[ Music ]
>>Two of the tech industries Bellwether companies Yahoo and Apple reported their Q3 earnings late today so what do the numbers suggest about their respective prospects as well as what it might suggest about the future health of the technology business for the rest of the year. Welcome to the CNET news daily debrief I'm Charlie Cooper here with my colleagues Tom Krazit and Steven Shanklin. Tom you cover Apple, had a pretty good quarter. iPhones 6.9 million units, that's pretty incredible but a relatively cautious outlook. Now the question becomes Apple usually sandbags analysts with cautious outlooks as a matter of course. Is this deragore [Assumed spelling] or is it something beyond?
>>Tom: One of the interesting things about this guidance was the wide range that they gave themselves. They gave themselves a billion dollars worth of wiggle room when it comes to their revenue guidance between 9 million and 10 million and something like .27 cents in earnings per share. I mean, these are really wide ranges. You know, most companies will give you, you know, maybe 500 million wiggle room or, you know .10 cents here or there so I mean, you know, it was below as usual and that doesn't really seem to surprise anybody. The wiggle room is interesting but I think, you know, for the most part people would have even thought that things might be lower.
>>Charlie: Now the $64,000 dollar question with Apple, especially now, the products traditionally receive a premium because Apple innovates and they're able to charge more and they have a very loyal customer base. But with everybody and their mother-n-law freaking out about the melt down in the financial markets does that assumption still apply?
>>Tom: Well, you know Steve Jobs made a rare appearance on the Apple conference call today and he addressed that very point. I mean his stance is that Apple chooses to play in certain markets and they choose not to play in certain markets meaning that the markets at the lower end that are more price sensitive, Apple doesn't really care about those. They just don't make products for that market because they just choose not to. They choose to focus on a higher scale of the industry. So that is, you know, that's how he addressed that one point about the pricing. And then about the, you know, the question of how they'll be affected in the overall market, you know, he was basically like look we're still small, you know. Depending on how you wanna count it Apple is around 10 percent of the US retail market right now. That's a huge pile of people that they can still draw from in order to keep growing. I mean, even if you only get 5 percent of the rest of the market that's a 50 percent increase in your business over the next couple of quarters so.
>>Charlie: Different situation faces Yahoo. They report a 64 percent drop in quarterly profit. Also announced layoffs to cut at least another 10 percent of the workforce. That's the second time this year. Steven, stock is up in after hours but I think that might be more of a dead cat bounce than a reflection of reinvigorated company. Henry Bloggy, silicon alley insider on his blog, called the results crappy but not awful. [Laughter] Crappy but not awful.
>>Steven: That's a fair characterization. I mean, the after hours trading is enough to bring it back to where it was yesterday. It was not enough to bring it back to even half of what it was compared to Microsoft's offer of $33 dollars a share so
>>Charlie: Not very long ago.
>>Steven: Not yet, just a few months ago. So yea, they're still in a pretty ugly spot when it comes to their share price certainly. The big question about the layoff its gonna be at least 10 percent of staff this year. That means more than 1,400 people. That will get the company down below 12,000 excuse me, that will get them down below 13,000 and the big question is whether that will be enough to actually make a big difference for the company or whether this is gonna be, you know, just the first step and they'll have to do another round, you know, a half a year from now that's equally big.
>>Charlie: Well Blake Jorgenson, the CFO, offered a pretty sober assessment of what's on the horizon. Their guidance wasn't great. Display advertising always gets hurt in a recession and I think we are in a recession. Do they have any plans going forward how they're going to square the circle?
>>Steven: Yea, well they offered a number of cautiously optimistic assessments about various growth initiatives they have in place. We'll see if any of them pan out. But they do have some credible arguments. One of them is, first of all, they don't just sell display ads. They sell search ads too just like Google, not nearly as many as Google and not as profitable as Google but they do have a reasonable business there and in fact that grew in the 3rd quarter. So that's one strong suit. They're also revamping a lot of the Yahoo properties to try to make users more engaged and to try to make things easier for advertisers to take out display ads too. So there are some improvements in the Yahoo technology that could actually help them out whether it's going to help them out at, you know, a significant rate in a significant time frame remains to be seen.
>>Charlie: Stocks at its lowest point in what, five years? Is Jerry Yang running out of time?
>>Steven: Yes, he's definitely, I wouldn't say he's running out of time necessarily but the pressure is not going away, it's getting stronger. So, you know, I think a lot of people are going to be asking was this a deep enough cut and an early enough cut? If he had been more aggressive a few months ago certainly, you know, the company could have gotten it's costs down even more. Obviously it's a hard thing to do but a lot of people wonder if, you know, he's one of the company cofounders if he's being too light on the company to deal with the current environment.
>>Charlie: Great stuff. You can find out more by going to the stories that both Steven and Tom have up on our site now. On behalf of CNET news I'm Charlie Cooper.
Biggest hacks of 2018
The huge Marriott cyberattack may have been the work of Chinese...
How to cut the cord like a pro
Representative slams colleagues, defends Google
US congressman demands to know if Google is tracking him
Biggest tech stories of 2018
Are iPhones really banned in China?
EU clamps down on tech in 2018
Qualcomm's Snapdragon 855 can enable 4K portrait mode video
Here's what Google Lens can do with Snapdragon 855 and 5G