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Kevin Stratvert produces videos at his home in Seattle.
Tara Brown

When Microsoft updated its Teams communication app with a more sophisticated way to give PowerPoint presentations in January, the company published a 500-word blog post on the feature. People could read the blog post and try to figure out how to use it, or they could consult YouTube.

On the video service owned by arch-rival Google, a former Microsoft employee named Kevin Stratvert published a video on Presenter Mode to his more than 800,000 subscribers, garnering more than 180,000 views and hundreds of comments. Microsoft itself had not published a video on the topic.

“I’ve built a Microsoft audience,” Stratvert said in an interview with CNBC. “Microsoft content drives a lot more viewership than non-Microsoft content. I’ve done Gmail and a few others, but they haven’t done quite as well.”

That might have to do with the reach of Microsoft’s products. The company held 86% of the email and authoring market in 2020, according to technology research firm Gartner, with 1.2 billion Office users.

Not every one of those 1.2 billion knows how to do everything in Office, though, and people also need to keep up with the latest updates that Microsoft pumps out. Videos from Stratvert and his YouTube contemporaries are helping with that — and sometimes getting more eyeballs than Microsoft’s official videos.

Much better off

Stratvert arrived at Microsoft in 2006, the same year Google acquired YouTube for $1.65 billion. His first YouTube video showed footage from a drone flying over a town in New Jersey. Then Stratvert filmed videos of his travels in the Puget Sound and beyond. How-to videos and gadget-review videos followed.

In 2017 he posted his first Microsoft-related video, in which he toured treehouses on the company’s campus with his wife, Kerry Stratvert, a manager at the company. In the video description, he included a disclosure saying that he was a Microsoft employee.

Two months after the treehouse video, Stratvert was working on the small development team behind Office.com, a website that gives fast access to online versions of Excel spreadsheets and other Office documents. The site was not well known, especially compared with Office applications for PCs, so Stratvert and colleagues asked their peers in marketing if they could spread the word about Office.com. The marketers didn’t have enough resources to help, Stratvert said.

So Stratvert produced a video showing how people could use Office.com to get most features of Microsoft Office free of charge. It performed well, and his manager told him he had done a good job.

He went on to make videos about Excel, Outlook, PowerPoint, Teams, Windows and Word. Microsoft employees on other teams noticed and started asking him to make videos about their products. They saw how many people were watching and recognized that getting him to talk about their products could bring in new users, which in turn could mean more favorable employee reviews.

“It’s almost like teams appreciate that there’s this other outlet that’s kind of unofficial,” he said.

Then, in July 2020, months after the pandemic sent the Stratverts home, he gave up his position at Microsoft and began making five times as many videos as he was before. He no longer needed to include disclosures in videos that he was a Microsoft employee, and he could talk more freely about competing products such as Slack and Zoom.

YouTube users have hit the subscribe button. Today he has 85% more subscribers than the official Microsoft 365 YouTube channel focused on Teams and other Office applications, which he said has a team of 20 to 30 people producing content.

“Economically I’m much better off,” he said. His wife still works at Microsoft.

Promoting external creators

Historically, developing and maintaining products has been the core of Microsoft. Today nearly 50% of employees work in engineering. Marketing is a considerably smaller part of the business, and employees work on ads, materials for Microsoft’s website, events and other methods of promotion.

In the past few years, a group inside Microsoft began focusing more on YouTube.

“On YouTube specifically, we’re starting to explore the concept of what it looks like to do something native to YouTube,” Sonia Atchison, a market research lead who worked on the Microsoft Creators Program, said on a podcast last year.

People often turn to YouTube when they want to get a better understanding of Microsoft software, and while Microsoft has plenty of its own videos available on YouTube, they don’t always come up at the top of the site’s search results, Atchison said. Videos from outsiders can receive higher rankings.

Sometimes a video from a Microsoft employee might be there. The company does have employees with large audiences, including Mike Tholfsen, a 26-year company veteran whose videos show how teachers and students can use Teams and other applications.

Microsoft wanted more people like Tholfsen. The company formed a group to help people working on different products learn how to build sizable YouTube channels, said Jon Levesque, who posted YouTube videos as a senior platform evangelist at Microsoft before taking a job at DocuSign in March. There were issues at times. Some employees asked why they were concentrating on a service owned by a top competitor, and teams didn’t always agree with everything that employee-creators said in videos, Levesque said.

The effort didn’t get far, and Microsoft began promoting videos from non-employees instead, with the establishment of the Microsoft Creators Program. The company started including outsiders’ videos in its video playlists, and it offered to use their videos for customer support. That led to some additional video views, said Jason Sele, whose YouTube channel goes by the name Sele Training. In late June, Microsoft announced plans to put the program on pause.

Among the dozens of people who joined the Creators Program, the most popular is Leila Gharani, a software instructor in Vienna, with over 900,000 subscribers. After picking up skills in Excel and other software on the job, Gharani began teaching classes in person and online. She made her YouTube debut in 2016, with the hope of enhancing her filming skills.

The channel took off, and that brought in money, plus it drew more students to her premium courses, which her company, XelPlus, continues to offer. With the company growing, her husband left his position as a chief financial officer to join her. They brought on an editor and a writer, too.

Many of Gharani’s YouTube videos detail parts of Excel. That doesn’t mean she completely ignores the competition. One of her more popular videos in 2020 was called “Google Sheets BEATS Excel with THESE 10 Features!”

Like Stratvert, Gharani has heard from Microsoft employees. After she posted a video on the Whiteboard app, a program manager said the team loved her video and offered to show her updates that were coming soon. The program manager didn’t tell her to make a video but instead wanted to see if she thought the enhancements would be video-worthy, Gharani said.

She said users might ascribe greater authority to YouTube creators who work at Microsoft, unlike her.

“People appreciate that they’re at Microsoft,” she said. “‘They must know what they’re saying. They’re not going to say it if it’s not true. That authority thing does come with it. But not a lot.”

Jason Sele makes YouTube videos from a high-tech RV.
Jason Sele

It hasn’t stopped Gharani from growing into a major entity. She boasts more subscribers than almost all of Microsoft’s YouTube accounts. The Xbox channel remains a top attraction, with over 4 million subscribers.

Sele would love the type of YouTube success that Gharani and Stratvert have had. Videos of his that contain tips and tricks on Excel and other applications have received more than 1 million views, but he’s not an on-camera star. Sele, who makes videos from his RV after 25 years of exposure to Microsoft products as a director of information technology, narrates while giving all the visual attention to the video feed from his computer. He said he spends time carefully writing and editing scripts before hitting record. The YouTube money is enough to live on, he said.

He said he isn’t worried about competing with Microsoft. “They’ll crank out all this training, but it really isn’t training you can just hand to your employees,” he said. “It’s either too high-level or low-level.”

Entertainment

While YouTube has no shortage of software walk-throughs, YouTube is more than just a destination for careful learning. It’s a venue for entertainment. Gharani gets that.

“It’s more passive, they don’t have to really concentrate,” she said of people who watch her videos. “They can let themselves also think about other things and come back and just watch and still get something out of it. You can’t get that out of writing.”

She strives to keep her YouTube videos moving along at a fast pace. She doesn’t want the videos to be too boring. Otherwise she won’t have many people watching.

“It’s not necessary that they actually learn something, but they just see the potential that they could learn something, or they feel like they’ve learned something,” she said. Her online courses have a different purpose. There’s no background music, they’re slower, and there’s less of her talking on camera.

The thumbnail images for her videos on YouTube always show her face, and her channel uses her full name, rather than some jumble of words such as OfficeIsSuperGreat, which helps her work stand out in search results.

The same can be said about Stratvert’s channel.

But his videos can be longer. Some run well past 20 or 30 minutes. He keeps them from becoming tedious by talking about how he uses software inside his made-up corporation, the Kevin Cookie Company. In one video about holding webinars in Teams, Kerry Stratvert made an appearance, posing as a Kevin Cookie Company employee who wanted to air her concerns. As the person running the meeting, he turned off her microphone and camera, demonstrating what webinar hosts can do in that situation in real life.

For years she had called Stratvert’s YouTube channel a hobby and pointed out that he hadn’t recouped the investment in production equipment. She didn’t think he could ever go full time. Then, last year, he did.

“It’s done extremely well,” he said. “My wife looks at that — ‘Oh, man, working at home, cranking out a video a day, maybe I should do this, too. Maybe I should pull together videos.’ Same with her sister, too.”

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Tech stocks just finished a five-week rally — the longest stretch since market peak in November 2021

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Tech stocks just finished a five-week rally — the longest stretch since market peak in November 2021

Tech stocks on display at the Nasdaq.

Peter Kramer | CNBC

The Nasdaq just wrapped up its fifth straight week of gains, jumping 3.3% over the last five days. It’s the longest weekly winning streak for the tech-laden index since a stretch that ended in November 2021. Coming off its worst year since 2008, the Nasdaq is up 15% to start 2023.

The last time tech stocks enjoyed a rally this long, investors were gearing up for electric carmaker Rivian’s blockbuster IPO, the U.S. economy was closing out its strongest year for growth since 1984, and the Nasdaq was trading at a record.

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This time around, there’s far less champagne popping. Cost cuts have replaced growth on Wall Street’s checklist, and tech executives are being celebrated for efficiency over innovation. The IPO market is dead. Layoffs are abundant.

Earnings reports were the story of the week, with results landing from many of the world’s most valuable tech companies. But the numbers, for the most part, weren’t good.

Apple missed estimates for the first time since 2016, Facebook parent Meta recorded a third straight quarter of declining revenue, Google‘s core advertising business shrank, and Amazon closed out its weakest year for growth in its 25-year history as a public company.

While investors had mixed reactions to the individual reports, all four stocks closed the week with solid gains, as did Microsoft, which reported earnings the prior week and issued lackluster guidance in projecting revenue growth this quarter of only about 3%.

Cost control is king

Meta was the top performer among the group this week, with the stock soaring 23%, its third-best week ever. In its earnings report Wednesday, revenue came in slightly above estimates, even with sales down year over year, and the first-quarter forecast was roughly in line with expectations.

The key to the rally was CEO Mark Zuckerberg’s pronouncement in the earnings statement that 2023 would be the “Year of Efficiency” and his promise that “we’re focused on becoming a stronger and more nimble organization.”

“That was really the game-changer,” Stephanie Link, chief investment strategist at Hightower Advisors, said in an interview Friday with CNBC’s “Squawk Box.”

“The quarter itself was OK, but it was the cost-cutting that they finally got religion on, and that’s why I think Meta really took off,” she said.

Big Tech earnings don't look compelling enough to buy, says Stephanie Link

Zuckerberg acknowledged that the times are changing. From the year of its IPO in 2012 through 2021, the company grew between 22% and 58% a year. But in 2022 revenue fell 1%, and analysts expect growth of only 5% in 2023, according to Refinitiv.

On the earnings call, Zuckerberg said he doesn’t expect declines to continue, “but I also don’t think it’s going to go back to the way it was before.” Meta announced in November the elimination of 11,000 jobs, or 13% of its workforce.

Link said the reason Meta’s stock got such a big bounce after earnings was because “expectations were so low and the valuation was so compelling.” The stock lost almost two-thirds of its value last year, far more than its mega-cap peers.

Navigating ‘a very difficult environment’

Apple, which slid 27% last year, gained 6.2% this week despite reporting its steepest drop in revenue in seven years. CEO Tim Cook said results were hurt by a strong dollar, production issues in China affecting the iPhone 14 Pro and iPhone 14 Pro Max, and the overall macroeconomic environment. 

“Apple is navigating what is, of course, a very difficult environment quite well overall,” Dan Flax, an analyst at Neuberger Berman, told “Squawk Box” on Friday. “As we move through the coming months and quarters, we’ll see a return to growth and the market will begin to discount that. We continue to like the name even in the face of these macro challenges.”

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Amazon CEO Andy Jassy, who succeeded Jeff Bezos in mid-2021, took the unusual step of joining the earnings call with analysts Thursday after his company issued a weaker-than-expected forecast for the first quarter. In January, Amazon began layoffs, which are expected to result in the loss of more than 18,000 jobs.

“Given this last quarter was the end of my first full year in this role and given some of the unusual parts in the economy and our business, I thought this might be a good one to join,” Jassy said on the call.

Managing expenses has become a big theme for Amazon, which expanded rapidly during the pandemic and subsequently admitted that it hired too many people during that period.

“We’re working really hard to streamline our costs,” Jassy said.

Alphabet is also in downsizing mode. The company announced last month that it’s slashing 12,000 jobs. Its revenue miss for the fourth quarter included disappointing sales at YouTube from a pullback in ad spending and weakness in the cloud division as businesses tighten their belts.

Ruth Porat, Alphabet’s finance chief, told CNBC’s Deirdre Bosa that the company is meaningfully slowing the pace of hiring in an effort to deliver long-term profitable growth.

Alphabet shares ended the week up 5.4% even after giving up some of their gains during Friday’s sell-off. The stock is now up 19% for the year.

Ruth Porat, Alphabet CFO, at the WEF in Davos, Switzerland on May 23rd, 2022. 

Adam Galica | CNBC

Should the Nasdaq continue its upward trend and notch a sixth week of gains, it would match the longest rally since a stretch that ended in January 2020, just before the Covid pandemic hit the U.S.

Investors will now turn to earnings reports from smaller companies. Some of the names they’ll hear from next week include Pinterest, Robinhood, Affirm and Cloudflare.

Another area in tech that flourished this week was the semiconductor space. Similar to the consumer tech companies, there wasn’t much by way of growth to excite Wall Street.

AMD on Tuesday beat on sales and profit but guided analysts to a 10% year-over-year decline in revenue for the current quarter. Intel, AMD’s primary competitor, reported a disastrous quarter last week and projected a 40% decline in sales in the March quarter.

Still, AMD jumped 14% for the week and Intel rose almost 8%. Texas Instruments and Nvidia also notched nice gains.

The semiconductor industry is dealing with a glut of extra parts at PC and server makers and falling prices for components such as memory and central processors. But after a miserable year in 2022, the stocks are rebounding on signs that an easing of Federal Reserve rate increases and lightening inflation numbers will give the companies a boost later this year.

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Jury finds Musk, Tesla not liable in securities fraud trial following ‘funding secured’ tweets

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Jury finds Musk, Tesla not liable in securities fraud trial following 'funding secured' tweets

Tesla CEO Elon Musk and his security detail depart the company’s local office in Washington, January 27, 2023.

Jonathan Ernst | Reuters

Elon Musk and Tesla were found not liable by a jury in a San Francisco federal court on Friday in a class-action securities fraud trial stemming from tweets Musk made in 2018.

The Tesla, SpaceX and Twitter CEO was sued by Tesla shareholders over a series of tweets he wrote in August 2018 saying he had “funding secured” to take the automaker private for $420 per share, and that “investor support” for such a deal was “confirmed.”

Trading in Tesla was halted after his tweets, and its share price remained volatile for weeks.

Jurors deliberated for less than two hours before reading their verdict. “We are disappointed with the verdict and considering next steps,” said Nicholas Porritt, partner at Levi & Korsinsky, the firm representing the shareholders in the class action, in an email to CNBC.

“I am deeply appreciative of the jury’s unanimous finding,” Musk wrote on Twitter.

Musk’s lead counsel, Alex Spiro of Quinn Emanuel Urquhart & Sullivan, arguing before the jury earlier Friday, said the matter had to be assessed in context, noting the Tesla CEO was only considering taking the company private. He said fraud cannot be built on the back of a consideration.

Spiro did not immediately respond to requests for comment.

The shareholders in the certified class-action lawsuit included a mix of stock and options buyers who alleged that Musk’s tweets were reckless and false, and that relying on his statements to make decisions about when to buy or sell cost them significant amounts of money.

Musk later claimed that he had a verbal commitment from Saudi Arabia’s sovereign wealth fund, and that he thought funding would come through at his proposed price based on a handshake. However, the deal never materialized.

During the course of this trial, Musk also said he would have sold shares of SpaceX to finance a going-private deal for Tesla, as well as taking funds from the Saudi Public Investment Fund.

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Apple’s long-term positives outweigh rare earnings miss, Morgan Stanley says

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Apple's long-term positives outweigh rare earnings miss, Morgan Stanley says

Apple CEO Tim Cook holds a new iPhone 14 Pro during an Apple special event on September 07, 2022 in Cupertino, California.

Justin Sullivan | Getty Images

Shorter-term macro issues don’t detract from the long-term value at Apple, Morgan Stanley analysts wrote in a note Friday that reiterated an overweight rating and a $175 price target.

“Taking a step back, it’s rare to see Apple miss and guide down in a quarter, but we believe the long-term positives from tonight’s report outweigh the short-term negatives,” Morgan Stanley’s Erik Woodring wrote. Apple’s Thursday night earnings report cited a strong dollar, continued production issues in China, and the broader macroeconomic environment as three reasons for Apple’s first year-over-year sales decline since 2019.

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“On the third factor, I would say was just the challenging macroeconomic environment, and you’re hearing that from, I would think, everybody,” CEO Tim Cook told CNBC’s Steve Kovach.

But Morgan Stanley assesses those headwinds as transitory, noting both accelerated growth in iPhone installed base and a continued upward margin trajectory as longer-term upside which will ensure “the Apple flywheel keeps spinning.”

Morgan Stanley reiterated its top pick rating for Apple. The company has managed to navigate a broader tech downturn with considerable success and is one of the few tech companies that has staved off layoffs and maintained a level of operational expense discipline.

It’s that same discipline that helps Morgan Stanley analysts maintain a bullish outlook on Apple, which guided to a March 2023 gross margin ranging from 43.5 to 44.5%, according to the note.

“We believe Apple’s ability to post the highest gross margin in a decade despite seeing revenue decline Y/Y is impressive, and moving forward, we expect gross margins to improve as mix, FX, commodities, and logistics all work in Apple’s favor through the rest of 2023 and into FY24,” Morgan Stanley’s note said.

Apple’s user spend levels are also keeping Morgan Stanley bullish, proof that “the underlying drivers of Apple’s model remain robust.”

Investors have apparently embraced Morgan Stanley’s appraisal of Apple’s durability as a long-term investment. Apple shares were up around 1% at the open Friday, despite the sales miss, recouping losses from a 4% drop Thursday night. The company also reported misses on the top and bottom lines, beating analyst expectations only in iPad and services revenue.

— CNBC’s Michael Bloom contributed to this report.

Apple misses on top and bottom lines

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