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"Performance was strong during the first two months of the quarter, but then in March we experienced a significant slowdown in ad revenues. We are sharpening ou

"Performance was strong during the first two months of the quarter, but then in March we experienced a significant slowdown in ad revenues. We are sharpening our focus on executing more efficiently, while continuing to invest in our long-term opportunities."

tenpies 7y ago
There is a parallel between many of these "tech" companies and the oil producers: both are producing a surplus when there is really not much demand for what they are producing. Google/Facebook can have all the MAU and views in the world, but if there is no one interested in buying ad space, then all that attention is effectively worthless. In recessions, one of the first things to go is ad spend.
- mav3rick 7y ago
  Same goes for iPhones, Airpods
  - scarface74 7y ago
    Apple introduced the iPhone in 2007 and saw growth unabated during the recession. People aren’t going to do without phones and at least in the US where all of the major carriers offer 0% interest payment plans. Over the course of two years, the monthly price of an iPhone isn’t that much more than a cheap Android phone. All most people care about is the monthly cost. Also, Apple unlike any other phone manufacturer has a direct relationship with the customer and has its own payment plans. Finally, while Apple’s revenue had start back growing pre-Covid, services has been growing like crazy. Even if people keep their iPhones longer, Apple is still making money off of them - unlike any other phone carrier. Apple is much better diversified than Google.
    - mav3rick 7y ago
      Market saturation and supply chain constraints weren't the same. No one is going to drop a 1000 USD on a phone right now with many businesses outright closed
      - scarface74 7y ago
        If only Apple had the foresight to release a new $399 phone so people wouldn’t have to spend $1000....
        mav3rick 7y ago
        Yes people go to Apple for the mid range phone. The entire brand is based on perceived or actual premium. The SE doesn't get you that. Your snark isn't going to change their numbers either. Also btw the argument applied to spending on luxuries. No one is going to upgrade on phones in this atmosphere.
        scarface74 7y ago
        The original SE was more in demand than Apple expected. https://www.fool.com/investing/general/2016/04/27/apple-inc-facing-iphone-se-shortage.aspx https://www.fool.com/investing/general/2016/04/27/apple-inc-... Do you think people who prefer an iPhone are going to buy an Android phone or buy a cheaper iPhone? Also, Apple sells the iPhone XR and iPhone 11 for less than $1000.
        three_seagrass 7y ago
        Which is a worthless statement since Apple neither released original projections or existing sales. A signal like running out of inventory would confirm this but that is not the case.
        scarface74 7y ago
        So you think Apple just decided to release a new iPhone SE even if it didn’t know the market? Why would Apple - led by the supply chain master himself - admit during earnings that they miscalculated demand leading to lower sales if they were merely trying to spin a positive narrative? Why would it be a positive narrative that people wanted to spend less money and not more?
fg6hr 7y ago
My interpretation of this message is that Google spends $20 billions/quarter and as the ad revenue has dried up, Google will have to spend its $100 billions of savings or consider other options. As far as employees are concerned, $6 billions goes to engineers, $4 to sales & marketing, $2 to administration.

tenpies 7y ago

There is a parallel between many of these "tech" companies and the oil producers: both are producing a surplus when there is really not much demand for what they are producing. Google/Facebook can have all the MAU and views in the world, but if there is no one interested in buying ad space, then all that attention is effectively worthless. In recessions, one of the first things to go is ad spend.

mav3rick 7y ago
Same goes for iPhones, Airpods
- scarface74 7y ago
  Apple introduced the iPhone in 2007 and saw growth unabated during the recession. People aren’t going to do without phones and at least in the US where all of the major carriers offer 0% interest payment plans. Over the course of two years, the monthly price of an iPhone isn’t that much more than a cheap Android phone. All most people care about is the monthly cost. Also, Apple unlike any other phone manufacturer has a direct relationship with the customer and has its own payment plans. Finally, while Apple’s revenue had start back growing pre-Covid, services has been growing like crazy. Even if people keep their iPhones longer, Apple is still making money off of them - unlike any other phone carrier. Apple is much better diversified than Google.
  - mav3rick 7y ago
    Market saturation and supply chain constraints weren't the same. No one is going to drop a 1000 USD on a phone right now with many businesses outright closed
    - scarface74 7y ago
      If only Apple had the foresight to release a new $399 phone so people wouldn’t have to spend $1000....
      - mav3rick 7y ago
        Yes people go to Apple for the mid range phone. The entire brand is based on perceived or actual premium. The SE doesn't get you that. Your snark isn't going to change their numbers either. Also btw the argument applied to spending on luxuries. No one is going to upgrade on phones in this atmosphere.
        scarface74 7y ago
        The original SE was more in demand than Apple expected. https://www.fool.com/investing/general/2016/04/27/apple-inc-facing-iphone-se-shortage.aspx https://www.fool.com/investing/general/2016/04/27/apple-inc-... Do you think people who prefer an iPhone are going to buy an Android phone or buy a cheaper iPhone? Also, Apple sells the iPhone XR and iPhone 11 for less than $1000.
        three_seagrass 7y ago
        Which is a worthless statement since Apple neither released original projections or existing sales. A signal like running out of inventory would confirm this but that is not the case.
        scarface74 7y ago
        So you think Apple just decided to release a new iPhone SE even if it didn’t know the market? Why would Apple - led by the supply chain master himself - admit during earnings that they miscalculated demand leading to lower sales if they were merely trying to spin a positive narrative? Why would it be a positive narrative that people wanted to spend less money and not more?

fg6hr 7y ago

My interpretation of this message is that Google spends $20 billions/quarter and as the ad revenue has dried up, Google will have to spend its $100 billions of savings or consider other options. As far as employees are concerned, $6 billions goes to engineers, $4 to sales & marketing, $2 to administration.