Bezos is watching you

Quote of the Day

I don’t believe anything Elon Musk or Tesla says.”

Apple co-founder Steve Wozniak. Guess you don’t need to be a Tesla fanboy to still “love the car,” which he owns.

Market Snapshot

  • Amazon jumped more than 3% on a strong earnings report.
  • Alphabet took a 5% hit after missing expectations.
  • Guess plunged 16% after Kate Upton accused co-founder Paul Marciano of sexual harassment.
  • Bitcoin slid 11% after increased regulatory concerns.



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Alphabet and Aramco Have the Tech Relationship Talk

What do you get for the kingdom that has everything? A tech hub.

WSJ reports the rumblings of a joint venture between Alphabet and Saudi Arabia’s state-owned oil giant Aramco.

The months-long talks have included Alphabet CEO Larry Page and Crown Prince Mohammed bin Salman, whose Vision 2030 plan includes weaning the kingdom from its oil dependency, borrowing a page out of Silicon Valley’s tech playbook, and modernizing the ultra-conservative culture. Perhaps it was the driverless car trend that spurred Saudi Arabia to finally allow women to drive as recently as last September.

The partnership would build data centers around Saudi Arabia. Whose data or whose control the centers would be under are questions that need answers. Actually, most of the details are unclear—including whether or not the deal will actually come to fruition.

So, let’s just imagine how and why this deal works—for both sides:

Alphabet

* Google is third fiddle to Amazon and Microsoft in renting data storage, so a foot in the Middle East door (where none have a data complex...yet) would be a step ahead.
* Another step? Winning business from old school oil customers looking to shift operations to the cloud.

Saudi Arabia

* Most Middle East data is piped in from Europe via undersea cables, so local servers = faster access, and access = competitive edge.
* With Aramco nose-deep in planning an IPO this year, a tech deal pre-offering could be baked into the valuation.
* Saudi Aramco gets a pathway to expansion in the U.S.

Either way, Saudi Arabia is getting serious about bolstering tech development. It’s close to finalizing a $1 billion deal with Amazon for three data centers. It’s up to Alphabet to strike first.

We Graded Apple’s Earnings

The most valuable public company on the planet reported earnings, with mixed results.

Our grades:

Revenue: B. In the quarter ending Dec. 30 (the “holiday season”), Apple’s revenue jumped 13% to $88.29 billion. However, it projected revenue for the coming quarter ($60-62 billion) to fall below estimates (~$66 billion). Cue 1,000 think pieces on the iPhone’s murky future.

iPhone sales: B-. Unit sales dropped 1% to 77.3 million iPhones. But, the average sale price of $796 soundly beat expectations. Which shows us that despite all the warning signs, sales of the uber-expensive iPhone X were strong.

Effects of the tax bill: A+. Even though it took a one-time $38 billion repatriation hit, Apple stands to benefit (perhaps more than any other company) from the new change in the tax code. Its cash pile now sits at a record $285.1 billion.

Non-iPhone products: A-. No, you’re not just imagining all your co-workers wearing AirPods. Revenue in the “non-iPhone” segment (AirPods, Apple Watch, Apple TV) outdid every other category with 36% growth.

CBS and Viacom May Join the Media Consolidation Blitz

CBS' (+2.30% ) board formed a committee to discuss a potential merger with fellow media company Viacom (-0.63% ) (whose board did the same) under intense peer pressure.

The peers? Disney/Fox, AT&T/Time Warner, and Sinclair/Tribune, whose aggressive consolidation is causing media’s singles to consider coupling up. But in the case of a CBS and Viacom merger, this marriage would be arranged.

Arranged by Shari Redstone, president of National Amusements, the privately held movie company that controls both CBS and Viacom. Her father Sumner Redstone broke up the two in 2005 (yes, CBS and Viacom were once one-in-the-same). But Shari might see opportunity in a reunion: complementing CBS’ broadcast network and streaming service with Viacom’s assets like Nickelodeon and MTV.

But wait, there’s more. Some analysts speculate that if a merger ever goes through, a combined CBS-Viacom might be just the appetizer for an entree: Verizon, Sony, or even Amazon could be interested in acquiring the new company to cement themselves on media’s Mt. Rushmore.

Amazon Takes Employees by the Hand with New Warehouse Tracking Patents

Imagine your boss breathing over your shoulder with each click of your mouse. Well, if you’re an Amazon warehouse worker that might be a reality. Two newly discovered Amazon patents (h/t GeekWire) show designs for wristbands that can track employees’ hand movements and provide real-time feedback to encourage faster warehouse logistics (i.e. filling up that Prime Pantry box pronto).

Bezos and Co. haven’t indicated whether the patents could become reality, and tech companies do have a history of filing for IP and never using it, BUT it does tie into Amazon’s history of overworking and over-scrutinizing warehouse employees. It’s best illustrated by one worker who said, “there was no time to go the loo.”

And these wristbands would take the oversight twelve steps further. The technology would use “ultrasonic sound pulses and radio transmissions” to monitor employees' hands from Echo to Echo Dot.

So if you ever do make it to the loo, just make sure you turn off the tracking.

What Else Is Happening…

  • Airbnb’s CFO Laurence Tosi checks out to focus on his investment fund. The company is also delaying its IPO
  • Alibaba reported a Q3 revenue jump of 56% and made another jump to buy 33% of Ant Financial.
  • Broadcom (-3.73% ) is concerned with Qualcomm’s recent earnings report.
  • Indian Prime Minister Modi is offering free healthcare, i.e. Modicare, for 500 million people.
  • Equifax (-0.62% ) has a free credit locking app—that doesn’t work.

Economic Calendar

  • Monday     Earnings: Lockheed Martin (+)
  •                     Economic Events: Personal Income and Outlays (+)

  • Tuesday    Earnings: AMD (+), Aetna (+), McDonald’s (+), Pfizer (+)
  •                   Economic Events: Consumer Confidence (+)

  • Wednesday    Earnings: Boeing (+), eBay (+/-), Mondelez (+), PayPal (+), Qualcomm (+)
  •                         Economic Events: Chicago PMI (+)

  • Thursday   Earnings: DowDuPont (-), GoPro (-), Royal Dutch Shell (+)
  •                    Economic Events: Motor Vehicle Sales (-), PMI Mfg Index (+), ISM Mfg Index (+)

  • Friday       Earnings: Charter, Exxon, Merck, Sony, Sprint
  •                  Economic Events: Consumer Sentiment, Factory Orders

Taking Inventory: Super Bowl Prop Bets

We have a lot of questions going into Sunday’s Eagles-Patriots Super Bowl. Will the Eagles take revenge after their 2003 loss to the Patriots? Will Brady win another MVP?

Every year, America gathers around the TV to gamble on these important questions. In fact, betting on the Super Bowl is expected to top $4.8 billion this year. So, in honor of America’s favorite pastime (gambling), here are some of our favorite prop bets heading into the game:

1. How long will the National Anthem last?
Over 2 minutes -150
Under 2 minutes +110

2. How will Justin Timberlake enter the arena?
Zipline 2/1
Jet Pack 15/1
Parachute 50/1
Reading the Brew 100/1

3. What color will Bill Belichick's shirt be at kickoff?
Blue 4/5
Grey 3/2
Red 15/2
White 15/2

4. What will Justin Timberlake’s first song be?
Can’t Stop the Feeling: +150
SexyBack: +175
Rock Your Body: +400
Mirrors: +550
Suit & Tie: +1500

5. Color or liquid dumped on winning coach?
Blue +250
Red +330
Yellow +350
Orange +350

Place your bets here.

The Breakroom

Question of the Day

Find the two six letter words that are combined in each row of letters. Their letters are in the correct order.

1. JSOYOMFUBELR
2. SCDUARWDRLYE
3. DASNAGEFERTY
4. CLULOOTSCEHN
5. USENEARSEYNE

(Answer located at the bottom of newsletter)

Business Trivia

Which major tech company offers 52 weeks of paid family leave?

Twitter, Airbnb, Netflix, Facebook

(Answer located at the bottom of newsletter)

Stat of the Day

46 million—How many viewers tuned into President Trump’s State of the Union speech. His words: “the highest number in history.” According to Nielsen, that’s not the case.

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Breakroom Answers

Question of the Day: 1. Joyful & Somber 2. Scurry & Dawdle 3. Danger & Safety 4. Clutch & Loosen 5. Uneasy & Serene

Business Trivia: Netflix (and year-long chill). Salaried employees, including birth and adoptive parents of any gender, can take up to a year—with full pay—after the birth or adoption of a child.

 

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