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by three_seagrass 2242 days ago
Don't be fooled by the Q1 results that only cover a few weeks of the shutdown - FANGs are hurting too.

30 M unemployed and growing means no disposable income for consumer businesses, which in turn are shutting down and shrinking their spending on B2B services. The latter is delayed and won't be fully visible until Q3.
1 comments
filoleg 2242 days ago
>which in turn are shutting down and shrinking their spending on B2B services

You are assuming the scenario where consumer division was making a lot of money. For a lot of very successful B2B businesses, their consumer division exists mostly to make small gains, while acting primarily as a getaway or advertisement for their B2B offerings.

You would be surprised to find out how much more revenue (and profits) a company like Microsoft makes on their B2B offerings compared to the consumer ones.

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three_seagrass 2242 days ago
Microsoft isn't FANG, and even then, who do you think Microsoft's B2B customers serve and get their revenue from?

Even those that are still B2B eventually need cash flows from consumer businesses. Hence the statement that we won't fully realize the losses until Q3. Less spending by consumers depresses all businesses, some sooner than others, but FANGs are definitely hurting.

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filoleg 2241 days ago
>who do you think Microsoft's B2B customers serve and get their revenue from

The cool thing about B2B, as opposed to consumer offerings, is that the contracts on those are usually multi-year. Just because the client enterprise suddenly receives less revenue from customers, it doesn't mean that they would be able to stop paying MSFT until the contract term is over. Unless this current lockdown situation lasts multiple years, it shouldn't affect things significantly.

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three_seagrass 2241 days ago
That's not how B2B contracts work. They have clauses for breaking them. They are not paid out in bankruptcy. They tend to scale per variables like users or calls.

AirBnB is now paying for 7000 less exchange accounts and office licenses, and you have yet to explain how FANGs are doing well.

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throwaway_12351 2241 days ago
Bankruptcies, Bankruptcies, Bankruptcies. All these contracts go underwater once the companies file chapter-11. Gold Gym has already started, most retailers are following the suit. That said, Microsoft (my previous employer) is well diversified to come out net positive or neutral.
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