Main story – Big tech earnings reports are in, so what’s next?
My POV: Big tech earnings reports have been decidedly mixed this week, but can we discern a helpful trend? Start with Amazon. As Stuart reports in AWS, Amazon’s retail arm is still impacted by the industry downturn, but this is another quarter of deep losses overall, AWS’s rise cannot compensate suddenly capricious/spendy consumers. The sector-wide retail hit is compounded by rising gas and energy prices. Wall Street sees the bright side:
It may have resulted in a big loss, but Wall Street drove Amazon’s stock price up 12% in after-hours trading. There is clearly a lot of confidence surrounding the organization and its ability to weather the current macroeconomic turmoil better than many of its rivals.
It’s a similar story at Google, where ad revenue through Alphabet is down. Stuart details this in Google Cloud’s rising revenue, but so does its losses as Alphabet sees its growth slow. Google blames “macroeconomic uncertainty” and clearly its cloud business isn’t entrenched enough to earn the kind of investor bounty that Amazon (AWS) received.
Still, I like Google’s ad revenue outlook better than Meta’s, which is tied to algorithmic walled gardens with high TikTok vulnerability. Stuart covers that
sh#tshow off in Ruling the Metaverse is proving to be a costly burden as Meta’s growth wanes for the first time (Sidenote: while I’m a Metaverse skeptic, this rough revenue report isn’t really a commentary on that subject, except that the Metaverse is far from contributing to the bottom line and increasing revenue of Meta, outside of games).
It’s a similar refrain at Microsoft: Microsoft Q4 is below expectations, but Azure is expected to deliver double-digit growth this year. As with Amazon, Microsoft’s cloud business is enough to offset the consumer spending blues, at least for investors. Stuart:
Wall Street showed commendable calm in the face of the weaker-than-expected numbers, buoyed perhaps by Microsoft’s forecast that Azure will drive double-digit revenue growth in the coming fiscal year.
Next, closer to business concerns, was ServiceNow: ServiceNow is softening near-term forecasts due to macro headwinds, but is optimistic about future success. Derek writes:
What is important is to look at the long-term indicators. The size of transactions increases. Existing customers expand their footprint. High renewal rates. On these metrics, ServiceNow looks good to deal with any short-term disruption.
We can’t read too much into these well-positioned behemoths; I expect Wall Street’s treatment of companies not backed by cloud infrastructure games to be a little gloomier. Recession or not, I see inflation and wallet-conscious consumers as just one headwind at this point. I do not yet see the crisis that would make for truly disastrous circumstances. In the meantime, Derek’s point prevails: “McDermott is right, while some companies may be cautious this year, what they also know is that cutting digital and tech investment is not the answer..”
I guess this means that “technology”, as an industry, offers some protection, but not enough to issue a pass for poor execution. I can think of times in tech where you could do well just by getting out of bed and showing up. This is not one of those times.
Diginomica Picks – my top stories on diginomica this week
Vendor analysis, diginomica style. Here are my top three picks from our provider coverage:
A few other vendor choices, without the quotes:
Jon’s handbag – Martin explores the future of enterprise developers in the age of low-code in Being the ‘manager of the managers’ – platform thinking revisited by OutSystems. Chris takes a critical look at UK drone dreams/policies in Make way for the drone superhighway, says UK. Bonus points for calling last mile urban drone delivery an “absurd concept”.
The best of business web
My top seven
- Intel CFO says we’re ‘at rock bottom’ after company misses earnings and shares tumble – Intel’s controversial earnings report comes with plenty of internal questions (and luggage). I’m glad Intel isn’t just hiding behind macro excuses, because there’s more at stake here. Important nugget on the weakness of SMEs compared to companies.
- Apple exceeds profit and revenue expectations, but growth slows to a trickle – Doing the right thing with people’s data (at least more often than Google or Meta) has served Apple well, but when demand material decreases, what is the plan B?
- How to Save a Software Implementation Gone Wrong – Eric Kimberling in his Project Intervention Wheelhouse:”You must have visibility into what your system integrator is doing and why they are doing it.”
- Trade Finance Scandal and Takeover: SAP’s Business Network Gets an Unlikely Boost – I really had no idea how Josh Greenbaum was going to tie a trade finance scandal to an SAP Business Network opportunity (sort of ), but I actually think he handled it.
- How to Foster Connection in Today’s Office Space – This is a podcast (and transcript) from McKinsey, so it’s not a concise account, but it’s a look forward-thinking/honest about what works in offices and where distance comes from – although the discussion of proximity in office design needs more attention. Last time I checked, people weren’t that interested in going back to the cubed sardine life.
- Overcoming Barriers to Using Channel Data – Lora Cecere is on a series of data-heavy and unwavering supply chain posts.
- TikTok and the fall of the social media giants – Although I don’t share Cal Newport’s
wishful thinkingan optimistic conclusion about TikTok forcing a more open internet, this is still one of the best articles on the state of social media I’ve read in a long time.
In 2018, via one of the corniest ad campaigns ever devised, Facebook proclaimed itself “A place for friends, not for things that get in the way.Fast forward four years, and, well, TikTok got Meta in the way. Now, in response, Facebook is indeed putting its AI algorithm in the way of you and your friends:
Zuckerberg promises to double the amount of content you didn’t ask for on Facebook https://t.co/1rnK67M1Bm
-> so Facebook is “a place for friends” except when your friends’ content isn’t viral/controversial enough, + your income stinks. Then you switch to “AI” to deliver viral crud
— Jon Reed (@jonerp) July 30, 2022
I haven’t had much satirical fun with the DAOs in this column yet. Well, let’s fix that, shall we?
Oh, and there was a viable scientific explanation presented recently for the possibility of the “Loch Ness Monster”.
Hey, I’ll take good news wherever I can find it. Finally, basketball legend and stellar human being Bill Russell passed away this weekend. On a tribute thread, I saw this great photo of Russell with Ali and Abdul-Jabbar in their prime:
Nothing guarantees us a pass from the puff section, but living well is probably the best defense. See you next time…
If you find a #ensw piece that qualifies for hits and misses – good or bad – let me know in the comments like Clive (almost) always does. Most articles on Enterprise successes and failures are selected from my @jonerpnewsfeed