Expectations for users and ad revenue. A drug also showing some positive results that may have been getting investors some optimism. To facebook, tesla and microsoft in a moment. Lets bring in taylor riggs to wrap up the day that was. Information showing that gdp pal gdp fell 5 . Maybeas thinking that things were not as bad as we think and that there was a sign that things could stabilize if not improve. You could say that was going on in the markets all day long. We got that data of a 4. 8 percent drop in gdp. Markets were already shrugging it off. Looking ahead to that news that we got from gilead. Tech is doing the best stuff. 3. 6 today. Those smallcap stocks are also some of the biggest out performers as we talk about how to reopen the economy. Gilead sciences was the driver behind all of this. They were up 5. 5 . Helpedxperiment drug coronavirus patients recover more quickly. Some 11 days instead of 14 or 15 days that was initially expected. Dr. Fauci came out and said this was a very positive sign. Past some of the negative data that we got this morning and forward to future optimism. Tesla and microsoft shares skyrocketing. Facebook even higher. Lets start with tesla and microsoft. Tesla beating revenue expectations. Still saying they have the capacity to deliver. 5 million cars by the end of the year. Microsoft is driven by the by a lot of this remote work. Rap of the numbers. Hears numbers out of both companies. Getting a big boost on the bottom line despite a lost year over year. Free cash flow is negative. 900 million. That is worse than the expected drawdown. The First Quarter they said was impacted by deliveries. They had a goal of 500,000 deliveries in 2020. They will revisit that in the second quarter. We will get details until about june or july. Microsoft, similar story. Big numbers on the top line. 50 yearoveryear. The cloud is better. Cloud growth was a bright spot for the company. That was similar with microsoft as well. Of course, personal computing. We are all staying home and working from home. That benefited as well. Extent, wetain expected microsoft and then tesla. Facebook was the surprise. 2. 6 billion monthly active users. A significant increase in ad revenue despite that slow down toward the end of the quarter. What is your take . We learned this from google yesterday. Things were bad. The Advertising Market was weak. Not as weak as we saw. Estimates came in related to alphabet were much less than expected. You see a similar theme coming across facebook as well. Revenue was flat in the first few weeks of april yearoveryear. It was not negative. They are already showing signs of stability in that Advertising Market than the first few weeks of april. April is supposed to be the worst. If you see revenue come in flat on a yearoveryear basis, that is a big outperform a relative to expectations when we thought that ad revenue would decline significantly. It is showing these big Advertising Companies are proving to handle this better than we thought. Much for thato update. We will continue to monitor these headlines as they will in and the Earnings Calls begin. I want to bring in deborah williams. A marketer who covers facebook. I wouldve to get your take on what taylor mentioned earlier. We are seeing flat ad sales. For the first three weeks of april. The question is if you could get worse. ,he real concern is about q2 not q1. What is your overall take . Think those are excellent points. I agree. Q1 was a better quarter than most expected. I do have to remember to say that january and february were premuch normal months. We really only had march as being the month where there was a lot of concern and downturn. For those that were saying that q1 was going to be negative, i dont think we ever thought that in our particular models. You are right, looking at q2, there are a couple of things that stood out for me. I want to push back on the idea flat forbook has been the early part of april. Is this a good start . If you compare that to what snape reported last week, snape snap reported last week revenue actually grew in the first few weeks of april through april 19. Facebook said it was flat in the first three weeks. If you compare those two companiesS Performances, you have to wonder what is going on here. It makes me think that facebook S Performance is worse than people think. In terms ofbility flatness, that is not necessarily good. That is something i would want to Pay Attention to. Yes. What is your sense of how bad this could get based on signs you are seeing in other places . Unfortunately, no one has a crystal ball on that. I think one of the state issues is that businesses are reopening at vastly different rates around the world. You have some countries where business is starting to reopen. You have other countries with the regions in those countries like the United States where businesses are very much locked down. Any recovery that is going to happen at facebook is going to be incredibly slow. It has to be. Varying opening rates going on, you dont know what businesses will be open and to what extent and in what markets. There is a lot of tough change and challenge ahead for facebook. Itself in a lot of types of businesses. We have not talked about facebook exposure to Small Businesses. They are hurting horribly around the world. Facebook has always touted the fact that they have 8 million advertisers. And as a large percentage large percentage of those are Small Businesses. These businesses are trying to stay afloat. Rather than spending more on marketing. That is a concern that we have not seen fully play out. Small businesses. One big concern, what about instagram . Whatsapp . What could he other pain points be . Instagram has always been a bright spot for facebook. We think advertisers are still very intrigued with instagram, stories, shopping related ads. That is where advertisers will continue to play. Whatsapp, the advertising potential within whatsapp is nonexistent. Facebook has pulled back on advertising within whatsapp. Messenger does have ads. We dont hear of a lot of attraction a lot of traction on messenger ads. This could spin even further beyond q2 as we think of some of the initiatives facebook is taking in terms of opening up that you messaging and video chats. That is something they announced for messenger rooms. We could see at revenue potential in those areas but that is further down the road. We will have to continue to whether through this difficult q2 before we start to see any momentum on newer, experimental areas of advertising like that. How do you think facebook fares compared to google . We heard of google yesterday, they are both getting the lion share of digital ad dollars. Does google have an advantage given that its bread and butter is search that facebook does not . I think they are in similar positions. We saw that in the relative earnings reports between the two companies. Google does have potential risk because it has a lot of Small Businesses as well that are part of the advertising roster. It did say in its earnings yesterday that a lot of the searchers that were happening were not necessarily related to commodities, the things that lend themselves to advertising. They were probably related to things that have to do with covid and staying at home. Relatable. Ess it closed off those keywords. If we were to compare facebook and google, they have both been in relatively similar positions even though the temp said advertisers they would typically reach out to me in some cases be different. In the meantime, we are getting headlines from earnings, zuckerberg saying that covid19 will have a continuing impact on the business. That is alluding to what you said there. Even facebook, even Mark Zuckerberg cannot foresee this, how dangerous is that . At think it is dangerous for every business. This has been said many times before. We are in unprecedented times. There is uncertainty around the economy, it is weighing on every single business around the world. I am not surprised that Mark Zuckerberg does not know what is ahead. It is something that a business like facebook is going to have to confront along with all of the other businesses that advertise on facebook. That is where it is going to come down to. Advertisers,jor the auto companies, the entertainment companies, the travel firms that typically advertise on places like facebook and google, when they are starting to be able to come back and open business. There is so much uncertainty about the future for those businesses that i not sure exactly how theyre going to whether this. We would all be coming to you for the answers. Debra williamson, thank you for sticking with us and giving us your thoughts. Have some breaking news. We have comments from the president and also the governor of florida. They say they are planning to start reopening their economy on monday, may 4. The president saying he wants the country reopened and is concerned about being closed too long and that he would intervene if decisions made by the state were unsafe but he wants to see sports stadiums packed again. We will see how other states respond to what the president is saying. We will dig into microsoft Earnings Results. Is all this remote work from home driving activity in the clouds . We will take a look. This is bloomberg. Continuing our look at tech earnings, microsoft shares also skyrocketing after hours. It is all the new activity in cloud and working from home. I want to bring in glen odonnell. We expected microsoft results to be good. Morgan stanley naming microsoft its topic in uncertain times. Is there anything surprising about these numbers . Glen not really, we expected them to do well. It has been one of the companies that is still shining through all of this. It hasprisingly because been providing a lot of the technology that people need to get through this. All of the work from home and teleconferencing and that kind of thing. Microsoft products have been in high demand. Where do you expect to see continued growth . Are you concerned that as the economy starts to reopen, we are hearing about it in florida. Some of the gains that microsoft has made, whether it is there teams or products or elsewhere, do those gains decline . Lenn we will see some users decline but much of what is happening now will continue as the new normal as people start going back to the offices, not everybody does. I think we all learned how useful these technologies like microsoft teams, zoom and others have been. I have to say that i use all of these systems. I have been personally very happy with the quality of the voice and video. It has been very good. I think that is a testament to how microsoft has not just designed is technology but also handled the load. Most of these Prescription Services subscription services, you assume you will have a certain amount of Customers Using it at any time and then you have way more. You may run out of capacity. That has happened with microsoft. It has happened with everybody. I think microsoft has been weathering the storm well. That bodes well in the long term. They are Building Trust with customers. Headlines fromng the microsoft call. Xboxsoft saying there holiday 2020 launch is on track. We know that gaming has generally seen a boost as a result of all of the shut in time. How much do you expect the Gaming Sector to buoy the overall business . N overall, it is still a small percentage of microsofts revenue. It wont make that big of a difference. Based on the release they issued today, xbox content and services were up 2 . I would have expected more. Coming back to subscribers, you pay for the usage and you use it more. It is basically going to cost you the same. Revenue was, it will not make a big difference when you have those bursts of activity. The capacity is there. Gaming is a big business. Smalll, it is still a percent small percentage. Thatcrosoft is saying coronavirus and the pandemic is hurting oneoff licensing deals with Small Businesses. We know Small Businesses have been particularly hurt by this crisis. The president is having an event with Small Business leaders at the white house right now. He says that it will all vary from state to state. As we start to see these moves with states reopening, what do you think the impact of this is more broadly on the markets and the companies that you cover . Glenn Small Business in particular has been suffering. I have concerns about the Small Business sector. Large business, most of it is ok. Travel and entertainment aside. The rest of the economy is still moving. Albeit at a sluggish pace in some places. The machinery is still trying to cooperate. I think Large Companies are going to whether this. Small business is a different story. The sooner we can get things restarted, the better Small Business will be. Technologies from microsoft are going to reflect that as well as other technologies. If you go to business, youre not going to be using microsoft as your services anymore. We will have to watch that play out and see how Small Business performs and how things recover once we do start getting back in business. So much. You glenn thank you. Good to hear where you stand right now. Some headlines rolling in. Facebook says its Profit Margins will shrink this year due to covid19. Mark zuckerberg says it plans to hire 10,000 mark employees this year. That is in contrast to alphabet saying they slowing down hiring through the end of the year. Interesting to see that from zuckerberg. We will continue to listen to the call. Up,he meantime, coming google wants in on the zoom action. Making its zoom competitor free. We will talk to mark furman about that, that is coming up. This is bloomberg. Welcome back to bloomberg technology. I am emily chang. Emily google meets will be free for all users. Google wants in on the zoom action. I want to bring in mark. A huge move. Google meet has been a videoconferencing editor and option to zoom. Zoom has really gotten a lot of the lion share. Mark that is one way to look at it. Had hangouts for years. They had gmail, it is built in, the bed with and technology. This video chat was theirs to lose. They lost it to zoom. Verizon wireless got in. Moreteams has gotten much impressive. Facebook is coming out with its own free radio chat service. Video chat service. They are requiring people sign up with a google account. They say they have 100 million users. I am sure that will skyrocket once he becomes free. Emily zoom has a free option. What does this mean for zoom, microsoft, webex . Google says they have a 60 minute limit for this but they are not enforcing that until september. Ify are waiting to see people will use this to catch up with friends or if it is something that businesses will use, the free version. That is where google is trying to challenge microsoft. By 11 ock was down today. There were arguments about whether that stock was in play given their revenue. It was clearly a challenge for them. Google has deep pockets and can do Something Like this. Thank you so much for your insights there. We will take you back to Earnings Results and dig into tesla with its first order firstquarter earnings reports. That as its production has been halted as its at its headquarters here in california. This is bloomberg. Emily welcome to bloomberg technology. Im emily chang in san francisco. Than profitability better feared. Tesla says it can still deliver 500,000 vehicles by the end of the year, but production remains a huge concern. Production at its headquarters in fremont, california has been ground to a halt. Firm top holding in many of your funds. What is your take on the headline results here . Folks one of the factories is going to reopen. What is the next quarter going to look like . Longterm, which we are interested in at ark, the longterm impacts of covid19 we think will be that the Auto Industry, which was already going to consolidate because of electric autonomous vehicles, that is going to be pulled forward. You will have companies struggling. They are going to look to the core business. Innovatione cutting products. Companies like tesla that are already further ahead on autonomous electric technology are going to shine here. The chinaortterm, factory is key for tesla. That is back up and running after the shutdown this year. We are looking forward to seeing what happens. Emily what about demand . It is one thing if they cant make the cars, but lets say reduction restarts. Is demand going to be there when you have 22 Million People out of work, an economy that has been plunged into a recession . For the Auto Industry as a whole, we could see auto sales hit their peaks. Carhink longerterm two households are going to become one car households. For electric vehicles, tesla has always been supply constrained. We see that demand still there. In the next couple years, an electric vehicle according to our work is going to be cheaper than a gas powered car. That Sticker Price is going to drive that uptick in demand. It is already lower on a total cost of shipping basis and on an operating cost basis. Now what will become cheaper on a Sticker Price basis. Emily i want to ask you about regulatory credits. There were 354 million in revenue attributable to regulatory credit. I wonder if without those the situation would look different and significantly worse. What are your thoughts on that . Tasha the key number to look at in the report is automotive growth margin excluding credit, which came in at 20 for the quarter. That is higher than most analysts were expecting. They were something in the and, 60 and 17 16 17 . At ark, we dont take into account any regulatory action. It is hard to predict. We want technologies that are viable in the underlying economics without subsidies. That is how we model ele