I liked my colleague Dan Primack’s reaction Tuesday upon reading that Donald Trump plans to force Apple to build all its devices in the United States. “Yeah, good luck with that,” Primack tweeted.
Oh, where to start? [Insert deep sigh here as I plunge into my first mention in this venue of the reality TV candidate for president.] Let’s start with why Apple manufactures in China. First, Apple can manufacture its products anywhere it pleases. That’s the beauty of global capitalism. Apple goes where the engineering talent and supply-chain infrastructure is. It invests billions of dollars to make its wares. Then it sells them around the world, including in the U.S.
Force Apple to stop making iPhones in China? It’s the sort of thing that someone who just wants to get noticed rather than be constructive would say. Do anything of the sort and you’ll start a trade war. Start a trade war and Americans won’t be able to buy the products they want, and certainly not at affordable prices.
This is such basic stuff it’s almost insulting to have to discuss. But then it’s insulting to have to listen to an obviously intelligent man pandering to a frightened electorate that doesn’t know any better. Complaining about Apple’s China strategy won’t bring manufacturing jobs back to the U.S. It’s too late for that.
Trump knows better. He must. Yet he keeps saying wacky-destructive things—like we should slap a tariff on every Ford vehicle imported from Mexico—and we keep encouraging him by dignifying his rantings with responses. (It calls to mind the parent who tells a child to stop encouraging their sibling’s antics at the dinner table; it will only provoke more bad behavior.)
In 2004, when Trump’s TV show The Apprentice first became popular, I wrote an article in Fortune questioning the wisdom of taking advice from someone whose publicly traded namesake gambling company was at that very moment teetering on the verge of bankruptcy.
I’m still trying to figure it out.
BITS AND BYTES
Netflix misses target, stock soars. Investors were so happy with the streaming-video company’s impressive international growth that they overlooked slower growth for domestic subscriptions. Netflix added more than 4 million subscribers outside the U.S., compared with 3.5 million it expected. The company reported 1.59 million new signups in the U.S., slightly lower than the 1.62 million it anticipated. (Fortune)
IBM disappoints, yet again. IBM’s fourth-quarter revenue result of $22 billion managed to meet reduced expectations, but it also marked the company’s 15th consecutive quarter of sales declines. The number its executives would rather talk about: $29 billion. That’s how much IBM generated in cloud, analytics, mobile, social and security sales in 2015. (Fortune)
Microsoft will donate $1 billion in cloud services. The software giant will give university researchers and non-profit organizations, among others, complimentary accounts for applications and data storage in Microsoft Azure. It’s targeting up to 70,000 accounts. Microsoft has given away software in the past, but this isn’t your typical philanthropic gesture. You can think of it as a lobbying effort meant to educate the public sector about the importance of cloud computing. (Fortune)
Apple plans retail expansion in India. Right now, Apple sells its smartphones, tablets and computers through a network of dealers in India, but it has applied for permission to set up its own stores there. As economic growth slows in China and the U.S., the company plans to hitch its wagon to India’s relatively strong prospects—7.5% growth is projected for 2016 to 2017. So far, Apple’s shares in India are pretty low, just 2% of smartphone sales in the third quarter of 2015 compared with Samsung’s 33%. (Fortune)
Symantec accepts discounted price for storage management division. Last summer, the security software company disclosed an $8 billion deal with Carlyle Group to take the Veritas backup software group private. Now the transaction, scheduled to close Jan. 29, is worth just $7.4 billion, reports Reuters. The reported reason for the lower value: slower sales than anticipated. (Reuters)
Intel wants to help eliminate passwords. The microprocessor giant is adding sophisticated authentication technology to its Core chips for business computers. This would require employees to log in using more than one form of identification, such as a fingerprint scan or a code sent to a smartphone. It’s a great idea, but businesses may be tough to convince. (Wall Street Journal)
AMD echoes Intel’s warning. Like its formidable rival, Advanced Micro Devices is pointing to slower economic growth in China as a reason to reduce its first-quarter sales projections. On a brighter note, the company’s CEO Lisa Su expects a return to profitable growth by the second half of 2016. (Wall Street Journal)
New digital health venture will keep former Twitter CEO Dick Costolo busy. Costolo, a big fan of CrossFit training, has co-founded a software company to produce fitness apps that trainers and other professionals can use to motivate clients. He leaked more details Tuesday—on his Twitter account, of course. (Fortune)
Do massive stock buybacks spell a bad year for tech companies? Insiders—company executives and directors—buy and sell shares all the time. Buying your own stock can be a perfectly legitimate way of using spare cash, of course, and it can also be used to prettify a bottom line by boosting earnings per share.
But large insider sales make the market skittish. And when selling coincides with company-sponsored share buyback programs, it raises suspicions that companies are buying back their own directors’ and managers’ shares. It’s often a signal of underperformance, which is why 2015 activity involving Apple, Facebook, Microsoft and other tech companies is concerning. (Fortune)
IN CASE YOU MISSED IT
Will robots steal your job? by Andrew Zaleski
Verizon tests sponsored data plans by Robert Hackett
Amazon exec: U.S. rules could delay drone delivery by David Z. Morris
Amazon expands its smart reordering service by Stacey Higginbotham
Starbucks cues up Spotify to bolster mobile app by Phil Wahba
7 reasons why Tesla insists on selling its own cars by Katie Fehrenbacher
Collaboration startup Trello seeks credibility by Heather Clancy
LeBron James leaps into virtual reality by John Gaudiosi
ONE MORE THING
Why Alphabet, Apple and Yahoo are hosting their hometown Super Bowl. It’s all about improving their image in local communities. (Wall Street Journal)