May 1, 2020 - Technology

Tech earnings show the sector isn't immune from coronavirus pain

Investors were hoping to come away from this week's earnings reports with a better sense of how tech companies were faring amid the coronavirus pandemic, but they ended up with some dollops of sobering news on a heap of continuing uncertainty.

The big picture: Tech may be the sector best poised to ride out the economic disruptions caused by the illness, but it won't be immune from the pain, and even some of its revenue gains will be dented by a higher cost of doing business.

Three key takeaways:

1. Ad dollars are disappearing fast. This was clear in Google's and Facebook's reports but made even clearer in Thursday's report from Twitter. CFO Ned Segal noted that its ads business so far in April is similar to the 27% decline it was seeing at the end of March.

2. The sour economy is going to take a toll, even on the giants. It's not just the ad-powered companies bracing for a hit. Both Microsoft and Apple did beat (already lowered) market expectations, but most of the first quarter preceded the full impact of the pandemic.

  • Amazon, which would appear to be among the biggest beneficiaries of the abrupt shift to e-commerce, said Thursday that it expects to invest billions of dollars this quarter, potentially posting a loss, to better serve customers and protect employees.

3. No one really knows just how bad it is going to get. Apple declined to offer any specific earnings forecast for the coming quarter, while others offered plenty of caveats to the guidance they gave, cautioning that it's really hard to know what the second half of the year will bring.

Go deeper: Amazon stock falls after tech giant forecasts billions in coronavirus spending

Go deeper

Mark Zuckerberg: Social networks should not be "the arbiter of truth"

Photo: Drew Angerer/Getty Images

Facebook CEO Mark Zuckerberg argued on CNBC's "Squawk Box" Thursday that social media platforms should not police political speech, and that "people should be able to see what politicians say.”

Why it matters: Zuckerberg was responding to Twitter's decision this week to fact-check a pair of President Trump's tweets that claimed that mail-in ballots are "substantially fraudulent." Twitter's label, which directs users to "get the facts" about mail-in voting, does not censor Trump's tweets.

House Democrats pull FISA reauthorization bill

Speaker Nancy Pelosi. Photo: Saul Loeb/AFP via Getty Images

House Democrats pulled legislation Thursday that would have renewed expired domestic surveillance laws and strengthened transparency and privacy protections amid broad opposition from President Trump, House GOP leadership and progressive Democrats.

Why it matters: The failure to reauthorize the Foreign Intelligence Surveillance Act (FISA) comes as Trump continues to attack the intelligence community, which he claims abused the law to surveil his 2016 campaign and Trump administration officials.

U.S. GDP drop revised lower to 5% in the first quarter

Data: Bureau of Economic Analysis; Chart: Axios Visuals

The U.S. economy shrunk by an annualized 5% in the first quarter — worse than the initially estimated 4.8% contraction — according to revised figures released by the government on Thursday.

Why it matters: It's the worst quarterly decline since 2008 and shows a huge hit as the economy was just beginning to shut down because of the coronavirus. Economists are bracing for the second quarter's figures to be the worst ever — with some projecting an annualized decline of around 40%.

3 hours ago - Economy & Business