- One year later, Alphabet is a tale of two Googles: Today marks the one year anniversary of the day Google co-founders Larry Page and Sergey Brin picked a new name and an audacious corporate structure in an attempt to spawn gigantic tech businesses in industries way beyond web search. So far, the year has been great for Google. Unshackled from the unprofitable moonshots, its balance sheet and steady ads business growth has reassured investors. The business soars: Revenues topped 21 percent growth last quarter and operating margins keep getting fatter. More focus: One senior exec at Google recently explained a key change from the Alphabet reorg: Before, meetings cluttered with discussion of extraneous projects — the self-driving cars, medical doodads and internet balloons. Now, Google meetings are spent on Google alone. Porat appeases Wall Street: Not too long ago, investors were making fretful phone calls about Google’s abundant spending. Not anymore. Thank Ruth Porat, the former Morgan Stanley CFO who helped orchestrate the Alphabet reshuffle. “Implementing a competitive culture in what was becoming a behemoth — that’s critical,” said Colin Gillis, an analyst with BGC Partners. “Ruth Porat has been priced into the stock.” About that stock: It has climbed nearly 24 percent since August 10th of last year. It’s been bumpier for “Other Bets,” the hodgepodge, ever-evolving group of companies outside of Google that Page and Brin desperately want to behave like lean, world-changing startups. Losses added: Alphabet poured $859 million into these units last quarter, nearly $300 million more than the same quarter last year. New equity: Employees at the non-Google company may soon have to get used to new stock packages — ones that aren’t tied to that soaring Google.
- China's JD.com revenue meets expectations as slowdown set to continue: JD.com Inc, China's second biggest e-commerce company, reported revenue for the second quarter of 2016 that was within company forecasts, even as the growth rate continued a steady decline that is expected to continue. The company said on Wednesday revenue for the quarter rose 42 percent to 65.2 billion yuan ($9.83 billion), within JD.com's forecast range of 64.2-66.2 billion yuan. But the company is predicting an even sharper decline in growth for the third quarter, compounding concerns that China's e-commerce sector is saturating. JD.com's revenue from Amazon-like online direct sales rose 40 percent in the quarter, versus a 67 percent jump in sales from services and other businesses.JD.com now expects revenues for the third quarter to be 59-61 billion yuan, a rise of 34-38 percent from the same quarter in 2015. Net losses were 132.1 million yuan ($19.92 million), compared to a loss of 510.4 million yuan in the previous year. The total value of merchandise transactions on JD.com's platforms was 108.7 billion yuan in the quarter, up 47 percent excluding online marketplace Paipai.com, which JD.com shut down. JD.com shares were up around 3 percent at $23.10 in pre-market trading in New York, but well below the $29.53 price at the beginning of the year.
- VC Funding Is Drying Up for Media Startups: As venture capitalists exercise more caution and place fewer bets, they’re leaving media startups behind. Venture funding to media-tech companies slid for the third consecutive quarter to $91.7 million, the lowest amount since mid-2013, according to data from industry researcher CB Insights. Investment activity followed a similar trend, declining to the fewest number of deals since the second quarter of 2012. While U.S. venture deals were down overall in the first half of the year, the drop in funding to media companies has outpaced declines in other sectors, said Garrett Black, an analyst at researcher PitchBook. Investors worry the businesses are expensive to run compared with software makers and struggle to keep readers’ attention.The decline in venture funding comes amid a moment of reckoning across the digital media landscape. Web publishers like Mashable Inc. and International Business Times have fired dozens of employees this year. Smaller players are seeking new business models as they struggle to sustain themselves on digital advertising, which is being increasingly dominated by Google and Facebook Inc. Many of them are shifting their business to focus on web video, where advertising rates are higher. Media hasn’t traditionally been the top investment area for VCs, but some big wins drew interest to the sector. AOL spent $315 million to acquire the Huffington Post in 2011, and the publication has become a cornerstone of Verizon Communications Inc.’s media strategy since it bought AOL. German publisher Axel Springer SE took over Business Insider last year in a $343 million deal, a win for backers including Institutional Venture Partners and Amazon.com Inc.’s Jeff Bezos.
- Bill Maris, the CEO and founder of Google Ventures, is leaving: Bill Maris, the founder and chief of Google Ventures (or GV), is leaving the firm and its parent, Alphabet,Recode has learned. His last day, said sources, is Friday. Maris would be the third high-ranking executive to depart from the Alphabet units outside of the main Google search business in recent months, as the tech giant continues to stumble through the transition into its new corporate structure. Sources say Maris is being replaced by David Krane, a managing partner for the venture arm and one of the earliest corporate communications managers at Google.Maris, an early web entrepreneur, founded Google’s venture capital arm in 2009 and quickly built it into a formidable presence in Silicon Valley. In 2015, the firm managed upwards of $2.4 billion in capital. Although GV cut back on investments in Europe and with early stage companies, the firm is still willing to cut checks. For the first six months of this year, it passed Intel Capital as the most active corporate venture arm, according to CB Insights. Under Maris, GV has had some high-profile misses — most notably, the disastrous app Secret. But those were outweighed by early bets in gigantic startups like Uber, Nest, Slack and Jet.com, which just went to Walmart for $3 billion.
- Amazon May Violate India’s New Rules on Foreign E-Commerce: For Amazon, no country is more important to its global growth ambitions than India, the second-most-populous nation in the world behind China, where online shopping is in its infancy and growing explosively. But Amazon’s India plans just ran into a hitch. Late last month, the Indian government issued additional rules governing foreign ownership of e-commerce companies operating in the country. The government added regulations related to pricing and the sourcing of sales on sites that Amazon and several rivals appear to violate. What is more, the new policy was effective immediately, giving Amazon and others no time to comply.India essentially bars companies with substantial foreign ownership from operating retail outlets that sell from their own inventories of goods. Although American multinationals like Amazon, Walmart and Apple have sought to overturn or soften those restrictions, the government has made few changes. To work around the restrictions, Amazon and competitors billed themselves as e-commerce marketplaces, eBay-like websites that matched buyers with independent sellers. Amazon owns no inventory of its own in India, though it handles the warehousing and delivery of goods for many of its independent sellers, a model it also employs in the United States. Last week, Indian regulators confirmed that online marketplaces, which had operated in a gray era, are legal. But they added a rule saying that no single seller can account for more than 25 percent of sales on such an e-commerce marketplace. It also limited the influence that online marketplaces can exert over the prices set by their sellers. The new regulations appear to make Amazon’s dependence on one large seller on its site, Cloudtail, illegal, according to industry officials and analysts. While Amazon says it has more than 80,000 sellers on its India site, Cloudtail is estimated to account for 40 percent to 50 percent of the site’s sales, according to Mr. Meena of Forrester. The parent company of Cloudtail is a partnership between Catamaran Ventures, the investment firm of the Indian business magnate, N.R. Narayana Murthy, and Amazon, which owns 49 percent. India’s leading e-commerce company, Flipkart, also works closely with an affiliated large seller and faces a similar problem.
- US Startup Funding Deals Fall to Lowest Level in Four Years - Different Story in India and China: Venture capitalists made fewer bets in the U.S. last quarter, while putting a larger proportion of their money into the most mature private companies, according to research firm PitchBook Data. The findings show that venture investors are trying to play it safe by backing proven businesses, making it more difficult for newer startups to find capital. Last quarter had the fewest number of venture deals in four years. Funding rounds dropped 12 percent compared with the fourth quarter of 2015, when startup funding began to slow. Investments totaled $17.7 billion in the first quarter of 2016, about flat with the prior period. More than half of that went to late-stage companies. Private investors are expressing skepticism as startup valuations have skyrocketed. Mutual fund companies have written down the value of their stakes in numerous technology companies since last year. Startups are staying private longer, leaving fewer options for shareholders to cash out. No tech company went public last quarter, and many of those that did in 2015 have gotten off to a rocky start. In other countries, there's plenty of money to go around. Venture capital investments in China and India surged in the first quarter, jumping about 50 percent.
- Alibaba Gives Shelter in Debt Storm as China Internet Bonds Gain: China’s Internet giants are providing a haven for bond investors fleeing mounting default risks among the nation’s state-owned enterprises. Investors are snapping up bonds from Alibaba Group Holding Ltd., Baidu Inc. and Tencent Holdings Ltd., a bright spot in an economy growing at the slowest pace in a quarter-century. The rising demand also reflects a broader shift in China’s economy away from smokestack industries toward private-sector services such as e-commerce, online finance and entertainment. Creditors have grown wary of state-backed firms after Moody’s Investors Service cut its outlook on 38 of them along with the government in March. Dollar bonds from Internet firms have returned 4.2 percent this year, the nation’s best-performing sector, according to Bank of America Merrill Lynch indexes. Alibaba’s securities due 2034 have gained 9 percent since Dec. 31, while 2025 notes of Baidu and Tencent both returned more than 6 percent. Alibaba, China’s biggest e-commerce company, has cashed in by raising $4 billion from loan bankers and Tencent, operator of China’s most popular messaging services, borrowed $2.45 billion in December.
- Morgan Stanley Paints Bleak Outlook for Twitter on Few New Users: Morgan Stanley analysts came down hard on Twitter Inc., lowering their forecasts for the social media company’s stock price, on projected slower growth in new users, revenue and earnings. “Engagement and new user trends remain troubling,” the analysts, led by Brian Nowak, said in a note to clients Thursday. Morgan Stanley cut its price target on Twitter to $16 from $18 and reduced its projection for 2017 earnings before interest, tax, depreciation and amortization by 13 percent to $769 million. The firm reduced its 2017 revenue forecast by 6 percent to to $3.23 billion.
- Mashable Fires News Staff, Replaces Executives as Part of Pivot to Video Infotainment: Last week, the digital publication Mashable said that it had raised $15 million in a funding round led by Turner and that it would be using the money to “co-develop” content for TBS and TNT. Today, the other shoe dropped. The company announced that it is replacing its chief content and revenue officers — Jim Roberts and Seth Rogin — and firing a large portion of its editorial staff. Additionally, Mashable is pivoting from hard news coverage; it will focus on producing lots more video about “digital culture.” According to Politico and a Mashable editor, 30 people were laid off.
