Tech Brew Ride Home - Thu. 04/30 – Don’t Fight The Tape (Tech Earnings Edition)

Episode Date: April 30, 2020

Four big earnings reports for four big tech companies, but we’ll leave that to the end. Intel launches a new flagship clip line, Andreessen Horowitz launches a new crypto fund, Zoom fesses up on MAUs, and Reddit goes old school with chat rooms. Sponsors: Tovala (text TOVALARIDE to 710-23) Metalab.co Links: Intel's 10th Gen Comet Lake for Desktops: Skylake-S Hits 10 Cores and 5.3 GHz (AnAndTech) Andreessen Horowitz raises $515 million for second crypto fund (Axios) Zoom admits it doesn’t have 300 million users, corrects misleading claims (The Verge) Reddit adds chat rooms for subreddits (Engadget) Smartphone Production to Drop by 16.5% YoY in 2Q20, Setting Historical Record in YoY Decline, Says TrendForce (TrendForce) Lyft lays off 17% of workforce, furloughs hundreds more (CNBC) Facebook soars after reporting ‘stability’ in ad revenue after fall in March (CNBC) Press Release & Webcast (Microsoft Investor Relations) Twitter Q1: sales up 3% to $808M as it swings to a loss on COVID-19, mDAUS hit record 166M (TechCrunch) Tesla posts profit despite hit from coronavirus (CNN Business) 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, April 30th, 2020. I'm Brian McCullough today. Four big earnings reports from four big tech companies, but we'll leave that to the end of the show.

Intel launches a new flagship chip line. Andriese & Horowitz launches a new crypto fund. Zoom fesses up on mouse and Reddit goes old school with chat rooms. Here's what you miss today in the world of tech. Intel has launched its flagship 10th generation Comet Lake desktop CPU lineup. with 10 cores, all based on its Skylake architecture. These chips can reach turbo speeds of up to 5.3 gigahertz, and quoting Anantec, Comet Lake is the fifth iteration of Intel's very profitable Skylake micro architecture built on Intel's

14 plus-plus nanometer process at a time when the competition is on to 7 nanometer with 16 cores. The crux, according to Intel, is that it will offer the best gaming. experience in this market. Users wanting the 10-core 5.3 gigahertz flavor will need to purchase the new top core I-9-10900K processor, which has a unit price of $488, and keep it under 70 degrees Celsius to enable Intel's new thermal velocity boost. Not only that, despite the 125-watt TDP listed on the box, Intel states that the turbopower recommendation is 250 watts. The motherboard manufacturers we've spoken to have prepared for

320 to 350 watts from their own testing in order to maintain that top turbo for as long as possible. The range of 32 new processors from Intel will vary from two core Celeron parts at 35 watts all the way up to 10-core I-9 hardware rated for 125 watts, with per unit pricing from $42 to $488. The standard rated TDP is 65 watts with the overclocked models at 125 watts, the low power T models at 35 watts, and Pentium Celeron at 58 watts. All of the core I3, I5, I7, and I9 processors will have hyperthreading, making the product stack a lot easier to understand. Certain models will also have F variants without integrated graphics, which will have a slightly lower per unit cost.

Users looking for eight cores and up will be in the $300 bracket. All of these processors support dual channel DDR4, 2933, while others lower in the stack only support DDR4-2666, officially. Intel has increased the amount of features on the chips with respect to how Turbo performs, end quote. Andresen Horowitz has raised $515 million for its second fund dedicated solely to cryptocurrency and blockchain technologies. Quoting from Axios, like its $300 million predecessor, the fund will primarily back crypto-related startups, but also will buy and hold some crypto assets. We're a crypto venture fund, not a crypto hedge fund, said partner Katie Juan, who joined Andres and Horowitz in 2018 after having been a federal prosecutor involved in the infamous Silk Road case.

We invest in them after evaluating the technologies and don't trade them, end quote. First fund portfolio companies include Anchorage, Rweave, Sellow, Filecoin, and Trust Token, end quote. I saw a tweet about this that kind of blew my mind this morning, both for what it says about A16Z's ambition here, but also about the state of crypto at the moment. This is Jack Purdy, quote. Andresen Horowitz's new fund is 0.7% of the total market cap of crypto, excluding Bitcoin and stable coins. That's not a small chunk of the money that will be invested into leading

crypto protocols, end quote. Zoom today had to admit that it doesn't actually have the 300 million daily active users that has been widely reported recently. I'm going to let Tom Warren at the Verge explain this one, quote. The admission came after the Verge noticed the company had quietly edited a blog post making the claim earlier this month. Zoom originally stated it had quote, more than 300 million daily users, and that, quote, more than 300 million people around the world are using Zoom during this challenging time, end quote. Zoom later deleted these references from the original blog post and now claims, quote, 300 million daily Zoom meeting participants, end quote. The difference between a daily active user, or Dow, and a meeting participant is significant.

Daily meeting participants can be counted multiple times. If you have five Zoom, Zoom meetings in a day, then you're counted five times. A Dow is counted once per day and is commonly used by companies to measure service usage. Only counting meeting participants is an easy, somewhat misleading way to make your platform usage seem larger than it is. The misleading blog was edited on April 24th a day after the numbers made headlines worldwide. After the Verge reached out for comment from Zoom, the company added a note to the blog post admitting the error yesterday and provided the following statement. Quote,

we are humbled and proud to help over 300 million daily meeting participants stay connected during this pandemic. In a blog post on April 22nd, we unintentionally referred to these participants as users and people. When we realized this error, we adjusted the wording to participants. This was a genuine oversight on our part, end quote. Reddit has launched Start Chatting, a new tool that lets users start a chat room with up to seven randomly selected fellow users of a given subreddit.

Yes, Reddit is already that site that continues to function the most like the old internet, so why not bring back one of the oldest internet features? Chatrooms. All the better to exchange messages and jiffs, right? This is from Engadget. Reddit has been testing the feature with a handful of subreddits, but opted to push it live sooner as the site has seen an uptick in usage of its existing chat features since the beginning of the year. Start chatting is rolling out now to around 16,000 subreddits and will be

expanding in the coming weeks, according to the company. Reddit has experimented with chatroom style features in the past. The company allowed some subreddit moderators to create chat rooms in a test in 2018, but the latest version is different in a couple notable ways. For one, the chats are centered around smaller groups of users rather than one big room anyone can join, and chat rooms are randomly generated based on which users. users opt to start chatting, so the feature isn't dependent on moderators, end quote. The real reason for this feature, though, probably the fact that lots of Reddit communities have had to turn to outside apps like Discord and Slack in order to organize their spillover

community activities recently. So, you know, if you're Reddit, why not try to capture some of that activity inside of Reddit itself? A couple of quick coronavirus data points. First, according to Trendforce, Global smartphone production in Q1 fell by 10% year over year to around 280 million units. The lowest number of units shipped in five years. Trendforce is also estimating a drop of 16.5% year over year for Q2 smartphone shipments, representing production of only around 287 million units. And I told you this week about the rumors of,

layoffs at Uber. But according to a filing, Lyft is making it bang official. Reportedly laying off 982 staff members or 17% of its workforce. Lyft will also furlough 288 employees and cut salary for all staff by between 10 and 30%. Quote, it is now clear that the COVID-19 crisis is going to have broad-reaching implications for the economy which impacts our business. We have therefore made the difficult decision to reduce the size of our team, Lyft CEO Logan Green, said in a statement Wednesday. Our guiding principle for decision-making right now is to ensure we emerge from the crisis in the strongest possible position to achieve the company's mission, end quote.

All righty, let's get on to the tech earnings, shall we? Starting with Facebook. Facebook says it did indeed see a significant reduction in advertising demand over the last three weeks of March. However, the first three weeks of April showed, quote, of stability, end quote. That would actually mirror almost exactly what Google told us on Tuesday. It was a tale of two quarters, kind of. That explains how Facebook was able to report strong Q1 numbers of $17.7 billion in revenue, up 18% year over year. Facebook also reported that COVID-19 will

likely flatten Q2 revenue growth, but note that, again, flattening is a far cry from catastrophic dropping. Might explain why Facebook stock is up 5% this morning. But also, for companies like Facebook, it's always important to keep an eye on Mao's and Dow's, right? Well, the news there was also very good for Facebook, quoting CNBC. Facebook said it counted 2.99 billion monthly active users across its family of apps compared to 2.89 billion in the previous quarter. This metric is used to measure Facebook's total user base across its main app, Instagram, Messenger, and WhatsApp. In the U.S. and Canada, Facebook's user base rose to 195 million daily active users, up from 190 million a quarter earlier. Its user base in Europe increased to 305 million from 294 million daily

active users in the prior quarter. Facebook's other revenue came in at 297 million for the quarter up 80% compared to last year. This includes sales of Oculus virtual reality headsets and the portal video chatting devices which were sold out from Facebook's website and retailers like Best Buy in March. The increase in other revenue was primarily driven by sales of Oculus products, winner said. Zuckerberg also highlighted that Facebook is now seeing 800 million daily active users engaging with Facebook and Instagram live streams, end quote. So unpacking all of that, number one, I guess I wasn't alone in buying a portal, no matter what they say. And with Dow's up 11% year over year to 1.73 billion and Mao's up 10% to 2.6 billion, I mean, if you're an investor

and you believe this downturn in advertising is something that is only a six-month sort of worry or something like that, then there's really nothing here to shake your bullcase. And on that live streaming number. Facebook also reported that Facebook and Instagram live video views are up 2x, while group video call time is up 10x in recent weeks. So again, the current environment is only boosting certain quarters of the Facebook empire. If possible, Microsoft reported the best tech earnings yet this quarter. Revenue up 15% at Microsoft year over year to $35 billion. net income of $10.8 billion up 22% you over year, intelligent cloud revenue of $12.3 billion up 27%.

LinkedIn revenue up 21%. Heck, Azure's revenue is up 59%. And Microsoft is not a company heavily dependent on advertising, so you know if that was your worry and you're an investor, you've got little cause for concern with Microsoft, right? Indeed, in the earnings call, Microsoft said COVID-19 had minimal impact on its numbers. It's segment with Bing, Windows, Surface, and Xbox, where ad revenue should probably live, that was up 2.9% year over year.

Again, going into the corners of the Microsoft Empire, the story just continues to be rosy. For example, Microsoft Teams now has more than 200 million daily meeting participants and 75 million daily active users up from 44 million daily active users in mid-March. That's a 70% increase. and that growth has to be coming from COVID-19 related contingencies, right? You also have to figure that a lot of those new users are paid users. Meanwhile, Xbox Live now has around 90 million monthly active users, up around 50% year-over-year. Microsoft also disclosed Xbox GamePass subscriber counts for the first time,

saying that service has more than 10 million subscribers. Twitter reported Q1 sales were up 3% year-over-year, to $808 million, as it swung to a net loss of $8 million. Twitter did blame COVID-19 for that, but at the same time reported that its monetizable daily active users hit a new record of 166 million people, up 24%. Twitter is always sort of a special case, it seems, with earnings, always zinging when others zag. And in this case, that sort of continues as Twitter did beat on sales but missed on earnings.

This is TechCrunch, quote. The company said that the quarter played out in two distinct periods. January through early March, which largely performed as expected, it said, and early March through the end of the quarter, quote, when the pandemic became global, end quote. None of this should come as a surprise. Twitter itself announced more than a month ago that it was removing its own financial guidance because of the instability of its business due to COVID-19, noting only that it would be lower than expected, end quote.

And as ever, Tesla is slightly outside of our purview, but it is worth noting that that company reported profits despite the coronavirus, quoting CNN. The electric carmaker earned net income of $16 million while income excluding special items such as stock-based compensation came in at $227 million. The company lost money on both of those measures in the year earlier quarters. Analysts surveyed by Refinnative had forecast the company. The company lost money on both of those measures in the year earlier quarters. Analysts surveyed by Refinnative had forecast the company. company would post a narrow loss due to the shutdowns of its factories in California and Shanghai at times during the quarter and a drop in completed vehicle sales compared to the fourth quarter of last year. Shares of Tesla jumped 9% in after-hours trading on the report, and shares have now more than doubled since the start of the year, even if they have come down from the all-time high reached in mid-February before the coronavirus concerns hit the broader market. Still, the company said it couldn't promise that its unexpected profit will continue. you in the face of disruptions caused by the COVID-19 outbreak, end quote. Now, finally, what do you want

me to do? You might have heard that Elon Musk had some interesting things to say on the earnings call relating to the coronavirus and stay-at-home orders. And I'll be honest, I frankly don't have an opinion on all this, but I will report that on the Tesla earnings call, Musk said the following, quote, this is the time to think about the future and also to ask, is it right to infringe on people's rights as what is happening right now, Musk said. I think the people are going to be very angry about this and are very angry. It's like somebody should be if somebody wants to stay in the house, that's great. They should be allowed to stay in the house and they should not be compelled to leave. But to say they cannot leave their house and they will be arrested if they do, this is fascist.

This is not democratic. This is not freedom. Give people back their goddamn freedom, end quote. At another point in the call, Musk said, quote, So the expansion of the shelter in place, or as frankly I would call it, forcibly imprisoning people in their homes against all their constitutional rights, but that's my opinion, and breaking people's freedoms in ways that are horrible and wrong and not why people came to America or built this country. What the F? Excuse me, it's an outrage, it's an outrage. It will cause great harm, not just to Tesla but to many companies. And while Tesla will weather the storm, there are many small companies that will not, he said, end quote. while on the Facebook earnings call, Mark Zuckerberg said this, quote, While there are massive societal costs from the current shelter-in-place restrictions, I worry that reopening certain places too quickly before inaction rates have been reduced to very minimal levels will almost guarantee future outbreaks and worse, longer-term health and economic outcomes, end quote.

So there you go. Some days it's just a matter of I report, and you decide. Also, on the whole earnings front, again, what can I tell you? If you heard that weekend bonus episode from a couple weekends ago, then you know my whole, shall we call it, incredulity around the stock market right now. But again, you know, alphabet up on earnings, Facebook up on earnings, Microsoft up on earnings. And given, as we discussed, the big tech companies account for whatever X huge percentage of the S&P 500, it would be hard for the market to be down if all of those guys are doing just fine right now.

So, you know, I'm in no way rooting against anybody. I'm in no way rooting for a stock market crash. And Lord knows, this podcast has never been an investing podcast. So, you know, shrug-shoulder emoji, right? Talk to you tomorrow.