Microsoft’s CFO is keeping an eye on gaming now that it does $10 billion in annual revenue

Mark Zuckerberg, chief executive officer and founder of Facebook Inc., listens during the Viva Technology conference in Paris, France, on Thursday, May 24, 2018. 

Marlene Awaad | Bloomberg | Getty Images
Mark Zuckerberg, chief executive officer and founder of Facebook Inc., listens during the Viva Technology conference in Paris, France, on Thursday, May 24, 2018.

Stifel on Wednesday published a note saying it has lowered its rating for Facebook shares from “Buy” to “Hold,” saying political and regulatory blowback could restrict how the company operates in the long term.

“Facebook’s management team has created too many adversaries — politicians/ regulators, tech leaders, consumers, and employees — to not experience long-term negative ramifications on its business,” the firm said in a note.

The lower rating comes after a rough year in which Facebook has experienced numerous scandals, a 30-million user data breach, declining and stalling growth in key markets, an executive exodus and its worst stock performance since going public in 2012.

Stifel also published the latest results from an on-going survey of Facebook users.

The results showed 79 percent of those surveyed now believe Facebook’s impact on society is neutral or negative, compared to 73 percent in survey results published by the firm in January. The survey also found that 60 percent of respondents said they rarely or never used Facebook Stories, Marketplace or video, which are some of the company’s key new products.

Stifel said there is no downside to holding Facebook shares, but the firm no longer believes the company’s upside is what it once was.

“We believe Facebook will struggle to return to the company that it once was or that investors expected it to be in the long run,” the note reads. “We prefer Amazon, Alphabet, and Netflix, as U.S.-based mega caps with similar thematic trends and more stable operating environments.”

Facebook board: Sandberg's request to probe Soros 'entirely appropriate'
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Microsoft’s CFO is keeping an eye on gaming now that it does $10 billion in annual revenue

Microsoft Chief Financial Officer Amy Hood speaks at the annual Microsoft shareholder meeting in Bellevue, Wash., on Nov. 29, 2017.

Jason Redmond | AFP | Getty Images
Microsoft Chief Financial Officer Amy Hood speaks at the annual Microsoft shareholder meeting in Bellevue, Wash., on Nov. 29, 2017.

Microsoft has been in the gaming business since the turn of the century. Finally it matters to the company from a financial standpoint.

“Amy Hood, our CFO, she likes to tell me I’ve made the spreadsheet now, and she says that can be a good thing, and I’m on the spreadsheet. So she’s going to pay attention,” Microsoft’s executive vice president for gaming, Phil Spencer, said on stage at the Barclays Global Technology, Media and Telecommunications Conference in San Francisco on Wednesday.

Today Microsoft is one of the top public companies by market capitalization, alongside Amazon and Apple. Sales of Xbox consoles and online services means Microsoft is less dependent on revenue from other products, like Windows, Office and enterprise software. In its 2018 fiscal year, which ended on June 30, Microsoft surpassed $10 billion in gaming revenue for the first time.

Spencer, who joined Microsoft’s senior leadership team alongside Hood and CEO Satya Nadella last year, pointed to several investments the company has made in gaming recently, building on earlier moves like the $2.5 billion Mojang acquisition. and its purchase of game-streaming company Beam, which has since been rebranded to Mixer.

“We’ve acquired and started seven new first-party studios in the last year. We obviously don’t do that without tremendous support from Satya and Amy,” Spencer said. “We understand content is a critical component of what we’re trying to go build and the support from the company has been tremendous.”

One of Microsoft’s stated growth opportunities in the future is cloud-based gaming, which could make the technical limitations of consumers’ devices less important and expose Microsoft’s gaming content for wider consumption. Spencer talked loosely about its cloud gaming initiative, called, Project xCloud, on Wednesday.

“We focus first on an Android phone because there’s over a billion Android phones on the planet and it’s a place that the content that we’ve natively built up over the past decades on our platform hasn’t been able to reach,” Spencer said.

This strategy builds on Microsoft’s past efforts to bring richer capabilities to Android. But Google, the company behind Android, has started working on cloud gaming with its Project Stream initiative, Spencer said. And meanwhile Amazon, which is the leader of the cloud infrastructure market, has its own gaming division, he said.

“We’ll have multiple business models that will work with streaming, but the connection of streaming with the subscription model makes a ton of sense,” Spencer said. “You see it in music. You see it in video. So you can look at Project xCloud and you can look at something like Game Pass, and you can see there’s natural synergies.”

On stage, Barclays asked Spencer how Microsoft differentiates from gaming subscription offerings from EA and Sony.

“For us, it’s all about how we reach 2 billion gamers,” Spencer said.

“If you build the market around a couple hundred million people that are going to own a game console or a high-end gaming PC, then your business model diversity can actually narrow because your customers are narrow. But when you think about reaching a customer with this content where their only compute device could be an Android phone, you think about, well, what are all the ways that that person pays for content if they do at all today?”

Microsoft will bring its Game Pass subscription service to PCs, and eventually it will be available on every device, Spencer said.

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Apple is in talks to buy a violent Israeli TV show and sign Richard Gere as lead, dispelling the myth that it wants only family-friendly video

Actor Richard Gere filming on location for 'Arbitrage' on the streets of Manhattan on April 11, 2011 in New York City.

Bobby Bank | WireImage | Getty Images
Actor Richard Gere filming on location for ‘Arbitrage’ on the streets of Manhattan on April 11, 2011 in New York City.

Apple is in advanced talks to buy rights to a gritty Israeli TV show called “Nevelot” (English translation: “Bastards”) and adapt it for the U.S., beating out bids from competitors including Showtime, FX and Amazon, according to several people with knowledge of the deal. The show’s plot involves two military veterans who go on a youth-focused killing spree because they believe today’s kids don’t understand the sacrifices of their generation.

While the details are still being worked out, show-runners Howard Gordon and Warren Leight are in negotiations to reformat it for the American market, perhaps under a different name, according to people familiar. Both have had critical success as TV show-runners, with Gordon co-helming “24” and “Homeland” and Leight behind “In Treatment,” “Law and Order: SVU” and “Law and Order: Criminal Intent.”

Richard Gere is also in talks to star in the series. Apple and 21st Century Fox will be co-producing. The project was previously in development at HBO.

All sides are still talking, and the deal is not yet finalized. It could fall though, the people said, if certain agreements were not reached, including budget.

Apple, Gordon and Gere declined to comment. Leight did not immediately respond to requests for comment. Fox said no deal is done and declined to discuss details.

The purchase of a violent show seems in contrast to Apple’s traditionally prudish standards for apps it sells in the App Store. In that vein, the Wall Street Journal reported in September that Apple did not want shows that included violence, politics or rude language.

But multiple people who have spoken to Apple and have knowledge of their thinking in recent months say that’s simply not true, and TV-MA content is fair game.

Apple’s heads of programming, Zach Van Amburg and Jamie Erlicht, who started in June, have been working overtime to dispel the myth that Apple is interested only in family-friendly material.

In general, Apple wants high-impact content based on things people have heard of, like books, franchises or ideas that have resonance, according to people who have spoken to the company. It’s not wedded to existing formats that need commercial breaks, emphasizing unusual formats like anthologies and content that doesn’t fit within the traditional 30-minute and 60-minute time slots. The company is emphasizing it’s looking for “different” content, as long as it has substance and isn’t gratuitous.

The push is pitting them directly against deep-pocketed distributors like Netflix and Amazon, who also are hungry for content that is likely to get acclaim. Apple has indicated it is willing to pay premium prices for shows that have awards potential.

Looking for Apple’s ‘Breaking Bad’

Van Amburg and Erlicht, who were previously presidents of Sony Pictures Television, are highly respected in the entertainment industry. One of their biggest successes was bringing “Breaking Bad” and its showrunner Vince Gilligan to Sony.

The duo has made it very clear they are now looking for Apple’s version of the series, which revolved around an high school teacher turned meth dealer.

But so far, the projects Apple has announced aren’t rocking the boat. “Amazing Stories” has been described as a softer version of Netflix’s “Black Mirror,” while “Top of the Morning” is a broadcast news drama — basically a safer version of HBO’s “Newsroom,” as one person characterized it.

Despite the push for its “Breaking Bad,” Apple is not only interested in adult content. It’s also in the market for kids’ programming, focusing on buying shows for preschoolers this year. Starting next year, the company will start looking at shows for school-aged children. It is expected Apple will have parental controls to help parents shield children from watching inappropriate content.

The immediate goal is to build a content library for an upcoming media service, several people said. At some point next year, Apple will announce the product and offer the content for free on its devices. The first slate of shows have a tentative deadline of spring 2019, and the company is expected to spend $4.2 billion on content through 2022 per Variety.

But in conversations with TV show creators and agents Van Amburg and Erlicht have also painted a long-term vision of more advanced interactive and immersive content. These plans are not imminent and are not driving which shows they’re aiming to buy, but are rather an example of the kind of advantages Apple could bring to the table.

Some industry executives have questioned if Apple has a chance to steal eyeballs away from Netflix, Amazon and other industry leaders considering the already competitive landscape. WarnerMedia has indicated it too is willing to invest heavily into new shows and movies.

Still if the money is there, there’s no reason for show makers to turn it down. More services mean more players to bid up prices. As one executive noted, everyone is more than happy to take Apple’s money until it ends.

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Money managers are realizing that Trump isn’t ‘dependable enough’ for the market: Cramer

Trump not 'dependable enough' for market, money managers learn: Cramer

Trump not ‘dependable enough’ for market, money managers learn: Cramer   13 Hours Ago | 01:17

Part of Tuesday’s stock market plunge may have stemmed from money managers giving up on getting clarity from President Donald Trump and his administration on their policies, CNBC’s Jim Cramer said as stocks settled.

“We have maximum uncertainty. That makes people want to sell. That’s how money managers view the situation,” the “Mad Money” host said after the Dow Jones Industrial Average ended the day nearly 800 points lower.

Over the weekend, Trump struck a cease-fire on trade with President Xi Jinping of China at the G-20 summit in Argentina. According to the White House, the two leaders agreed to postpone the Trump administration’s planned tariff hike from 10 to 25 percent for 90 days starting Dec. 1.

But while one White House camp — namely top economic advisor Larry Kudlow and Treasury Secretary Steven Mnuchin — seem optimistic about the prospect of a deal, U.S. Trade Representative and known China hawk Robert Lighthizer has emerged as a leading candidate for running the negotiations.

That sets up a battle between those who want a deal and those who would rather see China shed the title of global superpower, Cramer said.

“The president seems to actually enjoy these face-offs. They’ve become his style. The White House is the Thunderdome: two policies enter, one policy leaves,” the “Mad Money” host said. “But the markets crave certainty, which means they hate this kind of master-blaster, Mad Max confrontation.”

As a result, professional money managers — whose jobs call for predicting how certain policies will impact their investments — “feel like they’ve been had,” Cramer said.

“This is not some reality show, for heaven’s sake. It’s real life: real jobs on the line, [a] real economy at stake. While the president had a huge hit with ‘The Apprentice,’ governing the most powerful nation on earth is more serious than going to the top floor to learn who’s been fired,” he said.

“I think it’s starting to dawn on major-league money managers that … maybe they misjudged [the president]. Maybe he simply doesn’t take this stuff seriously enough to be considered dependable, even as what really matters [to his base] is the ratings, or the equivalent of [them], which means the White House version of ‘The Apprentice.'”

To make matters worse, Cramer worried that the Federal Reserve was back on autopilot, content with ignoring slowdown indicators and talking up the job market so it could push through its widely expected December interest rate hike.

But with the bond market doing what it tends to do before recessions, another rate hike could “push us over the edge,” the “Mad Money” host warned, saying that the Fed’s more optimistic members “sound like they’ve lost their minds.”

“The Fed isn’t thinking about how Toll Brothers just told us they had the lowest orders in the house business [in] four years. They aren’t thinking about stores with no cashiers like Jeff Bezos is. They aren’t debating what the cloud does to white-collar employment … [or] what Ford and GM are doing to blue-collar employment,” Cramer said. “They’re simply saying, ‘Friday’s employment number is going to be very strong and we don’t like to … look like we’re soft on wage inflation.'”

So, between the White House policy battles and the Fed’s insistence on following through on its interest rate raises, many stock-pickers and money managers feel like they’ve been left to their own devices, he explained.

“The bottom line is this: the president’s worrying people, the Fed is worrying people, and yet, somehow, they both think they’re being reassuring,” Cramer said. “They couldn’t be more wrong.”

[“source=cnbc”]

Money managers are realizing that Trump isn’t ‘dependable enough’ for the market: Cramer

 

Trump not 'dependable enough' for market, money managers learn: Cramer

Trump not ‘dependable enough’ for market, money managers learn: Cramer   13 Hours Ago | 01:17

Part of Tuesday’s stock market plunge may have stemmed from money managers giving up on getting clarity from President Donald Trump and his administration on their policies, CNBC’s Jim Cramer said as stocks settled.

“We have maximum uncertainty. That makes people want to sell. That’s how money managers view the situation,” the “Mad Money” host said after the Dow Jones Industrial Average ended the day nearly 800 points lower.

Over the weekend, Trump struck a cease-fire on trade with President Xi Jinping of China at the G-20 summit in Argentina. According to the White House, the two leaders agreed to postpone the Trump administration’s planned tariff hike from 10 to 25 percent for 90 days starting Dec. 1.

But while one White House camp — namely top economic advisor Larry Kudlow and Treasury Secretary Steven Mnuchin — seem optimistic about the prospect of a deal, U.S. Trade Representative and known China hawk Robert Lighthizer has emerged as a leading candidate for running the negotiations.

That sets up a battle between those who want a deal and those who would rather see China shed the title of global superpower, Cramer said.

“The president seems to actually enjoy these face-offs. They’ve become his style. The White House is the Thunderdome: two policies enter, one policy leaves,” the “Mad Money” host said. “But the markets crave certainty, which means they hate this kind of master-blaster, Mad Max confrontation.”

As a result, professional money managers — whose jobs call for predicting how certain policies will impact their investments — “feel like they’ve been had,” Cramer said.

“This is not some reality show, for heaven’s sake. It’s real life: real jobs on the line, [a] real economy at stake. While the president had a huge hit with ‘The Apprentice,’ governing the most powerful nation on earth is more serious than going to the top floor to learn who’s been fired,” he said.

“I think it’s starting to dawn on major-league money managers that … maybe they misjudged [the president]. Maybe he simply doesn’t take this stuff seriously enough to be considered dependable, even as what really matters [to his base] is the ratings, or the equivalent of [them], which means the White House version of ‘The Apprentice.'”

To make matters worse, Cramer worried that the Federal Reserve was back on autopilot, content with ignoring slowdown indicators and talking up the job market so it could push through its widely expected December interest rate hike.

But with the bond market doing what it tends to do before recessions, another rate hike could “push us over the edge,” the “Mad Money” host warned, saying that the Fed’s more optimistic members “sound like they’ve lost their minds.”

“The Fed isn’t thinking about how Toll Brothers just told us they had the lowest orders in the house business [in] four years. They aren’t thinking about stores with no cashiers like Jeff Bezos is. They aren’t debating what the cloud does to white-collar employment … [or] what Ford and GM are doing to blue-collar employment,” Cramer said. “They’re simply saying, ‘Friday’s employment number is going to be very strong and we don’t like to … look like we’re soft on wage inflation.'”

So, between the White House policy battles and the Fed’s insistence on following through on its interest rate raises, many stock-pickers and money managers feel like they’ve been left to their own devices, he explained.

“The bottom line is this: the president’s worrying people, the Fed is worrying people, and yet, somehow, they both think they’re being reassuring,” Cramer said. “They couldn’t be more wrong.”

[“source=cnbc”]