Adam Lashinsky is on assignment. Erin Griffith is a writer at Fortune.
In recent years, as the culture of Silicon Valley has seeped into the mainstream, I’ve found my “normal” friends (the ones who don’t work in tech) increasingly want to understand how the tech world’s wonkier corners work, be it venture capital, virtual reality, or startup business models. When Facebook’s newest feature affects 1.6 billion people, or Apple’s newest iThing could soon be in the hands of hundreds of millions of people, it only makes sense that the world wants to learn about it.
One corner of tech coverage that the average consumer has remained firmly uninterested in is public company earnings reports. I explain earnings calls to my normal friends as an accounting concert I attend with all my competitors four times a year. Shockingly, they’re not dying to hear more.
That magical time of year kicked off last night with Netflix’s mixed quarter (and major after-hours sell-off) and IBM’s 16th consecutive quarter of revenue declines. It’ll only get uglier tonight, when Yahoo reports what’s expected to be a grim quarter. Even though I don’t expect CEO Marissa Mayer to reveal much about Yahoo’s auction, which closed first-round bids yesterday, I do expect her to get lots of questions about the process itself, which some potential bidders last week described to Fortune as “a f–king joke.” Intel is also on deck, and it has plenty to prove with its burgeoning data center business.
But this earnings season won’t be a total catastrophe. Despite caution and uncertainty in the global tech markets, business has, apparently, been booming for digital advertising. Analysts expect Facebook and Google to surge, as they have for the past few years. It helps that they’re soaking up all the screen time: Google, which reports earnings on Thursday, now owns seven products with a billion users, and Facebook, which reports next week, has “two more Facebooks lurking inside Facebook,” according to Credit Suisse analyst Azar Boemh. Which reminds me of another thing I like to tell my normal friends about earnings calls: They’re so boring you almost forget how much power is on the line.
BITS AND BYTES
Goodbye, Bill Campbell. Facebook and Twitter were flooded Monday with reflections and remembrances of the former football coach who was mentor to dozens of tech entrepreneurs, including the late Steve Jobs. Campbell, who was 75 when he passed away Monday after a fight with cancer, was an early Apple marketing executive who was later Intuit’s longtime CEO. (Fortune, Re/code)
IBM accentuates the positive. Yes, the tech giant has posted 16 straight quarters of revenue declines. On the bright side, its Watson data-crunching technology just generated a “strong double-digit performance,” whatever that means. (Fortune)
Netflix walks the tightrope with investors. The company’s growth for its latest quarter, measured in the number of new subscribers, met expectations. But its projections for the future were far lower than anticipated, which sent its stock tumbling in after-hours trading. Amazon’s launch this week of a new video-streaming service certainly didn’t help assuage fears about the long-term trend. (Fortune)
Here’s Verizon’s competition for Yahoo. There are reportedly at least three bidders interested in acquiring the Internet company (or at least pieces of its assets like Yahoo Japan), reports Bloomberg. The names include apparent front-runner Verizon, private equity firm TPG, and the digital advertising company behind what was formerly called Yellowpages.com. (Bloomberg, Wall Street Journal)
Intel may get only a piece of iPhone 7 business. Apple is trying to diversify the component suppliers for its smartphone line, but Qualcomm’s lock on some proprietary wireless technologies may limit Intel’s success, according to analysts. Incidentally, look for a big design change in this next model: an all-glass enclosure. (Fortune, Fortune)
HP Inc. unloads part of its software portfolio. Canadian company OpenText is paying $170 million for its suite of content management applications, including website management tools and systems for running contact centers. The move was not unexpected. (TechCrunch)
The Google Books case is finally, truly over. The Supreme Court has refused to consider a decades-old challenge brought by the Authors Guild over the Internet company’s digital archive of more than 20 million scanned library books. The project saved many books from obscurity, but many writers have fretted over their copyrights. (Fortune, Wall Street Journal)
How Europe plans to digitize industry and build a mega-cloud. The EU administration will spend billions of euros on boosting tech R&D and the use of technology in industry and public services.
A big reason for this push, outlined in the European Commission’s new strategy for “digitizing” industry, is to create scale as Europe develops new technologies, and make sure the new gadgets and systems work across the EU’s many internal borders. Ultimately, the idea is to keep the EU competitive.
The push will include public-private partnerships—combining public and private investment, the Commission intends to “mobilize” over €50 billion ($57 billion) in the next five years. It also centers on a so-called European Open Science Cloud and European Data Infrastructure, which will in the short term be an agglomeration of (spot the trend) existing national research infrastructures. By 2020, this mega-cloud would also involve the acquisition of “two prototype next-generation supercomputers, of which one would rank among the top three in the world.” (Fortune)
IN CASE YOU MISSED IT
How YouTube cashes in on its weirdest, wildest niche communities
by Erin Griffith
Amazon lowers hurdle for Prime membership by Leena Rao
Apple’s big developers conference will hop venues by Jason Cipriani
Scrappy sales software company Insightly snags more backing
by Heather Clancy
Goldman Sachs invests in hot data center startup by Jonathan Vanian
Twitter pays plenty to protect CEO Jack Dorsey by Don Reisinger
ONE MORE THING
Meet the world’s most secret startup, Magic Leap. The augmented reality software company burst into the spotlight after amassing almost $1.4 billion in venture funding from the likes of Google, Andreessen Horowitz, and Kleiner Perkins. Wired magazine dispels some of the mystery about its technology, which appears to be equal parts virtual reality magic and artificial intelligence wizardry. Plus, don’t miss this footage of the world through Magic Leap’s “eyes.”