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    Big Tech Is Getting Clobbered on Wall Street. It’s a Good Time for Them.

    Flush with cash, Facebook, Apple, Amazon, Microsoft and Google are positioned to emerge from a downturn stronger and more powerful. As usual.SAN FRANCISCO — Apple, Amazon, Microsoft and the parent companies of Facebook and Google have lost $2.7 trillion in value so far this year, about the annual gross domestic product of Britain.So what have the companies done about this thrashing on Wall Street? Microsoft has doubled its employees’ bonus pool, Google has committed to hiring more engineers, and Apple has showered its top hardware talent with $200,000 bonuses.The dissonance between the stock market’s relative panic and the business-as-usual calm among tech giants foreshadows a period when analysts, investors and economists predict that the world’s largest companies will widen their lead in their respective markets.The bullishness about their prospects reflects an understanding that the companies have tight control of some of the world’s most lucrative businesses: social media, premium smartphones, e-commerce, cloud computing and search. Their dominance in those arenas and toeholds in other businesses should blunt the pains of inflation, even as those challenges hammer big companies such as Walmart and Target and the stock market nears bear market territory.The S&P 500 spent much of Friday below the threshold for what is considered a bear market — commonly defined as 20 percent below its last peak — before rallying late in the afternoon. The index ended the week with a loss of 3 percent, its seventh straight weekly decline. That’s its longest stretch of losses since 2001.In the months ahead, Microsoft, Google, Apple and Amazon are expected to boost hiring, buy more businesses and emerge on the other side of a bearish economy stronger and more powerful — even if they shed some of their total valuation and their relentless growth of the last few years.“Big tech can say, ‘Forget the economy,’” said Richard Kramer, founder of the London-based advisory firm Arete Research. Flush with cash, he said, “they can invest through the cycle.”Read More About Apple‘After Steve’: Jony Ive, who helped define Apple’s iconic look, left as the Tim Cook era took hold. A new book details how they and the company changed following Steve Jobs’s death.A $3 Trillion Company: Four decades after going public, Apple reached a $1 trillion market value in 2018. Now, the company is worth triple that.Trademarks: The tech behemoth has opposed singer-songwriters, school districts and food blogs for trying to trademark names or logos featuring an apple — and even other fruits.AirTags: Privacy groups said that Apple’s new coin-size devices could be used to track people. Those warnings appear to have been prescient.The large companies’ plans contrast sharply with a wave of spending cuts crashing through the rest of the tech sector. Steep declines in share prices at unprofitable companies such as Uber, down 45 percent, and Peloton, down 58 percent, have led their chief executives to cut jobs or consider layoffs. Start-ups are pruning their workforces as venture capital funding slows.Those companies’ plummeting values will create buying opportunities, said Toni Sacconaghi, a tech analyst at Bernstein, a research firm. Large deals may be difficult because the Federal Trade Commission is scrutinizing takeover moves by Facebook, Apple, Amazon, Microsoft and Google, he said, but smaller deals for emerging technology or engineers could be rampant.As people return to work and travel, they are making fewer Amazon purchases, leaving the company with more space and staff than it needs.Roger Kisby for The New York TimesDuring the Great Recession, Facebook, Amazon, Google, Apple and Microsoft acquired more than 100 companies from 2008 to 2010, according to Refinitiv, a financial data company. Some of those deals have become fundamental to their businesses today, including Apple’s acquisition of the chip company P.A. Semi, which contributed to the company’s development of its new laptop processors, and Google’s acquisition of AdMob, which helped create a mobile advertising business.“The big will get bigger and the poor will get poorer,” said Michael Cusumano, deputy dean of the Sloan School of Management at the Massachusetts Institute of Technology. “That’s the way network effects work.”There are caveats to this sense of invulnerability. The big companies’ plans could always change if the economy continues to deteriorate and consumers pull back even further on their spending. And some of the big companies are more vulnerable than others.Meta Platforms, Facebook’s parent company, has fared worse than its peers because its business is facing long-term challenges. It has posted falling profits as its user growth slows amid rising competition from TikTok, and changes in Apple’s privacy policy stymie its ability to personalize ads.Mark Zuckerberg, Meta’s chief executive, has responded by instituting a temporary hiring freeze for some roles. During a recent all-hands meeting with staff, employees asked if layoffs would follow. Mr. Zuckerberg said that job cuts weren’t in the company’s current plans and were unlikely in the future, according to a spokesman. Instead, he said the company was focused on slowing spending and limiting its growth.Amazon sent a similar signal to its employees last month after it posted disappointing results. In a call with analysts, Brian Olsavsky, the company’s finance chief, said Amazon would look to corral costs after it doubled spending on warehouses and staff to keep pace with pandemic orders. As people return to work and travel, they are making fewer Amazon purchases, leaving the company with more space and staff than it needs.But Amazon’s lucrative cloud business, Amazon Web Services, or A.W.S. for short, continues to gush profits. The company plans to lean into its success in the months ahead by increasing its spending on data centers. It also has committed to raising the cap on base compensation of its corporate staff to $350,000, from $160,000. And it is investing in a plan to build a network of satellites to deliver high-speed internet by launching 38 rockets into space.Between them, Facebook, Microsoft, Google, Apple and Amazon had nearly $300 billion in cash, excluding debt, at the end of March, according to Loup Ventures, an investment firm specializing in tech research.The cash reserves could fund accelerated stock buybacks as share prices fall, analysts say. Doing so would increase the companies’ earnings per share, deliver more value to investors and signal to the market that their firms are more valuable than Wall Street is willing to acknowledge.The companies roared ahead during the pandemic as people sequestered at home immersed themselves in a digital world. Customer orders soared on Amazon, for everything from hand sanitizer to Instant Pots. Shuttered stores shifted sales online and ramped up Google and Facebook advertising. Remote students and employees splurged on new iPhones, iPads and Macs.The last tech giant to cull its ranks during a major downturn, Microsoft, is doing the opposite during this turbulent period. Emboldened by a business that has proved more durable than its peers, Microsoft is sweetening salaries, boosting its investments in cloud computing and standing by a $70 billion acquisition of Activision Blizzard that it expects to unlock more sales for its gaming empire.A Call of Duty event in Minneapolis in 2020. Microsoft’s acquisition of Activision Blizzard is expected to unlock more sales for its gaming empire.Bruce Kluckhohn/USA Today Sports, via ReutersSimilar resilience has been on display at Google and Apple. Google, a subsidiary of Alphabet, recently overhauled its performance review process and told staff that they would likely get pay increases, according to CNBC. It also plans to increase its spending on data centers to support its growing cloud business.Tim Cook, Apple’s chief executive, has a longstanding philosophy that Apple should continue to invest for the future amid a downturn. It more than doubled its staff during the Great Recession and nearly tripled its sales. Lately, it has increased bonuses to some hardware engineers by as much as $200,000, according to Bloomberg.John Chambers, who steered Cisco Systems through multiple downturns as its former chief executive, said the companies’ strong businesses and deep pockets could afford them the chance to take risks that would be impractical for smaller competitors. During the 2008 downturn, he said Cisco allowed distressed automakers to pay for technology services with credit at a time when competitors demanded cash. The company risked having to write down $1 billion in inventory, but emerged from the recession as the dominant provider to a healthy auto industry, he said.“Companies break away during downturns,” Mr. Chambers said.Excelling will require disregarding the broader market’s gloom, said David Yoffie, a professor at Harvard Business School. He said previous downturns had shown that even the strongest businesses were susceptible to profit pressures and prone to pulling back. “Firms get pessimistic like everyone else,” he said.The first test for the biggest companies in tech will be contagion from their peers. Amazon’s shares in the electric vehicle maker Rivian Automotive have plunged more than 65 percent, a $7.6 billion paper loss. Apple’s services sales are likely to be crimped by a slowdown in advertising by app developers, which rely on venture-capital funding to finance their marketing, analysts say. And start-ups are scrutinizing their spending on cloud services, which will likely slow growth for Microsoft Azure and Google Cloud, analysts and cloud executives said.“People are trying to figure out how to spend smartly,” said Sam Ramji, the chief strategy officer at DataStax, a data management company.Regulatory challenges on the horizon could darken the big tech companies’ prospects, as well. Europe’s Digital Markets Act, which is expected to become law soon, is designed to increase the openness of tech platforms. Among other things, it could scuttle the estimated $19 billion that Apple collects from Alphabet to make Google the default search engine on iPhones, a change that Bernstein estimates could erase as much as 3 percent of Apple’s pretax profit.But the companies are expected to challenge the law in court, potentially tying up the legislation for years. The probability it gets bogged down leaves analysts sticking to their consensus: “Big Tech is going to be more powerful. And what’s being done about it? Nothing,” Mr. Kramer of Arete Research said.Jason Karaian contributed reporting. More

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    Tech Workers Who Swore Off the Bay Area Are Coming Back

    SAN FRANCISCO — Last year, Greg Osuri decided he’d had enough of the Bay Area. Between smoke-choked air from nearby wildfires and the coronavirus lockdown, it felt as if the walls of his apartment in San Francisco’s Twin Peaks neighborhood were closing in on him.“It was just a hellhole living here,” said Mr. Osuri, 38, the founder and chief executive of a cloud-computing company called Akash Network. He decamped for his sister’s roomy townhouse in the suburbs of Columbus, Ohio, joining an exodus of technology workers from the crowded Bay Area.But by March, Mr. Osuri was itching to return. He missed the serendipity of city life: meeting new people, running into acquaintances on the street and getting drinks with colleagues. “The city is full of that — opportunities that you may never have expected would come your way,” Mr. Osuri said. He moved back to San Francisco in April.The pandemic was supposed to lead to a great tech diaspora. Freed of their offices and after-work klatches, the Bay Area’s tech workers were said to be roaming America, searching for a better life in cities like Miami and Austin, Texas — where the weather is warmer, the homes are cheaper and state income taxes don’t exist.But dire warnings over the past year that tech was done with the Bay Area because of a high cost of living, homelessness, crowding and crime are looking overheated. Mr. Osuri is one of a growing number of industry workers already trickling back as a healthy local rate of coronavirus vaccinations makes fall return-to-office dates for many companies look likely.“I think people were pretty noisy about quitting the Bay Area,” said Eric Bahn, a co-founder of an early-stage Palo Alto, Calif., investment firm, Hustle Fund. “But they’ve been very quiet in admitting they want to move back.”Bumper-to-bumper traffic has returned to the region’s bridges and freeways. Tech commuter buses are reappearing on the roads. Rents are spiking, especially in San Francisco neighborhoods where tech employees often live.Twitter reopened its headquarters in San Francisco on Monday. The company plans to open more offices in the Bay Area.Cayce Clifford for The New York TimesAnd on Monday, Twitter reopened its office, becoming one of the first big tech companies to welcome more than skeleton crews of employees back to the workplace. Twitter employees wearing backpacks and puffy jackets on a cold San Francisco summer morning greeted old friends and explored a space redesigned to accommodate social-distancing measures.London Breed, San Francisco’s mayor, said she welcomed the return of tech workers, though she acknowledged that it also brought challenges. “Yes, we need to do the work to build more housing and address the many challenges that big cities face, but San Francisco is successful when we have a growing economy, and that includes tech,” she said in a statement.No one is quite ready to declare that things have returned to normal. Ridership on Bay Area Rapid Transit remains low, and nearly half of San Francisco’s small businesses are still closed. Office vacancy rates are high. The city’s downtown is still largely empty on weekdays.But recent data supports the notion that tech workers are coming back. In an area near San Francisco’s Financial District, where tech workers tend to cluster, average apartment rental prices dropped more than 20 percent in 2020, according to census and Zillow data compiled by the city. That area saw the biggest price jumps in the city in the first five months of 2021.In the bayside ZIP code surrounding the San Francisco Giants’ Oracle Park, where nearly 15 percent of residents worked in tech, average monthly rental prices dropped from $3,956 in February 2020 to about $3,000 a year later. They rose to $3,312 in May, according to Zillow data.“This could mean that tech workers are coming back, although it could also mean that other people, who also value those areas, are taking advantage of the lower rents to move in,” said Ted Egan, San Francisco’s chief economist.Median San Francisco home prices, which bottomed out at a still-jarring $1.58 million for a single-family home in December, recently hit $1.9 million, according to the California Association of Realtors. That’s higher than before the pandemic.Traffic this month on a highway leading toward downtown San Francisco and the Bay Bridge.Cayce Clifford for The New York TimesNearly 1.4 million cars drove across the Golden Gate Bridge into San Francisco in May, the most since February 2020, and afternoon freeway speeds have dropped to about 30 miles per hour, which was the prepandemic norm, according to city data. Some types of crime are close to prepandemic levels.Rizal Wong, a junior associate at the tech and business communications firm Sard Verbinnen and Company, left the Bay Area in December, trading a studio apartment in Oakland for a cheaper one-bedroom in his hometown, Sacramento, close to his family. But after getting vaccinated, he moved to San Francisco in April.“I felt like I was getting back to my life,” said Mr. Wong, 22. “Meeting up with co-workers who were also vaccinated and getting drinks after work, it definitely makes it feel more normal.”Mr. Wong, like many who left the Bay Area, didn’t go very far. Of the more than 170,000 people who moved from the vicinity of San Francisco, Berkeley and Oakland in 2020, the vast majority relocated elsewhere in California, according to United States Postal Service change-of-address data analyzed by CBRE, a real estate company.About 20,000 moved to the San Jose area, for example. A further 16,000 went to Los Angeles, nearly 15,000 to Sacramento and 8,000 to Stockton, in California’s Central Valley. The more than 77,000 people who left the San Jose metro area, a proxy for Silicon Valley, went to similar places: San Francisco, Sacramento and Los Angeles. In February, The San Francisco Chronicle reported similar numbers using Postal Service data.The net migration out of the San Francisco and San Jose regions — that takes into account people who moved in — was about 116,000 last year, up from about 64,000 in 2019, according to the analysis of the Postal Service data.Nearly every year for several decades, thousands more residents have left Silicon Valley and San Francisco than moved in, according to state data. Often, this movement is offset by an influx of immigrants from other countries — which was limited during the pandemic.Greg Osuri, center, and his employees meeting in their co-working space, Shack15.Cayce Clifford for The New York TimesThe majority of those who left the Bay last year, the real-estate firm’s analysis found, were young, affluent and highly educated — a demography that describes many tech workers. It’s a group that wants urban amenities like bars, restaurants and retail shopping, said Eric Willett, CBRE’s director of research.“That’s the group that left urban centers in large numbers,” he said. It is also the group “that we are increasingly seeing move back.”.css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-w739ur{margin:0 auto 5px;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-w739ur{font-size:1.25rem;line-height:1.4375rem;}}.css-9s9ecg{margin-bottom:15px;}.css-uf1ume{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-box-pack:justify;-webkit-justify-content:space-between;-ms-flex-pack:justify;justify-content:space-between;}.css-wxi1cx{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;-webkit-align-self:flex-end;-ms-flex-item-align:end;align-self:flex-end;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}There were some prominent industry defections from the Bay Area over the last 18 months. Oracle and Hewlett-Packard Enterprise moved their headquarters to Texas. The software maker Palantir moved its headquarters from Palo Alto to Colorado. Elon Musk, the chief executive of Tesla, said he was moving to Austin.“CA has the winning-for-too-long problem,” Mr. Musk wrote on Twitter in October. “Like a sports team with many championships, it is increasingly difficult to avoid complacency & a sense of entitlement.”Miami’s mayor, Francis X. Suarez, campaigned to lure tech workers to his city, and he was joined by some high-profile investors who said they had found a better life in South Florida. But the analysis of Postal Service data found that Austin was the 13th-most-popular destination for people leaving San Francisco. Miami was 22nd.Also not as well noticed in the exodus headlines: Oracle and HPE told most Bay Area employees that they would not need to leave.Now some companies are expanding their Bay Area footprints. Google said in March that it would spend $1 billion on California developments this year, including two office complexes in Mountain View. The company is also building a massive, mixed-use development that includes a 7.3-million-square-foot office space in San Jose. In September, Google will reopen its doors to employees. Most will come in three days a week.Twitter is also opening a 30,000-square-foot office in San Jose’s Santana Row this fall and an Oakland building next year, said Jennifer Christie, the company’s chief human resources officer.The share of Twitter’s work force in San Francisco declined to 35 percent last month, from 45 percent a year earlier, as the company grew quickly elsewhere, Ms. Christie said. But the total number of Bay Area employees is similar: about 2,200, compared with 2,300 last year.About 45 percent of employees at Twitter said they wanted to return to the office at least part time, Ms. Christie said, but she expects that number to grow. “I do think there’s a good number of people who still want to be in the San Francisco area,” she said.At Cisco Systems, a tech gear maker that is one of San Jose’s biggest employers, just 23 percent of employees want to return to the office three or more days each week. But many who prefer to work remotely will do so from nearby, said Fran Katsoudas, the company’s chief people officer. People have expressed a desire for work flexibility “more than a desire to have a different location,” she said.San Francisco’s Embarcadero, along the waterfront.Cayce Clifford for The New York TimesSome tech workers have found compromises — or at least a way to avoid long commutes. Annette Nguyen, 23, who works for Google’s ad marketing team, appreciated the outdoor space and lack of a commute when she moved from San Francisco last year to live with her parents in Irvine, Calif. She plans to return to the Bay Area in August, but will live near her office in Silicon Valley.“I couldn’t imagine spending three hours a day commuting anymore like I used to,” she said.Of course, some of the people who moved away are gone for good. Others are still in the process of leaving.Steve Wozniak, who founded Apple with Steve Jobs, said he and his wife had recently bought a house in a Denver suburb, Castle Pines, and would likely live there at least part time. He was eager, he said, to fulfill a lifelong dream of living close to the Colorado snow and away from the California crowds.“I don’t think people want to go back full time when they have the sort of job that can work well from home,” Mr. Wozniak, who currently lives in Los Gatos, Calif., said in an interview. “We’ve learned something that you really can’t take back.” More