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Tech Stonks and Earnings – The Six Five Webcast
by Daniel Newman | March 1, 2021

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

  1. Salesforce’s recent earnings report for the close of fiscal year ‘21
  2. NVIDIA’s record-breaking quarter that closed out FY ’21
  3. Twilio’s earnings report
  4. Pure Storage’s earnings report
  5. Dell Technologies’ record-breaking year in their latest earnings report
  6. HP earnings report and HyperX acquisition

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

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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:

Daniel Newman: Welcome to this week’s edition of the Six Five Podcast. I’m your host, Daniel Newman joined my always esteemed podcast partner in crime, Mr. Patrick Moorhead. Patrick, happy Friday morning to all of you live folks. And of course to you.

Patrick Moorhead: Daniel, how you doing my friend? It’s great to see you. It’s been a crazy week. We typically always end up doing these things on Friday, or at the least the last four or five. The good news is we’re doing it in the morning with energy, vitality. I think you and I were both comparing calendars and I think both of us had meetings every day in the teams. And by the way, I’m not complaining. Being busy is good. I like to say being an industry analyst is somewhat like being a plumber, right? We kind of get paid by the hour and that means you’re busy and people want to hear your insights. So I scored a win, but I’m looking forward to getting into the weekend.

Daniel Newman: Yeah, I feel that way too. I’m actually taking a trip, going to get on an airplane, got to put on that mask. I’m going to go watch my daughter play soccer outside. Don’t you worry, we’ll be outside. But there’s a little bit of indication of a very slow return to some normalcy. I’m glad to see the vaccine rolling out. Both of my parents now have been vaccinated. My sister is a teacher and she’s been vaccinated. When my turn comes, I’m only 19. I only look like I’m 40, but when my turn comes, it’s going to be time to do that because I am excited to see some normalcy, Pat. I’m excited to get back on an airplane, do these podcasts with you live, do some of our events live, and of course, I’ve also really enjoyed being here, being home, being able to do a podcast every Friday, but yeah, you’re right.

You know, 10, 15 meetings a day, 12, 14 hours, a lot of coverage, but hey, it’s a lot of fun. And by the way, this week, if you like tracking the markets which we do here on this show, through the lens of looking at the strategy, technology, and success of business, what you always like to call, Pat, the moment of truth, which is earning, this is a big week. So there’s kind of two waves every quarter. There’s the wave … for the companies that run on the calendar, like the Amazon, Google, Microsoft that happen all at the same time. Then there’s a second wave now. And that really happened in this past 10 days or so. And so we’ve got a whole bunch of earnings.

We’re going to call this show Tech, Stonks, and Earnings. And we’re going to do that because I think anybody that’s watched the GameStop thing, reared its head again. And it’s a lot of fun if you’re not in the market, it’s not so much fun to watch the volatility spike, but it’s been a bit of a crazy week. We’re seeing bond yields rise really fast, which is creating some volatility in the market as people are looking and wondering if interest rates are going to come up. So that’s something of consideration. You’ve got all the stonks driving market makers to move money out of good and into bad. And so I can’t stop saying stonks now. It’s like, I can’t stop.

Patrick Moorhead: Listen, I feel, I get that same feeling using the word stonks as I did when I’m 16 years old sneaking my parents’ alcohol. I feel like I’m getting away with something. Stonk.

Daniel Newman: Yeah. Well, we’re talking about stonks and what’s going on in the market, but there’s a lot. So we’ve got a good show. Over the last about seven business days, we’ve seen Salesforce, Nvidia, Twilio, Pure Storage, Dell, and HP all report, several of those just in the last 24 hours. So it’s going to be a pretty hot live post earnings take here. Now, since this is what we’re covering, we’re going to cover the strategy, got to do the disclaimer thing, Pat.

This show, for everybody out there that’s listening, is for information and entertainment purposes only. So while we will be talking about publicly traded companies, please do not take anything we are saying as investment advice, as Pat always says, maybe do the opposite. I will just say, have fun entertain, listen. We follow these companies very closely. We look at them through a lot of the product services, execution, and strategy lenses. The price of the stock is really oftentimes at least in some ways correlated and causated to those things. Not always.

Patrick Moorhead: Not always.

Daniel Newman: Stonks.

Patrick Moorhead: SPACs.

Daniel Newman: A lot of times, SPACs, baby. We should do a whole SPAC show.

Patrick Moorhead: No, we should. We should spackle it up. I mean the amount of SPACs out there that have like zero revenue, zero profits, and worth a billion dollars kind of feels a little bit like 2000.

Daniel Newman: FMAC, Pat. Futurum Moor Acquisition Corporation.

Patrick Moorhead: There we go.

Daniel Newman: All right, everybody out there you heard it.

Patrick Moorhead: Let’s get in it.

Daniel Newman: Let’s dive in, send the money.

Patrick Moorhead: All right, put your seatbelts on folks. We’re going in.

Daniel Newman: Put your seatbelts on. We’re going to move fast. So let’s start with Salesforce. Is that cool? The CRM ticker. So Salesforce came in yesterday, finished not only their fourth quarter, but also their year. And the company saw a dip that’s become a little bit of the trend in tech right now after reporting really solid earnings, fell 4% after hours. But just as a short, the company had a really strong beat on both top and bottom lines, dollar for earnings against 75 cents, 5.82 billion against 5.68, 20% growth for this quarter, 24% growth for the year.

Overall really good. When I talk about Salesforce, I say, this is really the bellwether for cloud and SAS. So if you’re wondering how is cloud and SAS doing? It’s really safe to look at Salesforce, although the diversification play has gotten bigger. So if you look at the company they actually share, they have a really nice deck that they’ve put out after earnings and they talk about their disaggregation of revenue, and that’s essentially where does the revenue come from.

So most people know CRM, know them from the Salesforce administration standpoint. Well, that’s no longer the biggest part of the company’s business. In fact, the biggest part of the company’s business now is their platform. So we’ve seen them move from pure SAS to PAS. And you and I have both at times challenged that because the company at its core was always pure SAS, pure software. We love software. And now it’s slowly migrating and creating that hybrid story, you got hyper force, they’re starting to say, “Hey, you can put Salesforce in your cloud.” You saw the acquisition of Tableau. That was a very prem based business intelligence and analytics stack that now is being integrated. MuleSoft, bringing the company’s AI capabilities forward. So that’s become the biggest part of the business, but essentially it breaks into four buckets, sales, service, platforms, and then their marketing cloud.

All of them grew. Sales grew slow, platform and marketing grew fast. And I’ll kind of leave my take on this, but platform’s growing because hybrid’s growing and as hybrid grows as the need for AI and connectivity to other software parts of the MarTech and the business productivity stack, you’re going to see more investment in platform. Marketing grew more than sales because with COVID and the shutdowns, of course, you had to see companies turning from more of a direct selling motion to more of a digital and marketing motion, omni-channel motion. And that’s where the marketing and commerce cloud really come into play.

One other observation that I thought was really interesting, Pat, was the company’s diversifying its global presence. Its growth was slowest in Americas and fastest abroad. So it saw 24% year over year in Europe and 27% in Asia. So still much smaller, only about a third of the revenue come out of global businesses. But the growth there is impressive saying Salesforce has gone from being kind of a company that was really Americas, North America, US, SAS, to really having that big global presence.

And then the last observation, Benioff set up a goal of something like $35 billion by 2024. Big, hairy, audacious goal for the company that’s just coming in in the 20s now. The categories they’re in, they estimate are of about 181 billion and addressable market between now and 2024. But the categories are only growing 11%. And my calculations say they’re going to need to continue this 20 plus percent growth rate across all their main segments in order to achieve that $35 billion goal in the next three years. So that’s going to be a really aggressive goal.

You’ve got companies, you’ve got Oracle, you’ve got Microsoft, you’ve got SAP, you’ve got some very strong players, and then of course Rising Stars in areas like CDP, Service Now all coming into this space, trying to compete for that same buck. So going to force a lot of aggression. I hogged that whole segment, Pat, but I’m sure you can at least round me out.

Patrick Moorhead: Yeah, if I can fill in some gaps. I find it just incredibly ironic that Salesforce, the company that founded Salesforce Automation, SAS, their sales part was only up 11%. And there’s two ways to look at that, right? One way is, hey, genius, expansion and successful expansion. The other thing is that their core business is, I wouldn’t say floundering, but dramatically slowing. I mean, that’s higher than VMware numbers, but then again, the multiple on a Salesforce versus a VMware is incredibly different. I am very interested to see in how they pull off the hybrid, because it’s one thing to run Salesforce in somebody else’s cloud. How about running all of their services in the private cloud? What if I’m a regulated industry? I mean, are they going to wait for 10 or 15 years? I see a lot of regulated industries being … really only picking hybrid type of offerings that be run in the big public cloud, but also on their own private cloud on-prem so that’s going to be something that I’m going to be watching.

The final thing is Slack. How is this going to do in a world where Microsoft is dominating the big time enterprises? And along with that, will we see Salesforce adopt some sort of video solution as opposed to partnering with somebody like Zoom like they do today?

Daniel Newman: That’s a great way to wrap it up. It was amazing. In my research note, I did touch on the Slack thing. The update is effectively close somewhere around the middle of the year, Pat. That’s a big one. And talk about something where 27 billion was spent. We’ve been asking the question from day one, how is the company going to return that to shareholders through inorganic and organic growth as the Slack business needs to even push to a billion in revenue? But I do see the innovation that’s going on there. I do expect Mark Benioff will come up with some very creative ways to make that Slack acquisition pay off.

All right, Pat, this is one that you and I both cover very closely, but because I led on the first one, I would love to give you the first stab at NVIDIA. Another big quarter for that company.

Patrick Moorhead: Yeah, this is great. So NVIDIA’s fourth quarter, fiscal ’21 was really a copy and paste from their prior quarter. The messages were exactly the same. They crushed it with gaming and they crushed it with data center. The gaming part is interesting because there was a lot of talk about a lot of that gaming revenue. A lot of it being Ethereum crypto miners, and the company came out and I think they said between 100 and 300 million, was it Daniel, they attributed, but they also said it’s not easy to track. Now, if you remember back in 2018, NVIDIA got into a crypto bubble. It was Bitcoin at the time, by the way, for what it’s worth, Bitcoin miners and move to ACX and off of GPUs. So I think everybody’s wondering, okay, is that number accurate or is it not? Because there is a lot of reason to believe that gaming, PC gaming is driving it.

Not only is gaming, PC gaming, as a genre growing. And we saw some killer titles that were announced last quarter, but also COVID has kept us in our homes like a bunch of gnomes. There was a question about, hey, how does this play out in the future? On the data center side, I would say the net add in the conversation, which I thought was a positive was, this was in the commentary, NVIDIA was seeing success in the enterprise. They called it vertical enterprise. And the reason I like that is most of NVIDIA’s success so far in AI has been in the cloud data center, the public cloud data center, and for them to start seeing some pull in there and they talked about going through their partners, right? Folks like Dell Tech and HPE and Lenovo, for that to show up in the enterprise is a really good move. Because where is 80% of the data? It’s on-prem typically serviced by these folks.

The final comment, we didn’t see a year on year increase in auto, as I predicted last quarter. We did see a sequential increase. And by the way, my prediction wasn’t a look at last year and then look at the look at the next quarter, it was based on some G2 that I have inside the auto industry saying that NVIDIA’s self-driving solutions are starting to come online and that’s not just robo taxis, like on level five, it’s eight S plus or level two plus, that’s starting to come online. So, Daniel, those were my big takeaways.

Daniel Newman: It was a big quarter. I had the chance to dig in on a couple of levels. I’ll touch quickly because you did cover a lot of them. Pat, first of all, a great result. Second of all, I think a lot of people are asking, is the trajectory high going forward for the company? In my op-ed in MarketWatch effectively said, yes, I think the trajectory is high for the company. I think gaming still has runway. Of course the constraints with production are going to be in question, can the company make enough? What I took away from the earnings was the more that can be made, the more that can be sold. The CNP products can at least focus on diving away from that small segment of a theory of miners that are taking GPUs and now they’ll have something to use that won’t take away from that core market.

From an AI standpoint, Tampere’s been the story, has a very strong resolve result. It’s growing, the business is growing. Mellanox is in there. So those triple digit growth numbers need to remember there is a inorganic number that was laid into those year over year, but the business, even without them, you’re only talking about maybe about 10% of the revenue in the fourth quarter and, Pat, yeah. Your comments on auto are interesting because I actually had that exact a note about bets outside. If they’re going to grow and become a quote unquote trillion dollar market cap company, they’re going to have to grow other than just data center and gaming. And that’s going to be tied to one, AV, but China has been great. So you’ve got Lee Auto X paying Neo. All of them saw a doubling of revenue in 2020, and they’re hit about 100,000 vehicles all based upon NVIDIA, multi-billion dollar pipeline for their AI cockpit and self-driving.

Then on top of that, Mercedes-Benz has been a big player. That MBUX platform that we heard about at CES, Pat, was a really big move for the company. And now it’s been installed over 1.8 million vehicles. So automotive kind of slowed after the fall with Tesla, but that’s a wrap on NVIDIA. Big, big, big quarter for the company. I’m sure we’ll be talking a lot more about NVIDIA throughout the year.

Initiating coverage on some new company here, Pat. So, let’s talk about Twilio. I started following Twilio more closely working with Segment, a customer data platform that was acquired for $3.2 billion by Twilio last year. But a lot of people maybe do or don’t know Twilio, but Twilio is one of the biggest, in terms of being able to help companies reach customers in the channels of their choice. So when you get messages, texts, when you get SMSs, WhatsApp things through Facebook, from companies that are putting that right channel, right message, right time, Twilio is oftentimes the power behind that.

And that company had a huge year over year growth. It saw its fourth quarter up 65% to 548 million year over year. It saw huge total revenue for the year, 55% growth at $1.76 billion, strong guidance, which is something, I don’t know about you Pat, but I’ve been watching for, who are the companies guiding and who are the companies not guiding? It doesn’t mean they’re bad or good, but companies guiding oftentimes seem to have a better handle on the business going forward and the outcomes that are ahead. What I noted on the company was it really focused in its call this quarter on the fact that it’s focusing on bigger wins, bigger customers, and bigger insights through its technology. It’s 93% growth in seven figure deals. It’s winning big deals to be a key partner to companies like JP Morgan and H&R Block, which had both turned to Twilio. It’s tax time, baby, who can’t think about H&R Block? That Segment…

Patrick Moorhead: I try to forget that, Daniel.

Daniel Newman: … was a macro trend that I saw going into Segment. Customer data platforms are huge. And with their ability to reach customers in the right channel at the right time, getting the rest of that omni-channel, being able to use more data successfully was a really interesting move and it enables them to start competing with the likes of Microsoft, SAP, Oracle, Salesforce that we just talked about. So overall this company is a really interesting kind of tech phenomenon, right at the right moment. The COVID-19 shutdown, the rapid digital transformation all really paved a clear path for Twilio and its platform to help people deliver the right messaging to their customers in the cloud.

And so everything in the earnings were pretty positive. 221,000 active customers, up almost 50,000, 42,000 new customers in the last year. I would love to add 42,000 new customers this year. That would be more than 13 meetings a day. So good results for Twilio. Interesting company to follow we’ll be tracking them more regularly here on the Six Five Podcast and throughout my earnings notes coverage, and Pat, I’m going to be talking about this so much because I think it’s pretty cool.

Patrick Moorhead: Yeah, it is. I always wondered who was sending me all those texts.

Daniel Newman: Oh, by the way, politics were a big play for them, just in case you didn’t know. Twilio behind all those messages you were getting, I may make you like them more or like them less, but it is technology like there’s that enabled politicians around the elections to get messages to constituents.

Patrick Moorhead: I love it.

Daniel Newman: Let’s start forward. Pure Storage. Another really interesting story. I’ll let you take that one.

Patrick Moorhead: Yeah, so Pure had had a great quarter. You may have seen after hours, they were up 8%. If you don’t know what Pure Storage does, they used to be a startup that came out. They were all Flash, but they’re really known for their experience and their performance and they’ve expanded into the hybrid cloud. They’ve expanded into Kubernetes, not Kubernetes on the application side, but Kubernetes where you would run storage and data related applications. So huge growth in subscription services, which every infrastructure company wants to be in. 32% growth consecutive quarter record sales for Flash Blade and Flash Array C. And they’re still all about customer acquisition. They are a startup, but they’re not. I’ve really appreciate the crawl chart that they do every quarter on new customers. Because when you’re a startup and you’re in a space that everybody’s not in, you want to show that you’re adding new customers and I’ve come to appreciate that a lot.

Even though they’re primarily an on-prem infrastructure company, they added new customers. And let me just tell you how hard that is. I heard this on every infrastructures call, which was, it’s a lot easier being an incumbent out there during COVID because people didn’t want to switch, but as you can see with new customers there, Pure Storage got people to switch, which I think is pretty darn impressive.

And I would say the final key message in my takeaway was their longterm strategy is looking solid. It’s working. And I would say as a service, that the feedback I’m getting from all the CIOs that I meet with, is that they really like the differentiation of their as a service offering. It looks exactly like if you were signing up for AWS S3, but obviously it’s on-prem and it’s as a service with all of these different options, because a lot of the classic infrastructure companies with their as a service offerings are very limited. Listen, I get that. It’s less expensive and it’s easier to offer a limited array, but that’s not what customers want; that they want choice. So anyways, Wall Street rewarded them for their growth. And I thought it was really good.

Daniel Newman: Yeah, it was a very sound result, Pat. Company, I’ve talked about this in the past really has leaned into experience. And that’s something that you can’t diminish the importance of right now being experienced-led. And right now in marketing and driving new customer acquisitions harder, you want to keep attrition low and you want to make every customer feel like they’ve made the right choice.

So, all right, let’s gain a little time back on those last two. We tend to do that, Pat. I jokingly sent you something let’s do on the Seven Six tomorrow. We add topics and we add time, but you know what, we really do appreciate everybody out there that’s spending time with us today tuning in.

Let’s jump to Dell. So Dell Technologies, my headline on my research note was Dell Delivers Record Year Despite COVID-19 Pandemic. So if you had told the market that, companies like Dell are going to deliver record revenue in their 2020 campaign after you heard what’s happening with COVID, with China, with supply chains, you probably would’ve shook your head. But the one thing none of us got right, which is part of the reason we have this constraint with production right now, is that demand was going to go through the roof for PCs.

As that diversified business, both infrastructure and client, and it had a record year, and it’s a PC business, Pat, shipped over, the number is over 50 million, right? 50 million point four PCs this year. And the company saw some staggering growth, 17% growth in that category this past quarter. So really strong results, 50.3, sorry, the calendar. So, the company really breaks its business into two big groups. It’s got the client group and it’s got the infrastructure group. Let’s make no bones about it. The infrastructure group was flat year over year for this quarter, storage down a couple points, network servers up a couple of points, but overall it was only flat.

And by the way, only flat was, I call this a win. Several quarters of being able, not being able to meet prior year. But this was the part of the business that got hit really hard. You’re not going on prem and deploying new infrastructure. Things were moving to the cloud. That’s why the cloud businesses were exploding, on prem businesses were struggling a little bit more, but overall, I think this was a really good result for their ISG business.

In the client business, though 50.3 million, as I said, commercial, huge commercial success. Dell saw a 16% increase in that space, but really had a big year overall on just their commercial business. And of course, like you said, the most recent data shows something like 17% growth in the PC space. VMware slowed a little, still grew 6% after I think three 10% growth quarters and finished out the year at 9%. Question marks, Pat, that I have around Dell going forward, despite record revenue, tremendous operating prowess, record operating income, showed its ability to tighten its belt, run the business effectively, drive more dollars, something like eight bucks a share of earnings. So go Michael Dell, you should be very proud of yourself and your company. Keynote speaker Six Five Summit last year, Michael, good job. Thank you.

Patrick Moorhead: Thank you.

Daniel Newman: VMware, the growth stalling a little bit, but the bigger question mark that I have is Gelsinger’s departure, which happened this last quarter. He headed over to Intel, look forward to talking to him at some point in the near future, but also, what’s going to happen with that 13 D. And so that’s been lingering out there, Pat, that was a filing that the company was considering to spin off the asset of VMware for big money as it was being undervalued somewhat by the market. So those are the kinds of things on my mind, but overall really good year. What do you think?

Patrick Moorhead: Yeah, a couple things I’ll fill in the gap on. First off, they continue to pay down an incredible amount of debt. And if you remember when they went public and even when they bought EMC, that was the big question mark. I just want to point out their PC group was up 17%. That is not a typo. Okay. It’s funny. I mean, that’s absurd. I mean, it’s less absurd when you look at the market went up 25%, but absurd when you think just how much that is. And it was nice to see this quarter that consumer growth kicked in, whereas last quarter it was primarily a commercial story. So, and the final thing is storage was off, and it was funny, I had some NetApp fans commenting to me on Twitter, basically saying how much better NetApp did.

The thing to understand about Dell in storage is Dell storage operates in every sub-segment. That includes mainframes, which by the way, is one of the most profitable areas out there. If you didn’t pay attention to IBM earnings, you should. Mainframes Z has been down two consecutive quarters big time. I think it was down 19%. That doesn’t mean people are not buying mainframes anymore. It’s just the cyclical nature of mainframes and where they are in their life cycle with Z 15.

You didn’t say you were concerned with, Daniel, on VMware, but I think it is something that investors want to know. I mean, the CEO’s gone and there was a search that’s out there and they want to know who it is. Growth as a percent went down. I feel like as a software and cloud play, VMware should be double-digit. It should be at least 10% easy for me to say as a pundit, but I am a pundit. And I think that’s what it takes to be looked at as a growth stock, you have to be double digits to be even in the realm of a growth stock. And my final comment is if they choose anybody other than Sanjay Poonen who’s President and COO there, I will be completely shocked and I’ll leave it at that.

Daniel Newman: Yeah, that would be a prime choice. Seems like it would be the right choice, continuity going. But I think for the shareholders, the company, the board, knowing that this 13 D is out there, the CEO they’re going to want to have lead, those things could all be playing a factor into whom will be chosen for that role. Speaking of, to lead, you and I both have had the chance to hear from HP’s leader yesterday, earnings fell to the market a little early, not quite sure what happened, but it was a good result. Let’s talk about it.

Patrick Moorhead: Yeah. So overall, both divisions printing and personal systems for HP did show growth around 7% in each of the businesses. By the way, I was trying to figure out this page and there’s another page in the deck, it said 6.4% for personal systems. Then I looked at another page and it was 7%. Actually it was reversed where printing was seven. I’m trying to get my head around that. I think they were changing constant currency, but anyways, around 7% growth for both. I have to tell you, I am shocked at how well printing did.

Literally, we all know it, right? We both worked at big businesses, larger businesses than we have here. And you go in and what do you do when you’re giving a presentation to the executives? You print out a high quality, color copies for everybody and you distribute them.

Heck, at Amazon, they still do that. When they start a meeting is they print out and it’s not a PowerPoint presentation in there, it’s more of a word doc to read before the meeting starts. And anyways, the fact that personal systems saw growth in the time of COVID, it amazes me. And I think it’s a testament to their print on demand for consumer called Instant Ink, where they have 9 million people signed up. And I think that’s a big accomplishment. On the personal system side, I’ll admit, with 25% market growth, I was expecting higher growth. And to HP’s credit, they did acknowledge it in the call that they could have done better. They should have done better. And their forecast exemplified that, it put their money where their mouth is, which I think is why we saw the stock go up after hours.

Daniel Newman: Yeah, that was a change of pace in tech where people seem to be selling on the news. I think HP wasn’t necessarily one of those massive run-up stocks where people are waiting for a little bit more specific data and the data came out mostly positive. Pat, you did call attention to something that deserves attention. 7% is good, but when you’re hearing 20 plus percent growth from multiple firms measuring, seven doesn’t sound as good anymore.

Patrick Moorhead: Lenovo was 27% and Dell, we just talked about was 17%.

Daniel Newman: And Apple was almost 50. And I know-

Patrick Moorhead: On the unit side, I didn’t do an analysis on their revenue, but, and by the way, what I’m…

Daniel Newman: I’m just talking about the…

Patrick Moorhead: … units.

Daniel Newman: The number of overall, but it was an interesting quarter. I will say their quarters don’t overlap exactly to calendar. So that can also have an indication because you are dealing with part of the first quarter and part of that last quarter, all in a single number. HP continues to do well, though. I feel like Enrique is leading a good sound company. The name, the premium on the name, is continuing to develop. Was very impressed with the magic ink and the recurring business. That’s an old, sort of unexciting business that the company is turning into a high recurring revenue stream. So I’m definitely encouraged by what’s going on there. It seems to be building stability for the company going forward, Pat. Wow. What a run, man. I mean six big earnings all in the last seven, eight days. You and I have been just running through it like a wrecking crew. And by the way-

Patrick Moorhead: I got to make one more, if you don’t mind, Daniel, before we close, I just want to talk really quickly about an act talking of growth. HP acquired a company called HyperX. If you’re not a gamer, you’ve never heard of HyperX, but they are a leading provider of gaming peripherals, particularly in Asia where HP’s Omen brand is strong. I like this acquisition for multiple reasons. First of all, PC gaming is a growing space. We talked about it when we talked about Nvidia. The other thing is that the degree of success in the PC market, a lot of the time increasingly is about the experience and the experiences, the hardware, the software, the services, and the accessories. And this is a gaming accessory. So I like it.

Third point really quickly. Typically accessory margins are three to five X on a percentage basis, the margins of the PC itself. So I got nitpicked on Twitter, on they could have acquired, they should have acquired somebody else, but I like this because it’s digestible. It’s more of a tuck-in than let’s say buying a Xerox. So I like it. Good job, HP. I had the chance to talk to Alex Cho the night before it went public. And we had a very good conversation. Any intelligently … Alex is smart. We had him on the Six Five as well. That’s not why he’s smart. He’s a smart guy, but he talked about culture. Every time I talk to him, he talks about culture and that’s what it takes long-term to pull off an acquisition like this is the right way to hit culture.

Daniel Newman: Yeah, absolutely, Pat. Always enjoy the conversations with Alex. Great guy. Had him on multiple times, quite a leader. First guy that I heard say the PC is essential.

Patrick Moorhead: That’s it.

Daniel Newman: Nailed it. And clearly if 2020 proved nothing else besides human resiliency, it proved that. All right, we got to wrap this up, Pat. It was a stonk show today and the stonks are stinking right now. Market continues to be in flux. I’m glad for all those GameStop people making some money. Meanwhile, it is sending the market into all kinds of chaos. It’s not just the yield it’s the stonks. Ice cream cones, weird stories coming out of Elon Musk’s Twitter handle. Just so much weirdness going on, Pat, but these companies, these are companies doing real business, real stuff, driving real revenue. And in the long run, feel really good about where a lot of these companies are going. It was a really another positive earnings wave.

Patrick Moorhead: Right.

Daniel Newman: Really not one of these companies had a bad quarter, all are showing trajectory up. We’ve got some indicators of reopening, some positivity out there in the market that we will be getting back to a more normal, not normal, more normal. I’m very careful with my words there, but you, the viewer, we appreciate. We want to thank you all for taking the time to tune in to the Six Five Podcasts. We love our audience, our community. We love those that follow us live. We love those on LinkedIn live. We love those that watch us later, listen to us on Apple and Spotify. Hit that subscribe button if you’re listening for the first time. If you’re over on YouTube, subscribe to us there. And we appreciate that as well. For this show, for this episode, for Patrick Moorhead, for Daniel Newman, for Moor Insights for Futurum Research, we got to say goodbye. Thank you very much.

 

Daniel Newman