Daily Tech Snippet: Tuesday, April 18

• Netflix shares head for new high after strong subscriber outlook: Netflix Inc made a bullish forecast for subscriber additions by mid-year, a positive sign for its push to expand around the world that sent its shares toward an all-time high. The streaming video company pushed back the next season of its smash-hit "House of Cards," and other programing to the second quarter, meaning it lured in fewer new subscribers in the first quarter than expected, but will likely make it up from April through June. Subscriber rolls, the most closely watched measure of Netflix's growth, rose by just under 5 million globally in the first quarter, behind analysts' projection of 5.18 million, according to FactSet StreetAccount. However, Netflix forecast 3.2 million more in the seasonally slow second quarter, well ahead of analysts' estimate of nearly 2.4 million. Its shares dropped as much as 3 percent in after-hours trading before rebounding to gain 1.3 percent. The late rise put Netflix stock on track to open at a record high on Tuesday. In its quarterly letter to shareholders, Netflix asked investors to judge its future success by looking primarily at revenue growth and global operating margins. That would be a shift for Wall Street, which has focused on subscriber numbers, said Needham & Co analyst Laura Martin. "The minute you actually pivot (investors) to an income statement, you're talking to a completely different kind of investor," Martin said. "And that investor demands profitability. So it's a risky business." The Los Gatos, California-based company said net income rose to $178 million, or 40 cents per share, compared with $28 million, or 6 cents per share, in the year-ago period. Revenue rose 35 percent to $2.64 billion in the quarter.

• Trump will sign an executive order reviewing high-skilled H-1B immigration visas: U.S. President Donald Trump will order a full review of the country’s high-skilled immigration visa program tomorrow, part of a continued push to clamp down on companies — including, potentially, some in the tech industry — that hire foreigners instead of Americans. In a forthcoming executive order, Trump will commission the Department of Homeland Security, which issues the popular H-1B visa, to review the way they are rewarded. The agency is also instructed to suggest reforms so that visas only land in the hands of highly paid, specially skilled applicants, and not foreign workers who might be paid less than their U.S. counterparts. On its face, Trump’s new directive — a push to “buy American, hire American,” as his aides described it today — does not change the immediate day-to-day working of the H-1B system, which many companies in Silicon Valley support. Instead, at least for the moment, it only opens a formal review of the program. Still, Trump’s move may leave many wary in the tech industry, as it’s the latest in a line of restrictions and changes the administration has introduced to the high-skilled foreign worker visa in recent weeks.

• Batteries could be Tesla’s secret weapon: Markets are very optimistic about Tesla’s future — so optimistic that it would be impossible to explain if Tesla were a conventional car company. On paper, Tesla shouldn’t be worth anywhere near as much as rivals like Ford and GM. Ford sold 6.6 million cars in 2016. GM sold 10 million. Tesla sold a paltry 76,000. Ford and GM both turned healthy profits in 2016. Tesla lost money. Yet earlier this month Tesla’s market value surged past Ford and then briefly eclipsed GM as America’s most valuable carmaker. One big reason for this is that Tesla has made a risky bet on batteries that could be on the verge of a huge payoff. Because Tesla cars are purely electric, a single car needs about 1,000 times as much battery capacity as a typical smartphone. So making electric cars a mainstream technology will require producing batteries on a scale that dwarfs today’s production for smartphones and other portable gadgets. A major test of this will come in Tesla’s release of the Model 3 later this year. These cars will be powered by batteries from the Gigafactory, a huge factory Tesla has constructed in the Nevada desert. If the Model 3 is a hit, experts say, the Gigafactory will ensure Tesla has plenty of batteries to meet demand for this relatively affordable mass-market vehicle. Other car companies would have to scramble — not only to design a similar stylish vehicle, but also to find suppliers for yet more batteries. Experts say this battery advantage won’t last forever — other battery makers might be able to catch up within a year or two. But having a year or two head start could make a big difference — not only cementing Tesla’s reputation as the leading electric car brand, but positioning Tesla to make further investments that could help it stay a step ahead of rivals down the road.

• How Infosys’s $20 billion revenue target by 2020-21 is hurting the firm: Infosys Ltd, despite a relatively good performance over the past two years, is battling perceptions of under-performance because of its inability to keep pace with its ambitious target of more than doubling its revenue to $20 billion by March 2021. This target appears to have done more harm than good: analysts continue to rate the company using it as a metric; and people in the know attribute the departure of at least a few senior executives over the past few years to it. Now, an analyst at a foreign brokerage has suggested that the company is better off without the target. “Management continues to maintain ‘aspirational’ revenue and margin targets that are increasingly becoming unlikely to be achieved, in our opinion. Given Infy (Infosys) is now guiding to lower levels of both revenue growth and margins in FY18 (2017-18), we think management would be well-served to either amend or drop its aspirational targets,” Keith Bachman, an analyst with BMO Capital Markets, wrote in a note dated 16 April. Since outlining this target, Sikka steered Infosys to dollar revenue growth of 9.1% in 2015-16 and 7.4% in 2016-17; for the second consecutive year, Infosys will grow faster than its larger rival Tata Consultancy Services Ltd (TCS) and cross-town peer Wipro Ltd (Wipro). Still, Infosys continues to be evaluated on the progress it makes in becoming a $20 billion company. Worryingly for the management, a bigger fallout of the targets has been the pressure on senior leaders, making a few of them leave. Since April 2015, half-a-dozen executive vice-presidents (EVPs) and a dozen senior vice-presidents (SVPs) have quit. Not all departures are on account of the targets but two former executives admit that they left Infosys as they could not keep up with the “impossible targets.”