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Tech Earnings Palooza – The Six Five Webcast
by Daniel Newman | May 3, 2021

On this episode of The Six Five Webcast host Patrick Moorhead and Daniel Newman discuss the tech news stories that made headlines this week. The six handpicked topics for this week are:

  1. AMD Crushes Q1
  2. Google Cloud Earnings Up
  3. Microsoft has Blow Out Quarter
  4. Apple Reports Monster Earnings
  5. Qualcomm Beats Top and Bottom Lines
  6. Amazon named #1 Company Where Americans Want to Work

For a deeper dive into each topic, please click on the links above. Be sure to subscribe to The Six Five Webcast so you never miss an episode.

Watch the episode here:

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Disclaimer: The Six Five Insiders Webcast is for information and entertainment purposes only. Over the course of this podcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we do not ask that you treat us as such.

Transcript:

Patrick Moorhead: Hi, this is Pat Moorhead with Moor Insights and Strategy. We are here for another incredible episode of the Six Five Podcast. It is Friday again, Daniel. We are getting into the groove of Friday morning-ness. It feels pretty awesome. Feel pretty good here. It’s starting to get warmer out. Many restaurants and gosh, I even saw an open air venue, a band playing two nights ago in downtown Austin. Feels really good. Daniel, how are you?

Daniel Newman: Anxious, a little bit that we break into the show. Big week. Tech. All this stuff happening. We talk about the weather. I am turning 40 next month. I think that’s the new thing. I meet people for coffee, although we do it over Zoom now. Then we’re just going to talk about weather because that’s an aging-

Patrick Moorhead: It really gets bad. We need to be shut down if we start talking about our health. No COVID speak. No got my jab. I’m good.

Daniel Newman: That’s an interesting one. Nonetheless, having said that though, it makes me think of those commercials about the insurance. Not becoming your parents. I don’t know which one that is, but we all do, eventually, become our parents anyway. But dude, what a week.

Patrick Moorhead: I know. Let’s dive in. We have an earnings palooza episode. I think we’re on the third or fourth quarter of doing this. It’s all earnings today. And by the way, for those of you who are new to the Six Five podcast, we cover six topics, five minutes each with some time on the front and some time in the back. Up 30, 40 minutes. We try to really hit the analysis because we know that you can get the news pretty much everywhere. You can Google it. You can go to Google News and find that. What we’re trying to do is find the deeper meaning and the significance of it. As tech analysts, I like to say, I watch earnings because tech companies can lie the least, because if you say something during earnings call that doesn’t end up to be true, you can get sued. You can get put in jail.
That’s why I like to tune in because it’s pretty exciting. Daniel-

Daniel Newman: Disclaimer here, huh?

Patrick Moorhead: Yeah, yeah. The disclaimers, this podcast is for information and entertainment purposes. Are you not entertained? Don’t take this as investment advice because we are not qualified to provide that. With that, Daniel, let’s jump in.

Daniel Newman: We are super smart though.

Patrick Moorhead: I think we like to think of ourselves as that. But with that, let’s dive right into AMD. AMD has pretty much been crushing it for the past two years. They crushed the first quarter. You know, Daniel, not triple digit earnings growth, just a mere 93%, 100% growth in gross margin, a measly 275% gross increase in op inc and net income. They’re killing it. The Computing Group, which is the Client Computing Group, which is essentially a Ryzen and Radeon, up 46%. ASPs were up.

And by the way, in this environment, and this is what shocked me so much about AMD, sorry, Intel’s earnings. Their ASPs were actually down. Processor and graphics ASPs worked up for AMD. EESG, which is a conglomeration of server, semi-custom, which means game consoles, was up 286%. Boy, how I wish they would break out their server numbers, epic. They really need to because every time I see it lumped together, even though they’re saying, “Hey, double digit growth,” I’m thinking, “Okay, what’s the base? Shouldn’t it be triple digit growth like it was two or three quarters ago.” And the market net net, the market rewarded AMD initially. And then, like a lot of tech stocks that we’ve seen, trailed off.

Daniel Newman: Our friend Kramer, actually, came out a bit, outspoken today about his frustration about these blah earnings and sort of the lack of movement. We have entered a parallel universe now where we’re on a full, by the meme, sell the news, buy the rumor, sell the news. People are getting all pumped up. But, it’s becoming a known entity that companies could blow out earnings. You used to think, oh, just wait till earnings. That’s when we’re going to see a big rise because they’re going to have a great quarter and everybody’s going to buy, it’s going to push the stock up. But, what’s happening now is the stock runs up right until earnings. These companies come out with these amazing results, 90 plus percent growth. That’s insane. Although I would say the sequential growth, quarter over quarter, was much smaller.

People aren’t realizing AMD is on a sustained path. They’ve been blowing out last year, but they’re slowly growing on a quarterly basis. But, what else is really happening is nobody’s surprised anymore. Were you surprised yesterday? We’ll talk about Amazon later. Were you surprised when they destroyed the EPS number by 50%? I wasn’t surprised. I was expecting it. I almost feel like I can predict these things accurately now because all you got to say is, “It’s going to be good.” And you’re going to be right.

That’s what Kramer was saying, that he’s frustrated that earnings… We move on tax. Someone makes a comment about a possible increase in our taxes, the stock market goes down 500 points. Somebody mentions that we might reopen or air travel is up, the market goes up 400 points. A company actually does a terrific job, on a quarterly basis, delivering on its promise. And people are like, “Eh, not interested. Going to sell it.” AMD deserves all the credit. Lisa Su has been on a tear. Thrilled that she’s going to be back at our event this year. Can’t wait to talk more about that, publicly soon. But listen, AMD is doing great. The market in semiconductors is very strong. We’ve seen CPUs up 30% plus. Let’s just say, ring the bell AMD. Good job.

Patrick Moorhead: Yeah. Final thing I’ll say is, I do believe that AMD took revenue share in client computing and server. I believe that, on a unit basis, we’ll probably see Intel up in client, but down in server. A good job, AMD. Let’s move on to our second tech stock and that is Google. Two big businesses there. Actually, one really gigantic business, which are ads, and a tiny business, but getting bigger, Cloud business.

Daniel Newman: Absolutely Pat. I’ll share the limelight with you here. I had the chance to go on and talk to Emily Chang on Bloomberg about this one. After digesting it, I kind of see the ad spend is back. Facebook, later in the week, proved this. But, across the board, companies that are in the ad space are performing very, very well. The earnings were almost $11 above expectation. 26 versus 15.

Patrick Moorhead: 11.

Daniel Newman: Over 55 billion in revenue. YouTube was up. Traffic acquisition costs were pretty steady. Revenue rose 34%, year over year. But, this is a reopening story. And again, everyone gets excited about those. But, when the pandemic took place, Google, actually, took a fairly significant hit to its ad revenue. Because a lot of people that advertise on places like Facebook and Google are smaller businesses that are spending money to drive traffic to their company sites.

As we’re starting to see reopening, we’re starting to see more momentum in industries that have, basically, been completely shut down. I traveled this week. I was in Texas, in Dallas, not Austin.

Patrick Moorhead: Bummer.

Daniel Newman: Even though Austin used to be my home. But, my point was, the hotel was packed. The airplane was packed. The airport was packed. We’re starting to see the world look and feel like the world. Like the one that we knew pre 2020. We’re not entirely back. There’s still issues. India is a big issue. There’s still issues going on here in the states. We have not gotten everybody vaccinated. We haven’t yet figured out exactly how robust our immunity is. But, we’re starting to see things more normal. And that means more spend in Google. That’s what’s going on in the advertising space, Pat. I’ll make one comment about Cloud and then I’ll let you chime in because I know you work closely with the team over there at Google Cloud. Revenue is up. It’s up substantially. Up over a billion dollars from the same period last year.  But, the losses are still mounting. Over 900 million in losses, but they’re narrowing.

And that’s basically, when it comes to Google Cloud, what I’m looking for. They’re not interested in being number three. They’re interested in competing side by side with Amazon and Azure. They’re going to spend what it takes. They will continue to lose. And when you’re generating $26.29 a share in earnings, even after losing a billion dollars on your Cloud business, you can continue to keep investing.

Patrick Moorhead: Yeah. And that’s why I’d like to focus on, which is their Cloud business, which, for forever, we were wondering, “Hey, how big is this Cloud business?” It was in the other bets before and I was really happy to see them break it out. I think the timing was good because, if I look at how they did, they were up 34% in Cloud. Up 1.3 billion or 1.27 billion. In comparison to AWS, which is sometimes unfair, they were up 3.2 billion. But still, even putting Google Cloud and AWS in the same statement is, I think, impressive. I’m going to come out and state the obvious, which is, that Google is primarily SaaS with some paths and a little bit of IaaS, where AWS is tilted more to IaaS. But, AWS does count their paths in SaaS as well as, as Cloud revenue. I don’t know what Cloud revenue is. My definition is IaaS plus paths plus SaaS. Loss narrowed. Loss can’t be there forever. But, you know what, when you’re cranking out 15 bucks a share, is that what you said?

Daniel Newman: 26.

Patrick Moorhead: Sorry?

Daniel Newman: 26.

Patrick Moorhead: $26 a share, you can afford investments and go for losses. Now the loss did narrow substantially, which was nice to see.

Daniel Newman: I think everybody wonders that question and that’s what we need to watch is, how long will Google, Alphabet sustain losses in this Cloud business in order to catch up and grow. And I actually think it’ll be awhile. I could see at least four to eight more quarters, which is significant, of taking losses because I think they’ll invest in people. They’ll invest in data centers. They’re going to invest in winning business at every opportunity. Because like I said, I just don’t see Google being interested or Alphabet being interested in being number three in anything. Which by the way, I love. We always say this on the show. Spurring innovation. Spurring competition. Good stuff.

Patrick Moorhead: The market, typically, comes in threes. I know a lot of that’s based on how you characterize the business. But, a good markets have three very large players. And that’s how that’s how markets typically end up. Hey, Daniel, let’s dive into Cloud and operating system giant Microsoft. They had a blow out quarter, as well. Overall revenue, not as impressive as let’s say an AMD. But, very impressive when you look at the scale and the profitability of 19%. Net income was up 44%. That’s gap, not non gap. But to me, key messages are, business was growing where it needed to grow. Where you would expect it to grow. The businesses that weren’t doing very well were ones you wouldn’t expect them to do very well. When you look at SaaS, when you look at Cloud. Azure, Dynamics 365.

X-Box right? People are home playing games. It was up 34%. But, the number one key here is Azure. Up 50% on a base that I have no idea what it is. In terms of dollars yet. And things that weren’t… Server was up 3%. That’s on Prem. Windows server. Something you wouldn’t expect to be up because, as we’ve seen, a lot of the on-prem businesses aren’t growing substantially. The one final thing I’ll point out is that Surface was only up, it was up 12%, which was good. But, when you’ve got Apple coming in, up 70% in Mac Books and the market’s going up 50%, it’s less impressive. The number is 50% on a unit basis. We don’t know revenue. Surface does have some lower priced options. But still, I’d like to see Surface in the 30, 40% growth rates in the future.

Daniel Newman: Yeah. It’s interesting. The ASPs are up on a lot of the chips for client. We’re seeing growth. Huge growth from AMD. But, Intel had a record quarter there, as well, which Surface has variants of both. I think that’s been a little bit of a puzzling spot for me in the overall earnings for Microsoft, the past few quarters, is that as strong as PC has been, the Surface, hasn’t been a little stronger. But, let’s look at the top. I like your comment about Azure. We don’t know exactly what it is, but we know that the market is looking at that 50% growth and continuing to see it 50 plus. Just a few quarters ago, it was running hot. In the eighties and seventies. Then it quickly fell in the beginning part of the pandemic, down into the forties. People were wondering if they were going to follow the trajectory of the AWS number which had a law of large numbers. Shrinkage and growth quarter over quarter.

We’re now seeing it stabilizing in the high twenties, low thirties, over at AWS. It looks like Azure, for now, is stabilizing in that forties and fifties. But again, as you said, we’re not really getting a clear indicator on that broken out number. But, we do know that the intelligent cloud business is very large. But Pat, here’s the thing. For two quarters in a row, Microsoft has, I believe… I’m just counting it down. I think it’s 10 segments that they break their business into. Not one of them retracted this quarter. 10 segments. All of them grew. The smallest growth was in office consumer products at about 5%. And the largest was Azure. X-Box was up 34%. The company really is delivering on its promise across all of its business units. It’s showing that there’s still room to run and room to grow.

That’s probably one of the most impressive things, Pat. This was the largest year on year, revenue growth quarter for Microsoft since 2018. All of the successful quarters that the companies had between 2018 and now, this has been the best. It’s just another bellwether moment for the tech industry, that tech is on fire. Microsoft is highly diversified. But as I said, this wasn’t growth. Even the Google thing where we talked, or Alphabet, where we talked about ads offsetting, they’re growing in every group. They’re profitable. Their margins are up. They’re operating very successfully. Dynamics 365 is growing. That’s their Cloud ERP CRM. It’s growing in the forties. In the forties percentage. You got to compare that with a Salesforce that’s growing around, on their CRM sales, in the teens, and on their overall product mix, in the twenties.

I’ve made suggestions before, that Microsoft is catching. Based on just those percentages, it may be a long route before it would catch. But, they’re growing at a faster pace than the leader.

Patrick Moorhead: That’s right.

Daniel Newman: Similar to here is what’s happening with Azure versus AWS. Azure is making some material gains. Now again, AWS is over 13 billion. We’ll talk more about that later. But, Azure is growing at a faster rate continuously quarter over quarter, which does mean, like you mentioned, with AMD making market share gains on certain big parts of Intel. Azure is doing something similar with certain parts of AWS. Buts overall really solid.

Patrick Moorhead: Good breakdown, Daniel. Let’s dive into Apple and maybe I can kick that one off. I love your provocative headline there. Apple destroys and stimulus purchasing. I have to say yes. If I look at all the companies who are taking advantage of the pandemic, I would put Apple right up there. It’s ironic when the pandemic started and the notion that people are going to stop buying smartphones and it did impact it in the first half of it. Then people revved it up. Apple came out with 5G. Here we here we are today. I would say that Apple is winning the pandemic race. The irony, though, is on a percentage basis, the biggest winners here were the Mac and iPad. Up 79% and 70% respectively, which just shows you how much demand there is for end point products given that people have to work, govern, and school from home still.

If I’m giving my awards, if I’m Tim Cook, I’m going to give my awards to the supply chain team. Tim Cook and I were actually at Compaq at the same time. I was a lowly product manager, global product manager. He was running a supply chain for Compaq. He was good at Compaq. He’s great at supply chain at Apple. I think he’s really lifted them up. You combine the roadmap of Steve Jobs and the innovation plus the supply chain expertise of Tim Cook, that’s a real incredible combination. Interestingly enough, is Cook did talk about some potential shortages out there of supply components. If it comes up with Apple, it’s got to be pretty bad. And let me tell you why. Unlike most companies, Apple, they invest a lot in CapEx. And typically we think of CapEx as PPE, property, something else that starts with a P, and equipment.

You think of Azure building data centers. What Apple does is they buy line capacity at TSMC. They buy line capacity at the Display Corp. They buy line capacity at the Toshiba memory offshoot. And they lock it in with CapEx. Great use of their cash, which by the way, is up to 204 billion, after earnings. Hats off to Apple on this. There was also some good signs for M1. Their margins were up. Here’s my suspicion, Daniel.

In a supply constrained environment, for gross margins to go up, this must mean that they had some cost decreases. The only thing that I could ever think of, that it could have a cost decrease, is the M1. Let’s just say, my back of the envelope says that the BOM cost of what Intel used to sell them is around $250. And I would say that the BOM cost of the M1 is between 50 and $75. They can take that right to gross profit. Yes, there’s R&D, but that’s below the line. Doesn’t impact gross margin. But, that is my sneaking suspicion that they are making boatloads of margin dollars on those M1 based devices.

Daniel Newman: Yeah, it was a really solid quarter. By the way, good back of the napkin math. That’s your specialty, Pat. Every part of Apple’s business is performing. No one would have expected Mac and iPad revenue to be up 70 plus percent in both cases. I think it is an availability thing, Pat. It was also a stimulus thing. People got money. Spent money. People that wanted an iPad went and got an iPad. This was a momentary opportunity to take advantage of the situation. And by the way, Tim Cook is also extremely good at that. Couple other things I think are worth noting around Apple. The stories that aren’t being told. One, we didn’t even talk about it, but the company’s lived and died by the iPhone for a long time. When iPhone outperforms and over performs, the company does well. And it did.

It over performed. 65% growth on iPhone. You would think, how does iPhone even grow at this point? It seems like everybody that would have one, already has one or three or five. But, this is also part of the 5G wave. And we’ll talk more about that in a little bit. Also Pat, and this is probably the last thing, they’re executing on services. This was something that I was more skeptical of. Could the company become a stronghold for services? There is $60 billion run rate on services now, Pat. They’re a juggernaut. They’re in TV and in movies, original content. Some of their shows are getting a lot of momentum now. Podcast offering. Credit cards. Now you got key tags.

There’re all kinds of services that are tying to every corner of what Apple does. And by the way, this was a margin enhancement that the company also had to make to drive up its margin. You talk about back of the napkin, margins up, risen by M1 which is center of the ecosystem. I will also say, when you have a services business generating over $16 billion a quarter in revenue, you are seeing extraordinary margin gains when your old business, when the legacy business, was pure hardware. That was another big transition, that the company is succeeding at, that you can only be impressed by it.

Patrick Moorhead: Yeah. Speaking of services, Apple could be in hot water here. The breaking news, this morning, was that European regulators that says Apple has a monopoly in the distribution of music streaming apps to owners of Apple devices. Daniel, you and I know from covering Qualcomm versus the world and Qualcomm versus Apple, when the EU comes out and says that you have a monopoly, the next step is a fine. You have to change your business practices. I’m wondering, could this be, like it was to Microsoft in the nineties, the regulators who will pull Apple down. Just like they did Microsoft. When it was dragged through all of this had to change its licensing for it’s windows operating system, which at the time, was basically it’s only product.

Daniel Newman: The company needs to regulate. You and I have been first and foremost. When it decided that it wanted to put the hammer down on Qualcomm to get a better deal, it took every resource at its disposal. We’re coming full circle. You’ve got Match, parent company to Tinder, going after Apple. We got the Epic Games. The EU is a police department. They’re going to give you a speeding ticket. You’re going to move on. Whether it’s been Google, Amazon, Apple, everybody in Europe, Qualcomm, they all get a fine. They pay it. They move on.

It’s a fundraising activity. What’s going to be most interesting to watch is will the United States, at some point determine that Apple is acting in some type of monopoly. And by the way, worth noting on that topic too, Pat, is the dominance of Apple devices in the US is substantially higher. Yes, it might be an issue in Europe and in other parts of the world, but the prevalence of people on Apple and on iOS, in the US, much higher. Meaning a much bigger opportunity for the company to use its dominant market share to limit competition, which is what the regulators will need to look at.

Patrick Moorhead: Yeah. I’m really going to be interested to see what Olivier spins up on this, in particular. Let’s move on to Qualcomm. Another chip stock that crushed it. They were up after hours, nearly 5.5% when they issued their second quarter earnings. It was the last earnings for CEO, Steve Mollenkopf who handed the torch to Cristiano Amon.

Daniel Newman: Absolutely. We had the opportunity to spend a little time with Steve ahead of that earnings call. It’s always been an honor to get insights, having Steve and Cristiano talking to us. The company is doing really, really well. It’s a tumultuous series of years. Speaking of Apple with its litigation, FTC regulation around the world, had its NXP deal killed by regulators and slow moving decision-makers. The company has not had the easiest set of years. But what it has had and what I said for quarter after quarter was, the tailwind of 5G is going to be important to the longevity and the momentum. And Qualcomm’s there. I admire Steve and what he helped the company get through. But, I’m also excited to see new leadership. Cristiano is a passionate, inspirational personality that I think is going to be really technology focused, hopefully, getting away from some of that legal and regulatory.

It won’t go away. But, just being a little bit more out there, talking about the technical. In terms of the earnings themselves, a $1.90 Versus $1.67, the earnings. The revenue came in at almost just under 8 billion, about 400 million. It’s funny when it says 7.93 versus 7.62, and you go, “That’s not that big of a beat.” Yeah, you’re right. It was only $300 million. I love how with multi-trillion dollar stimuluses, Pat, now we know stimuli. We no longer look at hundreds of millions as a big number. It’s a really big beat. Here’s the thing, Oat, that I really want people who are listening to this podcast to be thinking about with Qualcomm is. 5G handsets is a core part of the business and the momentum behind that 5G businesses. Year over year, we saw 53% growth in handset business.

That is the 5G way. You are seeing it. You’re seeing it happening. They haven’t revised their total handset number up from the 450 to 550 million 5G handsets yet. But, that number, in that revision, maybe could be coming, Pat. I think you might’ve even asked a question about that. Buts here’s the other part of what I thought was very interesting about Qualcomm.

2 billion plus dollars, over one third of their revenue, is not tied to handsets, on technologies business. There are a front end business against Skyworks and Qorvo. And Broadcom emerged the leader. Nearing a billion dollars a quarter. Up almost 40%. their automotive business hitting nearly a quarter billion dollars up 40%, as well. And then finally, 71% growth, Pat, in their IOT business, which is now a billion dollar business for the company. We think of handsets, we think of 5G. We might even think about licensing and intellectual property when we think about Qualcomm. What we don’t think about are all these adjacencies that are now generating a third of the technology’s revenue and growing about as fast as the handset business, meaning that within a few quarters that could be easily a $3 billion business, giving a lot of runway and a lot of trajectory for growth at Qualcomm.

Patrick Moorhead: Wow. There’s about a molecule of oxygen left in there. It was a great. No, it’s great analysis. And I want to echo. It was a real honor to, you and I both talked to Steve and Cristiano about the earnings. I thought that those two made an incredible pairing. Even more excited to see what happens next with Cristiano at the helm. I really think Cristiano’s legacy needs to be, what did Qualcomm do outside of wireless. It’s hard for me to separate RF handset and digital modems. Those are part of smart phones. You need a analog and a digital portion to make magic happen. I’m really interested to see, when it comes to AI, when it comes to IOT and automotive, where the company can go. I think we’re going to see a rate of acceleration at Qualcomm in terms of what happens and how it happens.

And I’m super excited to see where it goes because the engineers who work at Qualcomm are brilliant. The company is best at solving the hardest problems. Wireless, particularly when, I remember the naysayers saying, oh, 5G. It’s easy to have a separate digital and a separate analog function without working it. And Qualcomm’s like, “I think this is going to be really difficult here.” And that’s part of the magic behind their incredible analog business today, which like you said, is the biggest handset RF front-end business in the industry. Bigger than Skyworks. Bigger than Qorvo. And bigger than Broadcom. Strap your helmets on folks. Cristiano is in town. New sheriff in town. Let’s see what happens.

Daniel Newman: Absolutely, Pat. 54% year over year and 116% earnings growth. I didn’t say that earlier. Just reminding everyone. Pretty darn impressive. But, Kramer’s mad. Stock price should be up more.

Patrick Moorhead: Yeah, it should be. And speaking of a stock that should be up more. Let’s talk about Amazon. Two things I want to talk about here. We want to talk about earnings. We also want to talk about them getting ranked the top place where Americans want to work, by LinkedIn. Maybe I hit the word of work and you hit the earnings, Daniel. Why don’t you kick this off.

Daniel Newman: Sure thing, Pat. The numbers are just astounding. We’re talking 108 billion, not for the year, for the quarter. You’re talking about 15.79 in earnings versus just about nine expected. This is what I was talking about when we were at the top of the show, Pat. Was, it’s gotten to the point now where we’re not only beating, we’re destroying. This has happened across the board. We saw it with AMD. We saw it with Apple. We saw it with Amazon. And then everywhere else where it wasn’t destroyed, it was just a really, really significant beat. Amazon really is doing everything right. I’ve got an op-ed that should be out in the next couple of days. I’m really looking at this because the thing about when you’re growing this fast and you’ve gotten this big, we talk a lot about law of large numbers here on the show is, can it continue?

We had 44% growth. They did a 108 billion, 104 expected. A year ago, they only did 60 something, in this quarter. That’s the delta. By the way, that’s a big number, too, is where does that growth stop? What I’m really focusing on is where does invention and innovation and then support for doing the right things come into place. You’ll talk a little more about the doing the right things when I turn it over to you. But, let’s just talk about invention because people go, “Well, how can the company grow anymore?” The company can grow more because it continues to innovate and disrupt in every category that it decides to participate. You’ve got the 50 something percent growth in AWS. By the way, $54 billion run rate from their Cloud business and their Cloud business is small in terms of its revenue.

It’s been large in terms of its operating income. And it’s participated to the company’s ability to grow and invest. But, that investment seems to happen anywhere and everywhere. They’re growing in Europe. They’re growing worldwide. They’re growing significantly domestically. They’re expediting shipping. 2009 was the first time they did same day shipping. Now they’re doing same day on orders after 5:00 PM. They’re able to offer that included for Prime members. You’ve got scout. They’ve got drones driving around the streets, delivering stuff. They’re innovating and inventing consistently. Let’s look at other things. Amazon pharmacy. Now, they’re going to offer 80% discount on generic drugs delivered to your door in two days for no extra charge. They’re going to compete with the CVSs, they’re going to compete with the Walgreens, and they’re going to do it effectively.

You got Amazon Wardrobe. You want Stitch Fix? Nah, you don’t need Stitch Fix. You got Amazon. And then you start to add and diversify. By the way, devices, some of the most innovative devices through Ring and through Echo. They’re going in people’s homes. They’re getting better. They’re building chips that it actually derived higher levels of inference. People are now talking to devices in their home. Everybody’s got a smart doorbell. Well, not everybody. It feels like everybody. I’ll just leave it on one last thing. Studios. Everyone talks about Apple TV and everyone talks about Netflix. Amazon Studios had 10 Academy Award nominations and 12 Golden Globe nominations this year. They, legitimately, are innovating and inventing, diversifying and adding to every category. And Pat, by the way, I could go on and talk about a whole slew of things they’re doing on ESG and diversity and inclusion. But, I’m going to leave that for you because my darn molecule leaving behaviors have gotten so poor lately.

Patrick Moorhead: We’re all good. I suck the oxygen out of the room on some topics. You thank me back for that. One big award, that I think was a shocker to those people who don’t truly understand Amazon, was that, for the US, LinkedIn was voted the number one company where Americans want to work. No, that is not a typo. Out of LinkedIn’s 740 million members, the US folks said it was number one. The reason why I say that’s incredible, and you have to understand Amazon is, Amazon gets more heat than any other company I’m aware of for what it does. There’s memes on taxes. There’s memes on jobs. There’s memes on salaries and benefits. Amazon already is paying its workers a minimum wage of $15, which Bernie Sanders says should be the minimum wage. They’re providing healthcare benefits, as well.

And in a recent news story, Amazon employees at a specific warehouse voted down by 70 to 30%, the desire to unionize. I think, at some point, the meme starts to have to go back to Amazon is a very successful company. Let’s not punish them or think they’re bad because they make a lot of money. They do pay taxes and make investments based upon what is, essentially, thrust upon them. They do these. They play by the rules. But, I think the memes need to start changing to, Amazon helps a lot of people. They employed 450,000 more people than before the pandemic. Think about that 450,000 people. They’re way ahead of the Paris Accord by 10 years. And it’s not just them. They’re pulling other companies into it. I think the number is at a hundred, right now-

Daniel Newman: 105.

Patrick Moorhead: Some of the leaders in different areas like Proctor and Gamble.

Daniel Newman: Your Microsoft.

Patrick Moorhead: Yeah. They’re leading in so many areas. I think it’s just time to, everybody take a deep breath and look at their record. Yes, their founder is the richest man on the planet. That does not make them bad. Amazon employees, some of them are getting very rich. That doesn’t make them bad or a bad company. Call out bad behavior where it’s there. Denying Pgate. That was not handled correctly. I’ll call out Amazon on stuff that I don’t agree with myself. I don’t get passionate about this, at all. But, their own employees, LinkedIn, best place to work. I rest my case.

Daniel Newman: Yeah, absolutely, Pat. You hit a lot of it on the head. I know we’ve got to wrap this show up in just a few moments. I can go on and on. I’ll I’ll put my op-ed in the link as soon as I have it. You’ll see it. I’ve talked a lot about this. We’ve talked a lot about not punishing a company for being successful. But, like you said, great point, Pat. Punish them for the behavior. If they’re doing certain things bad, whether you’re a hundred billion dollar quarter company or a hundred thousand dollar quarter company, you should be called out for those types of things. Quick note. Just want to give a quick shout out of congratulations to our friends at Honeywell. This morning an announcement hit the wire, the company, after many, many years of being traded on the New York stock exchange is actually shifting and pivoting its ticker over to the NASDAQ.

This goes and coincides, Pat, with some you and I have talked a lot about, over the years. It’s changing its DNA to be more of a tech company. Many of the world’s most important tech and innovation companies are traded on the NASDAQ. This will not change its reputation instantaneously overnight. But what I would call it, is a strong sign of intent. Congratulations to Darious Adamczyk and Honeywell. Just a quick thing that happened as we were putting this podcast together. And at this point, I’m going to quiet my mouth and allow you to shut this show down.

Patrick Moorhead: Great ending, Daniel. Honeywell, leaders in quantum computing and the industrial IOT. They’ve got the OT and the IT. Imagine that. What can happen. I’d like to thank all of our viewers for hanging in there with us on our earnings palooza. We’re going to do this about every quarter and talk about stocks. But also, in a future episode, we’re going to talk about something Daniel and I have been working on that we’re very excited about. We had a very successful Six Five Summit last year with nearly 35 speakers. It’s a thought leadership summit. And guess what? We’re going to have one this year, too. We’re not going to talk about though. But we’re super excited and we are sold out, which I’m super pumped about. With that, if you like what you heard and listening to this on YouTube, press the Subscribe button. Let us know what you think on Twitter and LinkedIn. Daniel and I are very accessible. And we want to hear what you have to say. With that, I’m going to close this out. Have a great weekend. We love all of you. Take care.

 

 

Daniel Newman