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‘It’s just the beginning’: Covid push to digital boosts big tech profits

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Big tech is on a roll. In every minute of the first three months of 2021, Apple, Google owner Alphabet, Amazon, Facebook and Microsoft sold products and services worth about $2.5m (£1.8m) combined. Profits before tax for the period came in at $88bn – more than $1bn of profit for every working day.

After a year of shifting to online work and leisure across the global economy, financial results published this week by most of US tech’s biggest names were bound to be strong. But even more bullish analysts on Wall Street were surprised by how fast they raked in money in the quarter, auguring even greater profits in the years ahead.

Apple astonished investors with strong growth across its business, from iPhone buyers snapping up new models capable of using faster 5G mobile networks to the usually quieter business selling wearables such as headphones and watches.

Online advertising is booming. Facebook said demand is so high that the average price it charges for ads rose by 30% year on year – albeit compared with the start of pandemic. Alphabet revenues rose by a third year on year thanks to Google’s advertising business.

Alphabet was also helped by fast growth in cloud services, offering companies access to data centres – a business helped by the pandemic shift to working from home. Amazon’s cloud business added $1bn in profits compared with the previous year, even while profits from its core online retail business soared.

The Microsoft chief executive, Satya Nadella, said the shift to digital technology was “accelerating” as its profits jumped 31% year on year. “It’s just the beginning,” he added.

The strong results were not limited to technology’s biggest names: analysts also point to strong performances from smaller tech companies such as chip designer AMD or social networks Snap and Pinterest.

Share price gains left the big tech companies at all-time highs (barring Apple, which has the consolation of being the most valuable company in history). The gains reflected widespread investor agreement with Nadella’s thesis that the pandemic push to digital will benefit big tech.

The companies’ dominance is unprecedented in modern times. Daniel Ives, an analyst at Wedbush Securities, hailed record numbers for Apple, but argued that shares could gain another third to reach a $3tn valuation within 12 months. (Apple only reached the unprecedented $1tn mark in 2018, and $2tn in August.)

The scale of their balance sheets means they can rival countries on some metrics. Between them Alphabet, Apple and Microsoft spent $50bn on research and development in their 2018 financial years. That was equivalent to R&D spending by the whole UK economy in that year of £37.1bn, according to the most recent Office for National Statistics data.

Yet there appears to be only so much research and development that one organisation can do. One extraordinary aspect of the last week was the scale of share buybacks. Apple’s $90bn return to shareholders alone would be enough to individually buy almost all of the FTSE 100’s supposed behemoths.

Alphabet has scaled back some of its spending on famous “moonshot” programmes – such as the “Loon” effort to beam internet via high-altitude balloons – but even so it is ploughing money into technology that aims to push the boundaries of what computers can do. At the same time, it still judged that it had $50bn lying around to buy back shares.

There is more to come, argued David Donovan, a consultant at Publicis Sapient. His work upgrading technology at financial companies has convinced him that other sectors still have far to go in embracing digital technology, putting the economy “on the cusp of a major transformational period”.

Google office building in Mountain View, Silicon Valley
Google owner Alphabet has cut back some of its spending on famous ‘moonshot’ programmes. Photograph: Andrei Stanescu/Alamy Stock Photo

Donovan added that the shift to recurring revenue models by companies like Amazon and Apple will add another moat to keep rivals out. More than 200 million Amazon customers pay for the privilege of buying products via its Prime service. Apple’s services business made revenues of $16.9bn in the first quarter, with more growth expected.

It might not all go smoothly. Martin Garner, the chief operating officer at CCS Insight, a market analysis firm, highlighted the groundswell of regulatory pressure, such as the European commission’s warning on Friday that Apple Music has broken EU competition law.

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Big tech companies face another significant challenge: each other. There is large crossover in business models, whether it be advertising, cloud services or nascent targets such as in-car services. Apple’s battle with Facebook over privacy controls is the most striking cases of an open arm wrestle.

However, Alex DeGroote, an independent analyst, said that even at slower pre-pandemic growth rates there are such massive barriers to entry that it is difficult to see any way they will be dislodged. During last year’s market panic and the subsequent recovery tech stock gains have been nearly ever-present, suggesting a permanent shift is happening.

“The investment case has gone from defensive to growth in a year,” said de Groote. “The digital revolution is here to stay, and these businesses are embedded in our lives.”

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Bill seeks to make Louisiana ‘fossil fuel sanctuary’ in bid against Biden’s climate plans

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Just south of Oil City, where Louisiana representative Danny McCormick is from, is the predominantly Black city of Shreveport. Residents there breathe some of the most toxic air in the country. Oil refineries owned by UOP and Calumet contribute to the town’s toxic emissions, according to the EPA’s Toxic Release Inventory.

But McCormick, a Republican, introduced a bill at the Louisiana capitol last week that would protect oil companies and not residents in his district who have to breathe in that air. The bill would establish Louisiana as a “fossil fuel sanctuary state” and ban local and state employees from enforcing federal laws and regulations that negatively impact petrochemical companies.

The idea for the bill, McCormick said, came about after President Joe Biden began putting new restrictions on oil and gas companies, including a pause on new oil and gas leases on federal lands and waters. “Look at what they did to the coal industry,” he said at a Louisiana house committee hearing. “We already know what the game plan is. They already picked off coal. Now they’re going after oil and gas.”

The bill – which is unlikely to move forward in its current state because of legality concerns – is among several bills introduced at the Louisiana legislature this session that would likely reduce regulation of oil and gas companies in the state. Lawmakers say that deregulation is necessary to preserve tax revenues generated by oil and gas companies and to stop further job losses. A separate bill introduced by McCormick would redefine gas pipelines from modes of transportation to facilities, in order to prevent Louisiana state police from fining pipeline companies for failing to immediately report gas leaks.

Louisiana’s Democratic governor, John Bel Edwards, has also pushed back on the Biden administration’s energy agenda, penning a letter to the president that included petrochemical lobbyists’ talking points, according to HuffPost. Documents showed an oil and gas trade group coordinated between top officials in Louisiana and their counterparts in New Mexico – another oil state with a Democratic governor. Although the states are headed by Democrats, they remain obstacles to Biden’s climate plans. Texas, which has a Republican governor and legislature is also advancing bills to protect the oil and gas industry from climate efforts.

Nixing environmental requirements would disproportionately hit communities of color. Shreveport, which is 57% Black, is in the 90th to 95th percentile for cancer risk from breathing in air toxics, according to the EPA’s National Air Toxics Assessment. In 2013, the EPA fined the Calumet refinery $326,000 for nine air violations, prompting a new fenceline monitoring system.

Shreveport is in north-west Louisiana, almost on the border with Texas. But south-east Louisiana, between Baton Rouge and New Orleans, is also known for its heavy industrial presence and pollution. It has been dubbed “Cancer Alley”. Louisiana’s US senator Bill Cassidy has bristled at Biden using the term and opposed campaigns from Democrats to revoke permits from a major plastics plant proposed for the corridor.


McCormick runs M&M Oil. Before he was a legislator, he was a member of the Louisiana Oil and Gas Association, an industry lobbying group. Last week, when asked by other lawmakers about the constitutionality of the bill, McCormick said he wasn’t aware anyone was opposed to the legislation. “I don’t know who would have a problem with it, honestly,” he said.

But Velma White, 71, who lives in McCormick’s district said she’s concerned about the proposed legislation. “It’s going to hurt the people,” she said of McCormick’s bill. “I don’t think it’s right to the people.”

White lives a block away from Calumet Shreveport Refining and believes her family’s health problems were brought on by air emissions from the facility. White’s daughter was diagnosed with renal failure at a young age. White’s husband and sisters have also had health issues. “They have literally put me and my family through hell,” she said of the refinery. “I know there ought to be somebody who cares about the people’s lives.”

White and other residents filed a lawsuit against the previous owners of the Calumet refinery, Pennzoil-Quaker State, in 2001. White said she hoped the lawsuit would open a dialogue with the company about buyouts to help residents relocate away from the pollution. “These people can’t get out of that community,” White said. “They’re going to continue to be exposed by what’s going on at that refinery. You can’t just pull up and run.”

In January, White received an offer to settle her 20-year-old claim against the oil companies for $2,500. She’s experienced nausea, breathing difficulties and a miscarriage in 1987, according to E&E News.

“That’s what they offered me,” she said. “I’m just dumbfounded.”

White believes that federal regulators should take steps that would force companies to lower emissions. But if McCormick’s bill became law the state would not be able to enforce those regulations.

McCormick’s bill was tabled because of concerns that the current language could cause the US Environmental Protection Agency to revoke the state’s authority to enforce federal rules. But his colleagues still offered their support. The chairman of the Louisiana House Natural Resources and the Environment Committee, Jean-Paul P Coussan (R-Lafayette), said he would work with McCormick to resolve issues with the bill that could give the federal government more power over oil and gas companies in Louisiana.

“You’re not going to find a bigger support of oil and gas in his legislature than maybe you and I,” Coussan said to McCormick at the committee hearing. “We can tighten this up so all our oil and gas constituents can be proud of the bill. The intent is to help industry not to end up in court just for a headline.”

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‘Big bark but no bite’: Obamas mourn former first dog Bo

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Former President Barack Obama’s dog Bo died on Saturday from cancer, the Obamas said on social media.

News of Bo’s passing was shared by Obama and his wife, Michelle, on Instagram, where both expressed sorrow at the passing of a dog the former president described as a “true friend and loyal companion.”

“He tolerated all the fuss that came with being in the White House, had a big bark but no bite, loved to jump in the pool in the summer, was unflappable with children, lived for scraps around the dinner table, and had great hair,” Barack Obama wrote.

Bo, a Portuguese water dog, was a gift to the Obamas from the late Sen Edward Kennedy, a key supporter of Obama’s 2008 presidential campaign who became close to the family. Bo helped Obama keep a promise to daughters Malia and Sasha that they could get a dog after the election.

A companion dog, Sunny, joined the family in August 2013.

Bo at the White House.
Bo at the White House. Photograph: instagram

Both were constant presences around the White House and popular among visitors, often joining the Obamas for public events. The dogs entertained crowds at the annual Easter Egg Roll and Bo occasionally joined Michelle Obama to welcome tourists. The dogs also cheered wounded service members, as well as children in hospital the first lady would visit each year at Christmas.

In a post featuring a slideshow of images of Bo – including one of him sitting behind the president’s Resolute Desk in the Oval Office – Mrs Obama recounted his years bringing some levity to the White House.

“He was there when Barack and I needed a break, sauntering into one of our offices like he owned the place, a ball clamped firmly in his teeth. He was there when we flew on Air Force One, when tens of thousands flocked to the South Lawn for the Easter Egg Roll, and when the Pope came to visit,” she wrote.

Mrs. Obama wrote that she was grateful for the time the family got to spend with him due to the pandemic, and said that over the past year, “no one was happier than Bo.”

“All his people were under one roof again,” she wrote.

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Even in Super Bowl-winning Tampa, the Glazers are far from loved

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Not that this will make Manchester United fans feel any better, but the Glazers are barely visible in the Tampa Bay too, even though the family has owned the local NFL team since 1995 and won the Super Bowl three months ago (thanks mostly to Tom Brady and a turbocharged defense).

The family front man, if he can be called that, is Joel Glazer, one of six children of the late Malcolm Glazer. Joel Glazer typically makes himself available to Tampa media just once a year, and although he has a pleasant demeanor, he is hardly expansive on his family’s dealings with the club.

Because of the pandemic, Glazer’s availability to Tampa reporters this year consisted of a 20-minute Zoom call in March. But even in a typical year, four or five news outlets get 10 minutes each with Glazer, and questions about the family’s ownership of Manchester United are out of bounds.

This year, keeping in character, he was bland and vague when lobbed softballs about his favorite moment of the Super Bowl season (“It was just more the whole environment,” he said) and about how the roles of the family on the team had changed in recent years. “We all have different areas that we focus on,” he replied, “but it’s a collective effort, a collective organizational effort. No big changes there.” Imagine how ebullient he would have been had the Bucs lost the Super Bowl.

Tampa Bay became an American sports centerpiece in the span of four and a half months, with the Lightning winning the NHL’s Stanley Cup last September and the Rays advancing to the World Series in October (and losing to the Dodgers) before the Tom Brady-led Bucs beat Kansas City in Super Bowl LV, the first time a team had won an NFL title in their own stadium.

Someone else besides a Glazer, though, will have to serve as the city’s pitchman. Even in Florida, the Glazers’ way is to get out of the way, which often does not help them.

“I wouldn’t say the Glazers are beloved or hated around there,” John Romano, a sports columnist for the Tampa Bay Times, told the Guardian this week. “I think most people are indifferent toward them because, even 25 years later, the Glazers are still a mystery. And that’s a shame because they took a franchise that was a complete joke and brought two Super Bowl titles to Tampa Bay.”

Supporters of Manchester United, who the Glazers bought in 2005 and immediately saddled with huge debts, don’t appear to feel indifferent about the Glazers, judging by the protests over the weekend that led to the postponement of their game against Liverpool. But United fans have never been thrilled about the Glazers’ ownership for several reasons: the Glazers are Americans (or, perhaps more accurate, not British) who loaded the club with debt and, just as important, have overseen United’s relatively barren Premier League run in recent years from an ocean away.

Manchester United fans protest against their owners before the Liverpool match last Sunday.
Manchester United fans protest against their owners before the Liverpool match last Sunday. Photograph: Phil Noble/Reuters

The Tampa Bay and Manchester situations are different. While United have been one of the biggest clubs in the world for decades, prior to the Glazers taking over, the Bucs had 12 straight losing seasons, and Tampa Bay won the Super Bowl in the eighth season of the family’s ownership. The Bucs later failed to make the playoffs for 12 straight years, but won it all again last season after adding Brady. Then there is the difference between European sports and leagues in the US, where owners doing something like uprooting a franchise and moving it to a different city is seen as distasteful rather than inconceivable. US fans often dislike owners – witness New York Mets diehards’ long running dispute with the now departed Wilpon family – but they rarely erupt into mass protest as they do in Europe.

The European Super League mess, of course, just drove it over the top in Manchester. Public reaction was negative, because the six English clubs involved in the ESL, three of which are owned by Americans and another which has NFL ties, looked greedy. Even worse: they appeared indifferent about how British fans feel a sense of ownership of their local teams (if not literally) and apathetic about the cherished English football pyramid, with promotion and relegation.

The idea was abandoned after two tempestuous days. Joel Glazer tried to appear contrite, opening a letter to United fans on 21 April on the club’s website with, “You made very clear your opposition to the European Super League, and we have listened. We got it wrong, and we want to show that we can put things right.

“Although the wounds are raw and I understand that it will take time for the scars to heal, I am personally committed to rebuilding trust with our fans and learning from the message you delivered with such conviction.”

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The message probably would have been better delivered in person, or even in a video. But supporters’ groups were in no mood to forgive Glazer in any case, leading to the chaos at Old Trafford. The fans don’t really know the Glazers because they say they have never met, but that is also a perfect reason why they want the Glazers to sell the club.

As Tyrone Marshall wrote this week in the Manchester Evening News: “So much of it comes back not just to the way the Glazers have run the club, but the ignorance they’ve shown to supporters and the way they’ve treated them, with contempt.”

The same feeling was present in Tampa. Romano wrote a column in the Tampa Bay Times on Wednesday about the Glazers and Manchester United that included the passage: “British fans are not accustomed to owners calling the shots without engaging fans or at least pretending to listen to their suggestions and complaints. Honestly, it’s remarkable that the Glazers have spent 15 years there without figuring this out. It speaks to a remarkable level of either cluelessness or arrogance.”

The Glazers are still mostly invisible in Tampa Bay, although veteran journalist Ira Kaufman of joebucsfan.com told the Guardian they are active in community projects. As for the running of the team, they are low-key in that area too.

“While the family doesn’t interfere with football operations on a daily basis, the Glazers traditionally lead the search for a new head coach,” said Kaufman. “They also weigh in on significant decisions like the signing of Tom Brady or improvements to Raymond James Stadium. Joel and Bryan Glazer attend every Bucs game, home and away.

But then Kaufman cut to the bottom line: “Some Bucs fans believe the acquisition of Manchester United diverted some of the family’s focus and financial resources from the [Bucs] franchise. That view was reinforced during the club’s 12-year playoff drought, but the Super Bowl triumph has silenced Glazer skeptics here, at least for the moment.”

If last weekend’s scenes are anything to go by, keeping United fans quiet will be a much steeper task.

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