Data Sheet—How Apple CEO Tim Cook Entertains Wall Street as Sales Grow
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Apple reported mixed results Thursday and, as Aaron reported, investors see-sawed in their interpretation. True, the company offered a sales forecast that was dramatically lower than what investors expected. At the same time, it reported more than 240 million paying subscribers to its various services, a 58% year-over-year increase that analyst/venture capitalist Gene Munster told me suggests growth in that business “will remain high for a long time.”
I habitually listen to Apple’s earnings calls and can’t help but enjoying the cat-and-mouse banter between analysts and CEO Tim Cook. Back in the day, Steve Jobs would appear occasionally on the calls, sometimes to prove he was still actively engaged. But Cook, a businessman’s businessman, is a constant presence who senses what investors want—even if he isn’t willing to give it to them.
His responses to three questions were particularly entertaining:
* An analyst asked if Apple’s enthusiasm for augmented reality means the company will introduce new AR devices as opposed to its current product strategy of incorporating AR into its iPhone software. Here is Cook’s unsubtle way of ignoring the question: “AR has the ability to amplify human performance instead of isolating humans. We’re moving very fast. I couldn’t be happier with the rate and pace within the developer community.”
* Another noted that the “installed base” of Apple’s iPhone users is growing while Apple’s iPhone shipments are flat and asked if this means customers are upgrading more slowly than before. Without disputing the numbers, Cook said he had a “different view” of them, praised the “reliability” of iPhones, and finally said, “It’s not something we overly fixate on.”
* Asked if the soon-to-released HomePod speaker is primarily about music, Cook launched into a stemwinder, calling it an “incredible product” with an “unbelievable audio experience” in a small form factor that is great for playing music but also for turning up the lights, ordering an Uber (or Lyft) and sending messages—all the things Amazon’s Echo line does. “The use cases will be broad based,” he concluded. “Just like our phones.”
Briefly … Alibaba shares plunged 6% Thursday as retail investments crimped results and the company took on a third of affiliate Ant Financial’s equity. This comprehensive Breakingviews article reviews all the salient points … Three journalistic integrity cheers for Washington Post tech critic Geoffrey Fowler for this tough look at Amazon Prime. Jeff Bezos, CEO of Amazon (whose earnings soared in the fourth quarter), owns The Post. … A great read about an entrepreneur: Young-adult author Kwame Alexander is starting his own imprint. My daughter and I loved his award-winning verse novel The Crossover. … A lot of you have wondered how Fortune and our Time Inc. cousins will fare under our new owners, Meredith. It’s only one day, but top brass greeted employees with smiles and handshakes in New York Thursday, while others fanned out across the country, including to San Francisco, to host get-to-know-each-other gatherings. The warm gestures were genuinely appreciated by beleaguered Time Inc. veterans. (We got water bottles too.)
Moving parts. There were a few other minor earnings reports in tech land besides Apple's. Amazon said revenue jumped 38% to $60.5 billion, bolstered only a bit by the addition of Whole Foods, it turned out. Its shares gained 6% in premarket trading on Friday morning. Google parent Alphabet saw revenue increase 24% to $32.3 billion, but disappointed some on Wall Street with the even bigger 33% jump in its costs to acquire search traffic to $6.5 billion. Its shares dropped 4%.
What's that popping sound. Bitcoin's horrible January rolled into February as the leading cryptocurrency declined another 12% and fell below $8,000 for the first time since November.
Dishonored. Atari founder Nolan Bushnell will not receive the Pioneer Award at the Game Developer’s Conference in San Francisco, one of the industry's biggest trade shows, as previously announced. Organizers said they received multiple complaints about the frat boy culture prevalent during Bushnell's tenure in Atari's early days.
Closing time. Sony CEO Kazuo Hirai is leaving after six years, with CFO Kenichiro Yoshida taking over the top spot. Hirai steadily improved Sony's results and he goes out on a high note as the company reported record net profit of $4.4 billion.
Not trivial. Popular gameshow app HQ Trivia is raising $15 million of venture capital backing that will value the company at $100 million, Recode reported. The funding, which is not yet final, will help HQ improve prizes offered and attack some technical glitches, Recode noted.
IN CASE YOU MISSED IT
Google Is Hiring Thousands More People Across the U.S. By David Meyer
Inside the Shakeup at Airbnb: The Startup Loses a CFO, Gains a COO By Leigh Gallagher
Here's What to Know About Nintendo's Mario Kart for Smartphones By Don Reisinger
Robbed for Bitcoin: How a Dumb Crypto Criminal Botched a Kidnapping By Jeff John Roberts
Here's the Apple iPhone X Feature Woz Doesn't Like By Don Reisinger
FOOD FOR THOUGHT
The world of high finance centered around the big Wall Street banks hasn't exactly been known for its positive treatment of women (remember the "boom boom room," anyone). Some women thought the disruptive finance startups of digital currency would be different. Not so much, as Lily Katz reports for Bloomberg in a piece headlined: "A Bitcoin Conference Rented a Miami Strip Club—and Regretted It."
In interviews, many attendees made a similar observation: Bitcoin’s creators set out after the 2008 financial crisis to replace a system they deemed corrupt. They built a new one with nobody in charge. Yet as more enthusiasts pour in, the scene has begun to mimic Wall Street’s worst behavior.
“You hear them criticizing Wall Street and their regression constantly,” said Elizabeth Hansson, the chief technology officer of a blockchain startup in Michigan. Yet, “the leaders at this conference literally led the attendees into a strip club.”
It wasn’t lost on some that the party happened the same week women marched in hundreds of cities around the world for better treatment. It was held on Jan. 18, the same night that the Presidents Club Charity Dinner convened in London for the last time, before getting shut down over reports of men harassing and groping hostesses.
FOR YOUR WEEKEND READING PLEASURE
A few interesting longer reads I came across that are suitable for your weekend reading pleasure.
Why American Farmers Are Hacking Their Tractors With Ukrainian Firmware (Motherboard)
"There's software out there a guy can get his hands on if he looks for it," one farmer and repair mechanic in Nebraska who uses cracked John Deere software told me. "I'm not a big business or anything, but let's say you've got a guy here who has a tractor and something goes wrong with it—the nearest dealership is 40 miles away, but you've got me or a diesel shop a mile away. The only way we can fix things is illegally, which is what's holding back free enterprise more than anything and hampers a farmer's ability to get stuff done, too."
Inside Amazon's Artificial Intelligence Flywheel (Wired)
Thirumalai was only one of a procession of company leaders who trekked to Bezos a few years ago with six-pagers in hand. The ideas they proposed involved completely different products with different sets of customers. But each essentially envisioned a variation of Thirumalai’s approach: transforming part of Amazon with advanced machine learning. Some of them involved rethinking current projects, like the company’s robotics efforts and its huge data-center business, Amazon Web Services (AWS). Others would create entirely new businesses, like a voice-based home appliance that would become the Echo.
I Quit Twitter and It Feels Great (New York Times)
It has been one year and 28 days since my last tweet. I deactivated my account shortly after President-elect Donald Trump tweeted, “North Korea just stated that it is in the final stages of developing a nuclear weapon capable of reaching parts of the U.S. It won’t happen!” on Jan. 2, 2017.
Did Ancient Greeks Sail to Canada? (Hakai Magazine)
The story of the European settlement of North America usually features a few main characters: red-headed Norsemen who sailed across an icy sea to set up temporary outposts, Spanish conquistadors, white-collared English separatists, French trappers, and Dutch colonists. Now a team of Greek scholars proposes another—and much earlier—wave of European migration: the Hellenistic Greeks, in triremes powered by sail and oar in the first century CE, nearly a millennium before the Vikings.
BEFORE YOU GO
Enjoy this weekend's big football game, if that's your thing. In the New England area, sorry to say, it's getting to be old hat. Some folks in Seattle still may be burning about that little mistake their team made on the goal line at the end of Super Bowl XLIX. Just ask Alexa who's going to win Sunday's game.