Daily Tech Snippet: Tuesday, July 19

• Netflix Disappoints Wall Street as Subscriber Growth Slows: Netflix isn’t looking so invincible anymore. On Monday, the company disappointed Wall Street with the news that subscriber growth for its streaming video service had slowed significantly during the second quarter. Also disconcerting was that Netflix added far fewer subscribers over all during the period than expected, which the company blamed on news media coverage of its plans for price increases. Netflix added just 1.7 million new streaming members in the three months that ended June 30, about half the 3.3 million net additions from the same period the previous year. That anemic growth — for both United States and international subscribers — came in well below its forecast of 2.5 million new members. The development sent Netflix shares down as much as 16 percent in after-hours trading on Monday, representing the second earnings report in a row that has sparked a double-digit plunge in the company’s stock price. Mr. Hastings finds himself in a starkly different position from just six months ago, when he stood onstage at the big consumer electronics show in Las Vegas and declared that Netflix would conquer the global market for streaming television, adding more than 130 countries to its world service map. At the time, the company’s share had been soaring, surging 135 percent in 2015 as the top performer on the Standard & Poor’s 500-stock index. So far this year, Netflix’s share price has declined about 14 percent. Still, some analysts pointed to the company’s financials as proof that it would continue to deliver on its plans in the long term. Net income for the quarter was $41 million, up 58 percent from $26 million during the same period last year. Total revenue was $2.1 billion, up 27 percent from $1.6 billion in the same period last year.

• Yahoo Revenue Falls 15 Percent and Profit Drops 64 Percent: As Yahoo accepted the final bids for its core business on Monday, the internet company revealed just how badly that business was deteriorating. Yahoo said that its revenue in the second quarter fell 15 percent, after excluding accounting adjustments, and its operating profit fell 64 percent. Yahoo also acknowledged that Tumblr — its biggest acquisition under its current chief executive, Marissa Mayer — was now worth only one-third of the $1.1 billion that Yahoo paid for it in 2013. But investors were not focused on the quarterly numbers or Yahoo’s vast overpayment for Tumblr. They were far more interested in whether Yahoo’s web, email, news and other businesses will finally be sold — and at what price.Yahoo has been conducting a prolonged auction for those assets since February, and final bids were due on Monday. Yahoo’s board is expected to evaluate the offers over the next week or two and decide whether to proceed with a transaction that would end Yahoo’s 20-year run as an independent, publicly traded company.Analysts expect the final bids to come in at $3.5 billion to $6 billion, including Yahoo’s land and patents.The write-off of most of the value of the Tumblr blogging network is emblematic of the failure of Ms. Mayer’s strategy to expand Yahoo by luring the mobile young users who drive the business of its chief rivals, Google and Facebook.In the second quarter, Yahoo’s revenue was $1.31 billion, up from $1.24 billion in the same quarter a year ago. But the most recent quarter’s revenue rose only because of a change in how Yahoo accounts for revenue from its search partnership with Microsoft. Excluding those changes, revenue fell 15 percent, and both search ads and display ads posted significant drops. The company reported a net loss of $440 million, or 46 cents a share, for the quarter, compared with a loss $22 million, or 2 cents a share, in the same quarter a year ago. Excluding the Tumblr write-off and other adjustments, the company’s operating profit fell 64 percent. Shares of Yahoo were down slightly in after-hours trading Monday evening.

• IBM Rises After Sales Beat Estimates on Software Unit Gains: IBM second-quarter revenue beat analysts’ estimates, boosted by the unit that includes its Watson artificial intelligence platform, in an early indication that the company’s transition to cloud-based software and services is beginning to pay off. Sales were $20.2 billion, compared with the average analyst estimate of $20.1 billion, according to data compiled by Bloomberg. Revenue in cognitive solutions, which includes Watson, increased 3.5 percent to $4.7 billion. This is the first time since IBM reorganized its segments that the cognitive solutions portion has registered growth, after declining the previous five quarters in a row. Adjusted earnings, excluding some items, was $2.95 a share, beating the $2.89 average estimate of 19 analysts. The shares rose 3.2 percent in late trading to $165. They are up 16 percent this year through the end of Monday, compared with a 6 percent gain on the Standard & Poor’s 500 Index.

• What is ARM and why is SoftBank spending $32 billion on it? SoftBank’s $32 billion deal to buy chip designer ARM had many people scratching their heads Monday. It’s not that ARM isn’t important in tech. Indeed, its processor designs are used by nearly every chipmaker and, by extension, find a place inside nearly every piece of tech from cellphones to hard drives to networking gear. Rather, it is the fact that the chipmaker is so far removed from SoftBank’s other businesses. The Japanese conglomerate has a wide range of tech holdings, including a controlling interest in Sprint, its own mobile carrier business in Japan and investments in Alibaba, OlaCabs and Snapdeal. “SoftBank would have been one of the least likely I thought to buy ARM,” said longtime chip analyst Kevin Krewell of Tirias Research. “They are not in the semiconductor business in any significant way.” Krewell says he suspects that SoftBank looked hard at buying other companies in the chip business and decided that ARM was the strongest play, especially for the very long term.It’s worth taking a second to understand how ARM’s business works and what it does. ARM doesn’t make any products. Not only does it not manufacture chips, it doesn’t even design the ones that are eventually sold. Rather, it designs the core engines that get built into others’ chips — chips from companies like Qualcomm and Nvidia as well as processors like Apple’s A9 and Samsung’s Exynos. For its efforts, ARM gets a small license fee from every chip that uses its design. Because it is in so many products, that small license fee adds up to a pretty healthy business. Its 2015 revenue was nearly one billion British pounds. And its sphere of influence is growing, both in terms of the number of chips using its design as well as the kinds of products. Last year nearly 15 billion chips using its designs were sold, up from about six billion in 2010. Cars, servers and internet-of-things devices are all seen as big expansion areas for ARM chips.