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.