Daily Tech Snippet: Friday, April 24

• Amazon earnings: revenue $22.7B, +15% Y/Y, net loss of $57M, but shares surge on cloud computing revenue, profitability: The retailer lost 12 cents a share for a net loss of $57 million, as revenue rose 15 percent — a little more steeply than expected, especially in light of the company’s size — to $22.72 billion. Analysts had projected a loss of 13 cents a share on revenue of $22.39 billion, according to Thomson Financial. Last year, Amazon had a profit of 23 cents a share in the first quarter. AWS had net sales of $1.57 billion in the first quarter, up 49 percent from $1.05 billion in the first quarter of 2014. Shares in Amazon usually move forcefully after the earnings release — often down, but strikingly up after fourth-quarter results were announced three months ago. The stock has risen about 25 percent since then. In regular trading Thursday, the stock barely moved, but were up 8% in extended trading. 

• AWS is unexpectedly large $1.57B quarterly revenue - and very profitable! Amazon.com Inc's first-quarter revenue grew more than expected as rising sales in North America and its burgeoning cloud-computing services unit offset new business investments, boosting its shares nearly 7 percent. The e-commerce company for the first time broke out financial details of its secretive cloud computing unit, Amazon Web Services, on Thursday, saying revenue jumped almost 50 percent to $1.57 billion, or about 7 percent of total revenue. The unit's operating income grew 8 percent to $265 million. Amazon shares rose $26.01 to $416 in extended trading, after closing slightly higher at $389.99 on Nasdaq. Chief Executive Jeff Bezos revealed in a statement that Amazon Web Services is a $5 billion business and its growth is accelerating. "We're putting a lot of capex (capital expenditure) there, and we think over time we will be able to generate significant free cash flow," Chief Financial Officer Tom Szkutak said on a conference call. Cloud computing has turned out to be more lucrative than expected, Wedbush Securities analyst Michael Pachter noted. "Amazon's Web service is profitable, and apparently was a year ago as well. Everybody thought it was losing money ... and is probably a bit smaller than people thought it was." 

• Amazon's North America business up 24% Y/Y, international business continues to drag - down Y/Y Amazon's sales from North America rose 24 percent to $13.4 billion in the quarter ended March 31, the company said. The company said it is continuing to build its Prime delivery business with its one-hour delivery service called Prime Now. It is also investing in original content for its Prime instant video services and devices. The international unit, which accounts for about 35 percent of total sales, remained a drag, with sales for the quarter slipping 1.77 percent to $7.75 billion. Szkutak said Amazon has stepped up its investments, particularly in India, and remains selective in China. "The growth rate in India is very rapid," he said. "A big part of the challenge there is helping sellers to succeed and grow their online businesses."

• Microsoft earnings: revenue $21.7B, +6% Y/Y, net income $4.99B; shares up on cloud strength: Microsoft reported net income of $4.99 billion, or 61 cents a share, down from $5.66 billion, or 68 cents a share, in the same period a year ago. Revenue rose to $21.73 billion from $20.4 billion a year ago, Microsoft said. Wall Street analysts were especially pleased that Microsoft exceeded their profit forecasts. The average estimate of analysts surveyed by Thomson Reuters was for earnings of 51 cents a share and revenue of $21.06 billion. Microsoft shares jumped more than 3 percent in after-hours trading. Daniel Ives, an analyst at FBR Capital Markets, said that Wall Street was expecting to give Microsoft a C grade for the quarter after the company delivered disappointing results over the holiday period. He said the company ended up delivering a B-plus performance, adding that “it appears Microsoft is back on the right track after a head-scratching performance last quarter.” 

• Microsoft Cloud Strength: Azure revenue is $1.57B quarterly revenue A bright spot for Microsoft was the growth in its cloud business, a catchall category that includes Office applications that are sold as subscriptions and its Azure business, through which it rents computing capacity in Microsoft data centers to clients. The company said its commercial cloud revenue grew 106 percent during the quarter, and amounts to a $6.3 billion annual business based on its recent performance. The company said its commercial cloud-related revenue for the quarter more than doubled, and was now running at $6.3 billion a year. Amazon.com Inc said on Thursday its quarterly cloud revenue rose almost 50 percent to $1.57 billion, suggesting a similar annual number. Microsoft's overall revenue rose 6 percent to $21.7 billion, above Wall Street's average forecast of $21.1 billion, according to Thomson Reuters I/B/E/S. Taking out the effects of the strong U.S. dollar on currency rates, Microsoft said revenue would have risen 9 percent. Earnings per share declined to 61 cents per share from 68 cents in the year-ago quarter. Analysts had expected 51 cents, on average.

• Google earnings: $17.3B, +12% Y/Y, net income $3.6B; shares up despite earnings miss: Google on Thursday reported first-quarter revenue of $17.3 billion, up 12 percent over the same period last year. That figure was driven substantially downward by the strong dollar. Absent currency fluctuations, revenues would have been up 17 percent. Google missed Wall Street’s expectations for the sixth time in the last nine quarters. Net revenue, which excludes payments to the company’s advertising partners, was $13.9 billion, up from $12.2 billion. Analysts had expected net revenue of $14.04 billion, according to Bloomberg. Net income in the first quarter, which ended March 31, was $3.6 billion, or $5.20 a share, compared with $3.5 billion, or $5.04 a share. Excluding the cost of stock options and related tax benefits, Google’s profit was $6.57 a share, compared with $6.27 a year ago. Analysts had expected $6.63 a share. During its first-quarter earnings call on Thursday, the search giant tried to assuage analysts’ long-running concern that its growth is slowing because mobile phones, with their tiny screens that can be clumsy to click through, are a less lucrative advertising medium than the desktop computers with which the Google empire was built. In doing so, Patrick Pichette, the company’s chief financial officer, who is leaving, noted that Google’s YouTube video site has been growing fast but for now is simply a less lucrative business than Google’s highly targeted search ads. Google shares were up about 3 percent in after-hours trading.

• With Mi 4i Smartphone, Xiaomi Turns to India: For those who think the West is the center of the tech world, Xiaomi has a different opinion. The upstart Chinese maker of smartphones just hosted its biggest event outside of its home country to introduce a new flagship phone, and it wasn’t in the United States or even Europe, it was in India. The phone, the Mi 4i, was introduced on Thursday by Hugo Barra, a former Google executive. The phone includes impressive specs and special features in India — like extra language options — and will go on sale April 30 in India, and in May in Hong Kong, Taiwan, Singapore, Malaysia and Indonesia. As the company’s Lei Jun, Xiaomi’s chief executive, normally does in China, Mr. Barra guided an enthusiastic audience through the phone’s range of features. But for all the attention Xiaomi gives to technical details and its operating system, the denouement came when Mr. Barra announced the price of the phone: 12,999 rupees, or roughly $200, a low price for a flagship device. While there are a huge number of reasons for Xiaomi, valued at $45 billion after its latest December fund-raising round, not to push into markets like the United States — from potential patent lawsuits to having to develop relationships with carriers — perhaps the primary reason Xiaomi is entering India is because the country looks quite a bit like China several years ago. Most importantly, Indians are expected to buy far more smartphones this year than they did in 2014, according to IDC, the research firm. IDC estimates that the country will buy 111 million smartphones this year and 149 million units in 2016. India is expected to outpace the United States in sales in the coming years. Yet the $200 price point makes the Mi 4i far cheaper than the leading phones from other companies like Samsung, HTC and Motorola. Even so, in India, the Xiaomi phone still ranks as expensive, about double the price of the cheap mainstays of companies like Micromax.

• Quikr valued around $890M in latest funding round: Classifieds site Quikr, which raised $150 million in fresh funding from existing investors besides a new investor Steadview Capital Management, was valued at around $892 million, as per a note by its Swedish investor Investment AB Kinnevik. Kinnevik said its own stake had an implied value of $158 million and the fair value of ownership of its holding is $93.2 million which gives a fair value of around $517 million to Quikr. Kinnevik had also participated in the latest round with an infusion of $40 million as part of a larger $150 million funding early this month. It also saw participation from other existing investor Tiger Global. With the September deal, the total capital raised by Quikr stood at around $350 million. The latest funding comes barely seven months after it raised $60 million in a fresh round of funding led by Tiger Global with participation from its existing investors, including Matrix Partners India, Nokia Growth Partners, Norwest Venture Partners, Omidyar Network, Warburg Pincus and eBay Inc, besides Kinnevik. In the last disclosure, Kinnevik had pegged a fair value of Quikr at around $340 million. Founded in 2008 by Chulet and Jiby Thomas (who quit the firm later), Quikr was originally started as Kijiji India. The firm later rebranded to Quikr. It is a large scale cross-category classifieds business with over 30 million consumers. These consumers come to Quikr to sell, buy, rent or find products and services in a variety of categories such as electronics and household goods, real estate, cars, bikes, jobs and services. The firm claims that small businesses across 1,000 cities are using the site. It recently announced the launch of a new classifieds website for real estate called quikrhomes.com to allow B2C as well as C2C discovery of properties up for sale as well as those available for rent. It is also launching separate verticals and new sites with separate URLs for around half a dozen areas. Early this year, Quikr launched Nxt, an instant messaging service to enable buyers and sellers to interact with greater convenience and privacy.

• Twitter invests in Swirl, a beacon-based ad-targeting startup: Swirl, which offers a platform for retailers and brands to market to customers via beacons, announced Thursday it has raised $18 million from a handful of investors, including Twitter Ventures.Other investors in the Series C round include Hearst Ventures and Softbank Capital, both who have funded Swirl in the past. Beacons are a young, Bluetooth-powered technology that provides the potential for companies to specifically target in-store customers. A retailer could realize that a customer has been dwelling near its TVs for 15 minutes, and send a coupon for a 4K TV via a smartphone push notification. In one recent success story, American Eagle Outfitters found it was able to increase the likelihood of a customer trying on clothes when it used beacons to send customers a push notification. Still, beacons have a ways to go before gaining mainstream adoption. A sticking point has been ensuring customers have the relevant app installed on their smartphone, which acts as a tripwire of sorts and tips off the store of the consumer’s location. If a customer doesn’t have the right app, they’ll never receive the notification. This is what makes the interest of social networks such as Twitter and Facebook so noteworthy. “Everybody’s got one of these widely distributed apps on their phone,” said Swirl chief executive Hilmi Ozguc. “That’s where the whole picture is completed, and that’s what’s exciting about this.” Facebook announced in January it is testing using beacons at eight stores in New York City. Twitter declined to comment on its interest in beacons. With a treasure trove of information about users, social networks are already well-positioned to target advertisements at an extremely granular level. Facebook and Twitter could potentially take this another step forward, and fine-tune ads for users’ exact locations at a given moment. They could likely charge a hefty premium for such ads. “There’s a vast market potential here. And it’s going to be a big source of new mobile advertising revenue for a lot of companies,” Ozguc said. “From Facebook to Twitter, to you name it. So I think you’ll see a lot of these big guys start to make some moves and bets on the space and start offering the benefits they bring, this massive audience reach.”

• Zomato embeds Uber button to its own app for hailing cabs to reach restaurants in 13 countries: Zomato.com, owned and operated by Gurgaon-based Zomato Media Pvt Ltd, has entered into a partnership with Uber Technologies Inc (Uber) to enable users to book cabs to the restaurant they are planning to eat at, right from its own app. The feature has gone live for Zomato users in London and South Africa, and will now be rolled out to users in other key markets. The partnership would cover Zomato users in 27 cities across 13 countries where both the firms have a presence – India, Australia, Canada, the UK, South Africa, Indonesia, New Zealand, Philippines, Portugal, Qatar, Turkey, UAE and the US. “This partnership makes eating out more convenient with the Zomato app connecting to Uber services seamlessly,” said Pankaj Chaddah, co-founder and COO, Zomato. “Through this API integration, Zomato users in 13 countries will now be able to reach those hidden gems in their cities seamlessly and in style,” said Eric Alexander, head of business, Asia, Uber. How it works:Once a user has found a place to dine at or have drinks at using the Zomato app, a single tap on the Uber button on the restaurant page will allow him/her to find the nearest Uber cab. In addition to seeing the estimated fare and how long it will take for the Uber to arrive, one will also be able to choose the Uber service that best suits one’s need.

• Details on Alibaba's Cloud: After keeping the world waiting for nine years, Amazon finally broke out earnings for its Amazon Web Services on Thursday. The $1.57 billion in sales for the quarter suggest that the company is far ahead of rivals in the cloud computing business. But as AWS expands globally, it faces strong competition from a familiar foe: Alibaba. Amazon already has 28 percent of the worldwide market for cloud infrastructure services, followed by Microsoft with 10 percent, according to a report by Synergy Research Group. To expand its share, Amazon has spent the past few years plunking down gigantic data centers around the globe to help it quickly serve customers outside the U.S. In some cases, it did so to abide by local regulations as to where these servers should be located. Unlike many of its rivals, Amazon has targeted China, opening a data center near Beijing in 2014. Alibaba opened its first overseas data center in Silicon Valley in March to help provide cloud computing services to Chinese customers, Yu says. At the time, Alibaba said it served a 22.8 percent market share of the Chinese infrastructure-as-a-service market in the first half of 2014. It currently has five data center hubs in Asia: Beijing, Hangzhou, Qingdao, Hong Kong, and Shenzhen. Like Amazon, Alibaba has a strategic partnership with Intel to do custom chips. Unlike Amazon, it has been more public about its experimentation with low-power server processors based on designs from ARM Holdings. Alibaba joined a cross-industry engineering organization named Linaro in April to develop software to get the most out of new chip designs from ARM. The company is looking at ARM closely, says Yu, and will have more details to share next year. By adopting a non-standard processor architecture, Alibaba would be able to save money on its mammoth electricity bills by tailoring its chips to its software. In doing so, it would join a small club of companies such as Google, Microsoft, and Amazon, with the scale and engineering talent needed to make such a move. Aliyun has more than 1,200 employees, 80 percent of whom are engineers, says Yu. The company began looking at doing heavy engineering on hardware and software about 10 years ago, predating the formation of its cloud. As is typical of large Chinese technology companies, Alibaba is woven into China's bureaucracy. The company currently has strategic agreements with 12 Chinese provinces, regions, and municipalities, as well as an undisclosed number of government agencies, including the China Central Government Procurement Agency. That guarantees it a lot of business in China and ensures that its infrastructure is stress-tested in the same way that large clouds from Google, Amazon, and Microsoft are. This helps to make its service more resilient.