Friday October 31

• Amazon launches global shipping into China (from Amazon global stores) starting Singles Day: Amazon is planning an interesting move in China that could shift the balance somewhat starting with its Singles Day sale this year: global shipping. To be clear, this doesn’t mean you can buy goods off of Amazon China from anywhere in the world. Rather, it means that Chinese consumers will be able to shop on Amazon’s US, German, Spanish, French, and Italian stores and have whatever they order shipped directly to China. Amazon China is also launching an “international shopping” feature that should make it more convenient for Chinese customers to shop for goods they want from foreign Amazon shops. Moreover, the shipping may not take as long as you’d expect; Amazon China has arranged partnerships with EMS, UPS, and other global shipping companies that should bring international orders to Chinese doorsteps faster than ever. The new partnerships promise to help customers get their orders through customs quickly, and some items may arrive within three days of being ordered. Sure, that’s nothing compared to the speed of shipping within China, but for an international order, three days is very fast.

• LinkedIn positive earnings surprise (Q3 revenue $568M, 45% Y/Y, net loss $4.3M) on real momentum in China; no updated user stats: Interestingly, each of the company's three divisions grew at the same rate (~45%). Talent Solutions – otherwise known as the company’s recruitment products and services — continues to be the company’s biggest earner, now accounting for 61% of all revenues. Marketing Solutions – the company’s advertising products — is a steady 19% of revenues. Premium Subscriptions – the paid subscriptions to have access to more LinkedIn features — is 20% of total revenue, same as a year ago. The U.S. is 60 percent of all revenues, at $343 million, and while LinkedIn is pushing harder into markets like China, it’s pulling in $225 million at the moment.

• Groupon also had a positive earnings report (Q3 revenue $757M, 27% Y/Y, net loss $21M); firm is hanging in there tenaciously with many new products:  Groupon managed to best expectations, but not by a margin that investors found too compelling. The company is up 1% in after-hours trading. Groupon in the last quarter has been continuing its efforts to build out its product portfolio and continue developing its services in a bid to boost its traffic and offset any declines that it may see in daily deals. That has included the launch of individual business pages to rival those of Yelp, a shopping loyalty and couponing app called Snap, and a more flexible model for how it lets businesses list deals based on specific times of day to improve footfall. It’s slowly making some progress on these fronts. The company says that 100 million people have now downloaded its mobile apps globally.
• Facebook Audience Targeting could be changing politics just like it is changing the news business: Modern political campaigns home in on their key voters with drone-like precision, down to the smallest niche — like Prius-driving single women in Northern Virginia who care about energy issues. They compile hundreds of pieces of data on individuals, from party registration to pet ownership to favorite TV shows. Some platforms are now tailoring their offerings to meet the campaigns wherever they are. Facebook, for instance, at its most basic level allows campaigns to focus their message on a particular ZIP code or gender, or even a group of voters that “likes” a certain set of Facebook pages — maybe MSNBC’s Rachel Maddow and The Nation, or Fox News’s Sean Hannity and Guns & Ammo magazine. At a more sophisticated level, a campaign can upload its entire voter file to Facebook, and work with one of the site’s data partners to reach only its targets with messages designed specifically for them.

Thursday October 30, 2014

• Line reported strong results (rev: $192M, 104% Y/Y, income not revealed); 30 million users in India: Unlike rival Whatsapp (600M users), which effectively does not monetize at all (a luxury available to Whatsapp thanks to Facebook's spectacular overall profitability), Line makes its money as a digital content platform — most of its revenue comes from in-app purchases within its connected games platform, which includes more than 50 titles, but it also sells stickers and operates a marketing channel which lets brands run official accounts and pay to reach consumers. Line  stated that it has 170 million monthly active users worldwide, 87 million of which come from Taiwan, Thailand, and and Japan. The app claims 30 million users in India. By the end of the year it will introduce payments, taxi hailing, and food delivery services, which will accompany new gaming, manga, and music initiatives. Line recently postponed plans to go public in a rumored dual US-Japan IPO that could value it at $10 billion.

• Xiaomi is now the world’s third largest smartphone maker, while Samsung's mobile division has its worst quarter since 2011: Xiaomi is now the world’s third largest smartphone maker, due in large part to the success of its high-end Mi4, says new research by IDC. This is also the first time that Xiaomi has broken into the research firm’s list of the top 5 smartphone makers in the world. Samsung remains at the lead despite declining shipment volume, followed by Apple, Xiaomi, and Lenovo and LG, which tied for fourth place. Samsung spent most of the quarter without launching a new flagship device, and continued to struggle in the mid-to-low tier markets against cheaper and value-packed offerings like Xiaomi's Redmi 1S. Profit for the mobile division fell 73.9 percent to 1.75 trillion won in the third quarter, its worst performance since the second quarter of 2011.

• Dating/hook-up app Tinder has staggering engagement levels, based on a simple psychological truth: looks matter: In the two years since Tinder was released, the smartphone app has exploded, processing more than a billion swipes left and right each day (right means you “like” someone, left means you don’t) and matching more than 12 million people in that same time, the company said. Tinder’s engagement is staggering. The company said that, on average, people log into the app 11 times a day. Women spend as much as 8.5 minutes swiping left and right during a single session; men spend 7.2 minutes. All of this can add up to 90 minutes each day. While conventional online dating sites have been around longer, they haven’t come close to the popularity of Tinder.
• Reddit launches a crowd-funding site as it attempts to monetize non-intrusively: Reddit, where users find, share and talk about web links and photos, has been faithful to an antiquated design and still looks like an online message board plucked from the 1990s — think Craigslist, but with more Lolcats. You don’t need to hand over any personal data, not even an email address, to sign up and post or view an item. The huge online community message board site unveiled Redditmade on Wednesday, a crowdfunding initiative that allows Reddit users to raise money to manufacture and sell customized items. The move will add another revenue stream to Reddit, which has tried to find creative ways to make money from the millions of people who visit the site without angering its quirky community of Internet denizens. Reddit has grown enormously in popularity over the last five years but only recently started focusing more on making money. Reddit now makes money from a small e-commerce site, Reddit Gifts. It also sells Reddit Gold, a subscription program that offers perks for signing up. Its largest moneymaker by far, however, is advertising.

Wednesday October 29

• Facebook's shares fell 10% on forecasts of higher spending, lower growth, despite beating earnings expectations (Q3 rev: $3.2B, Y/Y 59%, net income $806M, Y/Y 90%). The firm forecast revenue growth of 40% to 47% in Q4 2014, down sharply from 59% in Q3. CFO Dave Wehner also warned that the social network is preparing for a 55% to 75% spike in expenses next year, when the world's largest social network intends to invest in Whatsapp, Oculus and other products that have yet to show a profit. Facebook declined to provide any estimates for its expected pace of revenue growth in 2015, adding to investor worries. "Giving expense guidance without giving revenue guidance is frustrating and spooking The Street," said BTIG analyst Richard Greenfield. "The multi-billion dollar question is what’s revenue growth going to look like next year," he said.

• As Facebook stock has risen, the cost of the Whatsapp acquisition has risen too: from $16B ($4B in cash, $12B in FB stock) originally to $21.8B: For this, Facebook offered $4 billion in cash and $12 billion in stock, with the company’s founders eligible for an additional $3 billion in restricted stock. But as Facebook’s own stock has continued to rise, so has the value of the deal. The final tally came in at $21.8 billion, as the Deal Professor noted this month. WhatsApp reported a meager $10.2 million in revenue last year, but has 600M users. Mark Zuckerberg spoke about how he wanted to take the mobile messaging app quickly to a billion users from 600 million. (“For us, products really don’t get that interesting to turn into businesses until they have about one billion people using them,” he said.)

• Facebook engagement ticked up; but the firm sidestepped Snapchat-inspired questions on teen engagement: Facebook, already the world’s largest social network, said it had 1.35 billion monthly users in September, up from 1.32 billion in June, and 64 percent of them used the service daily, up slightly from the second quarter. The firm however did not field the one question that could have instilled confidence…or sent it into a death spiral: teen engagement. The company refused to break out any data about usage levels of teens, which are widely thought to be abandoning Facebook for apps like Snapchat. When asked about engagement for different demographics, Facebook’s CFO David Wehner said the company had nothing to report on specific cohorts of users. That was probably smart. A year ago when ex-CFO David Ebersman said Facebook “did see a decrease in daily users specifically among younger teens,” the share price plummeted despite an otherwise killer quarter.

• Meanwhile Renren (in 2011 touted as the Facebook of China) serves as a cautionary reminder that valuations can be fleeting:  Renren Inc. (RENN) was touted the Facebook Inc. of China when it debuted in New York in 2011. Today it’s looking more like online flameout Myspace. The stock has lost more than three quarters of its value since 2011. “When Renren appeared, students like me added as many friends as possible, but you get tired scrolling through horoscopes and advertisements searching for original content, because WeChat looked like a more enticing platform for posting news and reading comments,” Hou said by phone on Oct. 21. “It was the same with Myspace: you log in, you scroll through your newsfeed -- to find out that all the interesting conversations are happening on Facebook.” Three years after the IPO, the networking website’s valuation has fallen to less than eight times sales. The 24-year-old still checks her Renren account about three times a week, though for WeChat “it’s every hour,” she said. Monthly unique users decreased to about 44 million as of June, Renren said in a statement in August. That compares with more than 438 million monthly active users for WeChat and 157 million users for Weibo, a Twitter-like microblogging service controlled by Sina Corp.

Tuesday October 28, 2014

• Amazon's non-US eCommerce business (EGM-only, not media) constitutes ~20% of total revenue and grew about 19% Y/Y in Q3: That's one of many interesting insights in a deep-dive by a well-known Amazon blogger. Amazon's geographical mix for the Q was 63% North America (growth 25% Y/Y), 37% non-domestic (13% Y/Y).  Amazon's 1P and 3P businesses are doing quite well and the problems are in media (25% of total revenue, which grew only 4%) and  non-seller oriented areas such as the Fire phone which had a  $170m write-down for the Q and Amazon is sitting on $83m in inventory. On a 2x2 of (EGM v Media) and (US v International), US EGM was the largest (~50%) and the fastest growing segment (31% Y/Y): every other segment is growing below the average. Amazon reported $20.6B in Q3 revenue, at 20% growth.

• Twitter earnings (Q3 rev: $361M, 114% Y/Y, net loss $175M) beat estimates, but the stock was still down 10% on engagement worries and lack of product innovation: Twitter is doing a great job monetizing (especially on mobile:85% of revenue from mobile), but engagement is stagnating: not enough new users (monthly active users rose only 23% to 284 million in the quarter) and decreasing engagement per user (timeline views per user slid 7% globally to 636). “The lack of growth there comes from Twitter’s relative lack of innovation,” said Nate Elliott, an analyst at Forrester who studies social media. “The experience on Twitter today is the same experience people have always had on Twitter.”

• AliPay and Apple Pay might join forces: Jack Ma and Tim Cook both repeatedly teased a possible partnership between The Paypal-like AliPay and Apple Pay in two separate talks while on stage at the Wall Street Journal Digital conference in Laguna Beach, California this evening. An Apple Pay/AliPay partnership is certainly intriguing. Apple Pay activated over 1 million credit cards within the first 72 hours of going live with the service, making it a strong contender in the digital payment space. AliPay dominates in online payments for a good chunk of the rest of the world and, as Ma pointed out on stage, “Alipay is now the third largest payment system in the world, behind Visa and Mastercard.”.

• Separately, Alibaba's mutual fund has shrunk a bit - from $92B to $87B as big Chinese state-owned banks respond to competition: Alibaba’s mutual fund Yuebao garnered a lot of attention when it first launched last summer, and at first, it grew extremely fast. But by this July, it had begun to stagnate, and now according to the latest numbers, investment in Yuebao is actually dropping. Its still huge though: at $87B down from $92B Yuebao has been limited by government restrictions that emerged around March, which made it harder for customers to shift funds to online rivals, imposed transfer limits, banned new types of payments such as QR codes, and halted the launch of virtual credit cards. Alibaba chairman Jack Ma publicly slammed the central bank and big four for abusing their ‘monopoly’.

Monday October 27, 2014

• Facebook’s Audience Targeted News Feed is fundamentally changing the news business (including in India): Facebook is increasingly becoming to the news business what Amazon is to book publishing — a behemoth that provides access to hundreds of millions of consumers and wields enormous power.  It drives up to 20 percent of traffic to news sites - even more on mobile devices, the fastest-growing source of readers. Roughly once a week, Facebook adjusts the complex computer code that decides what to show a user when he or she first logs on to Facebook. The code is based on “thousands and thousands” of metrics, Mr. Marra said, including what device a user is on, how many comments or likes a story has received and how long readers spend on an article. The goal is to identify what users most enjoy, and its results vary around the world. In India, he said, people tend to share what the company calls the ABCDs: astrology, Bollywood, cricket and divinity. Analysis here and here

• Tencent invests in Blink a Chinese Snapchat variant; investment in a potential rival could be to pre-empt competition: Tencent has made a new social play in the same vein as Snapchat to appease China’s “post-90s” youths. The web giant made a fresh US$20 million series A investment into Blink, a new photo sharing and messaging app out of China. Sequoia Capital, H Capital, ZhenFund, and Innovation Works also participated in the round, according to Techweb.Tencent became king of China’s online social messaging sphere with the mass adoption of QQ Messenger and kept the throne when it unleashed WeChat. But even though QQ earlier this year boasted a record 200 million concurrent users and WeChat’s growth is only now starting to show signs of saturation, the web giant is actively looking for the next big thing for young people who no longer think WeChat is cool.

• Just Dial plans slew of new products, announces Q3 earnings: Rev INR 147 Crore (30.8% Y/Y) Net Profit INR 32 Crore (9% Y/Y): Revenues growth was driven by a strong 24.1% rise in paid campaigns and 5.5% increase in revenue per campaign (after a recent price rise), over the year-ago quarter. Listings increased 44 % year-on-year (y-o-y), to 14.5 million.The company's product Search Plus offers 20 live services currently and has not been monetised so far. The firm plans to launch many new products such as ‘Just Dial Cash’, On-line cab booking, ‘Just Dial Guaranteed’, amongst others, which will start contributing to revenues from FY16. The firm hopes these will help it improve monetization and to translate its strength in voice to online.

Friday October 24, 2014

• Amazon's very weak earnings (rev $20.8B, 20% Y/Y, net loss $544M) and slowing growth outlook (Q4 at 7% to 18% Y/Y) triggered a sell-off; also the company took out a $2B line of credit to meet working capital requirements recently: Amazon reported lower than expected revenue in its third quarter, and a larger than expected loss. Analysts expected the company to lose $0.74 on revenue of $20.84 billion. Instead, Amazon lost $0.95 per share on revenue of $20.58 billion. Shares were down 10% after-hours. Investors were particularly spooked that forecasts for Q4 were weak too - “I think that the potential for a loss in the fourth quarter is what is freaking people out,” one analyst said. Last month the company revealed it had taken out a $2 billion line of credit with Bank of America for “working capital, capital expenditures, acquisitions and other corporate purposes.” Revenue growth - long Amazon's stated objective - could slow sharply next quarter.

• Microsoft's Q3 earnings (rev $23B, 25% Y/Y, net income $4.5B) were everything that Amazon's were not: Microsoft Corp (MSFT.O) reported higher-than-expected quarterly revenue, helped by stronger sales of its phones, Surface tablets and cloud-computing products for companies, while keeping its profit margins largely intact. The results on Thursday allayed fears of investors in recent days that the industry shift toward lower-margin cloud services was proving hard for established technology leaders to master. Microsoft shares, which have climbed 33 percent over the past year, rose another 3 percent in after-hours trading to $46.36. the company said its net income was $4.54 billion, or 54 cents a share, compared with $5.24 billion, or 62 cents a share, a year ago. Revenue was $23.20 billion, up from $18.53 billion

• Tencent seeks to marry messaging and eCommerce and out-flank Alibaba - invests in a mobile shopping portal that integrates with WeChat: Koudai Gouwu, a Chinese mobile shopping portal, today announced a huge US$350 million series C funding round led by Tencent and Tiger Fund, followed by H Capital, Vy Capital, Falcon Edge, and DST, according to the company’s official Weibo account (h/t TechNode). Of the total amount, Tencent pitched in US$145 million for a 10 percent stake in the company. On the surface, Koudai is a typical Chinese marketplace with a nice looking mobile website and app with an emphasis on fashion products, but it also has a few tricks up its sleeve. The biggest is that users can browse and make purchases from shops within WeChat. Small vendors can use the site to set up their own shops and market them through Koudai’s WeChat channels. That’s a huge opportunity for merchants looking to capitalize on WeChat’s 438 million monthly active users. Rumors on Chinese media suggested the three-year-old startup received even more traffic than Taobao on mobile, and Alibaba founder Jack Ma himself approached Koudai’s would-be investors to discourage them. Koudai could be a powerful ally for Tencent, which makes WeChat, in its face off against Alibaba’s Taobao and Tmall marketplaces.

Thursday October 23, 2014

• Xiaomi is moving user data out of China - possibly in response to security concerns, including some from the Indian Air Force: User data for those based outside of China is being moved to servers operated by Amazon.com in California and Singapore, Xiaomi Vice President Hugo Barra wrote today on his Google+ page. All shopping data for international users is expected to be moved out of Beijing by the end of the month, while profiles, text messages and other services should be completed by the end of the year, Barra wrote. In August, security firm F-Secure alleged that Xiaomi's devices were collecting and transmitting personal data to Beijing. The Indian Air Force made similar accusations, according to a report from the New Indian Express newspaper. Apart from privacy, Barra also said the moving data to overseas servers has significantly boosted speed in markets such as Singapore, India and Malaysia. Xiaomi is targeting India and Brazil as its next big markets. This, while Apple CEO Tim Cook met with Chinese Vice Premier Ma Kai to discuss protecting user data two days after a report that (possibly Chinese-backed) hackers targeted its iCloud services.

• Offline Retailers should use smart programmatic strategies to make in-store purchases more competive to  'showroomers'  consumers visit stores to see products in person, only to turn around and purchase those products at better prices online from other sellers. That's the recommendation of a study - see the image below for how this would work.

• Tumblr's 4 means of monetizing traffic:On Tuesday, Yahoo chief Marissa Mayer told investors that Tumblr would likely make more than $100 million in 2015. In our series this week, we learned that the social platform's millennial-leaning user base has grown 33 percent since Mayer and her team purchased it for $1.1 billion. This revenue is achieved via four main ad products:
• Sponsored Posts: Tumblr charges a cost-per-engagement (CPE) rate for Sponsored Posts, an offering for Web and mobile marketers that includes Yahoo.com properties in addition to Tumblr's. ("Engagements" entail likes, reblogs, clicks, etc.)Targeting options entail gender, location and interests.
• Trending Blogs: Brands pay for every follower picked up on the social platform when it comes to the mobile- and Tumblr-only Trending Blogs.
• Sponsored Radar: Two-year-old Sponsored Radar ads are Web- and Tumblr-only, while entailing a cost-per-thousand (CPM) pricing model.
• Sponsored Dot promos: And then the one-month-old Sponsored Dot promos are negotiated at a flat fee.

Wednesday October 22, 2014

• Chinese government backed hackers mounted attacks on Apple? The press (NYT here, Washington Post here) has been agog with reports that Chinese authorities have been involved in a sophisticated cyber-attack on Apple. A sophisticated cyber-attack has targeted Apple’s iCloud service in China, in an apparent attempt to collect user names, passwords and other private information as the company releases its newest round of iPhones in the world’s most populous country. The attack, first reported on Monday by Greatfire.org, an activist group that monitors Internet censorship in China, was confirmed Tuesday by Apple.  The group speculated that China was hoping to collect user names and passwords for iCloud because the newest iPhones will include a strong new form of encryption that governments will have a difficult time cracking, limiting their ability to monitor the communications of its citizens. Google has also reported significantly increased levels of Chinese government interference this year.

• Yahoo shows signs of life; might buy BrightRoll; revenue from Tumblr at $100M/year: Yahoo reported strong third-quarter financial performance on Tuesday, breaking a pattern of revenue declines and posting profits from its core operations that far exceeded Wall Street’s expectations. And mobile, long a bête noire for the company, for the first time contributed meaningfully to its results. Ms. Mayer, Yahoo’s chief executive, told investors that mobile revenue exceeded $200 million in the quarter and she expected it to top $1.2 billion for the full year. Yahoo and its Tumblr unit together had 550 million monthly users on mobile devices during the quarter, up 17 percent from a year ago.Shares of Yahoo rose 1.1 percent to $40.61 in extended trading on Tuesday. For the first time Yahoo disclosed its mobile revenue, which it said was more than $200 million in the third quarter. Yahoo said it expects that gross mobile revenues for the full year will exceed $1.2 billion. We finally have a look at Tumblr’s ad sales: $100 million in 2015. Interesting analysis here, here and here. Separately, Yahoo might buy BrightRoll, a digital video ad service provider, for about $700M.

• After acquisitions in Europe and New Zealand, Zomato now launched in Toronto: Just weeks after announcing its fourth acquisition in three months (in Poland, the Czech Republic, Slovakia and New Zealand), Indian restaurant search and discovery service Zomato took its first step into the North American market today. This time, instead of taking the buyout route, Zomato launched in Canada, listing over 11,000 restaurants in the Greater Toronto area on its website as well as mobile apps.

Tuesday October 21, 2014

• Apple's earnings sizzled, IBM's fizzled: Apple's earnings were spectacularly good (revenue at $42B, up 12% Y/Y, $8.5B in net profit, up 13% Y/Y), powered by surging iPhone sales (although the iPad continues to drag) and IBM's were spectacularlybad (like Oracle and SAP, IBM is struggling to stay relevant as cloud computing gains; IBM shares are at a three year low despite billions spent on buybacks and dividend. Those buybacks are now attracting harsh criticism. IBM revenue is now about the same as it was in 2008.

• Apple Pay Insight#1: It could substantially simplify in-app purchases - potentially be a huge win for Apple (via the App Store revenues) and for Facebook (which dominates in-app ad sales) but a bummer for Google (whose Play Store business is growing increasingly important as ad revenue growth slows). Although many people only associate Apple Pay with the ability to pay at point-of-sale at a growing number of supported retailers, Apple Pay also enables in-app transactions to take place with just a touch of the finger. That means that more consumers will be able to purchase things in apps, and this will be easier than before because they’ll no longer have to remember their Apple ID and password. Instead, just by touching on the fingerprint reader on new iPhones and iPads running iOS 8, they’ll be able to pay using the credit or debit card information on file, already associated with their Apple account. (Apple already offers Touch ID for in-app purchases, but Apple Pay could enable even more types of transactions to occur easily – like ordering food or ordering an Uber, for example)

• Apple Pay Insight #2: Apple's timing might be excellent (as usual): By next fall, though, American merchants face a deadline to upgrade their credit card terminals to accept E.M.V. — which stands for Europay, MasterCard and Visa — a technology that makes credit transactions more secure for consumers. Many believe those new terminals will also accept payments from Near Field Communication-enabled devices like the iPhone 6. “Apple’s timing here is an astute stroke of brilliance,” said Norm Merritt, president of ShopKeep, a start-up that sells point-of-sale products for small businesses. “People will already have to invest in new E.M.V.-enabled machines. N.F.C. is just a few bucks more.” Apple is also promoting Apple Pay’s security measures, calling it far safer than the credit cards consumers use on a daily basis.

• Walmart's smart way of gaining audience and competitor info: a mobile app that scans competitor receipts: This summer, Walmart rolled out a new mobile app called Savings Catcher that pulls in pricing information from competitors by scanning a customer’s receipt. If a product is cheaper elsewhere, shoppers get the money back on a gift card. In addition to saving consumers money, the app also helps Walmart collect troves of data on shoppers.