Before you head out of work early and get a jumpstart on the upcoming 4 day weekend, why not spend just a few minutes getting caught up with the latest headlines, think of it as our Daily Bites: PM edition.
On that note, we hope you enjoy your time off (or if you run your own startup, just another day of work with less traffic) and see you back here next week.
1. Twitter sees ad revenue fall, considers subscription & commerce
Twitter saw high user growth in Q2, as there was a lot of engagement and rambling on the platform during the global pandemic lockdown, Black Lives Matter movements and more.
Twitter’s users grew by 34% to 186 million this quarter.
Despite the high surge in users, its ad business took a big hit. This was due to the effects of pandemic-related shutdowns of events like live sports, with yearly growth declining 23%, a bigger drop than was expected by Wall Street analysts.
As a business, Twitter’s advertising is more dependent on live events than other social media platforms.
However, the advertisers are slowly returning, as Twitter reported its revenue growth declined 15% yearly during the last few weeks of June.
Management confirmed reports that the company is developing subscription products and also looking into monetization through commerce, but none of these products are due for launch this year.
2. Microsoft reports Q2 earnings, Cloud business sees under 50% growth
Earnings blew past expectations, but a lot people focused on the fact that Microsoft’s Cloud Business, Azure saw its lowest growth of 47%. Let’s quickly go through the numbers.
- Total revenue: $38.03 billion vs. $36.5 billion expected
- Earning Per Share: $1.46 vs. $1.36 expected.
- Personal Computing $12.9 billion vs. $11.5 billion expected.
- Intelligent Cloud:$13.4 billion vs. $13.1 billion expected.
The company’s stocks fell by nearly 3% in after-hours trading.
The company doesn’t break out its Azure revenue, but the below 50% growth was a concern for some analysts and investors. Key rival, Amazon’s AWS posted revenue growth of 33% to $10.2 billion, which analysts believe exceeds Azure’s total. IBM also beat Wall Street expectations this week with strong cloud growth.
Businesses are investing in cloud technology for remote work, and the Microsoft owned video game Minecraft reached a record 132 million monthly active users. However, Microsoft’s office software sales missed expectations slightly due to struggling SMEs who may be cutting back on corporate software.
Revenue from its personal computing unit saw a rise, which is unsurprising as most customers migrated to work from home. Overall, Q2 for Microsoft remained competitive, but it also shines a light on its slowed down cloud business.
3. South Korea officially enters a recession
Export dependent South Korea has officially entered a recession, triggered by the global pandemic.
GDP shrank 3.3% between April and June from the previous quarter, following a quarter-on-quarter contraction of 1.3% from January-March.
“Experts expected the coronavirus to gradually settle down, but the level of slowdown has fallen short of expectations,” said Park Yang-su, head of Bank of Korea’s economic statistics department.
South Korea’s export figures fell sharply by 16.6% from the previous quarter on weak demand for cars and petrochemicals. Investments in construction and factories also contracted in the same period.
Private consumption jumped 1.4% quarter-on-quarter, pushed by the government’s cash handouts and auto tax reductions. However, these are government led handouts, which could only temporarily stimulate the spending power.
Looking ahead, economists say South Korea’s economy is set to recover in the second half of this year alongside a slow recovery in global demand. Domestic consumption, alongside domestic travel has also returned to an extent.
4. China orders US Consulate to close in Chengdu
A quick retaliation on China’s part. This morning, we wrote about how China is likely to retaliate to the US’s ordered closure of the Chinese consulate in Houston, Texas as the US accused the Chinese of spying, intellectual property theft and visa fraud. Earlier today, China has ordered the closure of the US Consulate in Chengdu.
The relationship between Washington and Beijing is indeed spiralling downwards. By choosing to shut down diplomatic missions, it’s a sign that neither side is willing to back down.
The Ministry of Foreign Affairs in Beijing said the move was a “legitimate and necessary response to the unjustified act by the United States.”
The ordered closure of the US Consulate in Chengdu comes only a few hours after Secretary of State Mike Pompeo delivered a direct, aggressive speech outlining the Trump administration’s relationship with China.
“We must admit a hard truth that should guide us in the years and decades to come, that if we want to have a free 21st century, and not the Chinese century of which Xi Jinping dreams, the old paradigm of blind engagement with China simply won’t get it done. We must not continue it and we must not return to it.”
The tide is turning on a civil US-China relationship, and with the consulates being used as the first symbolic chess pieces, there are signs of more things to come.
Extra Bite: Dr. Anthony Fauci throws the first pitch at first MLB game
Your favorite Coronavirus voice of reason, Dr. Anthony Fauci took a short break from fighting with President Trump and cautioning Americans to wear masks to throw the first pitch at the first Major League Baseball game.