Daily Tech Snippet: Friday, April 29

• Amazon’s Cloud Business Lifts Its Profit to a Record:  Amazon delivered a blowout quarter on Thursday, joining Facebook as one of the rare bright spots in a technology sector that has recently produced a string of disappointing earnings reports. Helped by its fast-growing Amazon Web Services business, the company jumped to the most profitable quarter in its nearly 22-year history.For the first quarter, which ended March 31, Amazon reported net income of $513 million, or $1.07 a share, up from a loss of $57 million, or 12 cents a share, in the same period a year ago. Revenue at the company rose to $29.13 billion from $22.72 billion a year ago. Amazon’s share price jumped more than 12 percent in after-hours trading after the results were released. Investors were happy to see the company show profits after the disappointing run of reports from Apple, Google,Microsoft and Intel. The biggest source of the company’s profits is Amazon Web Services, the cloud computing business that started just over a decade ago and is now on track to bring in more than $10 billion a year in revenue. A.W.S., as the business is known, is the most popular cloud service for start-ups and for a growing number of big companies that want to rent computing capacity, rather than run their own hardware and software. Cloud computing is also much more profitable than Amazon’s North American retail business, which runs on thinner margins, and its international retail business, which runs at a loss. The operating income for A.W.S. more than tripled in the quarter to $604 million. The profits from A.W.S. represented 56 percent of Amazon’s total operating income, even though the $2.57 billion in revenue from A.W.S. — up 64 percent from a year earlier — amounted to less than 9 percent of total revenue.

• Baidu First-Quarter Profit, Revenue Outlook Beat Estimates: Baidu Inc. posted earnings in the first quarter that beat analysts’ estimates and forecast revenue in the current quarter that also tops projections after China’s biggest search engine provider controlled its spending and increased sales from new businesses. Earnings excluding some costs were $1.06 per American depository share in the first quarter, the Beijing-based company said Thursday. That compares with the average analyst estimate compiled by Bloomberg of $1.01. Sales for the quarter increased 24 percent to $2.45 billion compared with estimates for $2.44 billion. For the second quarter, Baidu said it expects revenue of $3.12 billion to $3.19 billion, compared with estimates of $3.10 billion.Baidu’s depository receipts rose 5.5 percent to $195.80 in extended U.S. trading.

• LinkedIn Rises on Better-Than-Expected Earnings Forecast: LinkedIn Corp. forecast earnings that beat estimates on improved performance from its main recruiting tools, suggesting a surprise slowdown earlier this year was not as dire as analysts feared. The operator of the largest online professional network said second-quarter profit, excluding some items, will be from 74 cents to 77 cents a share. That beat the 71-cent average analyst estimate. First-quarter earnings topped expectations by a wide margin and the company raised its full-year revenue guidance to $3.65 billion to $3.70 billion, from an earlier range of $3.6 billion to $3.65 billion.  LinkedIn Corp. forecast earnings that beat estimates on improved performance from its main recruiting tools, suggesting a surprise slowdown earlier this year was not as dire as analysts feared. The operator of the largest online professional network said second-quarter profit, excluding some items, will be from 74 cents to 77 cents a share. That beat the 71-cent average analyst estimate. First-quarter earnings topped expectations by a wide margin and the company raised its full-year revenue guidance to $3.65 billion to $3.70 billion, from an earlier range of $3.6 billion to $3.65 billion.  LinkedIn climbed as much as 16 percent to $142.89 in extended trading. The shares had declined 45 percent this year as of Thursday’s close. 

• Icahn: We're out of Apple, and it's China's fault: Billionaire investor Carl Icahn told CNBC on Thursday he has sold hisApple position as the tech giant's stock continues to shed value after disappointing earnings. "We no longer have a position in Apple," Icahn told CNBC's "Power Lunch," noting Apple is a "great company" and CEO Tim Cook is "doing a great job." Icahn previously owned a little less than a percent of the tech giant's outstanding shares, which were down more than 3 percent midafternoon Thursday after falling more than 6 percent Wednesday. He said he made roughly $2 billion on Apple, a stock he continued to tout as "cheap" despite his reservations.Icahn said China's attitude toward Apple largely drove him to exit his position. "You worry a little bit — and maybe more than a little — about China's attitude," Icahn said, later adding that China's government could "come in and make it very difficult for Apple to sell there ... you can do pretty much what you want there." He added, though, that if China "was basically steadied," he would buy back into Apple.

• The Apple Watch did not change the Apple Store like we thought it would: It was just over a year ago that the Apple Watch was slated to be unveiled, and the Internet rumor and analysis machine was running in overdrive: Wall Street-types weighed in on whether the new gadget could propel the world’s most valuable company to greater revenue and an even higher stock price. Tech geeks were chattering about the nitty-gritty of its features, and culture mavens debated whether it would become a game changer like the iPod or iPhone before it. And in the retail world, the major question was this: Would the arrival of a product that was not just a gadget, but also a luxury fashion item, push Apple to shake up its successful store format? The root of the speculation, or at least, the primary fuel for it, was a single paragraph in a New Yorker profile of Apple’s design chief, Jonathan Ive. In that story it was reported that Ive and Angela Ahrendts, Apple’s senior vice president of retail, were working on a redesign of Apple stores, perhaps to make the setting more conducive to selling a luxury timepiece. The story noted that Ive had “overheard someone saying, ‘I’m not going to buy a watch if I can’t stand on carpet.’ ” And so analysts — and reporters, including this one — began wondering: Would certain sections of the store be carpeted? Would they be outfitted with full-length mirrors so people could see how the watch fit into their overall look? Would there be showcase lighting, like at an upscale jeweler? If you’ve set foot in an Apple store lately, you know the answer to all of these questions: No. Apple did end up adding a backroom VIP area to at least one store in New York where customers could try on the Edition, the luxe version of the watch that has a five-figure price tag. But the Apple Store, by and large, still has the same vibe and aesthetic that it did in the pre-Watch era. Sure, some newer stores have fresh features, such as one in Brussels that is outfitted with live trees. An Apple representative has said that a forthcoming store in Memphis is to be a “next-generation” Apple store, with new design elements such as a large TV screen that can display a changing array of products or artwork. But even with those kinds of potential changes, the Apple Store continues to be defined by a spare, contemporary look and feel — and the changes that have been implemented or are on the way don’t exactly seem linked to the unique needs of selling the watch.

Daily Tech Snippet: Thursday, April 28

• Facebook revenue smashes expectations as mobile ad sales surge: Facebook Inc's (FB.O) quarterly revenue rose more than 50 percent, handily beating Wall Street expectations as its wildly popular mobile app and a push into live video lured new advertisers and encouraged existing ones to boost spending. The company's shares rose 9.5 percent in after-hours trading on Wednesday to $118.39, setting it on track to open at a new high on Thursday, at nearly triple its initial public offering four years ago. Facebook also announced it will create a new class of non-voting shares in a move aimed at letting Chief Executive Officer Mark Zuckerberg give away his wealth without relinquishing control of the social media juggernaut he founded. Some 1.65 billion people used Facebook monthly as of March 31, up from 1.44 billion a year earlier. Zuckerberg said users were spending more than 50 minutes per day on Facebook, Instagram and Messenger, a huge amount of time given the millions of apps available to users. "The company consistently 'warns' about higher spending, but they consistently manage their spending to deliver earnings upside. They're an impressive company, and they leave very little room for criticism," said Wedbush Securities analyst Michael Pachter, who called the operating margin a good surprise. Facebook did not offer details on sales of its Oculus Rift virtual reality headset, but emphasized that it was early days and said that sales would not significantly impact 2016 revenue.  The company's net income attributable to common shareholders nearly tripled to $1.51 billion, or 52 cents per share, in the first quarter from $509 million, or 18 cents per share, a year earlier. Excluding items, the company earned 77 cents per share, beating Wall Street's 62-cent consensus. Total revenue rose to $5.38 billion from $3.54 billion, with ad revenue increasing 56.8 percent to $5.20 billion. Mobile ad revenue accounted for about 82 percent of total ad revenue, compared with about 73 percent a year earlier.

• PayPal beats the street on Q1 sales of $2.54B and EPS of $0.37: Payments giant PayPal posted strong Q1 earnings today, counter balancing some of the weaker showings from other tech stocks yesterday and outstripping the overall growth rate of e-commerce, in its own words. Following in the footsteps of its former parent, which alsoposted strong results for Q1, PayPal posted revenues of $2.544 billion with non-GAAP earnings per share of $0.37, rising 19% and 28% respectively on a year ago and both beating analysts’ projections of $2.5 billion and $0.35 EPS. The company says it has 184 million customers now, up by 4.5 million, with 1.4 billion transactions in the quarter up 26% on a year ago. Services like Venmo and the company’s expansion into credit and other services has given the company a life on average transactions per customer, which were up 12% to 28 payments per user, and $81 billion in total payment volume. That $81 billion in TPV, it said, “was faster than the growth rate of e-commerce.” On the merchant side, there are now 14 million active accounts. When it comes to new-wave revenues, PayPal is showing some of its legacy: the company only completes 26% of transactions on mobile devices today, versus 22% a year ago.

• A Silicon Valley VC says investors from China are joining Series A deals, and they’re playing “hardball”: On valuations: The average thing coming out of Y Combinator is probably a half to three-quarters of what it was [in terms of valuation in recent years]. The average seed-stage deal is half. On hardball tactics: Docs are taking longer because there are new investors coming in, and they want more stuff in their terms. These are newer investors, often foreign investors, who are basically saying: “I want senior preference to [a company’s earlier] investors,” and that’s adding two or three weeks as they usually ask right as the docs are closing. They’re almost all from China, and they want all of their preferences to be senior to everyone else’s. What’s happening is, since they know the capital’s financials, they just wait it out. By that point, we’ve already signed a term sheet and turned off a lot of other people who wanted to invest. These things never come up in the term sheet phase but later in the docs. They’ll say, “We did our diligence, and we need XYZ to invest.” It’s not a great way to start a relationship. People in the ecosystem around here are playing for the long term; they realize that sooner or later, they’ll be on the other side of the table and don’t want this stuff applied to them. This is mostly coming from Asia, where they play much harder hardball than here. And [these investors] do it with a happy face. That’s just the environment [to which they’re accustomed]. On the slowdown in tech valuations:  I don’t expect it to pick up any time soon, which is a function of retail and institutional investors looking for high-growth stories with profit associated with them. They want profit and growth. Meanwhile, a lot of companies that have strong revenue can’t show that growth, and vice versa. There just aren’t a lot of companies that could sustain being public right now.

• Amazon is liable for billing you for your kid’s wild in-app purchases, a judge says:  A federal judge ruled on Tuesday that Amazon is liable for billing parents for unauthorized in-app purchases made by their children. With the ruling, U.S. District Court Judge John Coughenour sided with the Federal Trade Commission in its lawsuit against Amazon for failing to get consent from parents for in-app purchases made by kids. “Many of Amazon’s arguments improperly assume a familiarity with in-app purchases on the part of consumers,” the judge said in the ruling. “For example, Amazon cites to a case determining that a ‘reasonable Amazon customer is accustomed to online shopping,’ but online shopping and spending real currency while obtaining virtual items in a game are completely different user activities.” The court has not yet ruled on how much Amazon will have to pay out to customers affected by the practice. The FTC previously settled with Apple and Google in similar cases, resulting in more than $50 million being returned to consumers.

• Chinese phone makers Oppo and Vivo pass Xiaomi in global phone sales: Being the “it” smartphone sure doesn’t last long. New data from IDC finds that Xiaomi now trails several of its less well known Chinese rivals when it comes to global market share. Overall, there were 334.9 million smartphones worldwide in the first quarter of 2016, IDC said, up very slightly from the 334.3 million units a year ago. That marks the smallest year-over-year growth on record. Oppo and Vivo, two names unfamiliar to most Americans, are now the No. 4 and No. 5 phone sellers behind Samsung, Apple and Huawei, another big Chinese hardware maker. Huawei is also on the rise, still far short of its goal of supplanting Apple and Samsung, but at least closing the gap on the two leaders. Oppo and Vivo are mostly known in the Chinese market, though Oppo now gets about 20 percent of its sales from outside its home turf.

• It feels like every tech company is offering cash advances. Shopify is the latest: Following in the footsteps of PayPal and Square, e-commerce software company Shopify said on Wednesday that it would start offering cash advances to business owners who use its software. The program, called Shopify Capital, will let eligible Shopify merchants obtain a lump-sum cash advance in exchange for a fixed percentage of their daily sales. Cash advances are popular with small businesses that don’t have the time or business history to secure a loan from a bank. The Shopify announcement comes more than two years after payments companies PayPal and Square began offering similar programs. Right now, companies that serve small businesses are seeing this market as a way to create a new revenue stream that can be sold to existing customers — and, they hope, help retain them. They are joining an increasingly crowded space, as the online alternative lending space has heated up in recent years. Merchant cash advances have had a mixed reputation in the past, due to hidden fees and the risk of a business getting addicted to them. But internet companies like Shopify are trying to remove the stigma around them by promising to disclose up front how a business will pay back the advance. Square recently moved from offering cash advances to actual loans.

Daily Tech Snippet: Wednesday, April 27

• Apple's nine-year iPhone juggernaut stops with first sales decline since 2003: Apple on Tuesday posted its first-ever decline in iPhone sales and its first revenue drop in 13 years as the company credited with inventing the smartphone struggles with an increasingly saturated market. The company's sales dropped by more than a quarter in China, its most important market after the United States, and it also forecast another disappointing quarter for global revenues. Its shares fell about 8 percent, dropping below $100 for the first time since February. A hike in Apple's share buyback and dividend as well as bumper revenue from services failed to mollify investors. While Apple executives had predicted iPhone sales would decline this quarter, they must reassure investors that the drop represents a momentary roadblock, rather than a permanent shift for the product that fueled its meteoric rise. After years of blockbuster sales, many investors fear the iPhone has reached saturation, spelling the end for Apple's exponential growth. Apple Chief Financial Officer Luca Maestri told Reuters that the success of the iPhone 6 a year earlier had set a difficult bar to beat in the second quarter. "The iPhone 6 is an anomaly," he said. He pointed to the services division, which includes Apple Music and the App Store, as a bright spot. Its revenue grew 20 percent to $6 billion and surpassed iMac and iPad sales. Apple forecast third-quarter revenue of $41 billion to $43 billion, short of the Wall Street consensus of $47.3 billion. The drop in after-hours shares wipes out roughly $46 billion in market capitalization, roughly the value of heavy equipment maker Caterpillar. In reaction to Apple's results, shares of its suppliers Skyworks Solutions, Qorvo, Broadcom  and NXP Semiconductors all fell 2 percent or more on Tuesday.

• Twitter stock plunges as earnings miss estimates: Twitter disappointed investors yet again with first-quarter results that showed stagnant revenue growth as the microblogging service struggles to grab new users amid efforts to improve its complicated interface with several new features. Twitter shares plunged 13.6 percent to $15.34 in late trade on Tuesday after reporting lower-than-expected revenue, hurt by weaker than expected spending by big advertisers, and providing a current-quarter revenue forecast well below analysts' expectations. Twitter's user base grew modestly to 310 million monthly active users in the quarter ended March 31 from 305 million in the fourth quarter, above analysts' expectations. But investors were let down by the revenue miss since outlining a turnaround plan. First-quarter revenue rose 36 percent from a year earlier to $594.5 million, but widely missed the average analyst estimate of $607.8 million. Its net loss narrowed to $79.7.million, or 12 cents per share, from $162.4 million, or 25 cents per share, a year earlier. "It's obvious Twitter is having trouble," said Arvind Bhatia, analyst with CRT Capital. "It's not growing anywhere close to where people expected a while back."

• Alibaba Financial Affiliate Raises $4.5 Billion: The Alibaba Group of China has become a colossus in the global Internet world, with a market value of nearly $200 billion. Now its online payment affiliate is aiming for  similarly lofty financial goal: becoming one of the most valuable privately held technology companies in the world. The affiliate, known as the Ant Financial Services Group, said on Tuesday that it had raised $4.5 billion from investors. The private financing round suggests that the company is now valued at about $60 billion — or more than $10 billion over the market value of PayPal Holdings, its closest analogue. Ant Financial may not be as well known in the West as Silicon Valley darlings like Uber Technologies, which was most recently valued at about $62.5 billion. But Ant Financial — whose controlling shareholder isAlibaba’s billionaire founder, Jack Ma — has become an online power in its own right. It is one of the biggest electronic payment companies in the world by virtue of Alipay, a payment service that is commonly used in China. It is also one of the most prominent symbols of strength in China’s private sector, particularly in the field of online payments. Slow-moving state-run banks and an initial absence of regulation have allowed privately run companies to weave themselves into everyday life. Ant Financial now encompasses not only online payments, but also low-risk money market funds and a wallet app that enables easy payment from smartphones around China. Chinese consumers use Alipay to shop online, transfer money to one another, hail taxis, buy movie tickets and even invest their spare change. A money-market fund affiliated with Ant Financial was once one of the world’s largest. According to the announcement on Tuesday, Alipay has more than 450 million users, or more than double the number PayPal has. Such is the power of the company that its latest financing was led by some of China’s biggest state-controlled banks, including arms of the China Construction Bank and China Life Insurance. That indicates the level of government support that the company enjoys in a country where much of the economy is still state-directed. Ant Financial’s previous fund-raising round, which was held last year, included China’s national social security fund and an arm of the China Development Bank. In a move that could further endear the company to Chinese officials, Mr. Ma has said he hopes to take Ant Financial public in China. Still, if Ant Financial follows through on the plan, it would be one of the biggest initial public offerings since that of Alibaba itself, which raisednearly $22 billion in 2014 in the biggest public offering on record.

• EBay Forecast Beats Estimates as Traffic Efforts Pay Off: EBay projected sales on its marketplace for the second quarter and full year that will meet or exceed analysts’ estimates, suggesting efforts to boost traffic, such as using barcode scanning and a more searchable catalog, are gaining traction. Since separating from PayPal last year, Chief Executive Officer Devin Wenig has been under pressure to reverse sluggish growth at EBay in the face of competition from Amazon.com Inc., which continues to woo shoppers with fast delivery, and after Google changed its search algorithm in a way that hurt EBay traffic. The shares rose 2.1 percent to $24.98 in extended trading after the results were announced. They ended the day at $24.49, up 1.1 percent, and are down 11 percent so far this year. Revenue in the second quarter will be $2.14 billion to $2.19 billion EBay said in a statement Tuesday. The average analyst estimate was for $2.14 billion. For the full year, EBay said it expects revenue of $8.6 billion to $8.8 billion, compared with analysts’ estimates of $8.73 billion. Profit, excluding certain items, will be 40 cents to 42 cents a share in the current quarter, EBay said Tuesday, compared with analysts’ estimates of 44 cents. EBay’s Gross Merchandise Volume -- the total value of goods sold on the marketplace -- of $20.5 billion in the quarter was up 1 percent from a year earlier.

• As tide turns against chip industry, Samsung forges ahead of rivals: Gloom may be settling over much of the world's semiconductor industry but Samsung is expected to cope better than most due to its strong technological edge, enabling it to boost market share for some key products and possibly even lift revenue. A plunge in PC sales and slower growth for smartphones globally has hit the sector hard, prompting Intel Corp to say this month it would cut up to 12,000 jobs. Qualcomm has said fiscal third-quarter chip shipments could fall as much as 22 percent, while SK Hynix Inc on Tuesday reported a 65 percent slide in quarterly operating income - its weakest result in three years. Samsung, which reports its first-quarter earnings on Thursday, is also hurting. Chip profits - which accounted for just under half of its overall 2015 operating income - are widely expected to fall, with some analysts predicting a drop of more than 10 percent in January-March from a year earlier. But if its rivals are getting pummeled, the South Korean tech giant is merely bruised and is in many ways benefiting as clients shift towards premium power-conserving DRAM chips for smartphones, as well as solid-state drives for data storage using 3D NAND chips. "The technological gap between Samsung and its competitors in fields such as DRAM and NAND has been widening lately, which helps the company avoid the rate of profit decline seen at other firms," said Song Myung-sub, an analyst at HI Investment & Securities. Even with a first-quarter drop of around 10 percent, Samsung's chip operating profit is expected to be nearly five times that of SK Hynix. The world's No. 2 chipmaker also happens to run the world's biggest smartphone business, giving it a captive customer for its chips that none of its rivals have.

Daily Tech Snippet: Tuesday, April 26

• The future of TV is arriving faster than anyone predicted: Late last week, Comcast announced a new program that allows makers of smart TVs and other Internet-based video services to have full access to your cable programming without the need for a set-top box.  Instead, the content will flow directly to the third-party device as an app, including all the channels and program guide. The Xfinity TV Partner Program will initially be offered on new smart TVs from Samsung, as well as Roku streaming boxes.  But the program, built on open Internet-based standards including HTML5, is now open to other device manufacturers to adopt. As video services move from hardware to software, the future of the traditional set-top box looks increasingly grim. With this announcement, Comcast customers may soon eliminate the need for an extra device, potentially saving hundreds of dollars in fees. Many in the industry have long predicted eventual death for the box, driven in part by a rapid migration by pay TV providers (including fiber and satellite-based companies) to Internet standards for both video content and services, and by the enthusiastic response of consumers to a growing number of Internet-based alternatives. These include Roku, as well as Amazon, Apple, Google, Netflix, Hulu, YouTube, SlingTV, Sony, HBO and many others. Consumers, especially younger ones, are interested in defining their own video experience, mixing traditional and self-produced content and enjoying it not just on televisions but on every connected device, including tablets, smartphones and other mobile gadgets. At this year’s Consumer Electronics Show in Las Vegas, it was clear that list would soon grow to include other non-traditional viewing platforms, such as cars, refrigerators and game consoles. Comcast’s announcement suggests that future may already be here.

• Facebook developing camera app similar to Snapchat: WSJ: Facebook is developing a stand-alone camera app, similar to disappearing photo app Snapchat, to increase user engagement, the Wall Street Journal reported, citing people familiar with the matter.The app, being developed by Facebook's "friend-sharing" team in London, is in its early stages and may never come to fruition, according to the report. The company is also planning a feature that allows a user to record video through the app to begin live streaming, the newspaper reported.

• The Gannett-Tribune offer: No one knows what a newspaper is worth anymore:  Three years ago, Jeff Bezos paid $250 million for the Washington Post from the Graham family. Last year, Japanese publisher Nikkei paid $1.3 billion to take the Financial Times off the hands of the education conglomerate Pearson. Today’s $815 million bid to buy Tribune Publishing, from USA Today owner and newspaper chain Gannett, basically falls in the middle of those two recent deals. And it suggests that as print revenue continues to decline, there’s no such thing as a market price for newspapers anymore. Gannett is offering $12.25 a share (5.6 times Ebitda*), or a 63 percent premium on the current value of its stock, to buy the struggling newspaper publisher, which owns eleven dailies, including the Chicago Tribune and crown jewel Los Angeles Times. In 2013, Bezos paid what analyst Ken Doctor called a “friendship premium” of 17 times Ebitda; when Nikkei bought the FT, the going rate for European newspapers was 12 times Ebitda. Nikkei paid 35 times Ebitda. This isn’t a friendly offer, meaning Tribune might not play ball, but investors sure seem to dig it. Tribune Publishing’s stock opened the day by rocketing up more than 50 percent. Wall Street probably likes it because of Tribune’s dwindling print business, which justifies the lower Ebitda on the Gannett offer.

• Google Glass-based startup raises $17 million in funding: Augmedix Inc, a startup that uses Alphabet Inc's Google Glass to provide documentation services to doctors and other healthcare workers, said on Monday it had closed a $17 million funding round led by investment firm Redmile Group. Augmedix's employees transcribe doctors' notes and update patients' electronic medical record through Google Glass. The San Francisco company, which has raised $40 million so far, also said it had received investments from five U.S. healthcare networks, including Sutter Health and Dignity Health, which together have more than 100,000 healthcare workers. Augmedix, with 400 employees, said it serves doctors in nearly all 50 U.S. states. Funds raised will be used to build up the service to serve more health systems and private clinics, the company said. Augmedix is one of 10 partners authorized by Alphabet to deliver enterprise services through Google Glass.

Daily Tech Snippet: Monday, April 25

• A Marriage Gone Bad: Walgreens Struggles to Shake Off Theranos: The sprawling drugstore chain, now a part of Walgreens Boots Alliance, was Theranos’s first — and thus far only — direct-to-consumer retail partner, promising to eventually make Theranos’s “wellness centers” an integral part of its more than 8,000 stores nationwide. When it announced the deal in 2013, Walgreens hoped to drive traffic to its stores and bask in the reflected glow from one of Silicon Valley’s hottest unicorns and its youthful founder and glamorous chief executive, Elizabeth Holmes. For unproved Theranos, the Walgreens endorsement was akin to the Good Housekeeping seal of approval. Theranos’s valuation vaulted to $9 billion and put Ms. Holmes on the Forbes list of billionaires. Nearly three years later, with Theranos under siege on multiple regulatory fronts and its reputation in tatters, it’s clear that the relationship has been a disaster for Walgreens. The company has been trying to distance itself, halting expansion of Theranos testing in its stores and, in January, threatening to end the partnership if Theranos did not meet regulatory standards within 30 days. But that deadline has come and gone. With this week’s news that Theranos is under criminal investigation for, among other things, possibly defrauding Walgreens and other investors, the question is: What will it take for Walgreens to end its troubled relationship? Theranos’s lawyers have taken a hard line, insisting that Walgreens is contractually bound by their agreement. So far, the approach has worked. Walgreens appears to have taken a cautious approach toward terminating the relationship, perhaps preferring to wait until federal regulators impose penalties or the criminal investigation yields formal charges, either of which would strengthen Walgreens’s hand. But that could take years. Theranos can appeal any penalties, and a grand jury investigation could be a protracted process. And Theranos is likely to sue Walgreens in any event if it terminates their agreement. In the meantime, Walgreens risks being dragged into nearly every negative story about Theranos.

• Inside One of the World’s Most Secretive iPhone Factories: A few minutes past 9 a.m. at Pegatron Corp.’s vast factory on Shanghai’s outskirts, thousands of workers dressed in pink jackets are getting ready to make iPhones. The men and women stare into face scanners and swipe badges at security turnstiles to clock in. The strict ID checks are there to make sure they don’t work excessive overtime. The process takes less than two seconds. This is the realm in which the world’s most profitable smartphones are made, part of Apple Inc.’s closely guarded supply chain. After years of accusations that employees in China were forced to work long, grueling hours, Pegatron and Apple adopted new procedures to keep iPhone assemblers from amassing excessive overtime. They’re eager to show how the system works, and for the first time are granting a western journalist access into the inner sanctum.The factory at the corner of Xiu Yan and Shen Jiang roads is one of the most secretive facilities at the heart of iPhone production and covers an area equal to almost 90 football fields. In the center is a plaza with a firehouse, police station and post office. There are shuttle buses, mega-cafeterias, landscaped lawns and koi ponds. The grey and brown-hued concrete buildings are meant to evoke traditional Chinese architecture. The brand-new Shanghai Disneyland, which opens its doors in June, is a 20-minute drive away.Inside, the factory still hides a secret, according to China Labor Watch. Base pay remains so low that workers need overtime simply to make ends meet, the advocacy group said. It said 1,261 pay stubs from Pegatron’s Shanghai facility from September and October 2015 show evidence of excessive overtime. Pegatron, an Asustek spinoff, is the world’s biggest contract electronics manufacturer after Foxconn, according to Bloomberg Intelligence.Pegatron countered by saying the group miscounted because that period straddled state holidays, when pay was three times’ normal. Apple and Pegatron say they were never contacted by China Labor Watch, which said it approached Apple but didn’t get a response. Since March, the group said it’s collected an additional 441 pay stubs that point to continued excessive overtime. Back in the cafeteria, a group of women rush to finish lunch before their 50-minute break is over. They hail from across China, from Sichuan in the west to Shandong in the northeast. None has been there for more than a few months. “This is relaxed compared to other factories,” said Xu Na, 30, who followed her younger brother to work at the factory. “We never work more than 60 hours.”

• Flipkart is in the middle of a crisis of its own making—stalled growth compounded by management churn and the imminent possibility that it will cede the top slot to Amazon. But it’s not too late to change its strategy. Flipkart is in the middle of a storm of its own making: It is faced with a significant management churn at the top. For a company that pioneered e-commerce in the country, growth has virtually stalled since the middle of last year and the leadership team hasn’t figured out a way to kick-start sales. Its innovation engine isn’t firing. In e-commerce lingo, the gross merchandise volume (GMV) sold over a given period of time has not grown substantially. In the offline world, it is the equivalent of saying, the sales or revenue numbers aren’t growing. And this, for the e-commerce pioneer that until now grew its GMV by over 200% per annum for the past three years. The very culture that made Flipkart a runaway success in the first phase of its existence is now hindering its progress. The battle won’t be easy. Amazon will unleash Amazon Prime, Amazon Fresh and may even partner with offline retailers to consolidate its position as the default destination for online shopping. Amazon has rapidly scaled up its seller ecosystem and outstrips Flipkart today in several product categories. It has a chance to win India—and that is being handed over on a platter thanks to the internal confusion at Flipkart. Amazon is here to play a 20 year game—and any fumbles will cost competitors heavily. Now imagine the Flipkart investors’ dilemma. They’ve poured in over $3 billion and own over 80% of the company. They are neck deep in a business that is burning $50-70 million a month and has to get ready for the next phase of battle in the market. If the cost-cutting moves misfire and market share starts to shrink, the founders could very well put a request for another $500 million for the fight against Amazon. What will the investors do? A new investor is unlikely to step in. Even though the Chinese e-commerce players like Alibaba are waiting in the wings to swoop down on prized assets in India, there's a chance that they could choose to wait out this stage of the company’s evolution—why buy and restructure, when you can wait and buy a cleaned-up asset? Hence, one of the current investors will have to lead the round and it will put serious pressure on the team to show results. Flipkart has a last chance to redeem itself and take control of its destiny, else it will become another victim of early success. It is too big to fail and the market opportunity is too large to ignore. India will have more than one large e-commerce player—just the sheer potential of the market will keep it from consolidating for many years—and so, Flipkart’s existence is not in question. But the next few months will determine the destiny of the company. The A-team cannot afford to flounder so early in their journey. 

Daily Tech Snippet: Friday, April 23

• Apple Services Shut Down in China in Startling About-Face: For years, there has been a limit to the success of American technology companies in China. Capture too much market share or wield too much influence, and Beijing will push back. Apple has largely been an exception to that trend. Yet the Silicon Valley company is now facing a regulatory push against its services in China that could signal its good relations in the country may be turning. Last week, Apple’s iBooks Store and iTunes Movies were shut down in China, just six months after they were started there. Initially, Apple apparently had the government’s approval to introduce the services. But then a regulator, the State Administration of Press, Publication, Radio, Film and Television, asserted its authority and demanded the closings, according to two people who spoke on the condition of anonymity.The about-face is startling, given Apple’s record in China. Unlike many other American tech companies, Apple has succeeded in introducing several new products — like its mobile payments system Apple Pay — in China recently. New resistance from the Chinese government to that expansion could potentially hurt the Cupertino, Calif., company. To a degree more than many tech companies, Apple relies on the smooth operation of its software — including its App Store and services like iTunes, which are tightly integrated with the iPhone and iPad — to keep customers coming back to its devices. Apple, which is facing a slowdown in sales of its iPhones, is also reliant on China for growth, so further moves by Beijing to curtail services could crimp sales. The company counts China as its second-largest market after the United States. Its China numbers will be dissected on Tuesday, when it reports quarterly earnings. China’s pushback against Apple shows that the company may finally be vulnerable to the heightened scrutiny that other American tech companies have faced in recent years. That scrutiny was spurred by revelations from the former United States National Security Agency contractor Edward J. Snowden in 2013 of the use of American companies to conduct cyberespionage for Washington. China has sweeping goals in its move against Apple, said Daniel H. Rosen, founding partner of Rhodium Group, a New-York based advisory firm specializing in the Chinese economy. “They are interested in protecting the content that the Chinese people see, policing its national security and favoring indigenous giants such as Huawei, Alibaba and Tencent,” Mr. Rosen said. In this new era, he added, China “is strongly disinclined to accept the dominance of foreign players on the Internet, not least those from the United States.” Sales in China for those companies, including Cisco, IBM, Microsoft and Qualcomm, have slid as government oversight has increased. Some have grappled with raids, investigations and fines. Some have also been pressured to sell off holdings, hand over technology and work with local partners to expand their China businesses. Though Apple is one of the eight, it has had a much easier time - so far.

• Dell’s SecureWorks stumbles in first tech IPO of the year: It has been a dry year for tech IPOs. Up until today’s SecureWorks offering, there had been zero in the U.S. in 2016. Zero. This compares to seven in the same period last year and 24 in that timeframe the year before. So tech investors and late-stage private companies were watching SecureWorks closely, to see if the tech IPO window would reopen. It is one of the few indications we have right now to assess public investor appetite for tech IPOs. Unfortunately, SecureWorks faltered.The unicorn-sized security company split from Dell, although the computer manufacturer remains its majority owner. SecureWorks raised $112 million in the offering, after pricing its IPO at $14 per share. But the company was expecting the initial price to be between $15.50-$17.50. SecureWorks closed the day at $13.88, beneath the $14 IPO price. The offering certainly did not assuage concerns about the current environment for tech IPOs.

• Women’s coding school Hackbright Academy acquired for $18 million: Hackbright Academy, the San Francisco-based coding school for women, has been acquired by Capella Education for $18 million as the publicly traded education company looks to expand its efforts to train more women in technical careers.Hackbright, which was started in 2012, has graduated 364 women from its 12-week full-time fellowship programs. Another 279 women have graduated from its part-time program. Capella, meanwhile, is based in Minneapolis and specializes in degree programs for working adults, three quarters of whom are women. The deal closed Friday, the companies said, with all of Hackbright’s 25 employees joining Capella. Hackbright CEO Sharon Wienbar will continue to lead the team, reporting to Gilligan. Hackbright will continue to focus its efforts on in-person trainings exclusively for women, Wienbar said.

• In Asia, Netflix trips on regulation, content, and competition: Months after its global rollout, Netflix Inc (NFLX.O) is facing problems in several major Asian markets as it struggles to provide enough strong content to attract consumers amid tough local competition, and also faces many regulatory hurdles, underlining concerns about disappointing subscriber numbers reported this week. From complaints that programming libraries offered in many countries are far smaller than in the United States to delays in offering its signature "House of Cards" series in some markets due to rights issues, the U.S. video streaming giant's January launch into 130 new markets worldwide, including a slew in Asia, has been bumpy. When it launched in Indonesia in January, for example, Netflix ran afoul of the film censorship board for carrying content deemed inappropriately violent or sexual. The communications ministry also demanded that Netflix set up a local office and pay Indonesian taxes.Netflix is still available in Indonesia via wifi connections and other carriers.In South Korea, where local content is popular and consumers have numerous streaming options, the Netflix site offers fewer than 20 local TV shows or movies."Korean Netflix's library in terms of content is pretty thin," said Jung Dong-yoon, a 29-year-old Seoul office worker and subscriber since January.Netflix had an explosive start in Australia, counting nearly 3 million Australians as viewers, OUT OF A population of 24 million, within nine months of its March 2015 launch. But growth has slowed just as dramatically, from a 55 percent leap between April and May to a rise of 4 percent between September and October, according to Roy Morgan research.

• Tipping Is Coming to Uber, and It’s Going to Be Awkward: Uber's mega settlement of as much as $100 million helps it solve a major legal liability around workforce classification, but another piece of the agreement could make for some uncomfortable situations in the near future. As part of the settlement with drivers in California and Massachusetts, Uber has agreed to notify customers more clearly that tips are not included in fares and give tacit approval for optional gratuity. Drivers can now solicit cash tips by asking passengers or posting signs in their vehicles. Shannon Liss-Riordan, a lawyer representing the drivers, said riders should start seeing gratuities as a major part of an Uber driver's income. In other words, more like a cabbie. “I believe that, with this information, many riders will begin tipping their drivers, which will increase drivers’ pay substantially,” she said in a statement to the court. In the past, Uber tried to discourage tipping. During the company’s early days, its website said in 2011 that tips were included. Drivers complained that Uber was making its fares seem lower than they really were by rolling in a tip. In any case, they argued that Uber shouldn’t take a cut of the portion of the fare that was classified as a tip. The company eventually changed the way it described the cost of the ride. It currently says there’s no need to tip.

Daily Tech Snippet: Friday, April 22

• Alphabet’s Earnings Miss Forecasts: European regulators brought the hammer down on Google this week, and investors barely blinked. But when the company’s first-quarter numbers came in a little light on Thursday afternoon, its stock immediately plummeted. Both revenue and profit rose sharply from 2015 but missed analysts’ forecasts. Revenue, at $20.26 billion, was about $120 million less than expected. Earnings per share, excluding certain items, were $7.50 when the consensus estimate was $7.96. The result: The stock fell about $46, or about 6 percent, in after-hours trading. Shares of Google were priced for perfection, and the first quarter was a little less than perfect. Whether that means anything substantive is more doubtful.Revenue from what the company calls “Other Bets” — including its fiber business and the Nest thermostat — was $166 million, more than double what it was in the first quarter of 2015. Losses for Other Bets rose to $802 million from $633 million. The number of employees jumped to 64,000 from 55,000 last year. “The vast majority” of them, the company stressed, were engineers and product managers. A question hanging over Google is its ventures in cloud computing. This is the growth market where Amazon is far ahead of everyone. Amazon Web Services is more exciting to investors than the retailer’s core business. Microsoft, meanwhile, is mounting an aggressive challenge. Google is far behind at No. 3, or perhaps even No. 4 after IBM, said John R. Rymer, an analyst at Forrester Research. Last fall, Google hired Diane Greene, an industry veteran, to run all of its cloud businesses.

• Microsoft’s Cloud Business, Seen as a Salvation, Falls Short of Investors’ Hopes: Cloud computing is seen by many investors as Microsoft’s salvation, the growing business that has convinced many there’s a bright future for the company beyond the troubled PC market. But Microsoft’s cloud business didn’t grow quite fast enough during its last quarter to keep investors happy. The company missed Wall Street estimates, though Microsoft executives said it would have beaten them without the impact of unexpectedly high taxes. For its fiscal third quarter, which ended March 31, Microsoft reported net income of $3.76 billion, or 47 cents a share, down from $4.99 billion, or 61 cents a share, a year ago. Revenue fell to $20.53 billion, from $21.73 billion. Microsoft’s traditional profit engines, like Windows, have weakened considerably as sales in the PC market have remained in a multiyear slump. Last week, the research firm Gartner reported that worldwide PC shipments in the first quarter fell 9.6 percent from a year ago. Yet Microsoft has convinced many investors that it has found a way to adapt to technology changes, in part by vigorously embracing cloud computing. Shares of Microsoft, which is based in Redmond, Wash., are still trading near their price in 1999, their high, even with a 5 percent drop in value Thursday evening. The optimism stems from its success in transitioning legacy software businesses like Office to a cloud business model in which customers subscribe to the applications. There are now 22.2 million subscribers to Office 365, the subscription version of its Office business, up from 12.4 million a year ago.

• Ev Williams’s Medium raised $57 million in September — now it’s raised another $50 million: You may have heard there’s a tech funding crunch, especially for companies that have yet to generate significant revenue. Not for Medium: The publishing platform says it raised another $50 million — just a few months after it raised $57 million. Update: Investors valued the company at $600 million in the current round, said a person familiar with the financing. This round was led by Spark Capital and includes previous investors Andreessen Horowitz and Google Ventures. CEO Ev Williams, whose stake in Twitter has made him a billionaire, is also putting money into his own company

• Amazon is shutting down its Gilt Groupe competitor MyHabit: Another unhappy ending for a flash-sale shopping site. Three months after Gilt Groupe sold for a fraction of its valuation, Amazon has decided to shut down its fashion discount competitor MyHabit, according to a person familiar with the move. Amazon launched the website five years ago near the height of the flash-sale craze, but MyHabit has struggled in recent years as the one-time popular fashion niche has become less popular and Amazon has prioritized other fashion initiatives. Women’s Wear Daily reported employees have been told that the site will shutter at the end of May (subscription). In January, the CEO of MyHabit took on a new role at Amazon as general manager of its new private-label fashion business, according to his LinkedIn profile.Flash sales, on the other hand, has become an increasingly difficult business in recent years. The model exploded in popularity following the last recession, as designer brands were desperate to sell excess inventory in any way they could. But as the economy rebounded, there was less excess inventory to go around and some brands got smarter about how much inventory they produced.

Daily Tech Snippet: Thursday, April 21

• Facebook considers letting users add a tip jar to make money from posts: Facebook is exploring new ways for individual users to profit from their posts on the network, The Verge has learned. A user survey distributed this week hints at a broad range of ways that users could make money or promote a cause, including a tip jar, branded content and taking a cut of the ad revenue Facebook earns from posts. The survey also asked users to indicate their interest in a “call to action” button, a way to let followers make donations and a “sponsor marketplace” to match users with advertisers. It’s unclear whether Facebook is considering making these options available to all users; the language of the survey indicated it is targeted at verified users. The survey was spotted on the page of a verified user with a relatively small following. (Okay, it was me.) Facebook does not currently offer individual users a way to earn money by posting on Facebook. It has allowed publishers to sell advertising inside its fast-loading Instant Articles format, and recently clarified rules allowing posts sponsored by brands to be shared by verified pages. Facebook is also testing ads within the suggestions that pop up after you watch a video, sharing money with publishers. But recently, the company has taken steps to make its publishing tools more widely available. In February, the company began letting anyone publish Instant Articles.

• Line's Plan to Outflank Facebook in Asia: Think Local: Line Corp. has an instant message for Facebook Inc.: Asia is ours. Country by country, the chat app from Japan is signing up new users by adopting a different strategy in each place. In its home market, cute bunny and bear stickers drew in everyone from schoolgirls to suit-clad businessmen. In Indonesia, Line built a classmate-connecting service after learning that alumni networks are a powerful social glue there. In Muslim countries, Line rolled out special features for people observing the Ramadan fast. All of this is aimed at getting new users hooked onto Line before they have a chance to become loyal to a rival service, such as Facebook's Messenger and WhatsApp, or China's WeChat. That, along with Line's knack for making money from its app, bolsters the company's plan to hold an initial public offering as soon as this year. Line, a subsidiary of South Korean Internet company Naver Corp, now has more than 215 million monthly active users. One of Line's biggest foes in Asia is Tencent Holdings's WeChat, which boasts 697 million users. In some ways, WeChat is more than a just messaging service, with a myriad of features that let people book car rides, find dates and exchange money—all from within the app. Line isn't just good at reeling in new users, it also knows how to make money off of them. A third of the company's 120.7 billion yen ($1.1 billion) in 2015 revenue came from virtual-sticker sales. Idezawa also appears to have figured out how to make advertising work inside a messaging app. Under one marketing program, companies can pay 40 million yen to give customers access to sponsored stickers for two weeks. People are more likely to pay attention to ads if they appear while chatting with friends, Idezawa says. Line is also targeting other Southeast Asian countries, the Middle East and even South America. The company now has 3,800 employees (average age, 31) supporting services in 19 languages. In order to snag local users, Idezawa dispatches teams of engineers, designers, marketers and business developers to each new country—they are empowered to come up with new features and services that appeal to those markets. For example, in Latin America, Line rolled out a selfie app called B612, which now has more than 50 million users. Facebook, for its part, is keeping WhatsApp—a no-frills service with 1 billion users—just the way it is, even after buying the messaging app for $22 billion in 2014. At the same time, Facebook has started to add features to Messenger, the companion to its social-networking website, letting people book car rides, read news and, yes, download stickers.

• Got a Hot Seller on Amazon? Prepare for E-Tailer to Make One Too: Rain Design has been selling an aluminum laptop stand on Amazon.com Inc. for more than a decade. A best-seller in its category, the $43 product has a 5-star rating and 2,460 customer reviews. In July, a similar stand appeared at about half the price. The brand: AmazonBasics. Since then, sales of the Rain Design original have slipped. “We don’t feel good about it,” says Harvey Tai, the company’s general manager. “But there’s nothing we can do because they didn’t violate the patent.” Rain Design’s experience shows how Amazon is using insights gleaned from its vast Web store to build a private-label juggernaut that now includes more than 3,000 products -- from women’s blouses and men’s khakis to fire pits and camera tripods. The strategy is a digital twist on one used for years by department stores and big-box chains to edge out middlemen and go direct to consumers -- boosting loyalty and profits. At first, AmazonBasics -- launched in 2009 -- focused on batteries, recordable DVDs and such. Then for several years, the house brand “slept quietly as it retained data about other sellers’ successes,” according to the report. But in the past couple of years, AmazonBasics has stepped up the pace, rolling out a range of products that seem perfectly tailored to customer demand. In his annual shareholder letter earlier this month, Chief Executive Officer Jeff Bezos said Amazon is the “best place in the world to fail.” That philosophy applies to private-label products, which quickly disappear if they receive poor customer ratings. About 96 percent of AmazonBasics products had a rating of 3.5 stars or more, according to the Skubana report. The authors’ advice to merchants: “If you have a product that is lower than 3.5 stars, that product is dead to you and your customers. Liquidate and move on.” Amazon’s size gives it an advantage over so-called direct-to-consumer startups such as mattress seller Casper and eyewear merchant Warby Parker because Amazon can experiment with one product rather than having to build out an entire line. If an item flops, it’s no big deal. Amazon isn’t only copying products made by small, little-known merchants like Rain Design. Its private-label lines are increasingly competing with name brands, and nowhere is that happening more than in apparel.

• Review: Curb, energy monitoring for an entire home: Curb is a comprehensive household energy monitoring system. The system monitors the entire home by using sensors installed in the circuit breaker. For many consumers this means being able to monitor the energy consumed by a clothes dryer or electric range or all the outlets and lights in a bedroom. It cannot, however, easily monitor and report how much energy is consumed by a computer or espresso machine. I had the system installed in my house over a month ago. It took licensed electrician about three hours. He had to install a sensor on each breaker and configure the system through an iPad app. This is not something an average homeowner can install themselves and that’s kind of the point. Curb aims to serve a homeowner with data not previously available. Other energy monitoring services either monitor the entire home or individual outlets. Curb sits in the middle of the two at the circuit break box. Each breaker gets a sensor and an app can display real-time consumption information as well as a dollar approximation of how much the energy is costing the homeowner. But what do I do with all this data? That’s where the system stops being useful. Obviously I can stop using my electric dryer and hang the clothes outside. Or teach my kids to turn off their lights. But I need help from there. The system should be able to display more historical data. Right now all it can do is show how much energy a particular circuit consumed — but now a total amount of watts. It can show how much power a home has consumed over a set of dates and also what the average was during that period. But what about the individual circuits? I want the system to let me dial down to a granule level. The web and smartphone app are basic at this point. The founder tells me the company is working towards implementing new features. The team is also playing with weekly emails that gives the consumer a breakdown of their energy usage and if anything abnormal occurred. Apparently, according to him, the system can identify when an appliance is consuming extra electricity, which could be a sign that it is nearing the end of its life. Currently, just after launch, the user experience of Curb leaves me wanting more. It is collecting so much information about my energy usage yet I feel it’s not benefiting me in a major way. Of course I should use appliances less.Yet the system shows a lot of promise in surprising ways. A few weeks family and I were standing in line for the Easter Bunny. This was the day before Easter so we were in line for over an hour. And like any good parent, I spent the time putzing around on my phone. Mindlessly, I opened the Curb app and discovered the stove was drawing power though I thought I had turned if off. I texted my neighbor who went over and discovered the oven was still on.

Daily Tech Snippet: Wednesday, April 20

• Intel to Cut 12,000 Jobs as PC Demand Slumps: Intel, the world’s largest maker of semiconductors, said on Tuesday that it was laying off 12,000 people, about 11 percent of its work force, as it continues to reel from a long downturn in global demand for personal computers. Intel, the world's largest chipmaker, lowered its revenue forecast for the year. It now expects revenue to rise in mid-single digits, down from its previous forecast of mid- to high-single digits. Intel's shares were down 2.2 percent at $30.90 in extended trading. Net revenue rose to $13.70 billion from $12.78 billion. Non-GAAP net revenue came in at $13.80 billion, compared with analysts' average estimate of $13.83 billion, according to Thomson Reuters I/B/E/S. Adjusted earnings of 54 cents per share topped Wall Street forecasts of 48 cents. Up to Tuesday's close, Intel's shares had fallen 8.4 percent this year. Yet Intel still gets 60 percent of its revenue from chips supplied to PCs, and its profit margins there are not as good as in data center chips, its other major business. The company’s other businesses have small profits, or else lose money. That means PCs are still core to what Intel does. Most of the layoffs, along with things like consolidating facilities and cut projects, are expected to be inside the PC business. Employees who are affected by the restructuring will be notified in the next 60 days, the company said. The layoffs are the largest since 2006, when the company let go 10,500 employees.

• Verizon set to make Yahoo's bidder short list, as Yahoo reports tepid earnings: Verizon Communications Inc was set on Tuesday to advance to the second stage of bidding for Yahoo Inc's core assets, as the U.S. internet company went through offers to put together a short list, people familiar with the matter said. The field had whittled down ahead of Monday's first-round bid deadline as several companies that were mulling an offer, including Comcast Corp and Time Inc, decided to opt out, the people said. Meanhile, Yahoo, based in Sunnyvale, California, said revenue fell 11 percent to $1.09 billion, and its net loss was $99 million, or 10 cents a share, in contrast to revenue of $1.23 billion and net income of $21 million, or 2 cents a share, in the same quarter a year ago.

• Credit Suisse Says Instagram Is Going to Have a Huge Year: Facebook Inc.'s purchase of Instagram Inc. continues to look smarter and smarter. After buying Instagram for $1 billion in 2012, analysts at Credit Suisse Group AG now expect Facebook will get more than triple that price tag in revenue from the photo sharing app this year alone. "We are now forecasting $572.5 million and [circa] $3.2 billion in revenue contribution from Instagram in [the first quarter of 2016] and 2016, respectively," analysts led by Stephen Ju said in a recent note. Instagram and premium video will be a big driver for mobile and desktop ad revenue, the team writes. "Our projection for consolidated ad revenue of $5.24 billion in [the first quarter] reflects our projection for $573 million and $260 million in contribution from Facebook's Instagram and premium video ad product, respectively."  When Facebook acquired the startup, it had roughly 30 million users. Monthly active users have now ballooned to 400 million as of September 2015, topping that of Twitter Inc. Much of the recent expansion has been outside of the U.S.
 

Daily Tech Snippet: Tuesday, April 19

• Netflix’s Forecast for Growth Disappoints Wall Street: On Monday, Netflix announced that it expected to add just two million members outside the United States in the second quarter this year — less than the 3.5 million analysts had expected. The figure also represents a decrease from the 2.4 million members the streaming service added internationally in the same period the previous year. That cloudy forecast sent shares down more than 10 percent in after-hours trading, as Netflix has tied its future to its bold global push. The company has been pouring resources into its expanding its international footprint, telling investors that it would run at break-even profitability until the end of 2016 as it continued to roll out the service abroad and increased its investment in content. That uncertainty over the competitive landscape, as well as fears about growth prospects both inside and outside the United States, overshadowed the generally positive first-quarter financial results that Netflix announced on Monday. The company beat expectations for profit and revenue growth during the first quarter. Profits totaled $28 million, up 16 percent from the same period last year, and total revenues increased 24 percent to nearly $2 billion. Netflix added a record 6.7 million total streaming members during the first quarter, bringing its total to 81.5 million, with about 42 percent outside the United States. Netflix had forecast that it would reach nearly 80.9 million total paid members in the quarter. In the United States, Netflix surpassed its forecasts for subscriber growth during a period in which price increases went into effect for some customers. The company added 2.23 million subscribers in America during the quarter, bringing its paid membership in the country to 45.7 million. Outside the United States, Netflix also beat its expectations for growth, adding 4.5 million international streaming subscribers. The company said it was planning to spend more than $6 billion on programming in 2017, up from $5 billion this year.

• IBM reports worst revenue in 14 years, shares slide: IBM on Monday reported a 21 percent decline in net profit from continuing operations, to $2.3 billion in the first quarter that ended March 31. Its operating earnings per share fell 19 percent, to $2.35 a share, though that was above the average estimate of Wall Street analysts of $2.09 a share, as complied by Thomson Reuters. The company’s first-quarter revenue declined 5 percent, to $18.7 billion. But that was ahead of analysts’ consensus forecast of $18.29 billion. After adjusting for the impact of currency translation, revenue was down 2 percent. IBM shares fell about 5 percent in after-hours trading, a retreat from a recent uptrend for the stock. In the first three months of this year, IBM’s stock price had increased 17 percent. IBM delivered a quarterly performance that shows the steady headway it is making in new businesses led by cloud computing and data-analysis software, like its Watson artificial intelligence technology. But the company’s transformation remains very much a work in progress. The erosion of some of its hardware and software products continues to be a drag on growth and profits, overshadowing the gains in the new fields.

• LinkedIn built a new app for college kids - from which Lynda is missing: In an effort to lure more young people to its professional network, LinkedIn built a standalone app specifically for college students. The app helps students quickly create a profile (if they don’t already have one), find career paths and job postings that relate to their major, and connect with alumni who studied the same topic. The app is appropriately named “LinkedIn Students.” LinkedIn’s challenge is that its product is most useful once you already have a job. Or at least know a bunch of other people who do. Oftentimes, college students have neither, which makes the idea of creating a profile seem overwhelming, said Ada Yu, a product manager at LinkedIn. So LinkedIn is trying to appeal to young people with an app that’s less cumbersome than its flagship app. LinkedIn users can already do most of what the college app offers in LinkedIn’s main app; it’s just more simplified now. Two things worth noting: Lynda.com, the online library of classes LinkedIn bought for $1.5 billion last year, is noticeably missing from the app. It seems likely that LinkedIn will add online classes to the app at some point. LinkedIn can make money from this app. Once students scroll past the daily job and alumni recommendations, they get to an “extra credit” section which will include some branded content. LinkedIn will launch with branded content from J.P. Morgan. What LinkedIn will not do, however, is recommend career paths or job openings in exchange for cash. All suggested jobs will be based on LinkedIn’s algorithm, Yu said.

• China's Crowded Smartphone Market Heads for an Epic Shakeout: Smartphone sales in China exploded earlier this decade as incomes rose, prices for chips and displays plummeted, and carriers offered arrays of discounts. Shelves were flooded with hundreds of brands—from national heavyweights Huawei, Lenovo and Xiaomi to the smaller Dakele, Tecno Mobile and Gionee. Shipments more than doubled in each of the three years ending 2012, according to researcher Canalys. Xiaomi's valuation rocketed to $45 billion, and the phone maker started selling devices in India, the world’s fastest-growing major economy. Lenovo Group Ltd. spent $2.91 billion to acquire Motorola Mobility to help make it "a global player." In 2011, only four of the top 10 vendors in China were domestic. Last year, there were eight.  Now that wave has crested. Smartphones no longer are novelties in China, and most domestic brands target the mid- and low-price ranges, where buyers don't upgrade as frequently as those for high-end Apple and Samsung phones. China's herd of 300 phone makers may be halved in 12 months by competition, a sales plateau and economic growth that's the slowest in a quarter-century, according to executives and analysts. "The mobile-phone industry changed more quickly and brutally than expected," Dakele Chief Executive Officer Ding Xiuhong said on his Weibo messaging account. "As a startup, we couldn’t find more strategies and methods to break through."

• Don’t want your startup to fail? Arianna Huffington tells founders to go to bed: Sleep deprivation is the undoing of startup founders, according to Arianna Huffington. “There is this kind of founder myth that if you are a founder you can’t afford to get enough sleep,” she told me over the phone while catching a plane back to New York. “The truth is three-quarters of startups fail and if founders got more sleep they’d have a better chance of succeeding.” Wanting to get more sleep isn’t the problem for most of us. It’s fitting in the recommended seven to 9 hours of sleep with work, eating, exercise, relationships and a social life – and on top of that founders need to spend a lot of time growing their fledgling company. The advice is obvious – no caffeine after 2 pm and keep your bedroom dark and quiet – but like exercise and eating right, a lot of us probably don’t do it anyway. And sacrifices will be made – no tech in the bedroom and you might not get through all of those critically acclaimed Netflix dramas – Arianna tells me she’s only seen one episode of House of Cards because sleep is the priority. But then, maybe you’ll think clearly and your startup won’t fail.

• Media Websites Battle Faltering Ad Revenue and Traffic:  This month, Mashable, a site that had just raised $15 million, laid off 30 people. Salon, a web publishing pioneer, announced a new round of budget cuts and layoffs. And BuzzFeed, which has been held up as a success story, was forced to bat back questions about its revenue — but not before founders at other start-up media companies received calls from anxious investors. “It is a very dangerous time,” said Om Malik, an investor at True Ventures whose tech news site, Gigaom, collapsed suddenly in 2015, portending the flurry of contractions. The trouble, the publishers say, is twofold. The web advertising business, always unpredictable, became more treacherous. And website traffic plateaued at many large sites, in some cases falling — a new and troubling experience after a decade of exuberant growth. Online publishers have faced numerous financial challenges in recent years, including automated advertising and ad-blocking tools. But now, there is a realization that something more profound has happened: The transition from an Internet of websites to an Internet of mobile apps and social platforms, and Facebook in particular, is no longer coming — it is here. It is a systemic change that is leaving many publishers unsure of how they will make money. “With each turn of the screw, people began to realize, viscerally, that this is what it feels like to not be in control of your destiny,” said Scott Rosenberg, a co-founder of Salon who left the company in 2007. Audiences drove the change, preferring to refresh their social feeds and apps instead of visiting website home pages. As social networks grew, visits to websites in some ways became unnecessary detours, leading to the weakened traffic numbers for news sites. Sales staffs at media companies struggled to explain to clients why they should buy ads for a fragmented audience rather than go to robust social networks instead.

Daily Tech Snippet: Monday, April 18, 2016

• Facebook’s ambitious plan to make you a VR convert: Alongside announcements about drones, bots and other plans to use its Messenger app to take over the world, Facebook also spent quite a bit of time talking about virtual reality. The company, of course, is the owner of Oculus — the VR firm with the most general recognition — and just released its first commercial VR headset, the Rift. The Rift is focused on gaming right now, but Facebook has been saying since it bought Oculus in 2014 that it has broader plans for making Oculus's technology work for more general social interaction. Sheikh laid out a world where users could play a poker game with friends over VR that is so sensitive that you can read their tells. He describes what it could mean to people who live far away from their families to be able to interact with them through a headset. And he said that eventually his team hopes to make VR social interaction "indistinguishable from real life." Of course, this will all take a lot of work. Right now, the commercial Rift doesn't even represent your hands in VR, though that is poised to changebefore the year is out. But Sheikh also described research that would let users put their whole bodies in a virtual world and accurately map facial expressions. The team is also trying to analyze real-world social interactions, to figure out how to let virtual interactions flow as seamlessly as in-person meetings. He also warned that all the visions he laid out in his portion of the keynote speech were far from ready for prime-time. A study released Wednesday by Greenlight VR predicted that it will take six to eight years for virtual reality to go fully mainstream. Given all the research that Sheikh said had to be completed to make social presence really work during the Facebook keynote, that sort of timeline could actually seem a little ambitious.

• Kahoot App Brings Urgency of a Quiz Show to the Classroom: Kahoot, an online quiz system from Norway that is fast gaining market share in schools across the United States, plays out like a television game show spliced with a video game. Cast in the role of game host, teachers introduce a multiple-choice quiz — on, say, plant life or English grammar. Using the Kahoot platform, they project one quiz question at a time onto a whiteboard or screen at the front of their classrooms. Players typically have 30 seconds to click an answer on their laptops, tablets or smartphones. They earn points for correct choices, and extra points for clicking faster. During the answer period, Kahoot emits a catchy countdown tune, reminiscent of retro video games like Monkey Island. A gong sounds when time is up, and the classroom board immediately tallies the class’s correct and incorrect answers. Next, a leaderboard appears, ranking the top five students by points accrued. Kahoot’s gamelike features and easy-to-use format have helped turn it into a classroom phenomenon. Of the 55 million elementary and secondary school students in the United States, about 20 million used Kahoot last month, the company said. “It’s fun. Everyone is doing it. It pulls all the children in,” Tosh McGaughy, a digital learning specialist at the Birdville Independent School District in Haltom City, Tex., told me recently. “They get competitive and excited.”

• Apple Falls on Report iPhone Output Cut for Second Quarter: Apple  shares fell after it was reported that the company would extend an estimated 30 percent cut in iPhone production for another three months. Slower-than-expected sales of the iPhone 6S and 6S Plus have prompted Apple to reduce its orders, the Nikkei Asian Review reported, citing unidentified suppliers. The shares dropped as much as 2.1 percent and had declined 1.7 percent to $110.22 at 2:07 p.m. in New York. Apple introduced a smaller, cheaper handset dubbed the iPhone SE last month in an effort to plump up sales ahead of rolling out a new flagship model later this year. Taiwan Semiconductor Manufacturing Co., one of the biggest suppliers of chips to Apple, on Thursday forecast revenue below analysts’ estimates for the second quarter, saying that demand for smartphones that cost more than $500 is waning. “Ahead of the iPhone 7 people are holding onto their phones a little longer,” said Walter Piecyk, a New York-based analyst at BTIG LLC who recommends buying Apple shares. “But if this is as a result of lengthening product cycles then it could be a structural change for the industry.” In January, Apple said sales would decline for the first time in more than a decade. Global smartphone sales will rise by less than 10 percent this year, the smallest increase since the market’s inception, researcher Gartner Inc predicted last month. Nikkei reported that Apple cut iPhone production by an estimated 30 percent in the January to March quarter and that the reduction is being extended for the subsequent three months. Apple suppliers including Broadcom, Qorvo, Knowles and NXP Semiconductors also fell following the report.

• Tech Companies Face Greater Scrutiny for Paying Workers With Stock: For the last few years, LinkedIn, the professional social networking company, has doled out increasingly large amounts of stock to pay its workers. In 2014, LinkedIn paid employees $319 million in stock, or 14 percent of revenue; in 2015, that rose to $510 million, or 17 percent of revenue. At the time, those figures were largely met with shrugs from Wall Street. Now that attitude may be changing. As LinkedIn prepares to report its latest quarterly earnings next week, Wall Street is increasingly scrutinizing the number of stock grants that the company pays employees — especially after LinkedIn projected lower growth for this year and its stock price has fallen. The Silicon Valley company’s stock-based compensation “provides additional reason to remain cautious” on LinkedIn, Mark May, an Internet analyst at Citigroup, wrote in a research note. The issue is not limited to LinkedIn. With tech earnings season kicking off on Monday, investors are paying more attention to stock-based compensation at many tech companies. Paying employees with stock is largely unquestioned when times are good, since the move theoretically aligns the interests of the workers with company performance. The practice is technically a corporate expense, but during boom periods, Wall Street typically focuses on a company’s operating results that exclude that expense. Yet public tech companies have had a rockier time in the stock market this year. That has led investors to begin looking more closely at the quality of the companies’ financial results. The scrutiny means examining earnings with stock-based compensation expenses included — and certain financial measures, like earnings and margins, invariably look worse when that expense is factored in.

Daily Tech Snippet: Friday, April 15

• Lyft Is Gaining on Uber as It Spends Big for Growth: In January, Lyft said it raised $1 billion, which is helping fuel the spending spree and steal market share from Uber Technologies Inc. To keep costs in check, Lyft has promised investors to cap its losses at no more than $50 million a month, according to a person familiar with the matter who asked not to be identified because the plans are private.Meanwhile, Uber has been working to fulfill its own promise to shareholders and employees that it would achieve profitability in North America by the second quarter of 2016, a milestone it says it has now reached in the U.S. and Canada. In February, Uber earned an average of 19¢ per ride in the U.S., according to previously undisclosed financial documents. Uber takes about a 25 percent cut of a typical fare, most of which goes to antifraud efforts, credit-card processing, customer support, marketing, and software development, the documents show. Not included in Uber’s profitability calculations are interest, taxes, or equity-based compensation for employees. Uber Chief Executive Officer Travis Kalanick’s commitment to profitability has left an opening for Lyft, and the smaller upstart’s free-spending strategy is starting to pay off.  Lyft says it has captured 45 percent of trips in Austin, Texas, and Los Angeles and 43 percent in San Francisco, where both companies are based. Uber says it had 55 percent of ride-hailing sales in Austin, 75 percent in Los Angeles, and 66 percent in San Francisco, citing third-party credit card data from the first two weeks of March. Uber says Lyft has shaken loose only a few percentage points. “From everything I’m looking at, we’re gaining share in all top 20 markets, which is where 80 percent to 90 percent of rides happen,” says Lyft President John Zimmer. “This continues to prove what we said all along, which is once you hit a certain level of scale, it’s a natural duopoly.” Outside of big cities, though, it’s still Uber country. Of 169 million trips booked through Uber worldwide in March, the company says 50 million of those were in the U.S. Lyft says it did 11 million U.S. rides that month, up from 7 million in October. Lyft continues to devise new—and often expensive—ways to expand in the U.S., the only country in which it operates. When a Lyft driver refers someone to sign up as a new driver, both get a $750 bonus in some cities. And Lyft has the capacity to keep spending. Zimmer says the company still has “by far the majority” of the $2 billion it’s raised from investors. “This allows us to control our own destiny. We do not need to raise any additional capital, and it’s just a fantastic position to be in.” Whether Lyft’s gains will stick remains to be seen. Uber says customers lured away by subsidies are the most likely to return if Lyft’s prices go up. “It’s easy enough to buy trips with heavy subsidies for drivers and discounts for riders,” Jill Hazelbaker, a spokeswoman for Uber, wrote in an e-mail. “But to build a successful, long-term business, you need a path to profitability—which Uber has always had.”

• Rocket Internet Drops in Frankfurt Amid $222 Million Loss: Rocket Internet SE, Europe’s biggest startup factory, fell the most in more than two months in Frankfurt trading after reporting a loss of 197.8 million euros ($222 million) for last year. While Rocket-backed companies continued to increase sales, operating losses widened at several of them, including at food delivery startup HelloFresh and e-commerce site Lazada, which drew an investment from Alibaba Group Holding Ltd. this week. Rocket had net income of about 429 million euros the previous year, according to the Berlin-based company’s statement Thursday. The shares fell 10 percent to 26.09 euros at 11:42 a.m. local time after dropping as much as 12 percent, the biggest intraday decline since Jan. 15.

• Whatever Happened to Facebook’s Slack Competitor Facebook at Work? Do you remember Facebook at Work? The version of Facebook specifically built for your office? The one that would send Slack and Yammer and email running for the hills? We almost forgot, too. But hidden among the Internet-beaming drones and 360-degree video cameras Facebook showed off this week at its annual developer conference in San Francisco was a Facebook at Work booth, a small, unheralded reminder that the future of workplace communications is also on Facebook’s radar. Add it to the list. When we last spoke to Facebook about Work, the company was gearing up to launch a freemium version of the software to the masses before the end of 2015. It’s now mid-April 2016, and Facebook at Work is still in a closed beta. So what happened? Is Facebook at Work still part of the game plan? So things are still moving. Just slowly. And that matters because Facebook’s top competition, tech startup Slack, is growing quickly in the interim. Facebook said it has 450 companies using the pilot, up from 100 in August, including some big companies like the Royal Bank of Scotland, which has more than 100,000 employees. More importantly, though, Facebook says it has 60,000 businesses that have signed up for its waiting list. That’s a lot of interested customers, but it’s unclear how many of them would actually pay for Work or use the free model. Slack, for comparison, has more than two million users and more than 675,000 users who pay (or have employers who pay for them). That’s more than 100,000 new paid users since December, the same time we thought Facebook would be out on the open market. Facebook has a tendency to turn small numbers into big numbers very quickly, so it’s not as though a few months’ delay means Facebook at Work can’t ultimately be a hit. But at a conference dedicated to Facebook’s future, Facebook at Work was a side note. And side notes can be hard to remember.

• GoPro’s developer program aims to connect its cameras to cars, toys and apps: GoPro on Thursday very quietly took the wraps off its new developer program, by which it hopes to get its action cameras hooked into as many third-party devices, vehicles and services as possible. The program was announced at a private event in San Francisco, where it showed off the fruits of various partnerships. The Periscope integration announced earlier this year is an example of what the company is hoping to achieve. There was also a snap-on time-code system that you can use to sync your footage (announced last week, but still new), a mount for kids’ toys from Fisher-Price and add-ons for tracking your route and vital statistics when parasailing, skiing and other extreme activities — you get the general idea. Partnerships with BMW and Toyota also suggest more automotive applications in the future. Perhaps the coolest item, shown off at the end of this highlight video, was a gesture-based camera control system for when your motorcycle gloves or [insert extreme garment here] prevent you from operating the app.