Market Overview

Tech Roundup: Earnings, Responses To Russian Meddling, And More


President Trump's proposed tax reforms are particularly positive for the big technology companies that have been hoarding their cash overseas to avoid high taxes on repatriation. Apple AAPL, Microsoft MSFT, Cisco CSCO and Alphabet GOOGL will all benefit from the new plan to charge a one-time tax of 12% on all cash and 5% on all non-cash assets brought back into the country. The reduction in the corporate tax rate to 20% is also a positive.

The top stories from last week:


Apple: Apple sailed past the Zacks Consensus Estimates on both top and bottom lines, helped by growth across product lines and most geographies. Most encouraging was the acceleration in services revenue growth, the improved pricing across iPads and Macs and relative strength in China. But iPhones, which still account for more than half the revenue were a drag on margins.

The guidance of $84 to $87 billion was better than the Zacks Consensus Estimate of $83.3 billion, which is great considering that some people are definitely bypassing the iPhone 8 for the iPhone X, which is likely to remain supply-constrained. Read more: Apple Q4 Earnings Impress, iPhones & Services Lead

Facebook: Facebook FB also topped expectations. As far as revenues are concerned, the company grew both users (MAUs and DAUs grew 16% each) and prices (average price per ad increased 35%). There was a spike on the cost side that Facebook attributed to a bigger workforce and marketing. Costs will rise greatly going forward, as Facebook invests in security, video and AR/VR. Read more: Facebook's Mobile & Video Efforts Drive Q3 Earnings

Tech Companies Grilled on Russian Meddling

While Google, Twitter and Facebook were all taken to task by government officials for allegedly allowing meddling by Russians in the 2016 U.S. elections, it was Facebook that faced most of the flak. Officials were particularly upset with the time the social network took to track the ads bought in Russian rubles and that violated its terms of service, as well as its general lack of knowledge about the 5 million advertisers on its platform.

Facebook has said that at least 3,000 U.S. political ads had been bought by people in Russia. These people had also published another 80,000 Facebook posts that were seen by around 126 million Americans over two years. The company has now admitted that it could have done more to protect its platform from people deliberately posting divisive, hurtful, hateful posts.

The company has now committed to doubling its security staff (including temporary workers) to 20K by the end of 2018 (it currently employs around 20K in total). It also intends to give political ads special treatment going forward. So political advertisers will have to furnish more information about their identities now and there will be a 1,000 more people reviewing these ads. Facebook will compile a publicly searchable archive of political ads beginning next year.

Twitter said that Russians had 2,752 accounts on the platform. Google said that Russia-linked ad spending on its platform was only around $4,700, but it would build a database of political ads in any case.

Both Facebook and Google said that Russia linked ads were a tiny fraction of the total content on their platforms.



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Other Stories


iPhone X Demand in India: iPhone X is seeing very strong demand in India with the first devices selling off in a few minutes on Pre-orders are much higher than expected as many customers bypassed the iPhone 8 series, waiting instead for the tenth anniversary device. But the limited availability also put off a few that may now go for a Samsung device, according to media reports.

Tech Companies Building Undersea Cable: Companies like Softbank, Facebook and Amazon AMZN are getting together with telecoms to build an undersea cable that can transfer data at speeds of up to 60TBPS. The 8,700 mile long wire will lie beneath the Pacific Ocean connecting Hermosa Beach, near Los Angeles, to Japan and the Philippines. The new cable is intended to cater the growing number of IoT devices, according to Softbank. Gartner estimates that these devices will grow from more than 8 billion this year to more than 20 billion by 2020.

Microsoft Acquires Wind Power in the Netherlands: A wind farm adjacent to Microsoft's data center operations in the Netherlands is being expanded and repowered to generate 180-megawatts of energy to be used entirely by the software giant. The construction and operation will be by Nuon, part of Vattenfall in the Wieringermeer Polder, near Amsterdam. The plant will be the largest of its kind in the area and is expected to be operational in 2019.

Amazon Exits Fresh Grocery Biz in Some States: Delivering fresh groceries is a tricky business, as it deals with highly perishable items. There's also the need for more local sourcing because things gone bad are harder to return. The business is also hard for retail king Amazon, which is discontinuing the service with minimal notice in parts of Connecticut, Massachusetts, Virginia, New York, New Jersey, Pennsylvania, Delaware, Maryland and California.

It's true that Amazon may be working on synergies between Whole Foods, Amazon Prime Now one-hour delivery and Amazon Fresh to bring the service to these and other markets. But it isn't a given, especially because spokespersons for the company are not providing much further information.

Micron CEO Joins AMD Board: Mark Durcan, who resigned from the position of Micron MU CEO in February and from its board effective May 8, after 32 years at the company, has joined AMD's board. Sanjay Mehrotra, former SanDisk co-founder and CEO, is the new CEO and President at Micron. 


Facebook Faces Overtime Lawsuit: Susie Bigger, who joined Facebook in 2013 and worked there until earlier this year as a Client Solutions Manager, alleges that Facebook routinely classifies people wrongly to avoid paying overtime. She says that "[Client Solutions Managers'] primary duties do not involve the exercise of discretion or independent judgment with respect to matters of significance".

On the other hand, these people generally handle advertiser accounts based on decisions taken at the team level. So they should be eligible for overtime when they work more than 40 hours. The lawsuit claims damages for lost wages. Biggers' lawyers are now asking a judge to grant the case class action status, so they can sue for lost wages on behalf of not only Bigger, but also other Client Solutions Managers, Customer Solutions Managers and Account Managers at Facebook.

New Products/Technology

Cisco's AI-Powered Voice Assistant for Meetings: At Cisco's Partner Summit, the company announced an AI-powered voice assistant for corporate meetings. Powered by the NVIDIA Jetson platform, Spark Assistant as it is called includes machine-learning technology from MindMeld (a recent acquisition), speech recognition technology and natural language understanding (it can identify different people in the organization and sign them on to the meeting on the basis of their voice commands), as well as question-answering and dialog-management capabilities.

New Surface Pro in December: At the company's Future Decoded event in London, Panos Panay, Microsoft's corporate VP for Windows devices, announced that the new Surface Pro with LTE Advanced will be available on Dec 1. The product targets the mobile professional or enterprise customer looking for alternatives to the MacBook Pro.

So the basic version with Intel i5 processor, 4 GB RAM and 128 GB SSD will sell for $1,149 while the one with double the RAM and SSD storage will cost $1,449. Microsoft expects 17 hours of video playback time. The devices will also feature a Cat 9 modem for download speeds of up to 450 Mbps and support for 20 cellular bands, offering connectivity in almost any country in the world.

Amazon Prime Video Comes to Xbox OneX: The Amazon Prime Video app that launched last year in more than 200 countries will now be available on the Xbox family devices (including the just-launched Xbox One X). While the new device's 4K capabilities will be good for streaming high definition gameplay, a growing number of users in Canada, Mexico, France, Italy, Spain and India will also be able to stream video. This gives Microsoft a better chance of grabbing a share of the living room as it's been trying to do for a long time.

Google Launches Poly: Integrated with Tilt Brush and Blocks tools, and designed with a range of VR headsets and phone-based AR systems in mind, Google's Poly is a searchable database of free 3D objects that developers can easily incorporate in their 3D content. The database already has thousands of objects but Google is looking to increase that number manifold. Google may ultimately sell the objects to developers, but for now, the goal is to create more AR and VR content for its ARCore and Daydream platforms.

Amazon Launches AR Shopping: Amazon has added AR viewing on its iOS app for some items like furniture, electronics and toys. So users can press the camera icon inside the app to select AR View and then point the phone in the position they want to see how it goes with the décor. This won't earn Amazon extra money unless it makes you buy more Echos, but it can save costs arising from customer returns and encourage people to buy more furniture on Amazon (for example).

The feature is built on Apple's ARKit, so it can encourage more people to upgrade to iOS 11. Amazon hasn't said if it's building the feature for Android users as well, but that may take more time given that the companies compete on multiple levels and also because it will then have to develop the feature based on Google's ARCore. AR viewing in shopping isn't particularly novel however; companies like Target, Ikea, Wayfair and Houzz already offer the experience. Alibaba offers VR viewing.

Amazon Could Be Interested in Bitcoin Too: Amazon says it isn't likely to accept bitcoin any time soon because there isn't sufficient demand for it. But the retailer is going on registering domain names nonetheless. Three years ago, it registered, following that up last week with,, CNBC says that Amazon may just be protecting its brand name.

Snapchat Launches Snap Pixel: Snap is launching a conversion-tracking tool called Snap Pixel so brands can measure the performance of their ads on Snapchat in terms of subsequent purchase, save, start checkout, add to cart, view content, add billing, sign up, search and page view activities. The product is still in the testing phase, with Snapchat's sales team handling specific access requests from brands.

Separately, Google announced that it would be more closely integrating Snap into its just-announced Pixelbook where the conversation window will be larger, in line with the Pixelbook's 12.3-inch quad HD display.

Collaborations and M&A

Waymo Service Deal with AutoNation: Alphabet's self-driving unit Waymo has partnered with AutoNation, the largest auto dealer in the U.S. for the provision of maintenance and repair services to Waymo's self-driving vehicles. Waymo has in the past been in favor of fully automated vehicles as drivers lose contextual awareness of the surroundings when in self-drive mode, making it very hard for them to take over in an emergency.

While it will no doubt include the technology in its Waze service, in recent times, Waymo has gotten closer to ride hailing startup Lyft, leading many to think that it would be one of the first companies deploying the vehicles. But all these vehicles will need servicing, which is where AutoNation or others like it will play a role.

HP Closes Acquisition of Samsung Printer Business: HP has completed the acquisition of Samsung's printer business for $1.05 billion bringing on board Samsung's 6,500+ print patents and a workforce of nearly 1,300 researchers and engineers with expertise in laser technology, imaging electronics, and supplies and accessories. The acquisition expands HP's portfolio, greatly increases its capabilities in the $55 billion A3 copier segment and cements its leadership in the A4 laser printing business.

Some Numbers

Strategy Analytics Smartphone Market Share: Strategy Analytics estimates that Samsung held on to its leadership position in the third quarter of 2017 having sold 83.4 million units for a global market share of 21.2%. Apple stayed in the second place with 46.7 million units and 33.9% share. Huawei was third with 39.1 million units and 9.9% share, OPPO fourth with 31.4 million units and 8.0% share. Xiaomi was fifth with 27.7 million units and 7.0% share with other companies making up the balance.

Samsung grew 11% (the highest in 4 years), Apple grew 3% and Huawei 16%, with OPPO and Xiaomi growing a respective 45% and 91% off a much smaller base.

Nintendo Switch Shipments: Based on the considerable success the Switch console has brought Nintendo, the company now expects total shipments in its fiscal year ending March 2018 to be 14 million units. Its initial forecast was for 10 million units. But Nintendo is likely baking a strong holiday season into its forecast, so it will have to overcome current supply constraints.

Other Earnings Reports From Last Week: Snap, Groupon, FireEye, Equinix, Symantec, Cirrus Logic, CyberArk Software, TiVO, Arrow, Paylocity, Automatic Data Processing, Qorvo, Fiserv, Electronic Arts, Dun & Bradstreet, Cognizant, Insperity, ActiVision, Teradata, Pandora, FDC, Garmin, Fitbit, Alibaba, Ametek.

Some Companies Reporting This Week:  MCHP, SWKS, GDDY, PCLN, TRIP, TTWO, SNAP, ZNGA, DXC, NVDA


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