Snap’s Q2 revenue grew 13% year over year to $1.11 billion, substantially lower than the 50% compound annual growth rate in revenue since it became a public company in 2018, said Snap's investor letter Thursday. The disclosure sent the stock plunging 39.2% Friday to close at $9.96. Snap has been fending off “macroeconomic challenges” since late in 2021's Q4, said Chief Financial Officer Derek Andersen on an earnings call Thursday. “While there have been lingering supply chain and labor supply issues impacting certain segments that began during the pandemic, more recently, we've seen the impact of persistently high inflation, then rising interest rates and rising geopolitical risks associated with the war in Ukraine,” said Andersen. The various headwinds are putting pressure “on the earnings of a wide variety of companies, and this is directly impacting the demand for advertising,” he said. As many industries and verticals have come under “top line or input cost pressure,” ad spending has been among “the first areas impacted,” he said.
Any chance the Section 301 tariffs on Chinese goods would stimulate U.S. importers to shift their supply chains to alternative countries of origin were obliterated when the COVID-19 pandemic struck in early 2020, Jonathan Gold, National Retail Federation vice president-supply chain and customs policy, told the International Trade Commission in a virtual hearing Thursday.
Consumer tech products imported from China bore more than $32 billion in Section 301 tariff exposure between July 2018, when the first of the tariffs took effect, and December 2021, without dissuading most U.S. importers to abandon Chinese sourcing, said a newly released CTA report produced with Trade Partnership Worldwide. A CTA spokesperson said Wednesday the association released the report to coincide with this week's International Trade Commission public hearing as part of its Tariff Act Section 332 investigation (332-591) into the economic impact of the Section 301 and Section 232 tariffs on U.S. industries.
If there was a “single thing” in Q2 that spared Netflix half the 2 million net subscriber losses it projected in April (see 2207190077), it was May's debut of the fourth season of the science fiction horror series Stranger Things, said co-CEO Reed Hastings on a quarterly earnings webcast Tuesday. “We're talking about losing 1 million instead of losing 2 million, so our excitement is tempered by the less-bad results,” he said.
Netflix Q2 paid net subscriber losses reached 970,000, roughly half of the 2 million losses it had forecast in April (see 2204190066), reported the company in its quarterly shareholder letter Tuesday. The Q2 losses were up 385% from the 200,000 losses it sustained in Q1.
IDC has “realistic” expectations of a “consumer-led recession” affecting global economies in the second half of this year and into 2023, Stephen Minton, vice president-customer insights and analysis, told an IDC webinar Thursday on global recessionary scenarios and their impact on information tech spending. “We have reached a point where consumer spending is under a fair amount of pressure for the first six months of this year,” said Minton. IDC’s forecasts are for a “mild” recession, compared with those of the 2008 financial crisis and the dot.com fallout of the early 2000s, followed by a “soft landing” in 2023, he said. “We did have a period where consumers were pretty flush with disposable income” through COVID government stimulus packages throughout the world, he said: “That meant that consumers felt pretty bullish about a year ago.” Consumers to a certain extent were “willing and able to pay a little bit more for certain things, including technology, as prices began to rise,” said Minton. “We’ve kind of gotten to the point now where consumers are no longer willing, or in many cases able, to keep on increasing how much they’re spending as prices continue to rise.” The risk of recession “has clearly increased,” said Minton, but “there are no signs of businesses and service providers yet taking a really sharp knife” to their short-term IT budget planning. “The consumer side is much more vulnerable,” he said. “It’s a different kind of story. We already have pretty solid evidence of a slowdown in shipments of PCs and other consumer devices in the first half of this year, which is likely to get maybe even worse if we continue to head into a more negative economic climate in the next six to 12 months.”
Due to the “softening device momentum” in demand for smartphones, PCs and other consumer “end-market” segments, “we observe the supply chain is already taking action and expect inventory levels to reduce throughout the second-half 2022,” said Taiwan Semiconductor Manufacturing Co. CEO C.C. Wei on a Q2 earnings call Thursday. TSMC, the world’s largest foundry, reported a 36.6% year-over-year Q2 revenue increase in U.S. dollar terms to $18.16 billion on strong demand in high-performance computing, IoT and automotive.
More than seven of every 10 TVs sold to U.S. consumers in 2022's first four months were bought “on promotion,” reported NPD Wednesday. “Higher inventory coupled with growing price sensitivity as a result of weakening consumer finances have given rise to a surge” of TVs being sold at discount, it said.
The Bluetooth special interest group announced Tuesday completion of the full set of specifications defining LE Audio, the next generation of Bluetooth audio. LE Audio improves wireless audio performance, adds support for hearing aids and introduces Auracast broadcast audio, which allows an audio source device to broadcast one or more audio streams to an unlimited number of audio sink devices. The Bluetooth SIG said qualification for Bluetooth products to add support for LE Audio is now enabled. The first consumer products supporting LE Audio will come to market in the coming months, with product availability expected to ramp up before the holiday season. Nordic Semiconductor, which claims 40% share of new Bluetooth Low Energy design certifications, is seeing its first customers enter “volume production” with LE Audio products, said CEO Svenn-Tore Larsen Tuesday on a Q2 earnings call. The Bluetooth SIG calls LE Audio “the future of wireless sound, and we are in the position to accelerate the development of next generation wireless audio projects,” Larsen said. Nordic’s new development kit for LE Audio “uses the most advanced SoC we have” to take advantage of the new Bluetooth 6.0 spec due to be released by the end of 2022, said Larsen. Auracast "will open new applications for many new users," he said.
Intel “lost its way” as a U.S. semiconductor powerhouse because it suffered under the “non-technical leadership of the most important technology company in America for a decade and a half,” CEO Pat Gelsinger told a Washington Post webinar Tuesday.