This Week’s Tech Q1 Fiscal Results Show Diversity, Cloud Key to Success
It’s week two of tech first quarter earnings results, and while the impact of reduced hardware sales is still making the channel queasy, it’s nowhere near the trainwreck saw coming out of IBM, Intel and Microsoft last week.
It’s week two of tech first quarter earnings results, and while the impact of reduced hardware sales is still making the channel queasy, it’s nowhere near the trainwreck saw coming out of IBM, Intel and Microsoft last week.
This week, it’s all about social, mobile and cloud. The two companies on the list below that deal with hardware—Sony and Apple—are diversified enough that significant drops in mobile phone sales only spell dismay rather than disaster.
What does this mean for the channel? Diversification is key, as is a solid cloud game. But hey, that isn’t anything you didn’t already know. Read on to get The VAR Guy’s take on the first quarter results from this week.
It was another case of mixed news for Sony Corp., which earlier delayed giving a full-year forecast in order to assess damage from the Tokyo earthquake last year. While Sony reported both its first full-year profit in three years, it nonetheless reported a fourth-quarter loss of 88.3 billion yen ($812 million) this week. The biggest hit came from its camera sensor business, which has taken a hit due to the slowing demand for smartphones. On the other hand, Sony’s games and network services business reported a 5.1 billion yen profit in the quarter. Not much good for channel sales, but at least we can keep distracting ourselves from these dismal quarterly reports with some Metal Gear Solid awesomeness on our PS4s.
Now that everyone and their mothers own an iPhone (with the notable exception of The VAR Guy’s plucky associate editor, Michael Cusanelli—that rebel), it looks like Apple needs another big revenue play. The company reported its first quarterly revenue drop in 13 years on Tuesday. Apple faces a litany of issues in addition to market saturation. For starters, China’s economic nightmare clearly is limiting sales there. Then there’s the problem of growing buyer indifference. New iPhone releases no longer induce the kind of hysteria usually reserved for rock stars. And it shows. Apple reported first-quarter revenue of $50.6 billion, down 13 percent from the same period last year. To our utter shock (#sarcasm), shares of the Cupertino, CA, company plummeted more than 8 percent in after hours trading, eviscerating a two-month rally.
Remember the line that Yogi Berra once said about a restaurant in Manhattan? “Nobody goes there anymore; it’s too crowded.” We sorta feel that’s what happening to Twitter, which continues to add more users while simultaneously dropping in value. Twitter’s first quarter results came out on Tuesday, and they were “under expectations.” While Twitter did add 5 million users, bringing its total subscription base to 310 million, its reported revenue of $590 million was well below analysts’ expectations. It isn’t so much that Twitter is dying. As journalists, we can say with confidence that it’s still relevant in certain circles. As a Buzzfeed senior editor told Inc. earlier this year, the Twitter world is comprised mainly of media and tech professionals, and has little to do with the “real world.” As a result, marketers simply haven’t been willing to invest the same kind of ad dollars there as they do on Facebook and Google. (But seriously. Please retweet this article.)
Wishing for some good news? We sure are, and just like in our real lives, Amazon is there to deliver. The company’s stock rose nearly 9.6 percent this morning as Wall Street analysts finally found a reason to celebrate. A booming retail business and robust growth in its cloud business resulted in both revenue and margins that exceeded estimates by leaps and bounds. Amazon reported first quarter profits of $513 million, up from a deficit of $57 million during first quarter last year. Of specific interest to the channel, its cloud hosting business unit, Amazon Web Services (AMS), earned $2.6 billion, up 63 percent year-over-year. Amazon, thanks for making us smile for more reasons than two-hour kitty litter delivery.
And then, there was Facebook. The site that’s pulled up on our computers all day as soon as the workday ends reported first quarter revenue of $538 billion, up 52 percent year-over-year. The granddaddy of social sites added 60 million users since last quarter—12 times the number of Twitter. While smartphone sales might be dwindling, Facebook has obviously learned to commoditize them. Mobile ad sales, led by video ads, are up 75 percent to $4.2 billion and now make up 82 percent of overall ad revenue. As a whole, Facebook has 3 million advertisers that have helped the company’s net income nearly triple year-over-year, reaching $1.51 billion ($0.52 per share), up from $512 million ($0.18) in the previous-year quarter. Inflammatory political posts (no, Aunt Mildred, I don’t think President Obama lives on a diet of newborn kittens and Ovaltine) and inappropriate photos (Hey, guys! Like these pics of my water birth!) aside, Facebook’s numbers this quarter are almost as addicting as Facebook itself. Please excuse us. We need to post this adorbs video of 12 dogs who can’t catch anything, like, RIGHT NOW.
