Data Sheet–Apple’s Stock Price Rising, But for How Long?

I sympathize with the average investor who isn’t aware of the market’s odd ways on days like Wednesday when it comes to Apple.

The once-again nearly trillion-dollar company reported late Tuesday what common sense would suggest was, in Wall Street parlance, a turd of an earnings report. IPhone sales dropped 17%, revenue fell 5%, and the company said matters would have been worse but for heavy iPhone price discounting, particularly in China. (Apple’s smaller but growing services business shone.)

The market’s response? Apple shares jumped almost 5% in heavier-than-average trading.

The reason, as it often is in the stock-trading game, had to with expectations. Investors who get paid to predict such stuff thought Apple’s results would be worse. They also were heartened by Apple’s forecasted range of next-quarter earnings.

Not all analysts were impressed. Toni Sacconaghi of Bernstein frets that the mild decline in predicted iPhone revenue “essentially implies the most benign sequential [third-quarter] iPhone revenue decline in history.” He also worries that while Apple’s valuation has raced back to the trillion-dollar mark the company hasn’t resolved “the fundamental question of lengthening iPhone replacement cycles.” In other words, like Maytag washer-dryers of days of old, consumers are holding on to their iPhones longer than before.

Investors won’t tolerate that for long.

Investment Desk

Peek-a-boo. Speaking of Apple, we were led to believe by Apple execs that financial details of the company's legal settlement with Qualcomm would not be disclosed. But on Wednesday, Qualcomm tipped a $4.5 billion to $4.7 billion revenue gain next quarter for the settlement. Qualcomm also reported revenue last quarter fell 5% to $5 billion and issued a tepid forecast for the "next couple of quarters." Its shares, up 51% since the April 16 settlement, were down 1% in premarket trading on Thursday. The forecast comes as worldwide smartphone shipments dropped 7% in the first quarter, "a clear sign that 2019 will be another down year," IDC reports.

Charge card. Elsewhere on Wall Street, Square failed to cash in with its outlook while Fitbit ran stronger. Payments processor Square said its gross payment volume rose 27% to $22.6 billion but it forecast less profit and revenue for the next quarter than analysts expected. Square's stock, up 31% this year, declined 6% in premarket trading. At wearable maker Fitbit, revenue rose 10% to $272 million as the number of devices sold rose 36% to 2.9 million. Fitbit shares, previously up 8% this year, gained 2%.

Uninvited guests. There may be a new privacy boss at Facebook soon, and one who doesn't exactly please the company. As part of settlement talks with the Federal Trade Commission, Facebook is considering appointing a "federally-approved privacy official," Politico reports. At Google, the company is voluntarily giving users more privacy control, promising a new tool to adjust how long it keeps location, search and other personal data. And on the flip side of its Duplex appointment-making A.I. Assistant, Google announced CallJoy, an A.I. Appointment-taking assistant for small businesses.

Don't cut me off. A new law in Russia will seek to create a “sovereign Internet” that the government could easily disconnect from the global Internet at any time. Internet service providers in the country will have to route all traffic through servers controlled by Roscomnadzor, the country's Internet censor.

Rocket ships. The venture capital investing superstars at Andreessen Horowitz reloaded, completing fundraising on two new funds with $2.75 billion of fresh dough. The bulk of the money will be for "late stage" startups. What's that? "New companies that are just hitting escape velocity, and that may need a more venture-like mindset to support their further company building and scaling," the firm explained in a blog post.

Investment Desk

As noted in the newsletter last week, Hertz is suing Accenture for $32 million over a web and mobile app design project gone horribly wrong. James Blizzard, CTO at web app design firm Browser London, knows a few things about that sort of project. And he's delved into the lawsuit and come up with a few recommendations in a blog post. He finds plenty of blame to go around:

I don’t intend to shift all the blame onto Hertz; it has clearly been wronged. However, in my opinion, the company’s senior team were too trusting and didn’t give the project the attention it deserved. Project owners need both their own internal expertise, as well as that brought in by a partner. It’s only when these two pools of knowledge work together that you can plan an effective future roadmap, provide ongoing development services and constantly review your technical and strategic plans. This approach should be built into a relationship from day one.

Looked at from this perspective, it appears to me that the Hertz executives in charge simply didn’t understand that the website project would inevitably continue beyond the initial build. If they’d have recognized this, they would have understood that they required at least some talent on their side of the arrangement that was focused on the project full time. The company should never have let that talent go, as it allegedly did.

Investment Desk

When Artificial Intelligence Knows Too Much (or Too Little) About You By Michel Lev-Ram

Tesla Has a Lucrative—but Fleeting—Window in Europe By Geoffrey Smith

Twitter and Instagram Are Starting to Imagine a World Without 'Likes' By Alyssa Newcomb

A Women's New Deal? Supermajority Hopes to Create One By Natasha Bach

Aluminum Scam Results in Two NASA Mission Failures By Chris Morris

Investment Desk

I think I probably read every single Encyclopedia Brown story ever published. But I certainly didn't know much about the author of the tales of the fifth grade detective, Donald J. Sobol. It's a bit of a mystery story, but you don't have read to the end to get the solution.

This edition of Data Sheet was curated by Aaron Pressman. Find past issues, and sign up for other Coins2Day newsletters.