well as earnings season ramps up, several big tech
names are set to report earnings this week. They
included twitter, that'll be a big report, which
of course just moments ago accepted billionaire Elon musk's buyout
offer a facebook's parent company, meta and Apple as
well as Google's parent company, alphabet Microsoft, the
chip maker intel. A lot of companies on deck
, they do face a unique set of headwinds.
No to necessarily are the same, but some are
impacted by Apple's user privacy changes which have heard sales
and others could take a hit when it comes to
consumer spending for hardware and services. Well, broadly
, many investors are skittish about how higher rates could
evaluations and cash flows, most notably of these richly
valued technology companies which do rely on growth to appease
investors. So joining me now is Angela Zeno,
senior equity analyst at C. F. R.
A. Research Angelo. I gotta start with the
biggest news out there. Elon musk having his bid
accepted by twitter's board and that company is set to
report earnings later this week. What do we hear
from twitter when these results come out. Listen,
I think as far as twitter is concerned, I
mean we did just see snaps results, right?
I mean, clearly those, you know, there's
no correlation necessarily between the two companies outside of the
fact that they're within kind of the social media landscape
of things but um as far as twitter is concerned
. I mean I guess first and foremost it doesn't
necessarily mean much at this point in terms of the
fundamentals because we've got kind of the line mustang and
on the sidelines here. Um, but at the
end of the day, I mean, listen,
I think this is a situation where twitter has definitely
disappointed here over the last eight years are essentially becoming
a public company and I think, you know,
everyone is keeping their eyes on whether or not they
can meet that 2023 outlook that they hinted at early
last year and as of right now the street doesn't
believe it, we don't necessarily believe it. And
again, this is only one quarter and doesn't necessarily
mean much. I think some of the attention probably
now, just for all the attention now kind of
shifts towards um Elon musk and to be honest with
you, I don't know if this is a company
that's actually gonna have a call given what we just
saw announced here over the last half hour, so
okay, that's very interesting. And of course in
this press release, it says upon completion of the
deal, twitter will become a privately held company,
Angelo, are there things that twitter can do as
a private company that would make it more effective then
what it's doing now is a public one? Well
, I think what's most important is when you become
a private company is you're not in the limelight of
shareholders out there. So a guy like Elon musk
now here kind of has a lot more flexibility and
what he can kind of do, right? So
, um, you know, whether or not that's
kind of um shifting his vision towards one that's more
of a subscription type of offering, where of course
you're going to lose a host of um subscribers out
there. And again, that is probably going to
be okay one because he doesn't care as much about
the financial aspect of things here um in the near
term and um to again, he doesn't have the
answer to shareholders at this point in time. So
you can kind of do what he wants to some
extent with this business model. So um you know
, his, his kind of vision is clearly on
softening his stance on content moderation, you're going to
see him do it and we'll kind of see what
else he has in store in terms of the pipeline
of enhancing the product out there. But there's a
lot more he can do as a private company than
he can do as a public company, interesting.
Yes, so I guess, you know, I
think the outstanding question is, will users stick around
, will they feel comfortable out with Ellen was behind
this company? Will they feel comfortable with the company
being private and will privacy play a role here?
How comfortable will they be sharing this data as twitter
does become a private company once the deal is complete
. So still a lot of questions certainly out there
, I do want to ask you about some other
technology names. Apple for instance, we always know
the same. So goes Apple, so goes the
market, it's the most valuable company out there and
it does dictate many days the path of the stock
market, but tech names in general, clearly under
pressure due to rising rates. What's the expectation from
Apple? What matters most in its report this week
? Yeah, So listen, we have Apple reporting
thursday after the close. Clearly to your point,
the biggest company out there and um actually, probably
the most important in the sense that they are the
ultimate consumer company. Right? I mean, north
of 90% of the revenue is tied to the consumer
out there. So when we think about just large
cap tech in general, um, to us,
there's kind of three big factors out there that we're
keeping an eye across the space, inflationary pressures.
Um, the actual consumer out there and um,
you know, supply constraints. And as far as
Apple is concerned, our bigger concern is how does
the consumer look like specifically in china? Because we've
seen a big decline in the china's smartphone market.
Um, we'll see how Apple is navigating that side
of things, but they are taking significant share.
So we do think they hold up much, much
better than some of the numbers we're seeing out of
out of china and of course on the supply constraints
side of things, Apple again, should navigate better
than others out there. But the real key is
as far as Apple is going to be concerned as
the services number, as long as they can continue
to grow mid teens, um the secular growth story
for apple remains intact and we do think 17% growth
for the quarter is attainable. And then also the
capital allocation story story for Apple always important for the
March quarter results and we expect them to announce$100
billion buyback increased their dividend by 7% and that's also
bodes well for investors. Yes, certainly that will
be a tailwind for investors. Angelo, I have
time for just one more question. I gotta ask
you about meta the parent company facebook of course.
Now it's focus is on the metaverse, but we
don't see a lot of sales in that department just
yet. What do you expect when meta reports earnings
this week? Yeah, I think that's kind of
, you know, everyone kind of saw what they
did last quarter and there's definitely a huge concern about
them this quarter. I think the great thing is
expectations have definitely been set low. We saw again
snaps results last quarter. So I think, listen
, this is one of those situations where Zuckerberg has
definitely kind of put the Barlow but given some of
the issues out there, Russia Ukraine among other things
. Um what we expect to see is probably potentially
one more guide down lower into Q2, but that
being said the valuation is so depressed at this point
in time. Um, it remains to be seen
whether or not that would be a huge shock to
investors at this point in time. Okay, We
got to leave it there. Angelo. I know
it's gonna be a busy week for you. We
appreciate the time. That's Angela Zeno, a senior
equity analyst at C. F. R. A 00:06:46.579 --> Research.