Eric Schiffer on Facebook Earnings: ‘Zuckerberg Is Trying to Go on Offense’

‘— to reshape what has been tremendous negative sentiment over the last year’

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BARTIROMO: “Welcome back. Once again, earnings really driving the action on wall T street. Google parent alphabet posted a jump in revenue. The stock is under pressure amid rising expenses. Joining us now is chairman of reputation management consultants, Eric shiefer. Thank you for joining us.”
SCHIFFER: “Hi, Maria. Good to be with you.”
BARTIROMO: “What did you make of alphabet’s quarter, on capital expenditure the company spent $25.4 billion. That was double the same period a year ago.”
SCHIFFER: “Look, they’re trying to grow, Maria. They’re investing and trying to get another engine other than advertising which has been the core of Google and alphabet for years. So I think a lot of people are not paying attention to the fact that they’re looking at a much longer range view of the company and they recognize that you have to invest to be able to grow and they certainly got revenue numbers out of different divisions, cloud and hardware, et cetera, in moving in the right direction and I think people wanted to see less spending for more margin but the investments are going to pay off and I think that they’re making the right, smart moves for the long term.”
BARTIROMO: “Just on the cloud point, can you dig into that a little bit for us? That’s one area they’re investing in but they’re lagging behind Microsoft and Amazon, you azure, do you see them catching up to them any time soon?”
SCHIFFER: “That’s a tough one to catch up with. They have such legacy relationships and people that are already committed. I think they’re going to make incremental moves there over time and there are other things they can do to try to draw people back away from azure, away from aws. But again, that’s a very competitive area. But areas — but they do have opportunities to grow there, in my opinion.”
WOLF: “Eric, I found the numbers quite fascinating. One, it feels there’s a chase for content, so not surprising YouTube is spending more money because we see the battle with Netflix coming up and Disney and everyone else. There’s a chase for content. And then on the R&D side, things like Waymo and artificial intelligence and obviously their driverless cars. But where it seems they’re getting hurt is their handheld devices just aren’t really resonating, so they have to pay fees to literally — to their I would say quasi competitors or some say their strategic partners. It seems to me where they’re spending money is much more broad-based. It’s hard to get a real feel where the ROI is going to be. How do you see it?”
SCHIFFER: “Well, look, I think with YouTube, they’re certainly investing in content to begin to draw more people in and build relationships with those that are already committed to other services and begin to move people over. It’s a little bit fuzzy to understand where and how all of it is distributed. But I think that what’s clear in my opinion is that these are areas that are — that can continue to grow. They certainly recognize that by making the right investments they’re going to be able to get traction and the revenue — look, you look at the revenue and the revenue numbers certainly speak. And at some point, I mean, if they wanted to cut off the capital expenditures and costs, you’d see the margins. But these are competitive areas. Certainly Waymo requires significant capital investment to be able to get the scale that they’re going to want to have, the artificial intelligence, whole arena is very costly at this point. So I do think that they’re making — in my opinion, they’re making the smart moves, but we don’t have full clarity on all the details.”
BARTIROMO: “What a growth story.”
SCHIFFER: “Absolutely.”
McDOWELL: “Google’s going to need to break out what is going on at YouTube. And mark my words, because I have warned people that the direct TV, now streaming live television service is horrendous and finally its numbers are showing that. It just stinks to high heaven. This new — I’m not beta. I’m testing this new live YouTube — live TV service, it’s about 60 channels. It is great. And this is going to be a juggernaut and all the other streaming services better look out.”
BARTIROMO: “You’re right. It’s all about video. We just shot a video a minute ago on Instagram. I’ve been really active on Instagram. Are you on Instagram?”
BELL: “@LCBell.”
BARTIROMO: “Okay. Are you on Instagram.”
WOLF: “I’m not.”
BARTIROMO: “Hey, Facebook turns 15 years old yesterday. Remember 15 years ago when we were first covering this. Zuckerberg took the opportunity to defend the social network, he writes this, ‘People overly emphasize the negative consequences of the Internet, criticize the idea that the Internet and Facebook are harmful to society.’ So they’ve come a along way. Remember when Google went public, it was $75 a share, I think. What a story over the last 15 years. Your reaction, real quick, before you go. Eric?”
SCHIFFER: “Oh, is this to me? Look, I think it’s an incredible story. I think that Zuckerberg is trying to go on offense to reshape what has been tremendous negative sentiment over the last year, year and-a-half —”
BARTIROMO: “He’s got to.”
SCHIFFER: “— that they caused. But at the same time, I think his strategy in doing it, I think it upset a lot of people. He tried to conflate Facebook with the Internet to try to distract and look at the Internet’s overall patterns when, in fact, he didn’t take accountability. And the reality is, there are things that they did that were not proper, that certainly hurt consumers, certainly — “
BARTIROMO: “They can’t say they didn’t sell our data. They sold our data. They sold us out, let’s face it.”
SCHIFFER: “Of course they did.”

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