Protocol Index: Enterprise tech thrives, consumer tech doesn’t

What Matters Today

• 5 a.m. PDT: Spotify execs will discuss this morning's earnings, where results beat forecasts for both revenue and profit. The streaming giant said premium subscribers were up 31% from a year earlier, driving revenue up 22%.
• 5:30 a.m. PDT: The U.S. is expected to report its first GDP decline in six years. Analysts' consensus is for a 4% quarter-on-quarter decline, but some think it could be worse. Look to the Fed's 11:30 a.m. PDT press conference for more insight.
• 1 p.m. PDT: Tesla's earnings should show how badly the company's been hit by the global economic slowdown — and whether Elon Musk is worried about low oil prices hitting EV demand.
• 1:45 p.m. PDT: Qualcomm earnings could offer some insight into smartphone demand along with any slowdown in 5G rollout. Deutsche Bank's analysts think those "significant near-term headwinds" will be outweighed by the company's market leadership in 5G, though.
• 2 p.m. PDT: Facebook's earnings will offer a closer look at the state of digital advertising. As with all tech companies, investors are most interested in forecasts for this quarter.
• 2:30 p.m. PDT: Microsoft's earnings call should tell us more about the demand for cloud services and the company's suite of remote-work tools. Piper Sandler analysts expect commercial cloud growth of 37% year-on-year — a big number, albeit not quite as good as Google Cloud's 52% surge.

Layoff Watch

• TripAdvisor cut 900 jobs, around 25% of its workforce. It's shutting down its San Francisco and Boston offices, and remaining staff will shift to a four-day work week with a 20% pay cut.
• Uber reportedly plans to lay off 20% of its staff, which could lead to more than 5,400 job losses.
• U.K. delivery company Deliveroo is reportedly laying off 367 people.

Today's News

As of 4:20 a.m. PDT: Nasdaq Futures: 0.85% | Euro 600: 0.09% | Nikkei: -0.06% | Hang Seng: 0.28%

OPPORTUNITIES

• Google says Meet is adding 3 million users a day.
• The new Trolls movie made more from its digital release in three weeks than the original did in its five-month theatrical release.
• Checkout.com joined the Libra Association.
• Instagram now lets live streamers run fundraisers.
• Shopify launched a mobile app that lets you shop and track orders from a range of merchants.
• Huawei and InterDigital settled their patent lawsuit. Huawei will now license InterDigital's patents.
• SK Innovation is spending $727 million on its second U.S. electric vehicle battery plant.
• BYD thinks Chinese EV sales will recover, predicting a 24% rise in first-half net income.

THREATS

• Ford is delaying its self-driving car service.
• Google is shutting down Shoelace, its local social network.
• Activist investor Christopher Hohn wants Wirecard to fire its CEO.
• Senator Josh Hawley wants an antitrust probe into Amazon's private-label practices.
• Apple paid $18 million to settle a class-action lawsuit, which alleged it intentionally broke FaceTime on old iPhones.
• Hungary fined Booking.com $7.7 million for unfair business practices, including misleading ads.
• Landlords who built businesses on Airbnb rentals are struggling.

DEALS

• Rapid7 is acquiring DivvyCloud, a cloud security startup, for $145 million.
• SAP is reportedly in talks to sell its digital interconnect unit to Sinch, a mobile messaging company.
• Zoom will use Oracle as its core cloud infrastructure provider.
• Cloudflare partnered with JD.com to expand into China.
• JD.com is reportedly filing for a $2 billion second share listing.
• Huawei is reportedly partnering with STMicroelectronics on chip design as a way to protect itself from potential U.S. sanctions and gain access to U.S. chip design software.
• From Protocol: Elizabeth Warren and Alexandria Ocasio-Cortez want an M&A moratorium.
• U.K. startup investment deal value is up 34% year-on-year, but deal numbers are down 39%. "Investors are backing their existing portfolios and more established later-stage companies," Plexal writes.

Everyone's Thinking About

Enterprise tech is thriving. Consumer tech isn't.

Tech earnings keep flooding in, and they're starting to paint a more comprehensive picture of what the industry looks like right now.

• Enterprise tech is holding up, for now. Google Cloud's 52% revenue rise was the highlight of Alphabet's earnings yesterday, helping the company beat revenue estimates. Samsung also reported a small rise in operating profit, driven by demand for its memory chips from server and PC manufacturers. AMD said its server business was ramping up, too.
• Consumer tech seems to be worse off. Samsung warned that mobile and TV profits would "decline significantly" this quarter, with the economic environment and Olympics-postponement stopping people from spending. AMD's Lisa Su, meanwhile, said she expects "some softness in consumer demand" in the second half of the year.
• The ad market is mixed. Google saw "mid-teen year-on-year decline in revenue" toward the end of March, according to CFO Ruth Porat, partly because many searches were not so sponsor-friendly: No one wants to advertise next to "how many COVID deaths today."

But there are some glimmers of hope. Porat said there were "some signs users are returning to more normal" search behavior, and YouTube revenue was up 33.5% thanks to more time spent on the platform — though Deutsche Bank thinks that might just be because its advertisers are taking longer to react to the crisis.

• Porat said "we haven't seen further deterioration" in April's search behavior, though that could change as companies — including Google — slash marketing budgets.
• Apple supplier AMS, meanwhile, offered better-than-expected guidance for this quarter, meaning the smartphone market might not be as bad as Samsung fears.
• "There will be pent-up demand in the second half of the year, or at least in the first half of next year," Hana Financial Investment analyst Claire Kyung Min Kim told Bloomberg.

Overheard

• "Apple is better positioned than most to experience a rapid recovery in a post COVID world … We see demand as pushed out, not canceled." — Evercore's Amit Daryanani thinks Apple can weather this storm.
• "Phase two is how we make the most of it. It is about focusing on the opportunity. The last financial crisis was, in a way, the birth of fintech and created room for these companies to grow fast. I think we'll see this again." — Balderton Capital's Rob Moffat thinks this is an opportunity for startups.
• "Technology vendors are encouraged by the pace at which China's production has ramped up post the COVID-19 shock and this has reinforced their belief in locating the production of their high volume products in China." — Morgan Stanley doesn't think China needs to be too worried about supply-chain diversification.

Closing Bell

Qu-orange-tine Is The New Black

It was only a matter of time: Orange Is The New Black's Jenji Kohan is making an anthology series for Netflix, shot remotely. "Writers never physically meet during the writing process. Our director, Diego Velasco, directs our talent remotely. Our showrunner, Hilary Weisman Graham, runs production from her living room. The cast not only acts, but also films themselves at home," Kohan said.

As far as I know, this is the first big example of the entertainment industry using quarantine as a chance to try something completely different. We've seen SNL and the NFL rework their existing formats for lockdown-world, but starting from scratch could allow for some interesting experiments. I'm very excited to see what it looks like.