Transcripts For CNBC Squawk Alley 20240713

Sevenpart debt offer thats getting priced today its so true, carl. I think that word stabilization is really the key to the story here its signs of stabilization versus recovery and i think thats a key distinction and one playing out right now in the market whether youre looking at the ceo commentary on Earnings Calls or interviews on this network in recent days and the fed chairs message yesterday, arguably what were seeing in jobless claims, which are still so painfully elevate right now, but seem to have potentially peaked maybe three weeks ago, that the emerging theme is really that economic recovery is going to, at least based on everything weve seen right now and what weve heard right now, is going to take longer than initially thought, but there are still some of these potential signs suggesting that the worst, i say that with caveats and uncertainty still clouding everything, that the worst is over, whether its the comments we got from facebook on that Earnings Call yesterday or alphabet or macys, which is reportedly looking to open its roughly 775 stores in the next six weeks potentially, but still expects that those stores that come back online first to really only operate at about a fifth of their normal sales volumes, at least at first that being the key, stabilization versus how long this recovery is going to take to play out in the coming weeks, coming months. Jon . I hear you, morgan, and i agree with your general takeaway, but i have to say i also think that a lot of this stabilization that executives are talking about is predicated on the idea that things start to open up in june and that, as a result 100 . We dont end up with the some big step backward in terms of infections and having to go into a second phase of lockdown another takeaway im getting from this earnings season is that a certain set of big Tech Companies, some of that includes what weve called the f. A. A. N. G. Stocks, but they have a lot of cash, theyre pretty dominant in their markets and have diversified portfolios of business, whether cloud, subscription revenue, et cetera, theyre doing unusually well in this environment and for the people who are concerned about high valuations heading into this and was it a repeat of the dotcom meltdown scenario, at least with this first shock it seems the answer is no look at microsoft and how well it was able to balance the advertising related losses in search and linkedin versus the strength in azure and 365. Look at qualcomm and what it was able to do which were going to talk about in a moment look at facebook and its ability to see some stabilization in april because of some direct response advertising versus some of the other categories that are less stable for them carl, i think its a really interesting, but varied picture. Yeah. Indeed i mean there are companies that, to your point about microsoft, have huge utility in the currents of a Global Pandemic, contrast that with some obviously the targeted areas like retail and restaurants where you have in the example of mcdonalds 100 of stores in china now open, but traffic still subdued. We come back once again to the question of, even though reopening may have occurred technically, to what degree are consumers comfortable leaving their homes and getting back to business. Yeah. Thats going to be the key question and its going to be the one that plays out in terms of all that economic data. We saws it with the first read on q1 gdp as well with negative 4. 8 that was led lower by personal spending and you take that and look at the jobless claims, more than 30 million unemployed now and you have to wonder how this is going to play out, how painful these numbers are going to be in the coming weeks and thus how confident consumers are going to be to come back. I want to watch in terms of this, jon, Something Like operation warp speed, the governments push right now to try to get vaccines, hundreds of millions of vaccines, ready by january, which would be absolutely unprecedented and one for the history books and probably make a big difference as well. Thats important. In the nearer term weve got apple, amazon and visa earnings which will give us looks at very important Large Companies in their categories but for now one of the big earnings movers this morning is qualcomm, up and then down, and up again, about flat the Company Reported earnings and revenue beats last quarter forecast of the Current Quarter will see a 30 drop in smartphone sales and sticking to its projections for 5g shipments this year. Joining us is qualcomms Ceo Steve Mollenkopf good morning thank you, jon. Good to be here. I want to talk your specific quarter in just a moment, but first, youve got a great view of the big picture so i want to go there i heard two signals from you last night that on thes surface might seem conflicting smartphone shipments impacted down 21 last quarter and expected 30 on this quarter, but on the other you expect a robust 2020 for 5g how are both happening at once i think you have to look at the only data we have really thats firm is what happened in china and they are a little advanced relative to the rest of the world in terms of when this pandemic hit them. What you saw was a pretty big drop in the march quarter, but then really well on the way to recovery by the time you got out of march and certainly into the quarter that were in. We see that in orders and wie se that in handset reports from our licensees. If you project a similar model to the rest of the world and that model is backed up not only from what happened in china but also kind of what you see in exit rates leaving the march quarter, we have some visibility because of our chip orders and have estimates from some of our licensees, you lead to a view that yes, we are going to see a pretty good drop in the june quarter, but we do expect that to, on at least how it exits june, to be in a much better position so much so that we feel confident with our 5g forecast for the calendar year. Part of that is really being informed by the intensity with which the operators and primarily the hand seth vendors are making sure we keep our schedules and launching phones on time. I think theres a big impact to the near term, but long term, these trends are, we think, quite positive for our business and we thing for others as well. That is a positive signal, steve, on the idea that the oems are still going to launch these phones and are pushing you to do that give us a sense of what that signal really means . It seems to me, if im an oem and i think theres any chance i could still launch my phone this year, im going to be pushing you to deliver on time even if i dont think its a great chance im going to launch this year. Are you picking up a signal that theyre still hoping to launch this year but it might be a distant hope or can you be certain thats what they really expect to do if you look today even in the quarter we just reported we kept phone launches on time based on our deliveries remaining on time and people wanting to launch you got to remember the view primarily from the asian oems is that while we are through this, now we need to get back to normal sell in and if you look at the intensity with the chinese oems and market is pushing 5g, 70 of the new handsets being sold are 5g related and theyre already back to more normal levels of sellout, you know, you can see why they would have a lot of intensity. Even worldwide, with the exception of i would say northern or europe having some difficulties, significant human toll there, be deployment schedules that 5g is on, still being pushed with a lot of intensity, so i think its this is real people trying to meet launch timings and making sure we have it and making sure we have supply, things like the supply chain are humming and now its just a question of how does the consumer respond tell me more now about china and the degree to which we can extrapolate that out for the world when it comes to how this crisis affected smartphone sales . Did it affect all price points equally . When it first hit were people buying lower end phones, higher end phones more . When its starting to come back are all price points coming back equally or more on the lower or higher end. Its broad. There are two trends one is that it responded or it came back much more quickly than we expected, meaning that its recovered very quickly it also the penetration level or the point that is now 5g is actually extended down i think its been a broadbased recovery and, you know, we hope thats the same thing in the rest of the world. Weve given our model for what we think will happen and we hope its helpful thats what were planning for as a company, we think the technologies of 5g be the trend of being connected more, thats the thing weve learned through this episode and we have to be prepared to take advantage of it. One thing that gives me pause is chinas policies for testing, for quarantining and locking down and then opening back up have been different from the rest of the world so i wonder whether the recovery in the rest of the world can track the same way . Tell me, how soon are you going to know whether the recovery in the rest of the world is tracking the way it did in china . You know, were obviously fairly far into the quarter and things like chip orders for us are well known and fairly firm its always an estimate in terms of what the licensees will actually sell in the quarter, but we have a pretty good sense on what thats going to be the question is, what is the exit rate coming out of june and what does the shape of the curve and how does the consumer respond and i think its also important to remember that the phone sales, depending on where it is in the world, has a different mix of online and offline, whether you have to come into a store or not theres a lot of variables to mix into it but this is our best view as to whats going to happen and its informed by not only chip orders but what our licensees are telling us steve, weve been talking about geopolitical tension and friction between the u. S. And china for a while now as it relates to the industry, but now this week youre getting more headlines ate pompeo and probes into the origination of the virus and so forth do you expect rising walls between the u. S. And china to be material to the business well, i would say you have to kind of look at the level the short answer is i think in our industry, the focus is on launching products and technology and the reality is we work fairly well together in ord to do that, from the standard bodies into the delivery of products its a fairly theres a lot of cooperation that goes on, not just isolated to china theres always a theres a lot of, you know, cooperation as well as competition. But i dont see that as the narrative thats dominating the work flow. If you look today its about get these devices on time, help me become a Global Player and how can we make sure the industry and the world is ready for 5g. I think its probably a discussion at the parents level but at the kids level where we play, were focused a lot on our work steve, as the ceo of a Major Company that has operations all over the globe right now, what are the factors, what are the data that are shaping your decisions about how you are making decisions around production, how youre making decisions where your workforce is going to be located and how long how important are things like testing to that equation were in an enviable position because we have suf liquidity and strong Balance Sheet and our focus is making sure the company is prepared to take advantage of really the benefits of 5g, and although were obviously in a difficult position as a country and the world due to the corona 19 situation, but it proved to everyone that this work from home, educate from home, telemedicine, all of the things that 5g can bring at scale in terms of fundamental technology is very important. We are spending a lot of time making sure that we are prepared when this thing snaps back to take advantage of it even in the way in which were working its consistent up with that we have people working from home, still making productivity and launching phones and fixing bugs and taping out chips, doing all of this work, tremendous amount of productivity as lot of our employees are basically saying this is working so well, could we continue to work like this even after we have the ability to come back and i think thats going to be the trend for a lot of places and we want to make sure were ready to do that our geographical separation, our spread around and how we do work, has actually helped us have the infrastructure in place to respond to Something Like weve had to over the last quarter. Im not sure the world is going to go back to what it was before and its probably going to use more and more of the technologies that were inventing and we need to be prepared for it. Youve talked about that and talked about kind of the wide range of risks that we still face what type of defense is qualcomm prepared to play in the second half if we hit more rocky terrain . You talked about the strength of your Balance Sheet how are you prepared to either manage costs or shift things around should you need to . I think like any company we have levers that we can pull, but i can tell you that primarily the discussion is how do we make sure that were prepared for the upside and the snapback, whenever it should occur. Like any other company, we have levers that weekend pull if we had to but i can tell you, the emphasis is much more on the opportunity than the downside concern. Ive been saying i was looking forward to the data to come out of earnings season for a while and this is some of the best that ive seen that just gives a look at the entire Technology Landscape im grateful for that. I wonder, what is it as a Business Leader and Technology Leader that you want to see, whether its from governments, whether its from other institutions that you think would help to lift all of us out of this situation as quickly as possible im talking in terms of whether its testing, whether its policy, what would help you . Well, i think, you know, if you look at the way a company runs, looking inside, this environment is one that you dont have a lot of strategic, you know, uncertainty as to which way to go. You have to get through it, what youre working on is important and be prepared to take advantage of it. I think the next phase that Business Leaders will look for is how do we make sure the psyche of the consumer is repaired as quickly as possible. And i think thats one of the more challenging aspects i dont have any great idea as to how to do that, but i think thats the thing that will have the biggest impact to business worldwide is not so much how they operate internally but how does the market repair itself and the consumer feel comfortable to do many of the things that the broad economy needs for it to be successful. Good insight. I happen to think i think we here at cnbc believe that reliable information is a key part of building that confidence so thank you for doing your part and providing it steve mollenkopf, ceo of qualcomm. Thank you coming up after the break, microsofts head of gaming and president of xbox will join us in a few minutes dont go anywher wee ckn o. Woman my reputation was trashed online. I felt completely helpless. My entire career and business were in jeopardy. I called reputation defender. Vo take control of your online reputation. Get your free reputation report card at reputationdefender. Com. Find out your online reputation today and let the experts help you repair it. Woman they were able to restore my good name. Vo visit reputationdefender. Com or call 18778668555. Welcome back microsoft getting a boost this morning after a beat on the top and bottom line saying the covid19 outbreak had minimal impacts on its results last quarter and seeing an increase in its business including gaming xbox seeing record gaming and phil spencer joins us now. Thank for being with us. Thanks, how are you doing well. Hanging in so when i see alltime record engagement for the quarter, nearly 90 million active users of xbox live how much was existing users and new people coming to the platforms . Absolutely. Weve believed for a long time that gaming is just one of the most social and interactive forms of entaintment on the planet and microsoft has been invested in gaming for a while and at a time when people are physically distanced from their friends and family the fact that so many are looking at gaming as a social outlet is testament to what gaming means. Like you said weve hit nearly 90 million on xbox live, Subscription Services reach over 10 million subscribers its becoming a Strong Social fabric in the home at a time of need which im glad we can be there to offer that service. How durable is that fabric . When sports start to come back online, people go outside as some of the shelter in place restrictions are lifted, is this a Tipping Point and i guess in terms of more broadbased main stream adoption of gaming or will some of that start to slip away again obviously as the world starts to shift back to more of a normal state well see some moderation in certain things, but gaming already, prior to all of this, a third of the worlds population plays video games half the connected world, its nearly the Gaming Business is 200 billion globally, so its a big business already, and i think what youre finding and what were seeing now is people creating friends through their gaming experience, families playing in the home. Weve had over 23 million new friend relationships built through game passes. People are sitting at Home Building these digital relationships with people, socialized through video games im sure there will be some moderation, but i also think gaming activity, whether its in the house, the family together, or people playing online, is just going to continue to grow as it was before the c19 pandemic hey, phil, its jon fortt. Great to see you. Hey, jon. How is this crisis affecting your plans for the launch of the xbox series x . Still the same date . Still the same volumes great question. Yeah were learning every day i say over and over the safety and security of our teams is the most important thing obviously creating safety for our customers online with our services, critically important as you look specifically its an exciting year for us, were launching an xbox this year. It drives so much excitement on the teams and the community. Teams are doing a really good job on keeping our hardware on track. I would say the bigger unknown is probably the game production, just being honest. Game production is a largescale entertainment activity now you have hundreds of people coming together building assets and working through creative on the hardware side we feel good about our plans and feel like our plans, theres obviously some impact to schedules, but overall i think were on in line with where we thought we would be on the game production side were learning every day i feel good about it, but i also need to make sure the security and safety of the teams is the most important thing and not unduly push when things just arent ready yeah. Phil, that was where i was about to go with you, the content pipeline and what thats going to look like the other big focus i think is competition. Obviously microsoft is a giant in this space. Twitch, which is owned by amazon, facebook has unveiled more gaming plans and apple as well how fierce is Competitive Landscape given the fact that there is so much more opportunity for more people to come and use these platforms and be engaged in amore meaningful way. Were seeing the big tech players come in and see this gaming opportunity we think in order to achieve success you need great content, a large gaming community, and more and more were leveraging our cloud assets at microsoft to deliver our products to people on the devices that they already have we have a long history, its why the 90 Million People on xbox live is an important metric. A community of people that are already coming to microsoft looking for their gaming entertainment, looking for their great games, those great mine craft experience, whether its education as kids are learning from home or playing with friends, playing halo online, we have great content from our first party and our third parties on our platforms we have a large community. This cloud asset, something that were really leveraging right now, the partnership between xbox and azure is very strong. We have hundreds of thousands of people even in our preview we havent even launched our cloud streaming in a general availability yet, but hundreds of thousands of people playing xbox games with x cloud and i think the competition will be there just like you said, but i think our long history in gaming is microsoft building up this community and the large content base along with our strength in azure makes us uniquely positioned phil, earlier you mentioned the social aspect of gaming and i got to say in my household i have a 9 and 11yearold and thats probably the biggest change ive seen whether fortnite or mine craft, they are connecting with friends and playing, but i want to ask what youre learning watching that and other things how has what youre seeing in the surge of usage, the surge of social, how is that going to change the way you develop platforms in the future, whether thats how people interact in games or the way games are delivered the way people purchase them. Im glad your kids are having a good time playing, jon some of the things for us that have been foundational to being team xbox is the safety and security of our community. We invest a ton every day ensure as kids are coming online to play fortnite, mine craft, that we have an environment that is protected where parents through the Parental Controls mechanisms weve put in place feel like they have control of who their kids are playing with, what content, how long they play, we have family timers people can put in place, those things are really the bedrock for the growth that were seeing now i think those things have to be in place and we have a long be history with those in place as you as we grow right now with so many people coming online i think thats a great baseline for us the question about new things were seeing i think the thing of people finding their digital friends, finding people who have shared interests online, people like to play fortnite, like to play, you know build things in mine craft, were seeing things like i dont know if you saw the students at m. I. T. Rebuilt the full m. I. T. Campus in mine craft. People had never played together, being helped by people who have played. People coming together to achieve things online. As people are going outside im sure some of that will moderate but were seeing the digital friends and gaming friends that social and community really grow and its not just three or four markets. When you think about Something Like Xbox Game Pass its in 41 countries today and you think about streaming and taking this experience that were building to continents like africa, countries like industry, wheia, theyre not buying gaming consoles but want to experience the same social community your kids are playing as theyre playing and we can really connect the world through our networks and through the power of play. Phil, i wonder, i mean with schools closed, have you seen the average user get a lot younger . You have to imagine that some of these kids are not studying as much with Online Learning and then on live sports, is the return of live sports a liability from a mind share standpoint or good because you need to keep enthusiasm about sports alive the education point, one of the things we identified early on in the kids schooling from home was parents who needed and were asking for some help, and what we did, we have a product, mine craft, one of our biggest games and mine craft education is incredibly important component of what mine craft is. We actually created in our Community Marketplace a specific Educational Forum so parents could go up and find the best educational content that community had created for mine craft and were actually gave some of those packs away to parents so they could as my kids are at home and your kids are at home and hopefully studying, mine craft is the interesting merge are you studying or playing, thats the magic equation for teachers and parents to have something thats a little bit of both on the sports side, the relationship between sports and gaming has always been strong. The athletes play. We have a ton of xbox fans and athletes we want people out playing everything should be in moderation gaming is an alternative for people especially at a time like this but people playing in the home and friends online, we do see an uptick in peoples interest in esport right now because theres not physical sports that are out there and, you know, some of these behaviors and some of these interests people are learning during this time i think will stick with them. All right phil spencer, thank you for joining us today shares of microsoft are up 1 post earnings. Lets get the latest on the coronavirus, sue hereras has an outbreak update for us thank you, jon. Good morning, everyone heres heat happening at this hour ford has made 10 million face shields shipping to all 50 states as it produces one every ten seconds. Flight bookings in china are surging today after beijing relaxed some travel restrictions ahead of the mayday holiday. More than half of the inmates at a federal prison in Southern California have tested positive for the coronavirus and two have died in what officials call the worst outbreak in the federal prison system. The uss Theodore Roosevelt is preparing to return to sea after a thorough cleaning and new crew. Hundreds of sailors on board tested positive for the coronavirus this month. As always, you can get more on our coverage by heading to cnbc. Com back to you. The ceo of slack on the other side of this break stay with us woman my reputation was trashed online. I felt completely helpless. My entire career and business were in jeopardy. I called reputation defender. Vo take control of your online reputation. Get your free reputation report card at reputationdefender. Com. Find out your online reputation today and let the experts help you repair it. Woman they were able to restore my good name. Vo visit reputationdefender. Com or call 18778668555. Want to get to deirdre bosa with a special guest hey. Hey, carl, thank for that thats right, we have slack ceo and founder stewart butterfield. Stewart, hope youre doing well and thank you for joining us. Thanks for having me. Great to be here now its been more than a month since you recommended that all of your employees work from home you along with a bunch of other Tech Companies were early to this trend and you recently said that you wont fully reopen offices until september 1st. What does that look like what needs to be in place for you to get back to some kind of normal and have your employees go back to work . I think the real answer is i dont know theres so much uncertainty at this point and i think people really like to collapse that uncertainty because they dont its an unpleasant state for humans to be in. I cecsee compelling arguments o all sides. Were saying we dont expect to be back to normal until at least september 1st and not expect or require employees to come to the office we may before then open the offices to make it available for employees who need to get out of their house, but i think theres just, you know, still so much we dont know right are you encouraged by trends that youre seeing do certain testing requirements need to be in place for that to happen what are your indicators to know when it is time . You know, ultimately an organization like ours who is surviving well, working from home, in other words were still productive and serving customers and making new developments, has much less of an incentive. Theres no prize for being first here so i dont have any specific expectation or requirement. Its more just wait and see. So stewart, on microsofts Earnings Call last night teams was mentioned 42 times that was up from nine times the previous quarter even azure was mentioned less at 35 times sounds like microsoft is pouring everything into teams. Now i know that the competition is fierce but at the end of the day, slack has substantially less cash on hand, less of a reach into the enterprise space. Are you ready for this battle to heat up . Are you seeing signs of it yo yourself i dont know that what weve seen over the last couple months is that teams is not a competitor to slack. They talk about the product and never mentioned the fundamentals of slack and its been three plus years at this point that theyve been bundling it and giving it away for free talking about us and over that time weve grown our entire enterprise business. All of our grid customers is more than 100,000 in revenue has come up. This perpetual question at this point a little puzzling for us, that at some point microsoft is going to kill us another sense they have to be frustrated at this point they have 250 Million Office 365 users, announced an increase in growth of teams to a little under 30 . After three years of bundling it, preinstalling on peoples machines and insisting administrators turn it on forcing users from skype to teams, they have 29 , which means 71 of the users have said no, thank you. Hey, stu, its jon fortt. Good to see you. I wanted to ask you more about that competitive dynamic, because in some sense its the classic best of breed versus large incumbent battle, but i think its hard for us to see and understand sometimes how you view the Competitive Landscape and the path to the customer right now when so many customers are now aware of the need for a product in your category, whats your approach . Whats your strategy for converting customers and just in general continuing to grow your base the same stuff weve always done slack very often starts in a large organization, even our biggest customers which have hundreds of thousands of daily active users, a Million Dollars or more a year, they start with a work group and start with someone who thought i can improve how this happens, i can improve communication inside of this team or this Business Unit or this organization slack usage grows. We get in touch for them for a large organization, obviously it can be a complicated thing for people to buy Software Security review and vendor approval process implementation details, administration stuff, regulatory requirements for them, and in that environment it can take many months so we have sales and Customer Success teams that work with Large Organizations to do enormous deployments what is it that you have to do thats different then i imagine there must be something, even if youre able to work well from home, your customers are probably in different locations, their processes are different sorry i might have misunderstood the question its very different. In some cases it actually seems more effective for me to come on the show, typically i would have been in new york, i would blow 45 minutes going up town to the studio, spend time in the green room im going right back to work after this and just finished sml else immediately before this for our teams theyre more efficient. Customers are paying attention because this is an urgent issue for them and we dont have to travel you might, for a twohour meeting, there might have been 14 hours of overhead now does that sustain itself thats hard to say kind of looking further out second half of the year, you know, field Marketing Programs are not running, events not running, executive Briefing Centers are closed but were in the same position as everyone else and ask yourself, our are ty teams going to be spending less net on software, 6, 12, 18 months from now . Maybe at the margins, maybe temporarily, but if anything this has accelerated the Digital Transformation and adoption of software and come out of this, whenever we do, which could be 18 or 24 months, in a much stronger position. Us and the whole software industry, frankly. Yeah. Stewart, this is morgan, along those lines, slack has been focused on business and workplace, whether it is within the office or whether it is now increasingly folks that are working remotely, i wonder with so many other types of entities, institutions and industries also remote right now and the possibility and im thinking of like harvard saying theres a possibility that theyre going to be doing Classes Online come the fall as well, do you see other opportunities to expand into some of these other areas as well . Could they be potential Revenue Streams for you . Yeah. We actually do pretty well in education. I dont im not sure which customers were allowed to mention so i will stop but most of the ivy league and famous universities in the united states, some big state schools like arizona state, is a customer its not that slack is an open messaging platform for students because i dont think that would be that useful, but deeply integrated into the faculty and delivery ofeducation materials i think that is a significant market for us and exposes slack to students which is great you know, thinking a little bit more broadly, organizations are being forced to do things in a different way and one of the things that becomes more important when you kind of if youre an organization that is reliant on in person meetings to get work done, one of the things important is more discipline around communication the cost of coordination and making sure people are on the same page, generating this alignment becomes more expensive. Recently a couple days we had viacom and cbs and they rolled out slack for 20,000 users there and we think about the merger going on kind of knitting those companies together at a time when theres the Global Pandemic happening, theres real challenges and its an honor to be able to help in that context but thats happening everywhere. A challenge organizations have to up level how they communicate and rethink processes, from new higher on boarding to employee performance reviews to how they run their sales organizations. Given its not going to change overnight the investments make a lot of sense hey, stewart, its deirdre again. Earlier this month you raised 750 million in a Debt Offering that was upsized and carried very attractive Interest Rate of half a percentage point. Do you feel you need to continue to preserve cash or potentially even raise more capital, especially since were in these Uncertain Times . Microsoft is ramping up and you can secure it at such an appealing rate theres defensive reasons and theres kind of offense reasons for us to do that. One is we dont know how bad things are going to get on the macro and how long the recession is going to last or look like. Having more cash, even though we were in a strong cash position going in it 750 million already on the Balance Sheet, but my motivation as one of the people who made the decision was much more on thes over. The acquisitions we can make, youre seeing softness in the advertising market, our dollars will go further there, i think were in a relatively much improved position with respect to competition for talent and we want to be really aggressive there. I dont know that we can spend any more or that any more of a reserve would be useful at this point, but we want to be aggressive while we have this enormous opportunity. That Capital Raise was more of an offensive play but in a defensive play, a few weeks ago you also raised some caution about sustainability you said that its hard to know how much all of the explosive growth that you have seen is sustainable, given all of the uncertainty we are seeing. How is that going . Are you locking down more enterprise deals what are you seeing among your Small Business customers do you feel any kind of responsibility to help them out renegotiating deals or delaying payments we actually have done quite a bit of that and we proactively reached out to our customers we know are most affected and a lot of businesses who kind of ground to a halt, revenue falling 80 or 90 and businesses that thought they had a year and a half or two years of cash on hand have 45 days of cash on hand. Were trying to find solutions that work for them i think the growth is unsustainable in the sense that we would have more than the entire population of the world using slack if the rate of increase kept constant, so i think what im more concerned about is in the back half of the year, how many layoffs do we see or bankrupts with we see, companies or organizations pulling back and thats the question mark for us the initial stages of this have been a positive for the business, more new users, more new customers, more usage among existing customers, the expansion, but we are starting to see Small Businesses starting to pull back we have 110,000 customers as of our last earnings, so you can imagine most of those are small and medium businesses and weve yet to see what the real impact is going to be stewart, thank you for being with us today and i like the new background, like that you switched it up. Hp garage thank you. All right deirdre, thanks you so as well and now new york state is out with its latest numbers on covid19 here is Governor Andrew Cuomo just moments ago. The opportunity god gave us hospitalizations are down. Good news. Net change in total hospitalizations down, good news change in intubations down, good news new covid cases slightly down, 933, but still unacceptable. But down from where it was number of lives lost, still terrible 306. Optimist would say the number is on the decline realist would say, thats a tremendous amount of pain and grief for hundreds and hundreds of new yorkers who lost a loved one. Big question that is new york Governor Andrew Cuomo with the latest numbers regarding covid19 in the state right now, according to those numbers, everything is trending down, whether its hospitalizations, whether its deaths which do unfortunately continue well continue to keep an eye on all of that and bring you headlines as we get them when we come back, the big earnings parade in tech. Well break downs the numbers weve gotten and the numbers were awaiting next with the ceos of microsoft, plalphabet ad twitter and why elon musk is so mad about it stay with us what the [ bleep ] do you think. People outrage. It will cause great harm not just to tesla but many companies. While tesla will weather the storm there are Many Small Companies that will not. Its only human to find inspiration in nature. And also find answers. Our search to transform. Farm waste into renewable natural gas led chevron to partner with california bioenergy. Working to provide an alternative source of power. 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Its been a crazy 24 hours of tech earnings, whether its facebook, microsoft, tesla, c l qualcomm and apple and amazon on the way. Yeah, thanks, carl i think there are some Common Threads for the large digital ad platforms that have reported alphabet, facebook, snap and twitter. While the pandemic has led to accelerating User Engagement growth, its caused this major downward pressure on ad demand starting in march. Thats continued into april to varying degrees depending on the platform performance down units have performed better than brand advertising which has really fallen significantly gaming, ecommerce, cpg while people arent home while travel and auto have declined significantly. It really depends on the business mix of when youre looking at the platforms Google Search has high exposure to travel. That led to a 15 decline in their search biz facebook has a bit of a different mix. They have benefitted from their exposu exposure on the whole, its actually been better than investors and we thought and youve seen the stocks run up a bit. Mark, is there anything that argues against the notion that april will be a trough month on just about any metric you use except for things like capex and things like that to kind of echo johns point, its a very clear difference in the stories between traditional, call it brand advertising and the more direct response thats driving the Digital Events or activities it wouldnt surprise me at all on the latter if we already passed the mid to late part of march. Were seeing recovery on those ads coming into april. It looks like its on the way back up. Interesting for so long, 20 Revenue Growth was like this constant in our lives. It was unthinking some of these big names would get below that facebook, 17 year on year is the latest in history. Do we get back into that 20 range . We dont think so we have growth in the low to mid Single Digits the rest of the year there is no visibility past april. The management google, facebook, all reiterated that advertising is correlated with gdp growth. That thats why were forecasting declines google historic ad decline for the year now and kind of limited growth for facebook. Theres so many different segments and factors to assess what are you expecting and how have the results we have gotten so far, served as potential read through this this afternoon . Absolutely. I think were looking across all three businesses and trying to figure out where things land the percentage of thats happening online has on the increased. I think every one is expecting a reasonably good number there i think with googlegoogles clo business, i expect them to follow suit. Their decision to focus on only selling through essential items. You kind of cut off a portion of potential advertisers. They may be a touch slice on the ad side but the strength we have seen on the direct response business which is what amazons ad business is all about, its you should see some pretty strong numbers across the board. John, ill put the same question to you especially since we got the results from ebay and when we look ahead to next week, we get more e commerce names yeah. For amazon, its kind of like its such an unfortunate situation but its holiday like demand they added 175,000 people to their fulfillment infrastructure last Holiday Season they added 200,000 people in north america. Youre seeing a flux of demand were expecting very strong results for amazon and very strong top line guide and also to echo the other points, the Cloud Business should do fairly well given what google and azure have come out with advertising is insulated most of their ad business is product search it should be good and the stocks been a great stock thus far this year mark, is a june ramp to reopening up the u. S. Economy priced in to most of these stocks at this point a lot of companies seem to be suggesting that they expect some kind of a recovery to start right around then. Its great question the answer is i dont know i think what we saw with the retail some of these stocks have been performing, we learned the bottom feels like were kind of there and maybe slowly recovering that wasnt as bad as people thought. We saw numbers where some analysts were expecting facebook march refr knvenues to decline. They kind of kept flat i dont know if anyone has a sense of when the recovery will kick in whands it will look like they can plan their spend two o or three months out. A very different horizon in terterm terms of how we look forward as im watching all of this unfold, i wonder is the Regulatory Risk to some of these companies now reduced because theres been so much focus on how essential they are and their size in some cases has been kind of aboon to them but arguably to a lot of others as well. Yeah, i have to think in this environment that the Regulatory Risk would be reduced. I think going into this year probably facebook was kind of number one target. Alphabet 1a and amazon less so i think in in environment and i think hear Mark Zuckerberg talk and Alphabet Management speak about all the things they are doing to help governments and consumers. I agree. I think its pull back for the time being okay. Thank you, guys. So much to absorb. Were not nearly done for the week thank you very much. Were going to watch for some comments from the president. Hell been talking about Contact Tracing in new york state. Now the Washington Post has a piece up in which they say that u. S. Officials are starting to craft elements of punishment against china. For more on this well go to eamon. Theyre saying u. S. Officials are beginning to explore proposals for punishing or demanding financial compensation from china for its handling of the coronavirus pandemic according to four Senior Administration officials theyre saying theres a meeting expected thursday. That is today. To begin mapping out a strategy for seeking retaliatory measures against china. Well keep an eye on that and get you more soon we have it all right well look for some more headlines. Lets get to the half and the judge. Appreciate it. Thank you very much. Breaking News Coverage of the markets continues now. Welcome to the Halftime Report im scott wapner stocks lower after a pretty good stretch of updates s p still on pace for it best month since 1987 we also got big earnings on tap tonight with apple and amazon reporting. Well be all over that well do that with our investment committee, which is with me as always. Joe is here today along with josh brown, and Margaret Reed is the senior portfolio manager