The Frightful Five: Monster Valuation

2. November 2017.

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The total combined value of the Frightful Five — Alphabet, Amazon, Apple, Facebook and Microsoft — is indeed a frightful amount, most recently tallied at $3.3 trillion: a full trillion more than the companies were collectively worth just two years ago. Individually, each company has a market cap greater than half a trillion dollars.

Each enjoyed solid two-digit growth over the past year, with Facebook seeing the most at 55 percent. Even Microsoft, bringing up the rear, still grew 30 percent since this time last year — surpassing $600 billion and finally beating its dot-com boom high.

All five technology companies are facing political backlash, though — and probably increased regulations over their products and services, as some lawmakers are nursing antitrust concerns. However, investors seem to be nursing no such thing. Stocks for all five companies are trading at or near all-time highs.

Since it appears the Frightful Five will continue being frightful for quite some time, let’s take a look at what they’ve been up to this week — just in case you missed it.

Amazon

Paging Dr. Bezos! One Wall Street analyst speculates Amazon plans to not only get into the pharmaceuticals market, but the professional medical device market as well. Earlier this month, the eCommerce platform was granted wholesale distribution licenses in several states, which many assumed would be used to sell prescription drugs. However, the simultaneous launch of the company’s B2B medical device page could suggest Amazon has other plans.

Following the example set by Wayfair, IKEA and Target, the company recently introduced an augmented reality (AR) shopping feature allowing customers to virtually preview how products will look in their homes or offices. Amazon’s AR View feature doesn’t stop at furniture, however — it also works with electronics, home décor and toys, among other categories.

Fees on non-perishable grocery items are going down as Amazon hopes to encourage grocers who list on the site to add more products and keep prices competitive. It can be difficult for grocers to profit from online sales of inexpensive retail products, and the marketplace’s 15 percent seller fee wasn’t helping. That fee has now been slashed to 8 percent for items priced $15 or less.

Apple

To everyone who insisted iPhone 8 sales were only weak because consumers were waiting for the iPhone X: all right, go ahead and say, “We told you so.” Demand for the iPhone X, which became available for pre-order last Friday, has been so high that shipment dates were pushed back to December. However, more recent news reports suggest early preorders may be filled on launch day after all.

The opposite was true in China, where demand was so low that vendors were slashing the iPhone X’s price by as much as 20 percent to try to move units. That’s a steal by any standards, but particularly in Hong Kong where iPhones can sell for as much as four times their retail price.

Before the iPhone X could officially be released, however, an employee was fired for letting his daughter film a vlog featuring the unreleased handset while visiting the company’s campus. The daughter posted the video online where it quickly spread to YouTube, tech websites covering Apple goods and other outlets.

Facebook

The official count: 126 million Americans may have been exposed to content placed on Facebook’s platform by Russian sources during last year’s election. That amounts to one-third of the population. To Karen Webster, that begged the question: Is Facebook too big to govern?

The social media giant was slated to give testimony before the Senate Judiciary Committee on Tuesday (Oct. 31), along with executives from Twitter and Google. Facebook estimates approximately 29 million Americans received content via 80,000 posts generated by 120 pages, then spread the content to as many as three times that many people by liking and sharing it.

In better news, Facebook’s Q3 earnings and revenue came in higher than expected, showing strong mobile advertising growth with more than 6 million advertisers now on the platform.

The company saw $10.3 billion in revenue — a 47 percent increase over last year and well above the $9.84 billion analysts were anticipating. Despite that 47 percent increase in headcount, however, operating margins reached 50 percent, up from last year’s 44 percent.

Google

Alphabet, the parent firm of Google, delivered knockout Q3 results, reporting 24 percent growth and revenues of $27.8 billion. Emerging technologies and “Other Bets” sales growth increased 53 percent year-over-year, and “Other Revenues” from smartphones and cloud-based business grew 40 percent.

As Google builds its own consumer-facing flights service, it has announced it will be shutting off developer access to the API service that automates data for airfare search engines, potentially impacting third-party travel sites like Orbitz and Expedia. Those services may instead have to build their own databases by going directly to the airlines. The shutdown will take place on April 10, 2018.

In an unintentional social experiment, Google accidentally proved consumers have very strong opinions about how a cheeseburger should be assembled. The tech giant’s new cheeseburger emoji generated controversy across social platforms by placing the cheese slice beneath the patty rather than on top of it. While the interwebs agreed the cheese belongs on top, Google has yet to change the emoji, despite promising to do so by Monday.

Microsoft

Microsoft signed on as the primary cloud provider for American energy corporation Chevron. Throughout the seven-year partnership, Chevron hopes to accelerate the application of technologies such as analytics and Internet of Things (IoT) to improve performance and efficiency.

In the earnings realm, Microsoft topped Wall Street estimates as well as its own, reporting $24.5 billion in revenue. The company’s cloud business grew 56 percent over last year, catalyzing revenue and margins. Its $26 billion purchase of LinkedIn last year was validated by the $1.1 billion in revenue the professional social network contributed, demonstrating the success of the platform’s monetization.

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