018 to 34% in 2019. In addition to the increased expenses, Facebook also warned of advertising headwinds related to privacy and regulatory changes on the horizon, leading to slowing growth in the U.S. Facebook said privacy improvements on Apple's iPhones and Google's Android software could hurt its ability to target advertising, end quote. Things are going swimmingly at Microsoft. Q2 revenue up 14%, net income up 38%, and the twin strategy of the cloud and subscriptions continues to pay off. Commercial cloud revenue was up 49%. Azure revenue was up 62%.

Office 365 consumer subscriptions hit 37.2 million. Even the hardware end of things is doing well. The surface had another billion dollar quarter. In fact, it almost hit $2 billion coming in at $3.6. $1.98 billion for the quarter. One area for concern, though, gaming revenue was down 21% to $3.8 billion. Hardware revenue was down 43% in games and Xbox content and services. Revenue was down 11%. But, of course, quoting Geekwire, slowing Xbox 1 console sales are hurting Microsoft's bottom line, but that should change later this year as the company plans to release the Xbox Series X console. Also on the horizon is

Microsoft's Project XCloud technology, which entered testing last year and allows users to stream their games for Microsoft's servers on almost any compatible connected device. XCloud will be coming to Windows 10 as well as the Xbox platform, end quote. Things not going as swimmingly at Samsung. The company reported weak Q4 earnings from low memory chip sales as net profit slumped to $4.4 billion down 39% year over year. Quoting the Wall Street Journal. Samsung weathered challenges in 2019 from a global slump in memory chip demand that ended a string of record profits.

Net profit bottomed out in the first quarter, reaching its lowest point since 2016's global recall of the Galaxy Note 7 smartphones. Operating profit in 2019 was down by nearly half from its peak in 2018, end quote. Facebook has agreed to pay $550 million to settle a class action lawsuit relating to an Illinois Biometric Law and the tagging of users in Facebook photos. This came, by the way, after the Supreme Court last week declined to review Facebook's appeal of the case, quoting the New York Times. The case stemmed from Facebook's photo labeling service tag suggestions, which uses face-matching software to suggest the names of people in users' photos.

The suit said the Silicon Valley Company violated an Illinois biometric privacy law by harvesting facial data for tag suggestions from the photos of millions of users in the state without their permission and without telling them how long the data would be kept. Facebook has said the allegations have no merit. David Wenner, Facebook's chief financial officer, noted in an earnings call with investors that the settlement added to the social network's rising general and administrative costs, which increased 87% from a year ago. Quote, we decided to pursue a settlement as it was in the best interests of our community

and our shareholders to move past this matter, a Facebook spokesman said in a statement, end quote. Nintendo says its Switch gaming device has surpassed the S&ES in terms of lifetime sales with more than 52 million units sold. This came as the company reported sales of $9.39 billion and net profit of $1.8 billion for the first nine months ending in December. Quoting Venture Beat. Meanwhile, Nintendo said that it has sold 22.96 million copies of Mario Kart 8 Deluxe, 17.6 million copies of Super Smash Bros. Ultimate and 16.59 million copies of Super Mario Odyssey. The Legend of Zelda, Breath of the Wild, has sold 16.34 million copies, and Pokemon Sword slash Pokemon Shield have sold 16.06 million copies, end quote.

Follow up to a previous segment. Antivirus Software Maker Avast says it will shut down its jumpshot marketing subsidiary, following controversy over selling user data to third parties. Quoting ZDNet. Avast products will not change, and Jumpshot will pay its vendors and suppliers until the wind down is complete. Customers of the marketing tool have been asked to contact the subsidiary directly. Hundreds of staff members will have to find employment elsewhere. In a blog post, Avast's CEO said that the recent news about Jumpshot, quote,

has hurt the feelings of many of you and rightfully raised a number of questions, and as chief executive, he feels, quote, personally responsible for the turmoil. Quoting again, protecting people. is a vast top priority and must be embedded in everything we do in our business and our products. Anything to the contrary is unacceptable, Vleck wrote. When I took on the role as CEO of Avast seven months ago, I spent a lot of time reevaluating every portion of our business. During this process, I came to the conclusion that the data collection business is not in line with our privacy priorities as a company in 2020 and beyond, end quote. And now a trio of Apple stories. Apple has

apparently hired one of Netflix's top engineers to help the company build out the technical team supporting its TV Plus subscription services, quoting the Wall Street Journal. Rosalind Mechenberg, who helped build out Netflix's platform and was involved in key initiatives to create a speedier, more consistent service for viewers, joined Apple's Internet Services organization this week, according to people familiar with the hire and his social media accounts. He joins Apple at the same time. It is expanding its $4.99. the month TV Plus service, with other new hires and additional shows and movies, a complex undertaking that is tripped up other entrants into the video streaming business. Apple is shifting its approach

to cloud services, saving money by relying more on third-party providers. The company last year assigned responsibility for more of its internet services operations to Michael Abbott, a former engineer at Twitter, according to people familiar with the matter. He has been adding experienced engineers to Apple's technical team, end quote. And remember Apple's purchase of XNOR.com. A.I, the AI photo and other things startup that we told you about recently. Well, sources are telling the information that, as a part of taking over Exnore, Apple has terminated that startup's involvement in the Pentagon's Project Maven, the same Project Maven that sparked protests at Google when Google was involved with it.

Quote, until Apple acquired at Exnore.aI was a little-known Seattle startup that had spun out of the Allen Institute for Artificial Intelligence, a research lab formed by Microsoft's co-founder Paul Allen, who died in 2018. Exnor.a.I. made machine learning algorithms that could run on low-powered devices instead of relying on connectivity to the cloud. That technology could be especially useful on devices like drones, which sometimes operate with unreliable intermittent network connections. According to the person familiar with the matter, XNOR.A.I worked on Project Maven in conjunction with another startup, Clarify, which has publicly spoken about its work on the Pentagon

on effort. Clarify, executives didn't respond to request for comment. But XNOR.aI's technology could also be used inside consumer electronics devices for applications like image recognition. Its software could fit in with Apple's broader effort to run AI algorithms locally on devices rather than in the cloud, a practice that raises privacy concerns, end quote. And rounding out the Apple trifecta, Apple analyst extraordinaire Ming Chi Kuo is out with a note outlining what he expects from Apple in the first half of 2020. Get ready for a new 4.7-inch iPhone, refreshed iPad pros, refreshed MacBook pros, and airs, but also new high-end headphones, a new wireless charging mat, probably smaller than what air power was supposed to be, and air tags trackers. On those last three, quoting Mac rumors,

on the ultra-wide band tags, last year Mac Rumors uncovered evidence of Apple working on tile-like item tracking tags in iOS 13 code, including a potential air tags name. As with iPhone 11 models, Quo believes the tags will support ultra-wideband, which would likely make it possible to locate the tags with much greater accuracy than Bluetooth, LE, and Wi-Fi. On the high-end headphones, Quote did not provide any details about these headphones beyond claiming that they will support Bluetooth. Bloomberg's Mark German previously reported that Apple-branded over-ear headphones were under development, but it is unclear if they were canceled, became the beats solo pro or otherwise. Mac Rumors has also uncovered evidence of Apple developing new power beats for headphones,

but the existing Powerbeats 3 are not considered high end. And on the small wireless charging mat, no further details were shared. Apple canceled its much-anticipated air power charging mat last year due to quality concerns. That mat would have been able to charge an iPhone, Apple Watch, and AirPods case simultaneously, regardless of where each device was positioned on the mat and with deep iOS integration, end quote. So if this is coming and it's smaller, I guess they're just doing away with the all your devices on one map thing. Finally, finally, news that makes me nervous, but excited at the same time, Fantastic Cal, the popular calendar app for iOS and macOS that I and a lot of other people basically live

inside to keep our days running smoothly is switching to a subscription model for new premium features. and has a new version of its app out. Now, there is still a free tier of Fantastical and Fantasticalal Premium. We'll run you only $4.99 a month or a 33% discount that basically gives you four months free if you pay annually. What do you get for premium? Integrated weather forecasts. You can subscribe to particular calendars, like, say, the game calendar for your favorite sports team or popular TV show schedules. Also, Fantasticical on the Apple Watch can now work independently of your iPhone, and quoting 9 to 5 Mac,

Fantastic Al 2 for Mac, introduce an awesome new feature called Calendar sets. This lets you quickly switch between various calendars like family and personal or work and run training with a few clicks or even location triggers. Now this awesome calendar grouping behavior is available on the iPhone, iPad, and Apple Watch for the first time, and it's brilliant. Calendar sets are a fantastical innovation to quickly manage calendar, and task lists like never before. Calendar sets consist of visible and hidden calendars, which lets users quickly toggle multiple calendars and task lists off and on with a click or a keystroke.

Even better, location-based calendar sets will automatically switch to a specific calendar set when the user arrives or leaves a specified location. New and Fantastic Al is one of the most requested features by users, the ability to sync calendar sets to all devices even on Apple Watch. and quoting again, the new fantastical introduces a game-changing new feature for proposing scheduled meetings, and it doesn't even require the person you're scheduling with

to use fantastical. Meeting scheduling made easier. Fantasticalel now includes meeting proposals, which makes it easy to ask people what dates or times work for them. Create a proposal with multiple times, and the invitees will be asked to choose what times work for them. Once everyone responds, any common time is found, the proposal can automatically be turned into an event

and added to your calendar. No more back and forth emails, texts or calls, end quote. So I said I'm nervous about this because one thing that I worry about when apps switch to a subscription model versus a one-time license fee is the tendency towards feature bloat. Companies seem to feel the need to keep packing on features once they go subscription as an incentive for you to keep paying up. If there's anyone I trust to do this right, it's flexi bits. But still, flexi bits, don't do too much. Fantastical is one of those apps that just works.

That is perfect just as it is. And long may that last, I hope. Yeah, 11 segments today. I think that's an all-time record for this show. Talk to you tomorrow.