Big Tech Continues Its Surge Ahead of the Rest of the Economy (nytimes.com) 38
While the rest of the U.S. economy languished earlier this year, the tech industry's biggest companies seemed immune to the downturn, surging as the country worked, learned and shopped from home. From a report: On Thursday, as the economy is showing signs of improvement, Amazon, Apple, Alphabet and Facebook reported profits that highlighted how a recovery may provide another catalyst to help them generate a level of wealth that hasn't been seen in a single industry in generations. With an entrenched audience of users and the financial resources to press their leads in areas like cloud computing, e-commerce and digital advertising, the companies demonstrated again that economic malaise, upstart competitors and feisty antitrust regulators have had little impact on their bottom line. Combined, the four companies reported a quarterly net profit of $38 billion.
Amazon reported record sales, and an almost 200 percent rise in profits, as the pandemic accelerated the transition to online shopping. Despite a boycott of its advertising over the summer, Facebook had another blockbuster quarter. Alphabet's record quarterly net profit was up 59 percent, as marketers plowed money into advertisements for Google search and YouTube. And Apple's sales rose even though the pandemic forced it to push back the iPhone 12's release to October, in the current quarter. On Tuesday, Microsoft, Amazon's closest competitor in cloud computing, also reported its most profitable quarter, growing 30 percent from a year earlier. "The scene that's playing out fundamentally is that these tech stalwarts are gaining more market share by the day," said Dan Ives, managing director of equity research at Wedbush Securities. "It's 'A Tale of Two Cities' for this group of tech companies and everyone else."
Amazon reported record sales, and an almost 200 percent rise in profits, as the pandemic accelerated the transition to online shopping. Despite a boycott of its advertising over the summer, Facebook had another blockbuster quarter. Alphabet's record quarterly net profit was up 59 percent, as marketers plowed money into advertisements for Google search and YouTube. And Apple's sales rose even though the pandemic forced it to push back the iPhone 12's release to October, in the current quarter. On Tuesday, Microsoft, Amazon's closest competitor in cloud computing, also reported its most profitable quarter, growing 30 percent from a year earlier. "The scene that's playing out fundamentally is that these tech stalwarts are gaining more market share by the day," said Dan Ives, managing director of equity research at Wedbush Securities. "It's 'A Tale of Two Cities' for this group of tech companies and everyone else."
Not tech (Score:4, Funny)
Google is an advertising company.
facebook is also an advertising company that is also a propaganda outlet for the Russians, Chinese and Iranians.
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Information technologies is still a technology. Amazon is also in more than just retail - their entire Alexa line is both an information and physical technology.
Just sayin.
Re:Not tech (Score:5, Funny)
There is more technology in a Boeing and a Chevy than in an Alexa or anything Amazon has to offer.
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Re: Not tech (Score:2)
GM is a tech company, but they are about physical goods first. Google, amazon, and even faceboot are about tech first. I'd make the distinction based on how they make their money. Car companies don't ship their latest tech, it goes into concept vehicles and eventually gets into products much later. It's often not even their tech any more, it's actually the tier 1 suppliers'.
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some car companies can push software updates over the air ...
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Google, amazon, and even faceboot are about tech first
Really? Google fits this description the best considering their initial work but the other two far less, especially Amazon. People see Amazon and they think of aspects like their huge cloud based service without having any idea the story behind it's creation. The story is that they had a huge rushes specifically during the 4th quarter and needed significant more computational power to run their "online book store". They realized they could sell this computational power during the other quarters of the year
buh buh buh (Score:2)
buh bble.
Logistics is nice but it's not something other people cannot due. Momentarily economies of scale are benefiting these first movers. But the cheaper you make it the less the economy of scale gives you an advantage. Their only hope, obi wan, is to use all the capital they can raise to buy other companies. But just because their stocks are going up does not mean they are seeing that money. That only comes from issuing new shares or if the company is holding its own shares.
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This isn't what I would call a bubble. A bubble is where the asset price has no obvious connection to the earnings or potential earnings of a company. These companies have the earnings to go along with their large valuations. They are making serious money (and increasing the money they earn). The only one that might be a bit weaker is Amazon who never seems to make all that much profit, but even they are growing revenue substantially.
Apple is buying back their stock (the opposite of issuing new shares) and
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Amazon is 94 plus - bubble territory.
All of them are overpriced. They cannot grow fast enough to warrant their stock prices. It is not Tesla insanity of 825, but never the less, there is a lot of risk built into their prices and not worth buying.
But WTF do I know. I lived by Ben Grahams work and it got me nothing. The stock market is nothing but a gamblers market now and prudent investment is all but impossible now. Shit goes up, quality gets taken
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A P/E ration of 30 isn't so bad. Basically it means a 3% or so return on investment (assuming things don't change - obviously a big if). In today's depressed interest rate environment, that's actually rather good compared to the other investment opportunities. So if nothing changes in their profits, they're probably a good investment.
Given that all of them have increasing earnings - not a guarantee for the future, but still something to look at, they are probably still good investments. They have extremely
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Whenever I see "You may think that this isn't sustainable, but", I run for the hills.
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Amazon is a retail store.
Google is an advertising company.
facebook is also an advertising company that is also a propaganda outlet for the Russians, Chinese and Iranians.
Common usage of the word "tech" has stretched beyond any overly strict and dogmatic definition.
While Google's revenue stream is built on advertising, for the vast majority of people, Google is the very nice tech company that provides their preferred search engine, with extras.
Like it or not, the great unwashed see on-line companies like Google, Facebook, Uber, etc, as tech companies, no matter what their revenue model is. The use of "tech" in the headline, and article, is in keeping with general usage. A
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they're all marketing technology companies.
Go figure (Score:4, Insightful)
The "Big Tech" companies that didn't need to close down, or were declared essential services, are unaffected.
Who would have imagined such a surprise...
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That's not going to last forever. They're more shielded to COVID, but much, much less shielded to Wall St. credit and cash flow problems.
As this continues on, and more people become unemployed and start defaulting, or can't buy expensive gadgets and overall demand diminishes, even tech companies are going to start to fizzle. They're just not taking this particular crisis on the chin as they have the past few wall st. fiascos.
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Nothing lasts forever, of course. But many things last a long time.
I don't think Apple, Facebook, Google, Amazon or Microsoft need to go to Wall Street to borrow money any time soon. They all have very large cash balances and no net debt (the ones that have borrowed have just done so for tax purposes but have a lot more cash than debt). And they are making a lot more than they are paying out in dividends, so they continue to accumulate more money.
It may be true that Covid will eventually reduce their revenu
Google at $1,623 (Score:3, Funny)
https://tech.slashdot.org/comm... [slashdot.org]
Of course none of us sitting around that table had any money to invest either way, so...
They had an advantage (Score:5, Insightful)
"Big Tech" just kept rolling right along during COVID; they just kicked their workers out the door and sent them home. Basically, any industry that was deemed an essential service is faring much better than things like in-person retail, restaurants and other service businesses that need presence.
It's similar to what happened post-WW2 where the US mainland was mostly unscathed and Europe/Asia were a mess. There's no other outcome than to have the unscathed company/economy do extremely well. What will be very interesting to see is what happens with China. Who knows what they're doing to control their population to prevent COVID from speading again, but they're doing it. I'm in the airline industry and the reports are that domestic Chinese traffic is basically back where it was where the rest of the world is 30 or more % down still. If their control holds, they'll be in a much stronger position than they were and might end up the dominant global economy not too long from now.
Same thing goes for Big Tech. If people are used to shopping online now, retail is dead. If people won't travel for business anymore because Zoom is cheaper than a $10K last minute airline ticket, then travel is dead. If people don't have any money to do anything fun because the vast majority don't work for Big Tech, entertainment is dead. People aren't seeing the knock-on recession(s) that will be happening once the stock market gets done ignoring reality.
I don't think the "essential service" mattered (Score:3)
Basically until the pandemic is under control any place that relies on groups of people (restaurants, theaters, sports & music venues, etc etc) is boned.
ecommerce and telecommunication are 20 years old! (Score:2)
Same thing goes for Big Tech. If people are used to shopping online now, retail is dead. If people won't travel for business anymore because Zoom is cheaper than a $10K last minute airline ticket, then travel is dead. If people don't have any money to do anything fun because the vast majority don't work for Big Tech, entertainment is dead. People aren't seeing the knock-on recession(s) that will be happening once the stock market gets done ignoring reality.
I think you're over stating this. We've had eCommerce for 25 years now. We still have bookstores. My corner bookstore seems to be thriving. They had to adapt and obviously Borders is no more, but there are a lot of successful bookstores in the Boston area, even post-COVID. We've had great cheap videoconferencing for over 10 years. People conduct meetings in person because it's better, not because they've never heard of Zoom, Skype, or WebEx. This is fad. In 5 years, things will be pretty similar to
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So nice to know a large metropolitan area with roughly 5 million people has successful bookstores. Now try it in locations where the metropolitan area is less than 500,000 people spread over an area three times as large.
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https://www.statista.com/stati... [statista.com]
Re:They had an advantage (Score:4, Informative)
What they are doing is implement aggressive containment and tracing policies that the WHO has in place, but on a massive scale.
If the numbers in a city rise beyond a certain limit, they implement the all out policies. The limit is how many cases of contact tracing and isolation for all those that were in contact with a positive case their system can handle. A small number of these is acceptable, as long as they are kept in check.
But, if larger outbreaks happen, they go in high gear: they shut down entire cities, and test everyone. Only those who test negative are allowed to move about. Everyone else stays at home until the whole city is tested. That way, they contain the outbreaks. It happened in:
1. Wuhan (11 million) in the original outbreak, then later in
2. Qingdao (~ 10 million), and now in
3. Kashgar [cnn.com] (4.7 million)
In some ways, this more aggressive approach has a better outcome, not only in containing the virus, but the overall duration of closures and disruption to society and commerce is much less than just flatten the curve, then not much else.
Remember: it was a three step plan:
a) flatten the curve (so the hospitals are not overloaded),
b) increase testing capacity to find out outbreaks, and
c) contact tracing.
Europe, the USA, Canada, ...etc. did the first two but did not maintain a level that allowed the third to be effective ...
Can we in the west do something like what China did? Australia did it for Melbourne, but it was a very long 110 days (waiting for it to die out, rather than testing everyone like China does). New Zealand did it too, but their initial case load was much lower. The whiners will complain about freedom (to spread the disease) and CO2 in masks making them toxic ...
Big tech ... (Score:3)
Prediction (Score:1)
It's probably best to start preparing for life in the dark ages sooner rather than later.
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The limiting scenario (Score:2)
The following scenario is not realistic but it is a limiting case: imagine a massive spaceship comes to our planet, and the aliens on it can provide us with every need, in return for raw materials, which they can only get by people mining the materials.
Then everyone will essentially become poor, and have to do hard physical labour.... that is what big tech is bringing us towards. A future where more and more services can be done by them, so they accumulate a disproportionate amount of wealth (not to mention
Is Big Tech Success Hiding Economic Reality? (Score:2)
Food, housing and medical care are non-essential (Score:2)
Correction (Score:2)
Correction: suck the life out of the rest of the economy.