Weekly Tech Update: Tech Booms in America and China
Welcome to The Macro Mail’s Tech Newsletter. Every week we highlight stories from three technology subsectors and provide insights into their implications. Today’s focus is on Earnings, Cybersecurity and Chinese Tech.
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CONSUMER TECH: Apple Beats Earnings
In the tech industry’s first big quarterly earnings report of the season, smartphone manufacturer Apple Inc beat earnings expectations in the most recent quarter.
Apple reported a net profit of $28.8bn for the period 1st October to 29th December 2020. This was up by 29% from the equivalent period the previous year, far outpacing the analyst forecast of a 6.3% growth rate
The iPhone constituted 59% of total revenue, an unexpectedly high proportion, highlighting the incessant demand for Apple’s flagship product
The fastest growing area of Apple’s business was the sale of iPads, with net sales up 41%
This was followed by the most recent addition to Apple’s business, with “wearables” - including their smartwatch and wireless headphones brand Airpods - seeing net sales rise 30%
Apple shares slipped after-market by 2.7% on this news. Meanwhile, shares in struggling IT manufacturers Nokia and Blackberry have skyrocketed by 30% and 100% in the past 5 days, driven by speculative activity. Nokia issued a statement saying that they were not aware of any fundamental reason for this sudden increase
Apple’s earnings represented the second-highest nominal quarterly earnings ever reported, setting a bright outlook for tech in this earnings season. Driven by the same boost in consumer spending, Microsoft reported a 17% rise in profits after a surging demand in PC and gaming sales, and further proliferation of its cloud computing services. It is hoped that a continued economic recovering into 2021 can spur further growth in the consumer technology industry.
CYBERSECURITY: EMOTET Takedown
An international collaboration of law enforcement agencies has disrupted EMOTET, which they describe as the “world’s most dangerous malware.”
EMOTET was first discovered in 2014 as a banking trojan (an infiltrative computer software designed to steal financial information)
EMOTET was mainly spread through spam emails with fraudulent hyperlinks or infected attachments, and was responsible for 30% of cyber attacks. As well as corporate targets, it has been used against universities, hospitals and courts. Due to the malware’s reach, rapid propagation, and ability to avoid basic antivirus software, EMOTET was described by the German Federal Office for Information Security as “the king of malware”
Authorities from the US, EU, UK and Canada worked together with anti-terrorism agency Europol and law enforcement agency Eurojust. They targeted EMOTET infrastructure, rerouting computers that had been running the malware to prevent further spread to new targets
In December, we reported on a cyber attack on the Finish Parliament, and highlighted the increasing threat posed by malware. The disruption of EMOTET represents an important step towards securing the safety of the internet. It will be hoped the the US and EU can continue to work together to combat cyber-crime.
CHINA’S TECH BOOM: Ant IPO? TikTok earnings
Last week, we reported that the Chinese tech billionaire Jack Ma had been seen on a live video for the first time in three months. This week, China’s central bank governor Gang Yi has indicated that the IPO of Ant Group, a digital payments company backed by Ma, might still go ahead.
Ant Group was expected to go public with a valuation of $313bn in October 2020, before Chinese authorities intervened to scupper the IPO just days before its launch
Ant Group offers digital payments service for 730 million monthly users, but has come under attack for supposedly monopolistic practices. Alibaba, Ma’s ecommerce company, is currently embroiled in an anti-trust probe
Yi described the Ant Group IPO as a “complicated issue”, but suggested that if “you just follow the standard of legal instruction, you will have the result,” seeming to indicate that the government may allow Ant Group to continue operations after some sort of mandatory restructuring to reduce its economic power
Meanwhile, Bytedance Inc, the owner of social media app TikTok, has reported $35bn in earnings for last year, more than double the previous year. This demonstrates the ever-growing reach of Chinese IT infrastructure, even after the Trump administration’s attempt to ban TikTok in the US
Bytedance is rumored to be considering an IPO in Hong Kong for 2021
China’s technology industry has been perhaps the key player in expansion as a major player in the global economy. Until recently, the central government had allowed almost unconstrained growth; while the actions against Jack Ma demonstrates their resolution not to allow any corporation to grow too powerful, the optimistic statement from the central bank this week hopefully indicates that Chinese tech firms will be allowed to continue their explosive growth and innovation.
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