Cisco Systems’ (CSCO) Q4 2017 Earnings

Charles Robbins – CEO

Cyber attacks have increased

“the 90% increase in cyber-attacks against IoT devices over the last year”

Currency headwinds in the UK

“On the UK, if you go back to Q3, we talked about it being significantly down and one of the primary drivers was the headwind created by currency. In Q4, what I’ll tell you is that headwind from currency remained, it did not ease up….I’ll say one final thing on the UK: while enterprise and commercial we saw a good uptick, service provider remained about the same.”

Orders improving

“In general, I think if you just look at our order rates that we released today, we went from Q3 negative four to flat in Q4. So clear that we saw improvement there.”

Kelly Kramer – EVP & CFO

Inventory is up

“A large majority of the inventory increase is driven by memory advanced purchases. So that protects us in for a large portion but we also have been as I mentioned in the lack — we’ve also been securing and committing to our purchase commitments for even more access to supply that also will ensure that we have the supply albeit perhaps at higher prices if they continue to rise.”

 

 

Tencent Holdings’ (TCEHY) Q2 2017

Martin Lau

It will take a while for online video to breakeven

“there is a lot of usage, more and more people are watching online video at longer and longer time, on a daily basis. But at the same time — and at the same time, advertising revenue has been increasing, and there is also an increasing willingness from consumers to pay. So, the subscription number as well as revenue has been increasing quite rapidly. On the other hand, the flip side of this is the cost of content has been increasing, even faster. So, what we see is that over time, we believe the content will continue to increase, but the rates would probably be lower. And the subscription, as we continue to increase, would deliver higher revenue per active user. So, we will get closer to a more equilibrium between cost and revenue at some point in time. But I think unfortunately at this point in time, the net loss of the business is still increasing.”

James Mitchell

High demand for AI-as-a-service 

“In terms of providing AI-as-a-service, I think this is definitely a one direction that we are going into in our cloud business already and we are seeing a lot of demand on that. And we have been able to sign up a lot of customers because of our ability to offer them AI capability. And that’s just the beginning. Over time, I think we will do much more on that.”

People are discoevring games on more communal venues

“In terms of games and targeting, if you look at games playing globally, particularly on the personal computer, it’s moved from being media driven to being increasingly community driven. 20 years ago, people discovered new games on the PC in the U.S. and Europe through computer magazines; now, they’re discovering them through reddit, through Twitch, through those kinds of more communal venues. And some of the same trends are underway in China. And what we’re trying to do is working with the game developers to make sure that we target their games to the users who are likely to be most receptive.”

Apple (AAPL) Q3 2017 Earnings Call

Timothy Donald Cook – Apple, Inc.

The iphone is 10 and still popular

“The combined iPhone 7 and iPhone 7 Plus family was up strong double digits year over year. One decade after the initial iPhone launch, we have now surpassed 1.2 billion cumulative iPhones sold.”

They are keen on autonomous systems

“We are very focused on autonomous systems from a core technology point of view. We do have a large project going and are making a big investment in this. From our point of view, autonomy is the mother of all AI projects. And the autonomous systems can be used in a variety of ways and a vehicle is only one.”

The drivers of Apple growth going forward include emerging markets

“I do think that we can grow both in units and market share….And so what are the drivers? The installed base is growing. It’s still growing very strongly. That will generate more upgrades over time. I feel good about our ability to convince people to switch. And where the developed markets the first-time buyer rates are down other than places like Japan perhaps, the emerging markets, we haven’t even gotten started yet, really. From a revenue point of view, we had very strong growth there. Emerging markets ex-China were up 18% year on year. It was a record for us, so we see a lot of opportunity in these markets.”

Created 2m jobs in the US

“We’ve created 2 million jobs in the U.S., and we’re incredibly proud of that. We do view that we have a responsibility in the U.S. to increase economic activity, including increasing jobs, because Apple could have only been created here. And so as we look at that 2 million, there are three main categories of that, and we have actions going on in each of them to further build on that momentum. The first category is app development. About three-quarters of the 2 million are app developers. And we’re doing an enormous amount of things to deliver curriculum to both K-12 with Swift Playgrounds in the K-to-6 area, other curriculum as you proceed beyond grade 6 under the Everyone Can Code area.”

Luca Maestri – Apple, Inc.

High interest and satisfaction with Iphone

“Customer interest and satisfaction with iPhone are very strong with both consumers and business uses. In the U.S., the latest data from 451 Research on consumers indicates a 95% customer satisfaction rating for iPhone 7 and 99% for iPhone 7 Plus. Among consumers planning to buy a smartphone, purchase intention for iPhone was nearly three times the rate of our closest competitor. Among corporate smartphone buyers, iOS customer satisfaction was 94%. And of those planning to purchase smartphones in the September quarter, 78% plan to purchase an iPhone.”

Service is growing driven by the App store

“Turning to Services, we set an all-time quarterly record of $7.3 billion, up 22% year over year. The App Store was a major driver of this performance…the App Store, which is the largest of our Services categories, is seeing an increasingly larger amount of paying accounts. On a year-over-year basis, the number of accounts that are actually transacting and paying on the App Store is growing very, very well.”

On App store spending trends

“What we’re seeing and we’ve seen over a long period of time as we keep track of these cohorts of customers, we see that as customers get on the App Store and start spending on it, we see the spending profile is very similar across generations of customers. People tend to spend more over time. Obviously, you have different spending profiles in different geographies around the world, but in general you see that trend across the board.”

Alphabet’s (GOOG) Q2 2017

Ruth Porat – CFO

Mobile is the primary driver this quarter

“The primary driver again this quarter, as you noted in question was the strong growth in mobile and the fact that more mobile searches are subject to TAC. But the increase in Sites TAC year-over-year, I think what I would stress is it really provides another lens on just how strong our mobile business is. There are other factors that affect the TAC rate including the mix of paid versus organic traffic as well as changes in partner mix and agreement terms. But I think at the, main point of your question here is we do continue to expect Sites TAC to increase, but our focus remains on growing profit dollars and I go back to my comment which is really pleased with the strength of our mobile business, which is benefiting profit dollars even as the TAC percentage increases.”

Sundar Pichai – CEO

The growing influence of Youtube

“YouTube now has 1.5 billion monthly viewers and people watch on average 60 minutes a day on their phones and tablets. That’s incredible and it helps 1000s of passionate video creators make money. The fastest growing stream for YouTube is in the living room. YouTube watch time on TV screens has nearly doubled year-on-year.”

Apple CEO Tim Cook on Bloomberg BusinessWeek

Apple CEO Tim Cook on Bloomberg BusinessWeek

AR is the future

“The first step in making (Augmented Reality) a mainstream kind of experience is to put it in the operating system. We’re building it into iOS 11, opening it to ­developers—and unleashing the creativity of millions of people. Even we can’t predict what’s going to come out….You’ll see things happening in enterprises where AR is ­fundamental to what they’re doing. You’re going to see some consumer things that are unbelievably cool. Can we do everything we want to do now? No. The technology’s not complete yet. But that’s the beauty to a certain degree. This has a runway. And it’s an incredible runway. It’s time to put the seat belt on and go. When people begin to see what’s possible, it’s going to get them very excited—like we are, like we’ve been.”

On repartiatring dollars

“I’d come up with a reasonable percentage. I’d make it required, not something where people say, “Well, I’ll just bring back X.” You get charged, and you can decide whether you want to bring it back or not. But you’re getting charged. That’s what I would do on the past stuff. On the future stuff, I’d come up with a really simple system. I would go for zero deductions. I wouldn’t allow any.”

The tax on international earnings is too high

“The issue is not that there’s a tax on international earnings. The issue is the existing tax has been crazy. No one would bring it back at a 40 percent—I mean, 35 percent federal and then state taxes. That’s the problem.”

Hewlett Packard Enterprise (HPE) Q2 2017

Meg Whitman – CEO

Strong demand for datacenter care

“We’re also seeing strong demand for our datacenter care as customers look to consolidate their datacenter footprints and flexible capacity, which delivers cloudlike consumption models with on premises solutions.”

They have a new prototype with powerful memory

“in May, we announced the latest milestone in our machine research projects, a powerful prototype that connects 160 terabytes of memory to 1,280 processor cores. In other words, an amount of memory that would hold 80,000 human genomes and simultaneously run anomaly detection algorithms on every core and while this is impressive, the most exciting thing about this milestone is that it demonstrates the ability to scale the architecture to a potentially limitless pool of memory, which is the secret to delivering scientific breakthroughs, industry-changing innovation or life altering technology for the mountains of data we create every day.”

Tim Stonesifer – EVP and CFO

A general outlook

“…we continue to see competitive pricing and a challenging commodities environment….The pricing environment was also increasingly difficult and hindered our ability to raise prices as an offset. We anticipate the impact from commodities will remain significant in the near-term”

Sprint (S) at Deutsche Bank Notes

Sprint’s marketing message: why pay a lot more for a network that is only marginally better?

“And so we’re very pleased with that campaign, because what it actually pointed out is that there isn’t much of a difference between network performance today. We don’t profess to have yet the best network but we do feel that our network is good and certainly does not justify a very large premium that the competitive providers are actually charging… we shifted the messaging to say why pay more. And this started to resonate with consumers in the United States” Tarek Robbiati – CFO

 

Network is the number one cause of churn

50% of the reasons why customer churn are network related. 30% to 35% are price related and 15% to 20% are service related.” Tarek Robbiati – CFO

 

CapEx is lower presently because Sprint is benefiting from its historically high CapEx

“We spent and historically Sprint has had the highest CapEx to sales ratio of the industry. With Network Vision we spent a fair bit of money modernizing our tower infrastructure. And so we are still benefiting from that historic investment and this is really a positive walking into fiscal year ‘16 and that’s why our CapEx in part was lower in the first quarter of fiscal year ‘16.” Tarek Robbiati – CFO

 

CapEx is also lower because small cell installation is far cheaper than towers and other previous infrastructure

“The cost of those cell sites, small cell site is a fraction of the cost of the towers. So it depends on how many cell sites you need to build in every geography but a cell site is on average costing 20% the cost of a tower. So you need to spend less per small cite as you roll out some of them. So the spend is more scattered over time because of the permitting and the unit dollars that you spend are lower and the two effects combined explain why we guided the market towards the 3 billion mark for this fiscal year. We said less than 3 billion.” Tarek Robbiati – CFO

 

Sprint wants to utilize multiple sources of financing going forth

“It’s important for us that we have a diversified financing strategy. And so we will use different types of source of financing whether it’s high yield, whether it’s asset backed lending or others that I’m not mentioning but — to continue to finance our operations. And that’s really important because now that we have shored up liquidity we’re paying more attention at lowering our cost of capital and lowering our cost of debt. We pay every year around $2.3 billion of interest expense. It’s a very high number and it stands in the way from us becoming pretax positive. You know, it’s not talked a lot about in our – by the analysts who follow us but we do have a fair bit of operating losses on our balance sheet that we would like to monetize and realize the value for. We have $19.2 billion of notes at the end of the first quarter… It’s really important that we have sufficient liquidity to repay them and it’s a gradual process that we are embarking on incremental over the next several quarters to reduce our cost of debt.” Tarek Robbiati – CFO

Sprint (S) at Goldman Sachs Conference 2016 Notes

Every employee has been given equity based incentive, that triggers only if the stock price reaches $8

“Every single employee — over 30,000 employees, we did 30,000 grants. So every single employee has the exact copy of what I — of my incentive package, meaning no equity until the stock hits $8”. Marcelo Claure – President and CEO

 

Prime families are the ideal customer

“Now just putting perspective, a prime customer will stay with you about two and half times more than a subprime customer… And if you could capture that which is what we want, prime families that come more than individuals with a single line, you start seeing the business provide a very different customer life value and profitability changes.” Marcelo Claure – President and CEO

 

Wireless communication industry is aggressively competitive

“I think we’re living in a pretty competitive environment. If you look at Verizon’s advertising, it’s turned a bit aggressive. They hire people to talk about the Sprint network and for also you would be following Verizon, they have not done that I think.” Marcelo Claure – President and CEO

 

iPhone war results in free iPhones

“There is once a year where there is a big launch of iPhones and we all try to basically put up the best offer. I think this year, we are very little creative. I think we all went with a free iPhone. So therefore there is no competitive advantage. So it’s interesting to see Verizon and AT&T react fast” Marcelo Claure – President and CEO

 

Consumers are confused by data plans, and prefer a fixed bill

“And the vast majority say, give me one bill, with a fixed amount that I don’t need to try to figure out how many gigabytes, how many megabyte — maybe you guys are smarter than me, but I don’t know how to use a gigabyte. I don’t know what it really means” Marcelo Claure – President and CEO

 

After years of bashing, PC Magazine gives Sprint some favorable coverage

“I thought the editors of PC Magazine really hated us, they were bashing Sprint for years and if you read PC Magazine today, they have done an awesome piece that basically shows why, yet Sprint is not better than Verizon yet, but we are the story. We’re the comeback story. We’re more reliable than Verizon in certain markets. We’re faster than Verizon in other markets.” Marcelo Claure – President and CEO

 

Sprint believes it has a cost advantage in network structure

“Every single structure comes into a control tower in which we basically figure out what is the most cost efficient and the fastest speed that you can deploy a structure…. We believe that we have a competitive advantage in how we’re deploying our network and what is our cost to basically put a new gear and what’s our cost to operate a network that we feel is not being good but just basically exposing our plan. It’s very different than the way our competitors have deployed networks.” Marcelo Claure – President and CEO

 

Building a network is no longer extremely expensive

“Look at our network today, it’s the lowest CapEx. Now as we densify our network, yes we’re going to increase our CapEx and yes we’re going to increase our OpEx. But never to the tune of the way it’s been done in the past. There is way too many new technologies today. We have way too much spectrum and we’ve been real smart on how we deploy our network.” Marcelo Claure – President and CEO

 

Smaller companies like Sprint favor net neutrality, while its bigger competitors oppose it

“Sprint was the first one that endorsed net neutrality because we believe that when you’re a smaller company, it is not such a bad thing to have the government look over and in many competitive practices that or bigger competitors do.”Marcelo Claure – President and CEO

 

Sprint plans to use its spectrum to get financing

“We have a lot of spectrum and we’re right now — our goal would be that before the end of the year we’re able to potentially basically be able to use spectrum in order to finance the company.” Marcelo Claure – President and CEO

Verizon Communications (VZ) at Bank of America Merril Lynch 2016 Notes

VZ’s plan for AOL and Yahoo is to create a consumer brand company, in contrast to Facebook and Google’s emphasis on social

Yes, I would say just again super high level is, there is two strategies that it won’t work. One is basically anything, but Google and Facebook strategy overall. And the second one is copying Facebook and Google. So, I think, we were successful at AOL, because we chose a very clear gap in the market, where there was opportunity and we invested against it. I believe there’s a gap in the market that’s bigger than we’ve got AOL. And I – with Google search and Facebook is social, I think, we will be the brand company that essentially builds brands, builds consumer brands, but also on the B2B side helps other people build their brands. And the gap in the marketplace are the following two places. Tim Armstrong – Chief Executive Officer, AOL

 

VZ is going to become a brand company by providing a different set of tools, data, and metrics

We’re coming to them with a different set of metrics, different set of data, and different set of targeting criteria around content. And that allows us to have a differentiated place in the marketplace. And then number two is, in a lot of cases, where search and social have gotten tremendous traction, and they’ve done a very good job with that overall.

A lot of the dollars that have lagged behind or in this brand space and that’s where we’re working on a number of things, I think, are super innovative that will be done at the end of this year and into 2017, that will allow us to kind of push new types of metrics and opportunities to those customers overall. So, I – the easiest way to think about us is, if there’s search and social we’re branded. Tim Armstrong – Chief Executive Officer, AOL

 

There is a $90 billion new market coming over the next four to fives years in mobile and mobile video as 3.5 billion more consumers connect

You have a near-term opportunity over the next four to five years of about $90 billion of new market opportunity, just in mobile and mobile video alone. So, if you woke up today and said, hey, the size of this total pie there’s going to be 3.5 billion more consumers that could connect to this network, so there will be 7 billion people connected by the early 2020s. There’s a 90 billion near-term opportunity. Tim Armstrong – Chief Executive Officer, AOL

 

Google and Facebook dominate their market, but there is a clear market space for helping consumers find new customers

“where we come in as we help customers find new customers overall, and we help people measure, how do you find new customers. And that’s a very, very important, I’d say, strategic different lens into the ad marketplace than Facebook and Google are doing.

Again, Facebook and Google are way above us. They’re executing very well. But for the areas that we’re focused on, we think there’s a clear market opportunity for us in the ad technology and marketing space.” Tim Armstrong – Chief Executive Officer, AOL

 

Over a million people watched the Super Bowl on mobile

“But people said, hey, people won’t watch the Super Bowl on their mobile device. the reality is over 1 million people did watch the Super Bowl on their mobile device and it wasn’t everybody gathering around a big screen in a bar or somebody’s house.” Tim Armstrong – Chief Executive Officer, AOL

 

VZ has invested substantially in sports, because sports draw consumers in scale and consistency like a religion

“You look at what the investments that have gone into Yahoo Sports and Verizon put into sports overall through the digital properties. Sports is one of those things that is in a key part of people’s time, many times it’s on the weekend… You’ll see normal human beings during the week put on different clothing and go to a soccer match or a football match for those things. And the same – it’s almost a religion overall… if you went out all the middle schools or high schools in the country and you asked all of the middle schoolers or high schoolers to name every single player on the New England Patriots or name every single player on Manchester United, you would have a 90% percent hit rate” Tim Armstrong – Chief Executive Officer, AOL

Pandora Presentation at Telsey Conference Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

$P Notes From Presentation Telsey Advisory Group Conference

“The average Pandora listener listens around 21 hours per month”

“The other 20% is what is oftentimes confused with as competition for Pandora, which is the on-demand space…that amounts to around 20% of the consumption of audio that takes place in that lean forward environment”

“When you look at how radio consumption takes place, nearly half of it takes place in the automobile, in the car side of things. The other — the rest of it, 35% in the home, 18% in the office is generally how radio has been consumed, again to the amount of roughly 56 hours per month. When you look at what Pandora is bringing to the table in terms of combining the best of what has historically made radio successful, which is ubiquity, which is discoverability, zero work, and ad supported and free to the consumer, that is why roughly 93% of the U.S. population listen to radio still on a weekly basis.”

“We’re now over 8% of the U.S. radio market. That essentially makes Pandora the number one station in every major DMA throughout the country.”

“200 million registered users”

“That traditional terrestrial radio market makes up around $15 billion in total available market.”

“revenue per thousand hours…Desktop…$52 per thousand hours…mobile…$25 per thousand hours”

“when you do direct deals, the challenge with that is every two years– it’s up in the air again. And with due respect to our on-demand vendors, that’s a challenge that in Apple or Spotify, Rhapsody, a MOG, an RDIOall of those companies have to engage in that constant behavior of negotiations with the labels…we are very happy in terms of operating under our compulsory license, the way radio has historically done.”

“what makes Pandora special isn’t creating static playlist, it’s about creating real live dynamic algorithms.”

“Pandora’s algorithms…have to…evolve with both cultural and personal tastes, and that’s really what the power of the algorithms are.”