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Protocol Index: Tech earnings beat expectations

Protocol Index

Good morning! This Thursday, tech earnings keep beating expectations, Lyft's slashing jobs, and Salesforce built an AI economist. Want Index in your inbox each morning? Subscribe here.

What Matters Today

  • 5 a.m. PDT: Twitter's management will discuss this morning's earnings, which beat expectations.
  • 5:30 a.m. PDT: Initial jobless claims for last week will likely post a fourth consecutive decline, but any good news is only relative: Another 3.5 million people are expected to have filed for unemployment.
  • 2 p.m. PDT: Apple's earnings will shed light on how badly it was hurt by China's lockdown, in terms of both sales and supply chain disruption. Consumer-facing Apple is more exposed to COVID than most tech giants, so prepare for the worst.
  • 2:30 p.m. PDT: Investors hope Amazon's earnings will justify its buoyant stock price. The retailer should have been a major beneficiary from lockdown, and AWS may also have seen a boost. Amazon's numbers could also hint at the state of ecommerce in general.

Layoff Watch

Today's News

As of 4:20 a.m. PDT: Nasdaq Futures: 0.28% | Euro 600: -0.46% | Nikkei: 2.14% | Hang Seng: 0.28%



  • Smartphone production could drop 16.5% year-on-year this quarter, according to TrendForce. That would be the largest decline on record.
  • SoftBank said it expects a $9.6 billion loss on investments outside of its Vision Fund, including a $6.6 billion loss on its WeWork stake.
  • Zoom doesn't have 300 million daily users: It has 300 million daily meeting participants. People with multiple meetings in a day are counted more than once.
  • Salesforce canceled Dreamforce, scheduled for November.
  • Amazon reportedly bought almost $10 million worth of thermal cameras from Zhejiang Dahua Technology, a Chinese firm blacklisted by the U.S. over allegations that it helped China detain Uighurs.
  • Multiple Amazon domains were added to a U.S. list of "notorious markets" that allegedly enable counterfeit good sales.
  • Workers from Amazon, Instacart and Whole Foods are planning to strike tomorrow.


Diving Deeper

Earnings show things aren't as bad we feared

The resounding theme across yesterday's crop of earnings results was optimism. Facebook, Microsoft, Qualcomm, Tesla and eBay all reported better-than-expected revenue, showing that tech is proving to be more resilient than was feared.

  • We got more good news from the cloud, with Microsoft Azure revenue growing 59%. "Commercial cloud revenue," which also includes Office 365 and Dynamics 365, grew 39% year-on-year, confirming the windfall that many suspected.
  • "Microsoft witnessed two years of digitization within the last two months," said analysts from Piper Sandler.

Facebook's results signaled that the ad market is holding up, too. The company said that though revenue dipped in March, it's been "approximately flat" year-on-year so far in April.

  • Tech and ecommerce advertising remained stable, according to COO Sheryl Sandberg, while gaming ad revenue grew — all of which bodes well for the broader tech ecosystem.

eBay, meanwhile, said total sales were up 20% year-on-year each week in April.

  • But the boost may be temporary, rather than a wholesale shift to ecommerce: Wedbush noted that its guidance for this quarter "implies a return to 'pre-confinement' growth ... by mid-May."

But not everyone's unscathed: The smartphone market may be doing even worse than feared.

  • Qualcomm said it expects COVID to reduce handset shipments this quarter by around 30% and said licensing revenue would drop 42% from a year earlier as R&D spending slows.
  • Component manufacturer Murata echoed that warning, saying this morning that it expects a 10% drop in smartphone demand this year. Ace Research's Hideki Yasuda said "the market had expected Murata to see smartphone production rise or at least stay flat. A 10% decline shows how serious the impact is."
  • Supply disruptions are also causing problems. Nokia told investors that it was affected by Chinese shutdowns in the first quarter that challenges may persist throughout the year. It lowered its 2020 outlook as a result.

Elon Musk, meanwhile, is in his own world. Though Tesla posted a surprise profit, Musk had somewhat of a meltdown on his earnings call, decrying lockdown policies as "fascist."

  • Protocol's Lauren Hepler and David Pierce have the lowdown: "After Musk finished, there was a long pause, and the moderator asked for the next question. A few moments later, the call's audio cut out, before coming back several minutes later. Musk was noticeably more subdued after that."


  • "The pandemic has made Amazon essential, while also increasing its vulnerability … I predict antitrust and worker-protection legislation of the kind that we saw at the turn of the last century." — Wichita State University's Uhsa Haley thinks regulation is on its way.
  • "It is becoming increasingly clear that ecommerce is having a moment while physical retail is shut down." — Wedbush analysts think Etsy is benefiting from lockdown. I recently looked at U.S. retail data, and found nonstore retail's share of overall retail is unsurprisingly skyrocketing.
  • "This whole thing is creating a new norm." — AxleHire CEO Daniel Sokolovsky told Protocol that grocery delivery is here to stay.

Closing Bell

Let the computers fix the economy

One of the many ways in which economics differs from other sciences is that it's pretty hard to do experiments. You have to implement a policy to know if it works, and you'll never really know what would have happened if you hadn't tried. If only there were a really sophisticated AI that could solve that problem for you! Salesforce thinks it's made one: It claims its AI Economist "can improve the trade-off between equality and productivity by 16%." I'm skeptical, but if this does actually work, it could usher in a delightful new era of technocratic policy making. Who needs politicians, anyway?

Thoughts/feedback/tips? Email me — — or anonymously contact Protocol. And subscribe to get Index in your inbox each morning. Thanks for reading, see you tomorrow.

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