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Amazon, Facebook, Google, Apple, Earnings, Australia, News Publishing and Big Oil

Big Tech posts healthy earnings, Australia suggests rules for platforms to pay news outlets and Big Oil gears up for a tumultuous ride.
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New York, NY - May 15, 2019: Jeff Bezos arrives at the Statue Of Liberty Museum Opening Celebration at Battery Park. (By Lev Radin)
New York, NY - May 15, 2019: Jeff Bezos arrives at the Statue Of Liberty Museum Opening Celebration at Battery Park. (By Lev Radin)

Good morning! Today’s word count is 1,241 words, or a 7-minute read. Let’s get to it:


Amazon, Apple, Facebook Show Dominant Results, Grip on Society

Thanks to a slew of impressive earnings reports Thursday, Big Tech had a reason to smile despite a long day in court defending against accusations of anticompetitive behavior. The success of Amazon, Apple, Facebook and Alphabet amid a global health crisis, economic chaos and millions of job losses demonstrates “how tech giants have become even more indispensable at a time when people are living and working more online.”

Amazon

The Seattle-based e-commerce site reported record revenue, even as it spent $4 billion between April and June stabilizing its supply chain and improving worker safety. The company now employs more than 1 million workers, the second-largest total in the U.S. The No. 1 cloud vendor also reported the backlog for cloud services was up 65 percent from a year earlier.

  • $88.9 billion in total sales
  • $5.2 billion in profits
  • $10.81 billion in Amazon Web Services sales

Apple

Between strong demand for apps, work-from-home devices and a new, low-price iPhone, Apple crushed analysts’ expectations. The tech giant reported an 11 percent increase in quarterly sales. Apple experienced a 5 percent bump Thursday, gaining around $100 billion in market value. The company also approved a four-for-one stock split, aiming to make the stock more accessible to a broader investor base.

  • $59.69 billion in fiscal third-quarter revenue
  • 12 percent increase in profit to $11.25 billion
  • $26.42 billion in iPhone quarterly sales
  • 15 percent increase in services revenue to $13.16 billion (App Store, Apple Music, AppleCare)

Facebook

Laced with controversy in the last few months, Facebook still managed to exceed expectations. Sales increased 11 percent to $18.7 billion, stemming from increased engagement from users. Growth did slow down, and the company warned about the long-term risks from the economy and an advertiser boycott. Though multiple key advertisers – North Face, Pernod Ricard and Heineken — have already returned to the platform citing Facebook’s “initial progress.” Others – Beam Suntory, Eddie Bauer and SAP – haven’t after calling Facebook’s moves “insufficient.”

  • $5.18 billion profit for the second quarter
  • 4 percent increase in average monthly users to 2.7 billion

Alphabet

After reporting a decline in quarterly revenue compared with a year earlier for the first time in company history, Google parent Alphabet was the outlier Thursday. “Alphabet Chief Executive Sundar Pichai blamed the macroeconomic environment caused by the coronavirus pandemic and said he saw early signs of potential stabilization,” The Wall Street Journal writes. But the company’s sales still beat analysts’ expectations, and while profit sank 30 percent, its profit was still more than $6 billion. Nearly all of Google’s $14.8 billion backlog at the end of the June quarter was linked to its cloud business.

  • 8 percent drop in Q2 advertising from a year earlier to $2.6 billion
  • $29.9 billion in total ad revenue in Q2
  • 43 percent increase in cloud revenue to $3 billion

Read More: (WALL STREET JOURNAL)

Australia Unveils Its Plan to Make Facebook and Google Pay for News

In a landmark move, media companies in Australia will now be able to seek payment from Facebook and Google for news articles posted on their platforms, according to new rules that “could set a precedent for other countries seeking to compel tech giants to compensate local publishers.” The deal would require digital platforms to take part in negotiations with media companies. If a compensation agreement cannot be reached, an independent arbitrator would rule with a binding decision.

Why It Matters

“Publishers worldwide have long sought compensation from Google and Facebook, which collect ad revenue based on visits to their platforms and increase traffic by including links to news articles. In the past, major technology companies have resisted paying for content, instead donating to news organizations through philanthropic arms. They have also argued that publishers benefit by getting traffic directed to them from their digital platforms,” The Wall Street Journal writes.

However, with Google already reaching agreements to pay some publishers around the world and Facebook set to follow suit, the platforms expressed concerns that the Australian government wasn’t “letting the market work, and [undermining] Australia’s ambition to become a leading digital economy.”

The regulations still need approval from Australia’s Parliament.

Read More: (WALL STREET JOURNAL)

A Quick Look

Big Oil Companies Lose Billions, Prepare for Prolonged Pandemic

  1. Big oil companies endured one of their worst second quarters ever and are preparing for long-term struggles as the Covid-19 pandemic shrinks global demand for fossil fuels.
  2. Exxon Mobil posted its second consecutive quarterly loss for the first time this century, losing $1.1 billion compared to a profit of $3.1 billion a year ago. Exxon, the largest U.S. oil company, had not reported back-to-back losses for at least two decades.
  3. Chevron lost $8.3 billion in Q2, a steep decline from $4.3 billion in profits during the same period last year. It wrote down $5.7 billion in oil and gas properties, including $2.6 billion in Venezuela.
  4. Royal Dutch Shell posted a second-quarter loss of $18.4 billion, which included a $16.8 billion write-down. French giant Total also posted an $8.4 billion loss and an $8.1 billion write-down.
  5. According to investment bank Evercore ISI, holdings of oil and gas stocks by active money managers have reached a 15-year low. Crude prices have stabilized around $40 after briefly going negative for the first time in April. But U.S. oil prices closed below $40 per barrel for the first time in weeks.

Read More: (WALL STREET JOURNAL)

Worth Your Time

Split Decision: As worldwide tensions escalate over TikTok’s Chinese roots, ByteDance is weighing splitting up its businesses. The tech giant is reportedly considering listing its domestic business in Hong Kong or Shanghai, while potentially going public with TikTok, and other non-China components, in Europe or the United States. (REUTERS)

All Warped Up: French drugmaker Sanofi, and its partner GlaxoSmithKline, announced Friday it had secured a $2.1 billion agreement to supply the United States government with 100 million doses of its experimental Covid-19 vaccine, the largest of such deals announced to date. The move brings the Trump administration’s total investment in Covid-19 vaccines to more than $8 billion. If the vaccine is successful, it would be made available to Americans at no cost, other than what providers charge to administer the shot. (NEW YORK TIMES)

Big Spender: Electronic Arts reported its strongest June quarter in its 38-year history, while peers Activision Blizzard and Take-Two Interactive expect to do so as well. Pandemic lockdowns are fueling gamers’ spending much to the benefit of the industry’s giants. (WALL STREET JOURNAL)

Tidbits

With Covid-19 enhanced unemployment benefits set to lapse, lawmakers failed to agree on an extension as the financial futures of many Americans hang in the balance.

China’s central bank is urging the country’s antitrust regulators to launch investigations into the digital payments platforms of Ant Group and Tencent. 

Wells Fargo unloaded hundreds of millions of dollars of assets during the second quarter market freefall to stay out of trouble with the Federal Reserve.

A Couple Cents Content

This year has undoubtedly been the “Year of the SPAC,” so I took a look at the sector and what could be the next major blank-check company acquisition – Topgolf. (POST)

In case you missed it, check out Thursday’s Live Show where Justin Oh discussed Kodak, Bitcoin, Tattooed Chef and more. (YOUTUBE)

Watch Justin Oh breakdown Rush Street Interactive’s SPAC merger and why it may be the best long-term bet on online gambling. (YOUTUBE)

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