- Apple sells more iPhones than expected, shares jump after hours despite revenue drop: Apple Inc (AAPL.O) sold more iPhones than Wall Street expected in the third quarter and estimated its revenue in the current period would top many analysts' targets, soothing fears that demand for the company's most important product had hit a wall. Its shares rose 7 percent in after-hours trading. The world's most valuable publicly traded company said it sold 40.4 million iPhones in the third quarter, down 15 percent from the year-ago quarter but slightly more than the average analyst forecast of 40.02 million, according to research firm FactSet StreetAccount. IPhone sales dropped for the second straight quarter, pushing down Apple's total revenue 14.6 percent in the fiscal third quarter, ended June 25. Demand for Apple's phones has waned in China, partly because of economic uncertainty there, and has also slowed in more mature markets as people tend to hold on to their phones for longer. The sales slump has stoked concerns about whether the tech leader can continue to deliver profits at the level Wall Street has come to expect. "China was a major letdown," said Patrick Moorhead, an analyst at Moor Insights & Strategy. "Samsung and Huawei are much more competitive now than a year ago and the Chinese economy is not doing well at all." Apple's services business, which includes the App Store, Apple Pay, iCloud and other services, generated nearly $6 billion in revenue, up 18.9 percent from the previous year. As iPhone sales level off, Apple is attempting to use such services to wring more revenue out of its existing base of users. The business emerged as Apple’s second largest after the iPhone for the first time in the second quarter, eclipsing gadgets such as the iPad and the Mac. That shift bodes well for Apple because gross margins on services are better than the average for the rest of the company, Maestri said.
- Twitter still has revenue problems, and its stock is down big: Twitter reported Q2 earnings on Tuesday and investors aren’t happy. The key issue is likely Twitter’s Q3 guidance. The company says it is targeting $590 million to $610 million in revenue next quarter. Early analyst estimates pegged that number at $678 million, according to Yahoo Finance. So that’s a big discrepancy.The stock was immediately down more than 10 percent on the news and seems to be hovering there.So here’s Twitter’s dilemma: CEO Jack Dorsey has effectively been in charge of Twitter for the past year, and it’s clear that the company’s growth problem is still a problem. On top of that, Twitter has now missed revenue estimates two quarters in a row, and significantly cut its Q3 guidance. So there’s a clear revenue problem to go along with the growth problem. Not good. To state the obvious, this kind of production (or lack thereof) doesn’t help Dorsey’s case for running two companies (remember, he also runs Square). It also puts pressure on the board to consider broader options for the company, namely selling. Twitter is in the very beginning stages of trying to transition its business to look more like TV, but it doesn’t have a lot of runway left.
- $1 Billion for Dollar Shave Club: Why Every Company Should Worry: Unilever is paying $1 billion for Dollar Shave Club, a five-year-old start-up that sells razors and other personal products for men. Every other company should be afraid, very afraid. The deal anecdotally shows that no company is safe from the creative destruction brought by technological change. The very nature of a company is fundamentally changing, becoming smaller and leaner with far fewer employees. Dollar Shave Club was a phenom in the men’s grooming industry. The online business was founded in 2011 by Mark Levine and Michael Dubin to combat the high cost of razors. The idea was rather simple. Instead of paying $10 or $20 a month at a store for disposable razors, a Dollar Shave Club subscriber could go online and set up a regular order to be shipped to his home monthly at a fraction of the retail cost. The experiment was a brave one. Until that time, Gillette dominated the razor business and was in an arms race with itself to add yet more blades and other features to its razors. Gillette was so dominant in advertising and shelf space that Procter & Gamble paid $57 billion for the company in 2005. Everything changed in 2012, when Mr. Dubin’s comedic free ad posted on YouTube. Within 24 hours, the new business had more than 12,000 orders, more than it could handle. The ad went on to get over 20 million views and rocket Dollar Shave Club to over $240 million in revenue. The wealth will be spread among a few. Dollar Shave Club has over three million subscribers but only about 190 employees. Its razors were made in South Korea by Dorco. Distribution was initially handled in-house but eventually was contracted to a third-party company in Kentucky. What remained was a terrific design, marketing and customer service shop; and a business that was easily expandable to meet demand and that had a good niche with men who do not like to shop. These super-successful companies with few employees should worry an America struggling with inequality. That is the way things roll these days. It used to be that if you wanted to sell razors, you needed a factory, a distribution center, a sales force, a research and development team and a marketing budget. Keeping all of these functions under one roof lowered transaction costs and made operations more efficient. In part this was because of communication structures — having telephone and mail together was a necessity. But the internet, mass transportation and globalization destroy everything. If you do not believe this change is about brand, experience and disruption, know that you can buy razors directly from Dorco, presumably the same brands sold by Dollar Shave Club.
- Flipkart-owned Myntra acquires Jabong for $70 mn in all-cash deal: Flipkart-owned Myntra today said it has acquired Jabong from Global Fashion Group for USD 70 million. Myntra, which itself was acquired by Flipkart in 2014 in an estimated Rs 2,000 crore deal, will have access to a combined base of 15 million monthly active users.Jabong has been in the market for a sell-off and was in discussion with companies including Future Group, Snapdeal and Aditya Birla-owned Abof among others. Jabong was founded in 2012. In September 2014, its investor, Rocket Internet merged Jabong with four other online fashion retailers in Latin America, Russia, the Middle East, South-east Asia and Australia to create Global Fashion Group (GFG). Swedish investment firm Kinnevik also owns a large stake in Jabong's parent Global Fashion Group. While Jabong has managed to reduce losses by reducing discounts, both Kinnevik and Rocket Internet seem unwilling to infuse fresh capital and are believed to be keen to exit.
- Dollar Shave Club hit the jackpot when Unilever agreed to buy the online men's razor merchant for $1 billion. Other e-commerce startups such as Birchbox and Stitch Fix can't necessarily expect their own suitor to sweep in with such sweet deals. That's because the key to Dollar Shave Club's appeal is not so much its online prowess but the fact that it built a powerful brand in four years. Dollar Shave Club upended the industry's traditional business model by offering a subscription service that sells blades for as little as $3 a month (including shipping and handling). The day Dollar Shave Club started selling subscriptions in March 2012, the company released a YouTube video starring founder Michael Dubin. He tells viewers the product is f***ing great, "so gentle a toddler could use it." The website crashed, but the blades sold out in six hours. The video has been viewed about 23 million times. The company reached $150 million-plus in sales in 2015, Unilever said in a press release announcing the deal. That despite the fact that the blades lack many of Gillette's high-tech enhancements. Few other e-commerce startups can claim to have built a brand so quickly. Unilever and P&G are masters at traditional marketing, mostly offline, but they struggle with the direct-to-consumer brand-building at which upstarts like Dollar Shave Club excel.
- Intel's slowing data center growth overshadows strong profit: Intel on Wednesday reported slower revenue growth at its data center business, which makes semiconductors used in high-end servers, overshadowing a better-than-expected quarterly profit. Shares of the world's largest chipmaker fell 3 percent in after-hours trading. Hurt by weak demand from enterprises, revenue at the highly-profitable unit rose 5 percent to $4 billion, but lagged the previous quarter's 9 percent increase and remained below Intel's annual target of low double-digit growth.Net revenue rose 2.6 percent to $13.53 billion, narrowly missing the average analyst estimate of $13.54 billion.Intel reported a better-than-expected profit as its cost-cutting begin to pay off. In April it announced plans to slash 12,000 jobs, or 11 percent of its global workforce, of which it said about half was already complete. Intel's forecast for $14.9 billion in current-quarter revenue topped the average analyst expectation of $14.63 billion. Net income fell to $1.33 billion, or 27 cents per share, in the second quarter, from $2.71 billion, or 55 cents per share, a year earlier
- Uber Investors Said to Push for Didi Truce in Costly China Fight: Uber Technologies Inc. investors have a message for management: It’s time to wrap up the costly fight in China. Several institutional investors are pushing the ride-hailing company to ink a partnership agreement with China’s market leader Didi Chuxing, according to people familiar with the matter, stemming the billions of dollars Uber is spending to expand in the region.Uber and Didi are bleeding cash in China as they fight for dominance in the world’s most populous country. Uber has said that it is spending at least $1 billion a year to expand its business in the country. Both are giving out incentives for drivers and free rides to compete for market share.Benchmark’s Bill Gurley -- an Uber investor and board member -- spoke briefly with Didi President Jean Liu at the Code Conference in Rancho Palos Verdes, California, a few months ago, according to a person familiar with the matter. Didi is in the lead on its home turf, with 14 million drivers signed up in 400 Chinese cities. Uber has set a target of operating in 100 cities this year. Uber set up a separate corporate entity to insulate its Chinese business, which has gathered local Chinese investors. Still, the parent company has also invested its own money, keeping the units financially intertwined. Among private technology companies, the rivals are giants. Uber, which was last valued at nearly $68 billion, says it has access to more than $11 billion in cash and equity. Didi, which was last valued at $28 billion, says it has more than $10 billion at its disposal in cash and equity.
- Strong demand from China buoys Qualcomm forecast: Qualcomm Inc forecast current-quarter profit largely above market estimates as it sees strong demand for its mobile chips in China and expects to sign more licensing deals. Shares of the company, which also posted a better-than-expected third-quarter profit, rose about 7 percent in extended trading on Wednesday.The company, whose chips are used in Apple Inc and Samsung Electronics Co Ltd smartphones, is focusing on its flagship mobile processors to regain the market share. Qualcomm expects to launch Snapdragon 821, an advanced and a faster version of Snapdragon 820, which powers Samsung Galaxy S7 and S7 edge smartphones."I think it is pretty straightforward...Samsung is back as their customer and...more people in China are ready to pay to license their technology...so it looks like the company is well positioned for the coming quarters," said Patrick Moorhead, an analyst with Moor Insights & Strategy.Revenue rose to $6.04 billion quarter ended June 26 from $5.83 billion a year earlier. Net Income attributable to Qualcomm rose to $1.44 billion, or 97 cents per share, from $1.18 billion, or 73 cents per share.
- EBay beats revenue estimate, bumps up forecasts: Online retailer eBay Inc reported better-than-expected quarterly revenue and raised its sales forecast for the year as efforts to revamp its online marketplace start to pay off. EBay shares were up 8 percent after the bell on Wednesday after the company's board also authorized an additional $2.5 billion stock buyback program. The company, which spun off PayPal last July, has tackled slowing growth by focusing on small business sellers, while offering a bigger selection of products. Gross merchandise volume, or the total value of all goods sold on its sites, was up 4 percent at $20.9 billion in the second quarter ended June 30, helped by strength in its U.S. business. The number of active buyers rose 4 percent to 164 million. The company's revenue also got a boost from robust sales at Stubhub, which won a 6.5 year revenue-sharing deal to resell tickets for the New York Yankees last month.The company's net income rose to $435 million, or 38 cents per share, in the latest quarter from $83 million, or 7 cents per share, a year earlier. Revenue rose 5.7 percent to $2.23 billion, ahead of analysts' average estimate of $2.17 billion. Up to Wednesday's close, shares of the San Jose, California-based company had fallen 5.6 percent in the past 12 months.
