Tech Brew Ride Home - Tue. 07/27 – No More Hedging. Tesla Truly Profitable.

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 tech meme right home for Tuesday, July 27th, 2021. I'm Brian McCullough today. Tesla is profitable beyond all caveats and hedges. Intel continues to telegraph its turnaround plans, tangible numbers from the Chinese tech carnage this week. Instagram changes the rules for teens on their platform,

Starting point is 00:00:54 and what are Facebook's ultimate designs on building a metaverse? Here's what you miss today in the world of tech. Tesla reported earnings yesterday, and it was another series of milestones for the company in the continued narrative of, you know, Tesla winning, quoting the verge. Tesla sold enough cars and energy products to turn a profit even without counting the sale of emissions credits to other automakers, a milestone for the company. This was the eighth profitable quarter in a row for Tesla, but the first, where it can truly say it's a profitable automaker. Tesla shared Monday that it logged a $1.1 billion profit in the second quarter of 2021, with $354 million of that coming from credit sales. The rest came from automotive sales,

Starting point is 00:01:44 as well as a boost in energy storage sales. Tesla pulled this off despite taking a loss of $23 million on its big Bitcoin bet, something that had helped it to a profit last quarter, a delayed rollout of the revamped Model S-S sedan and Model X SUV and the global semiconductor shortage. All told, Tesla generated $11.9 billion in revenue in the quarter. The Model 3 sedan and Model Y compact SUV dominated Tesla's sales again, proving once more that there's a market for affordable electric cars. Tesla delivered over 200,000 Model 3s and Model Y's in the quarter compared to the 1,895 Model S sedans sold. It's clear that the Model-W's initial success has been enough to give the company a boost,

Starting point is 00:02:30 but it's hard to say exactly how big that boost is since Tesla doesn't break out sales by individual model. Same with China. Tesla doesn't break out sales by country, but it has been delivering locally made cars from its factory outside Shanghai for more than a year, and that has helped the company continue to grow its business. In fact, Tesla said Monday that it considers the factory in China to be its primary vehicle export hub, end quote. about that Bitcoin-related news, quoting CNBC. Tesla reported a net gain of $101 million from sales of Bitcoin during the first quarter, helping to boost its net profits to a record high.

Starting point is 00:03:06 On the company's statement of operations, that gain shows up as a reduction in operating expenses, suggesting that it flipped some of its holdings as Bitcoin prices rose that quarter. But the price of Bitcoin plunged more than 40% in the second quarter, so Tesla's holdings would be worth much less than at the end of the first quarter. The cryptocurrency peaked above $63,000 a coin in April and then dropped below $30,000 earlier this month. Bitcoin is currently trading just shy of $40,000. Tesla doesn't account for Bitcoin as a mark-to-market asset, meaning it only recognizes an earnings benefit if it sells to lock in the gains. Therefore, the drop in the value of Bitcoin shouldn't affect earnings as long as Tesla hasn't divested of any of its holdings, end quote.

Starting point is 00:03:49 Intel continues to at least make all the right noises about getting back in the game in the semiconductor race. Intel says its Foundry Services will build chips for Qualcomm and AWS and laid out a roadmap to catch up with TSM and Samsung by 2025, quoting Reuters. Qualcomm, which dominates chips for mobile phones, will use what Intel is calling its 20A chipmaking process, which will use new transistor technology to help reduce how much power the chip consumes. Amazon, which is increasingly making its own data center chips for its Amazon Web Services, is not yet using Intel's chip-making technology, but will use Intel's packaging technology, the process of assembling chips and chiplets or tiles, often stacking them up in so-called 3D formation. Intel excels in this

Starting point is 00:04:45 packaging technology analysts say. There have been many, many hours of deep and technical engagement with these first two customers and many others. Intel CEO said. Intel did not give any details on how much revenue or manufacturing volume the customer wins would bring, though Gelsinger said during an event announcing the news that the Qualcomm deal involved, quote, a major mobile platform and engaging in a, quote, deep and strategic manner. Qualcomm has a long track record of using multiple foundry partners, sometimes even for the same chip. The biggest question facing Intel is whether it can make good on its technology promises after years of delays under previous chief executive Brian Krasnich. In recent weeks, Intel announced the delay of a new data center chip called Sapphire Rapids. But David Cantor, an

Starting point is 00:05:32 analyst with real-world technology, says Intel is being more cautious than in the past. The years of delays resulted in part from the hubris, his words, of tackling multiple technical problems in a single generation of technology. This time, Intel is laying out five generations of technology in four years tackling smaller sets of problems and also saying that it might not introduce the new EUV technology with its forthcoming Intel 18A process if it is not ready. Intel is absolutely going to catch up and be ahead in some dimensions with TMC over the next few years, Cantor, the analyst said. Intel really does have people who spend all their time looking at how to deploy new material and technology to juice their performance, end quote.

Starting point is 00:06:12 Real quick, wanted to mention that Apple has pushed out new updates to iOS, iPadOS, and MacOS. And normally, I don't just cover software updates, but this one is largely to address a zero-day flaw that was reportedly actively being exploited, so, you know, maybe worth updating immediately. But also, I wanted to point out that this represents the 13th zero-day that Apple has patched so far this year. Seemingly, this sort of thing is on the rise for an OS that usually didn't get targeted for this sort of thing. And also, remember recent news. I wonder if this is related, quoting the record. While there is a pretty solid chance that this Zero Day might be a new exploit

Starting point is 00:07:00 used by the iOS jailbreaking community to root iPhones, it is also unclear if today's Zero Day is in any way related to NSO Group, an Israeli company that sells iPhone hacking tools to governments around the world and who was recently at the center of a large number of investigative reports that have exposed some of its past hacking. Tracked as CVE 2021-3807, Apple said the Zero Day impacts I.O mobile frame buffer, a kernel extension that allows developers to control how a device's memory handles the screen display, the screen frame buffer to be more exact. According to Apple, an application may exploit CVE 2021-307 to execute arbitrary code with kernel privileges on a vulnerable and unpatched device, gaining access to kernel privileges

Starting point is 00:07:46 effectively gives attackers full control over a device, may it be an iPhone, iPad, or MacOS, notebook, or desktop, end quote. Also, following up on stuff we've been talking about recently, just wanted to note that the Hong Seng Tech Index, which tracks the 30 biggest Hong Kong listed tech companies, including Tencent and Alibaba, is down a whopping half a trillion dollars since its February peak, quoting Bloomberg. The gauge, which marks its one-year anniversary on Tuesday, was up 59% at its February peak, but has since seen more than $551 billion in market value wiped out amid Beijing's clamped down on the sector. That has reduced the gain to nearly 6% as of last Friday, compared to more than 40% for the MSCI World Information Technology Index and the NASDAQ-100 index. The measure also lags onshore piers. The Chinax index is up about 35% in the period.

Starting point is 00:08:48 The underperformance highlights regulatory risks for one of the fastest growing sectors of China's economy. Beijing's bold moves to rein in the nation's powerful tech firms such as Jack Ma's Ant Group and D.D. Global have sent global investors fleeing on concerns over China's tighter grips on data while relations with Washington remain difficult, end quote. Indeed, one bit of analysis that I'm eagerly looking everywhere for, so forward to me if you see it or send me someone if you think they'd be willing to come on the air and talk to me live and be honest about all this. What I'm looking for is, number one, when would Western capital firms decide that China is just too risky to invest in? Like, what would be the proverbial straw on the proverbial camel's back?

Starting point is 00:09:32 I don't think we're anywhere close to that happening, but believe you me, those conversations are happening right now, and contingency planning is happening as well. And number two, what would it do to the startup scene in general if Western capital was indeed to be shut out of China. There are billions of dollars of funds devoted to investing in China. If that money now has to go somewhere else, well, you think private company valuations are frothy now. Instagram has announced changes for the accounts of teenagers, including making them private by default, restricting messages from suspicious adults and limiting ads. Quoting NBC News. Creating an experience on Instagram that's safe and private for young people, but also fun, comes with competing challenges,

Starting point is 00:10:24 the company said in a blog post announcing the changes. We want them to easily make new friends and keep up with their interests, but we don't want them to deal with unwanted DMs or comments from strangers, end quote. Starting this week when people under 18 join Instagram, the accounts default to private. That means people have to follow the users to see and comment on their content. The company will also show users who already have public accounts a notification highlighting the benefits of switching to a private account and explaining how to do it. The change will bring Facebook into compliance with the UK's new age-appropriate design code, a set of rules from the country's data protection authority that requires all online platforms to default the accounts of users under

Starting point is 00:11:03 age 18 to the strictest privacy settings. The company said it has also developed a tool that automatically detects potentially suspicious adult accounts and stops those accounts from interacting with teens' accounts on the app. An adult's account might be marked as suspicious if it has been blocked or reported by multiple teen accounts, said Instagram's head of public policy, Karina Newtonin, in a separate interview. Once they are flagged, adults won't be shown any teen accounts in discovery tools. They also won't be able to follow young people's accounts, leave comments on their posts, or see comments from teens on other people's accounts. We are creating an additional buffer around young people, said Newton, noting that the company had already restricted adults

Starting point is 00:11:44 from sending direct messages to users under 18 who didn't follow them, and quote. I almost shared a couple of long reads about this a few times in the last few weeks, but Mark Zuckerberg has been giving a series of interviews lately about the Metaverse and his vision for how Facebook can build it. Well, Facebook seems genuinely serious about this, as a new strategic direction at least, announcing a new Metaverse product group with plans to hire hundreds of staff for it, led by Instagram VP Vishal Shah, reporting directly to VR-A-R-VP, Andrew Bosworth, quoting protocol. Other key executives of the group include Facebook gaming VP VP VVVVEVAC Sharma, who will be leading the development of the company's Horizons VR world, and Facebook

Starting point is 00:12:34 gaming executive Jason Rubin, who previously led content for Oculus. The new group is reporting to Facebook's VP of AR and VR Andrew Bosworth, who announced the founding on his Facebook page Monday afternoon. To achieve our full vision of the metaverse, we need to build the connective tissue between these spaces, so you can remove the limitations of physics and move between them with the same ease as moving from one room in your home to the next, Bosworth wrote. To focus our efforts and deliver on this vision, we are bringing together the teams that have been driving some of this fundamental work, end quote. The new group will encompass the teams that have been working on Horizon, the ARVR content team, as well as the Unit 2 Games team, which Facebook acquired last month. The company also intends

Starting point is 00:13:16 to hire hundreds of new employees for the group, according to a spokesperson. The announcement comes a few days after Facebook CEO Mark Zuckerberg outlined his vision for the Metaverse in an interview with Casey Newton. In that interview, Zuckerberg called the Metaverse, quote, the successor to the mobile internet and pledged to turn Facebook from a social media company into a Metaverse company, end quote. Let's end today with an interesting raise. Remember that decentralized secure messaging protocol that I recently was turned onto? It was called Matrix. It's the one that some governments and spy agencies have been turning to because they don't trust even things like Telegram. Well, Element is a messaging app built on top of the Matrix Protocol, and it just

Starting point is 00:14:03 raised a $30 million series B from protocol labs and others, bringing the total raised by the company to $48 million, quoting Venture Beat. London-based Element develops an open source messaging client on top of Matrix, a decentralized open standards-based communication protocol created inside Amdox by Matthew Hodgson and Amandine LePape in 2014. The duo departed Amdox in 2017 to focus entirely on growing and commercializing Matrix, first through a company called New Vector, which developed a Matrix hosting service and a cross-platform Slack alternative called Riot. In 2018, the matrix.org foundation came into being to cement Matrix's development as a neutral not-for-profit entity, while last year, Hodgson and LePape rebranded both New Vector and Riot app as element.

Starting point is 00:14:50 can perhaps best be compared to something like a telephone network or email insofar as it's an interoperable communication system that doesn't lock people into a closed ecosystem. With email, you can send a message to another person regardless of what service provider or client app they're using. Yahoo, Gmail, Outlook, and Proton mail users can all message each other just fine. The Matrix protocol is striving to achieve a similar goal, but with modern internet-based messaging in its crosshairs. In a Matrix world, WhatsApp users can easily communicate with Slack and Skype users. users. Because Element is built on Matrix, it essentially serves as a catalyst for the growth of the broader Matrix network. Anyone using Element is participating in an open and global network

Starting point is 00:15:30 of tens of millions of users spread across thousands of deployments from different organizations. It also means that someone that's using Element isn't locked into Element. They can switch to any other Matrix-powered client and not lose any data. Separately, a method called bridging opens up support for third-party apps not built on the Matrix Protocol, including telegram, Slack, WhatsApp, and rival open source messaging tools such as Mattermost. Earlier this year, a new startup called Beeper entered the fray, courtesy of Eric Mijikovsky, who sold his previous Pebble smartwatch business to Fitbit back in 2016. Beeper is a universal chat app built on Matrix, and it uses bridging to relay messages

Starting point is 00:16:09 between more than a dozen chat apps, including iMessage, WhatsApp, Slack, Twitter, hangouts, and Facebook Messenger, and quote. That's all for today. Talk to you tomorrow.

Tech Brew Ride Home - Tue. 07/27 – No More Hedging. Tesla Truly Profitable.

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