Apple had a huge quarter, but revenue growth is slowing

All eyes are on Apple today, after a tumultuous series of earnings reports dropped this week. Google parent company Alphabet missed revenue expectations, while Meta (formerly Facebook) recorded a higher profit than expected this quarter. Apple just released its results and the company has performed respectably in its second quarter of the fiscal year 2022. This was its best March quarter yet, with revenues of $97.3 billion — a 9 percent jump from the same period last year. On today’s earnings call, CEO Tim Cook said the results were “better than we anticipated.” That said, it’s still a drop from its results last quarter, where it broke all-time records with revenues of $123.9 billion. 

Apple also hit a new all-time high on its revenue from Services, which includes things like subscriptions to TV+, Music and Fitness+. With its strong showing on the awards circuit recently, it’s hardly a surprise that TV+ is drawing in subscribers. Apple doesn’t break down how much it makes specifically from each individual service, so it’s hard to say just how much impact shows like Coda or Ted Lasso have had. Notably, Coda‘s winning of Best Picture at the Academy Awards makes Apple TV the first streaming service to win in that category.

The rest of the company’s products continued to do well too, with revenues from Mac, iPhone and “Wearables, Home and Accessories” all having increased year over year. On the call, Cook highlighted the new Mac Studio and Studio Display that were launched in March, as well as the iPhone SE and the M1-powered iPad Air. CFO Luca Maestri also said on the earnings call that the last seven quarters have been “the best seven quarters ever for Mac.” Interestingly, the one segment that faltered was iPad, raking in about $7.6 billion compared to around $7.8 billion the same time last year. That type of up-and-down performance is pretty typical for iPads, though. 

The wearables category was the most eye-catching, with Apple making $19.8 billion this quarter from sales of things like AirPods and watches, compared to $16.9 billion this time last year. That’s more than it made from Macs, which came in at $10.4 billion this quarter (up from $9.1 billion last year). Maestri said on the call that “our wearables business has doubled in three years and is nearly the size of a Fortune 100 business.” If you’re keeping track, that means the Services category made Apple almost twice as much money as Macs, which is the next closest category (aside from iPhones, which came in at about $50.5 billion).

Apple Studio Display
Devindra Hardawar/Engadget

Maestri attributed some of the Services earnings to a few things. The company’s “install base has continued to grow, reaching an all-time high across each geographic segment,” he said. Paid subscriptions also increased, with more than 825 million paying subscribers across the services on Apple now. Of that number, 165 million signed up in the last 12 months, Maestri added later in the call.

Global supply constraints were a big point of focus on the question-and-answer portion of the call, and when asked about the long lead time on Mac products, Cook cited COVID-related disruptions in China and the ongoing silicon shortage as contributing to the issue. “We’re not really forecasting when we can be out of the silicon shortage,” he said, adding “I think the COVID piece of it — I hope it is a transitory kind of issue and so I would hope that it would get better over time.”

Activision Blizzard shareholders approve Microsoft’s $68.7 billion takeover bid

Activision Blizzard’s shareholders have overwhelmingly voted in favor of a proposed $68.7 billion takeover by Microsoft. More than 98 percent of the shares that voted at a special meeting held on Thursday approved of the merger.

Though the company called the vote non-binding and advisory, the deal could not have moved forward without the majority of shareholders giving it the green light. The board of directors unanimously agreed it was in the best interest of Activision Blizzard and its shareholders, and recommended they vote in favor.

The planned merger is not finalized and it could still collapse. The Federal Trade Commission is reviewing the deal and is expected to closely scrutinize the details. Under chair Lina Khan, the FTC has put the kibosh on NVIDIA’s attempt to buy ARM and revived an antitrust case against Meta over its purchases of Instagram and WhatsApp.

Microsoft and Activision Blizzard will also need regulatory approval from the UK, the European Union, China and some other jurisdictions, according to an SEC filing. The companies expect the deal to close by June 2023.

There are other considerations that may impact the planned Activision Blizzard-Microsoft merger beyond antitrust concerns. The embattled game publisher has been the subject of lawsuits and accusations alleging workplace harassment and discrimination. Meanwhile, some quality assurance workers at Activision studio Raven Software are holding a union election over the next few weeks.

Samsung reports steep rise in profit for the first quarter of 2022

Samsung has reported a massive rise in operating profit for the first three months of 2022, thanks in part to the robust demand for its memory chips and the strong sales of its new Galaxy flagship devices. The Korean tech giant has posted an operating profit of KRW 14.12 trillion ($11.12 billion), which is 51 percent higher than the same period last year, and a record consolidated revenue of KRW 77.78 trillion ($61.2 billion). 

As usual, Samsung’s memory division was a standout performer, exceeding market forecasts because memory prices didn’t drop as much as analysts had expected. It posted a consolidated revenue of KRW 26.87 trillion ($21.14 billion), and while it saw a slight decline in profit due to incentives and seasonality, demand for PC and server chips remained solid. The company’s foundry business also contributed to the division’s performance by achieving its highest ever first quarter sales. Samsung is optimistic for the division’s prospects going forward, but it also expects component shortages to persist through the second half of the year and will constantly monitor the situation. 

While overall demand for mobile was down due to seasonality and “geopolitical uncertainties,” Samsung posted higher profit (KRW 3.82 trillion or $3 billion) and revenue (KRW 32.37 trillion or $25.5 billion) for the division this quarter compared to the last. The strong sales of its new flagship phones, particularly the Galaxy S22 Ultra, as well as of its mass market 5G phones contributed to both profit and revenue growth. Despite the allegations that a preinstalled app on S22 phones is throttling the performance of several applications, the company previously said that demand for the flagship is 20 percent higher than of its predecessor’s. Samsung expects component shortages for mobile to continue, as well, but it also expects the availability of component supplies for the S22 to improve. That’s why it plans to focus on maintaining strong sales for its flagships in the next quarter.

The tech giant reports a rise in mobile display earnings due to solid demand for premium products, as well. For larger displays, it says its QD monitors were well-received. It debuted its QD-OLED technology, which differs from standard OLED in that it only uses blue organic light-emitting diodes for a brighter output, at CES earlier this year. Samsung’s TV business lagged behind its other divisions, though, and saw a decline in demand following strong sales in the end of 2021 and the Russian invasion of Ukraine. In early March, Samsung halted its product shipments to Russia, where it has a TV plant and where it’s known as the top smartphone brand. 

Robinhood lays off nine percent of its full-time employees

Robinhood is letting around nine percent of its full-time employees go, company CEO Vlad Tenev has announced. In a blog post, Tenev said the company grew rapidly throughout 2020 and in the first half of 2021, thanks to several factors that include COVID-19 lockdowns. Robinhood’s revenue grew from $278 million in 2019 to over $1.8 billion in 2021, and it hired so many new employees to “meet customer and market demands” that its headcount grew from 700 to nearly 3,800.

Tenev explained that the rapid growth in headcount led to “some duplicate roles and job functions” and the the company decided that reducing its workforce is the right move to improve efficiency. “We will retain and continue to hire exceptional talent in key roles and provide additional learning and career growth opportunities for our employees,” he said. 

The CEO’s announcement comes just as the company’s stock hit its lowest closing price ($10) since it went public. As TechCrunch reports, it also comes just before Robinhood announces its first quarter results on April 28th and could be a measure meant to preempt investor disfavor in case its results fall short. 

Robinhood is known for pioneering commission-free stock trades and, as Tenev said, skyrocketed in popularity in the early days of the COVID-19 pandemic. However, its practices had previously drawn criticism, as well. In late 2020, the Securities and Exchange Commission fined the company $65 million for “misleading customers about revenue sources and failing to satisfy duty of best execution.” It was also hit with a class action lawsuit after it restricted trading on GameStop and other “meme stocks.” And in late 2021, the company was targeted by a cyberattack that exposed the data of as many as 7 million users.

Ads are coming to YouTube Shorts

With YouTube’s Shorts gathering significant momentum over the past year, Google is now experimenting with ads on the platform, Bloomberg reported. At first, you’re likely to see app-install ads and other promotions, according to Google. “While it’s still early days, we’re encouraged by initial advertiser feedback and results,” said Google’s chief business officer Philipp Schindler on an investors call. 

Shorts launched in September 2020 to counter TikTok offering 15-second videos shot on mobile phones, and expanded to the US in March 2021. The platform now averages over 30 billion daily views, up more than four times over last year. “As we’ve always done with products, we focus on building a great user experience first, and we’ll work to build monetization over time,” said Alphabet and Google CEO Sundar Pichai.

YouTube as a whole missed expectations by a good margin, posting $6.87 billion in sales compared to the $7.48 billion investors were expecting, according to Variety. Parent Alphabet also fell a bit short of targets with $68.01 billion in revenue, but that’s still up 8 percent over the same quarter last year.

Along with YouTube shorts, a bright spot was the YouTube TV cord-cutting subscription service that “continues to deliver substantial revenue growth,” the company said. Pichai also revealed that viewers watch more than 700 million hours of YouTube content per day on connected TVs. He added that YouTube will introduce new smartphone features for connected TVs this year that will make it easier for users to comment and share content. 

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