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| Mark Zuckerberg, chief executive of Facebook, announced a new stock structure for the company this week. |
Each Saturday, Farhad Manjoo and Mike Isaac, technology reporters at The New York Times, review the week’s news, offering analysis and maybe a joke or two about the most important developments in the tech industry.
Farhad: Hello, Mike! I’ve got to tell you, I’m getting really tired of saying that. We’ve already chatted on Facebook Live this week. We keep up a regular banter on Slack and Twitter. And then there’s this newsletter, week in and week out. You’re a nice guy, but … don’t you think we’re just too involved?
Mike: Is this you trying to break up with me? Don’t ever leave me, Farhad. I’m too fragile.
Farhad: Er, let’s just talk about tech news. It was another big week for corporate earnings. Let’s summarize: Apple made $10.5 billion in three months, which would be a record for just about any other company on the planet, but for Apple it was an embarrassing comedown from its year-ago peak. Now people are wondering whether Apple’s best days are in its past. Hey, whose aren’t, am I right?
Mike: My mom says my best days are ahead of me. But she also said I was the coolest kid in school which, uh, turned out to be a slight exaggeration.
Farhad: Twitter also disappointed investors: The company added some new users, but it fell short of revenue projections, sending people on Twitter into a panic. Amazon, meanwhile, crushed it. The company’s sales grew 28 percent, and it posted a profit of $513 million, a record for Amazon. For those keeping score at home: That’s about what Apple makes every four days. Amazon’s stock went predictably nuts.
Mike: Man, what if your job was looking at how much companies’ profit margins grew or shrank every day? Just thinking of being surrounded by Excel spreadsheets and punching in figures makes me want to cry.
Farhad: While we’re on the boring subject of earnings, let’s note some recent boardroom shuffles. So Yahoo — remember them? Used to be kind of famous — gave in to one of its fiercest tormentors this week: the hedge fund Starboard Value, often described as an activist investor. Yahoo allowed Starboard to have four seats on its board, a way to ease some tensions in advance of a potential sale of Yahoo’s core bus— oh, my God, I’m bored already. Anyway, that’s the Yahoo update.
Mike: Holy moly, I am bored out of my mind. I need a place to sleep now.
Farhad: Funny you should say that! Arianna Huffington, the founder of the Huffington Post and the author of a new book about sleep, has joined the board of Uber. Also, the Huffington Post recently killed a story critical of Uber. Coincidence, I’m sure.
Mike: Maybe she can tell me the best way to sleep in an Uber. She’s willing to join us on rides, apparently.
Farhad: Maybe we should chat about Facebook? Mark Zuckerberg’s social behemoth announced huge growth and profits this week, beating out even the most optimistic of analysts’ expectations. Zuck also announced his intention to become a kind of world-historic deity, creating a new stock structure that would allow him to give away his money so that he can do things like — I kid you not, this is a real goal, written down on paper and everything — “cure all diseases by the end of this century.”
So you cover Facebook. Tell me, why are they doing so well? More important, can anything stop them?
Mike: I think we talked a little bit about this in our Facebook Live discussion this week. (Tune in every week!) It’s an important thing to highlight, so let’s dive in again.
For one, we cannot stress enough just how well Facebook handled the broad consumer shift from using a desktop computer to get to the web to now using smartphones as our gateways to pretty much everything on the Internet. The entire industry was caught off guard by the success of iPhone and Android, and absolutely no one was prepared for how to make money on the phone.
That killed — or at least deeply wounded — quite a few successful companies. Remember Zynga? That place was raking in the cash from FarmVille-loving moms on the desktop. Suddenly, everyone is playing Candy Crush Saga on the iPhone and all those cash crops are lying fallow. Zynga still hasn’t recovered or found a viable way out.
Anyway, Facebook nailed mobile ads in the news feed, and now 82 percent of the company’s ad revenue comes from people viewing those ads on smartphones. That’s a shift in just a few years, and it’s insane.
Farhad: It’s all the more remarkable considering how unlikely the transition looked a few years ago. Just after the company’s I.P.O. in 2012, investors were almost universally convinced that Facebook couldn’t get people hooked on its app the way it had seduced us on desktops. And analysts were constantly sounding an alarm that Facebook was just a fad — “Teenagers Leaving Facebook!” became an evergreen tech headline — and everyone was constantly on the lookout for the next great social network.
Facebook endured, I think, because it understood that its appeal was primal and wasn’t dependent on format: People wanted to see what was going on with their friends and frenemies from whatever device they used. Kind of like how you and I can’t stop chatting no matter what machine we’re on.
Mike: Yes, isn’t it great? Now, Facebook gets to make all these huge bets on the future to figure out where the next enormous platform for consumers will be and really try to dominate that long before it’s backed into a corner and forced to.
No one puts Zuck in the corner, ever again.
That means huge gambles on acquiring start-ups like Oculus, the virtual reality company, and WhatsApp, the messaging app, for billions upon billions of dollars.
I’m nervous to give Facebook too much in the way of props, only because it’s already a lovefest with analysts and what goes up must eventually come down. I think Isaac Newton said that. Or Gordon Gekko.
Farhad: Yeah, I don’t think we should go overboard. Their bets on the future still face huge questions: Can WhatsApp ever make money? Will Facebook Messenger really become a place for commerce and services? Will virtual reality become entrenched in society, or could it end up as the next 3-D TV? And then there’s the biggest vulnerability: Will the new Farhad and Mike Facebook Live show convince people to delete Facebook forever?
Mike: I’ve got people unfriending me after that show already — 99 percent of the comments were insults.
Anyway, for now, Facebook is still the company to beat. I guess they get to keep taking victory laps.
Farhad: Not for long, friend. We’re doing another Facebook video next week. That’ll show them. See you then!
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