- Ahead of Earnings, Alibaba's Shares are at Post-IPO Low, Even as Rivals JD, Tencent have Surged: After Alibaba Group Holding Ltd. raised a record $25 billion last year, founder Jack Ma said the Chinese e-commerce company faced the danger of high expectations. He might be right. About $70 billion of market value has evaporated since Ma made that statement in November as investors worry about slowing growth. Alibaba’s dominance at home as a marketplace for buyers and sellers of goods is being undermined by a Chinese economy projected to grow at the slowest pace since 1990 and a consumer shift to mobile shopping that crimps advertising revenue. While investors have punished Alibaba, an index of U.S.- traded Chinese companies has jumped by 17 percent this year. Rival e-commerce operators have also surged with JD.com Inc. rising 46 percent in New York and Tencent Holdings Ltd. gaining 40 percent in Hong Kong through Tuesday. The two companies have joined forces to compete against Alibaba. Tencent is trying to drive the 1 billion users of its WeChat and QQ chat apps to JD.com, which recently started a service to speed imports to Chinese buyers. As JD.com, China’s second-biggest e-commerce company, “ups its game,” said Mark Tanner, founder of China Skinny, a Shanghai-based research and marketing agency, Alibaba’s previous growth “seems unsustainable in the medium term.” Ma’s push outside China also has yet to gain traction -- its presence in the U.S. and much of Europe remains negligible. Results due Thursday are expected to show that the pace of Alibaba’s revenue expansion fell below the average of the previous seven quarters. Shares of Alibaba closed Tuesday at $79.54 in New York, 33 percent below their November peak and the lowest since the Hangzhou-based company sold stock at $68 apiece in its initial public offering in September. Alibaba currently gets less than 5 percent of its revenue from outside China, Ma said in March on a company Twitter account. Alibaba’s sales probably rose 41 percent in the fourth quarter to 16.9 billion yuan ($2.7 billion), according to the average of 23 estimates compiled by Bloomberg. That compares with an average of about 50 percent during the past seven quarters. The company’s strategy of expanding in under-served regions of China and overseas is driving up marketing costs as more consumers shop on mobile devices, where ads typically generate less revenue than those on desktop computers. Operating income will probably shrink 18 percent to 4.5 billion yuan, according to the estimates.
- Brand Safety and Twitter's Porn Problem: Twitter Scrambles for an Ad Fix as Nielsen's Promoted Tweets Show Up in Porn Feeds TV company pulled its campaign today. Twitter has a porn problem, and it caused one brand to temporarily halt a campaign today. Nielsen, the television and digital data company, pulled the plug on its Promoted Tweets after they appeared near adult content on the site. Nielsen's promos showed up on Twitter profile pages called "Daily Dick Pictures" and "Homemade Porn." Ads are not supposed to appear on a profile page if X-rated content is posted there, and a bug was to blame, a source familiar with Twitter's technology said. "As Twitter works to resolve this issue, we have temporarily suspended our campaign," a Nielsen spokesman told Adweek. Nielsen was not alone, either. Marketers' promos from Duane Reade, NBCUniversal and Gatorade also showed up in feeds of pornographic photos and videos. Brand safety is an issue across the digital advertising ecosystem, where it is difficult to police every website and social media post. Twitter rivals like YouTube and Facebook also have dealt with racy or offensive content that concerned advertisers. Twitter is in a particularly tough position—it has to monitor 300 million active accounts filled with user-generated content—and its troubles with not-safe-for-work material have been raised before. The San Francisco tech company has been trying to clean up its site—not just accounts that share NSFW pictures, but also those that support terrorism or harass other users. It recently introduced a quality filter that removes abusive or offensive tweets from a user's timeline. But just last week, Robert Peck, a SunTrust Robinson Humphrey analyst, wrote a report warning that Twitter ads were appearing near pornography and that brands would pull back on spending if the problem became more widely known. Peck estimated there could be as many as 10 million Twitter accounts dedicated to sharing pornography and that Twitter needs to do a better job of blocking them.
- Aftermath of Secret's Shutdown: Google Ventures Managing Partner Criticizes Founders for 'Taking Money Off the Table': For many in Silicon Valley, the rapid rise and precipitous fall of Secret, the prominent start-up that recently closed its doors, will most likely serve as a cautionary tale of how not to run a company. For Google Ventures, one of Secret’s earliest backers, it will also be a reminder of the type of company not to invest in. The product of two former Google employees, David Byttow and Chrys Bader, Secret attracted intense media interest early in its life. The app let users anonymously share “secrets” to their network of close friends and friends of friends, an activity that quickly caught on among founders, investors and the media of Silicon Valley. It also helped that Secret took some early rounds of funding from Google Ventures and Kleiner Perkins Caufield & Byers, two big venture capital firms. After the flurry of attention and just a few months later, Secret opted to raise another round of financing, this time seeking $25 million. Bill Maris, managing partner of Google Ventures, did not think it was a good idea and the company did not participate. “We advised them against it,” Mr. Maris said in an interview, referring to Secret’s leaders. “We told them they didn’t need the money. And raising that much money that soon, it was going to be impossible to meet the expectations in the future.” The discussion could be considered a case of life imitating art, or perhaps vice versa: In a recent episode of Silicon Valley, the satirical HBO series, a young start-up founder is offered millions of dollars from multiple venture capital firms at high valuations. Ultimately, the founder is advised to instead accept a lower offer, in order to make future funding rounds more achievable and growth targets reasonable. That is not what the founders of Secret chose to do. The company completed its $25 million financing led by Index Ventures and Redpoint Ventures, along with a variety of individual angel investors. In that round, the two founders each wanted to take $3 million off the table for themselves, a practice that is commonplace for more mature companies, but less so for very young start-ups. Not joining the $25 million round proved to be a wise choice for Google Ventures. Downloads of Secret declined over 2014, according to App Annie, an app analytics service. Secret redesigned its entire app to look like a near-perfect clone of Yik Yak, a competing service, but traffic did not improve. Many employees, including Mr. Bader, left the company. Last week, Mr. Byttow said he was shutting down his company, and would return the remainder of the money to the venture capital firms. Neither Mr. Byttow nor Mr. Bader have said if that includes the $6 million the two of them took off the table and deposited into their bank accounts.
- In 2014 Jabong’s GMV grew 2.5x to Rs1320Cr; Ended Year with INR 289 Crore Cash; Lost INR 454 Crore on EBITDA Basis: Rocket Internet-incubated lifestyle e-tailer Jabong.com more than doubled its gross merchandise value (GMV) to Rs 1,320.6 crore during the calender year ended December 31, 2014. The firm’s GMV captures value of total transactions, excluding taxes and shipping costs but including value of paid vouchers and coupons. The firm had ended 2013 with GMV of Rs 511.4 crore, data pulled from its latest annual statistics show. The data is net of returns and cancellations. Jabong shipped 8.7 million orders last year of which 5.9 million transactions represented products sold by Jabong while another 2.8 million orders or close to one in three orders were through its marketplace. This means the firm handled on an average 23,835 orders a day last year as compared to 16,164 in 2013. The company’s net revenues (which captures the sales by the firm as against GMV which includes sales by third party vendors too, for which the company just gets a listing fee) grew 2.3x to Rs 811.4 crore last year. Meanwhile, its loss at an operating level as captured by EBITDA (adjusted for share based compensation) rose to Rs 454 crore as against Rs 236 crore in 2013. This means, for every Re 1 worth of sales it books directly (not covering third party vendors), it is losing around 56 paisa. This is still an improvement over the previous year when it was booking operating loss of over two thirds (68.5 per cent) of whatever it sold. The firm did see its cash position dwindle as a result ending 2014 with Rs 289.4 crore as against Rs 853.2 crore the previous year.
- Home Depot Aiming to Put Apple Pay in Its 2,000 Stores: Home Depot Inc. has the goal of offering Apple Inc.’s mobile-payment platform at its more than 2,000 stores, which would make it the largest retailer yet to accept Apple Pay. Customers already were able to use Apple Pay at some of Home Depot’s stores despite there not being an agreement. The world’s largest home-improvement retailer could accept mobile payments at those locations because its checkout terminals have near-field communication readers. Those devices have now been turned off for the past few weeks during an upgrade of its point-of-sale system, Holmes said. That led to some inaccurate reports that Home Depot had dropped Apple Pay. If it pushes ahead with the plan, Home Depot would join chains like Macy’s Inc. and Whole Foods Market Inc. in embracing Apple Pay at stores. Many other retailers are betting on a mobile-payment option from the Merchant Customer Exchange, which was founded in 2012 by companies such as Wal-Mart Stores Inc. and Target Corp. That offering, CurrentC, is still being developed.
- 3-D Printing Is Saving the Italian Artisan: Italy’s craftsmen turn to a new tool in their competition with cheap products from China. Northeast Italy’s industrial heartland stretches roughly from Milan to Venice, along the floodplains of the Po River all the way to the Adriatic. Like much of the rest of the country, however, the region has fallen on hard times. Italy’s craftsmen have been undermined by competition from China and other parts of Asia. Since the beginning of the global economic crisis, the northeast’s industrial sector has shed about 135,000 jobs—some 17 percent of its total workforce. Techniques such as the 3D printing used by Pomini and Armani have helped turn northeastern Italy into an unlikely hothouse of innovation. Last year growth in the region was positive for the first time since 2007, at 0.5 percent. Exports rose by 3.5 percent in 2014 and are expected to keep climbing. In the province of Trento, for instance, the public and private sectors together invest some 2 percent of gross domestic product in research and development. At the Centro Moda Canossa—a trade school in Trento for children age 14 to 18 specializing in fashion design and tailoring—the faculty recently added a class in which students incorporate 3D printing, laser cutting, and microcontroller chips into their designs. “You can’t offer a job from the past. Nobody will come,” says Michele Bommassar, 36, the school’s vice director. “You have to offer the jobs of the future.” He points to a student project, a purse with a laser-cut pattern on its flap and an interior that lights up when it’s opened: “It’s beautiful, but we believe it is also necessary. The alternative is to be eaten by others.” At their best, these technologies inject elements of the digital economy into the physical world, allowing a galaxy of small companies to compete with multinationals, in much the same way homemade YouTube videos hold their own against traditional video production. The advent of rapid prototyping and other innovations means “you can compensate for your disadvantages with variety, customization, and a rapid response to what the market is demanding,” says Paolo Collini, a business professor and the dean of the University of Trento. Or, as Armani puts it: “If something doesn’t work, you simply stop producing. You haven’t filled a warehouse. For a designer, it’s a dream. You can take more risks.”
- Salesforce shares spike on report of Microsoft evaluating bid: Shares of Salesforce.com Inc (CRM.N) jumped as much as 6.4 percent on Tuesday after a Bloomberg report that Microsoft Corp (MSFT.O) was evaluating a bid for the cloud software provider. Salesforce shares rose from $71.4 to $75.82 in about a minute late Tuesday afternoon, after which trading was temporarily halted. The stock closed 1.6 percent higher at $72.75. Microsoft shares closed down 1.3 percent at $47.60. Microsoft is evaluating a bid after Salesforce was approached by another potential buyer, Bloomberg reported, citing people with knowledge of the matter. Microsoft is not in talks with Salesforce, and no deal is imminent, the report said. Bloomberg had reported last week that Salesforce was working with financial advisers to help it field takeover offers after being approached by a potential buyer. The news sent the company's shares up as much as 17.3 percent to an all-time high of $78.46 last Wednesday.
- Paytm’s big day: IRCTC adds Paytm wallet as a payment option: Government-owned railway ticketing platform IRCTC, which is the one of the most used internet commerce site in the country clocking on an average over half a million tickets a day, has added Paytm’s wallet as an online payment option. IRCTC, the primary seller of railway tickets online (others OTAs act as secondary link) in the country, has been offering various online payments options besides the conventional credit/debit cards and net banking. It allows payments through cash cards, its own co-branded pre-paid Rupay card with Union Bank and with Paytm wallet it adds another payment option. Last we checked the Paytm payment option was integrated on IRCTC’s web portal but was not yet available on its mobile app on Android. The development means a big move for Paytm as it is already available as an alternate payment option in several key internet ventures such as the country’s top online food ordering venture Foodpanda, cab hailing app Uber (in India), eBay and Jabong. Although IRCTC has come a long way in terms of streamlining online payment process on its site, given the huge load on its servers it is not uncommon to see payment failures in a multi-authentication process which comes with a credit and debit cards. Paytm wallet would look to capitalise in partly solving this pain point for users and hopes to also expand its reach in tier-II and tier-III markets, where trains are a primary mode of long distance travel and IRCTC by default is the booking platform.
- This too shall pass: Secret Shuts Down: Anonymous sharing app Secret will shut down soon, according to sources close to the company. The announcement could be made as soon as today or tomorrow, and there’s some talk of current employees receiving modest severance packages. Having raised $35 million, it’s unlikely that the company is out of money. But after a major redesign sterilized the app’s identity and made it look just like its much more popular competitor Yik Yak, and its co-founder Chrys Bader-Wechseler left, Secret may see shutting down as the best outcome. Many employees, including top talent like Sarah Haider, Safeer Jiwan, and Amol Jain have left the company over the past month or so. One source says the company has been whittled down to under 10 employees from over 20 several months ago and has been in “maintenance mode.” More here: Secret’s trajectory illustrates the flash-in-the-pan nature of Silicon Valley’s current technology boom. Even as a handful of start-ups rise to stratospheric valuations and take in billions of dollars in financing, other privately held companies cannot sustain their following. Fab.com, a onetime e-commerce darling, was once valued at more than $1 billion and had raised more than $150 million before ending up in a fire sale this year, when it was bought for about $15 million. Other start-ups are dealing with a cooling-off process as big companies muscle in on their turf. Meerkat, a live-streaming video app that gained great traction early this year, is now grappling with the entrance of Twitter and its Periscope live-video app, for example.
- Cloud CRM major Salesforce is exploring a sale - shares up 17%; seen as pricey but valuable target: Cloud software company Salesforce.com Inc is working with financial advisers to help it field takeover offers after being approached by a potential acquirer, Bloomberg said, citing people with knowledge of the matter. The company's shares rose as much as 17.3 percent to touch an all-time high of $78.46 on Wednesday. They closed up 11.6 percent at $74.65, valuing the company at about $49 billion. Salesforce Seen as Attractive, If Pricey, Target for Cloud Push: Salesforce.com, the software provider that has hired bankers to field takeover offers, would make sense as a partner for a buyer willing to spend a lot to become the leader in cloud computing. Salesforce jumped 12 percent to close at $74.65 in New York on Wednesday, giving the company a market value of about $49 billion. Salesforce’s business is entirely cloud-based. That means that as the company adds clients, it can lower costs-per-customer through economies of scale and by improving operations in its software and data centers. It also can update products and roll out new business lines quickly via the Internet. Also, customers are flocking to software and service contracts that tend to be simpler for cloud computing than for traditional software. Cloud clients also can avoid the sunk costs of buying hardware. “Specific to the cloud, the shift is accelerating and it’s happened more quickly than the big guys were hoping,” Steven R. Koenig, an analyst at Wedbush Securities Inc., said in an interview. The San Francisco-based company would give an acquirer “a lot of critical mass in the cloud.” Salesforce had 16 percent of the customer-relationship management market in 2013, compared with 13 percent for SAP SE, 10 percent for Oracle Corp. and 7 percent for Microsoft Corp., according to Gartner Inc. Salesforce will have more than 15 million end users in 2018, up from around 6 million last year, Gartner wrote in a November report. The CRM market has “gone to Salesforce, and no one is going to catch up,” Koenig said. Around 40 percent of organizations with greater than a billion dollars in annual revenue ran all their CRM applications within their own data centers last year, according to Gartner. That will shrink to 25 percent by 2020 as companies move to the cloud, Gartner said. As customers start to move into cloud CRM systems offered by Salesforce, Microsoft, Oracle and SAP, they also to tend to buy related products, such as analytics or marketing services, from the same company. That stitches clients tightly to their provider, making it less likely for them to move away. “There is still room for Salesforce.com and competitors to grow rapidly in CRM without reaching capacity for at least the next five years,” Gartner wrote. Salesforce has begun investing in data centers around the world. Chief Executive Officer Marc Benioff has said the company would open “multiple” data centers in Germany, along with ones in France and Canada. Local facilities help the company serve customers with stringent data regulations, without having to give up the economies of scale and operational expertize gained by being a cloud company. Salesforce also has expanded into data analytics through investments and product development. Lashing these various products together with its Salesforce1 program has allowed the company to pursue larger contracts with bigger firms. Salesforce closed 550 deals valued more than a million dollars each in its most recent fiscal year, up around 100 from the prior year, the company said in February.
- Yelp Shares Tumble on as First-Quarter Earnings, Outlook Disappoint: Yelp Inc., an operator of user-review websites, declined as much as 17 percent in extended trading after its profit and sales forecast missed analysts’ estimates. The San Francisco-based company reported a first-quarter loss of $1.28 million, or 2 cents a share, from $2.64 million, or 4 cents, a year earlier. Analysts’ estimated a profit of 1 cent. Revenue was $118.5 million, the company said Wednesday in a statement, trailing estimates of $119.8, according to data compiled by Bloomberg. Yelp forecast second-quarter sales of $131 million to $134 million, falling short of analysts’ average estimate of $137.4 million. “There’s not a lot of forgiveness for technology companies right now,” said Blake Harper, an analyst at Wunderlich Securities Inc.. “They are valued pretty well and there’s an expectation that they’ll perform well.” Yelp operates websites that let users search local businesses for free and read reviews about them. The company charges for advertising on those sites. It had 142 million unique monthly visitors in the period, an increase of 7.6 percent from a year earlier. Yelp’s local advertising revenue dropped as a result of a sales-force restructuring implemented in the first quarter, Harper said. Shares of Yelp dropped to a low of $42.68 in extended trading after closing at $51.28. The company competes with Angie’s List Inc. as well as new features offered by companies including Amazon.com Inc.
- Baidu Sees Revenue Growth And Profit Slump In Q1 2015: China's dominant Internet search engine Baidu Inc on Thursday posted its slowest revenue growth rate in almost seven years in the first quarter of 2015, as customers spent less money on its core online marketing business. The company's bid to create new avenues of income from mobile in China, the world's biggest smartphone market, also took their toll. Baidu's profit margins sank to their lowest in a decade, or 19 percent, as promotional costs for new businesses and research and development expenses skyrocketed. The search company's bid to promote new mobile-centric businesses like food delivery to compete with Tencent and Alibaba saw selling, general and administrative expenses rocket 47.2 percent to $477 million from a year ago. Revenues of 12.73 billion yuan ($2.05 billion) came in below forecasts of 12.9 billion yuan, according to a Thomson Reuters SmartEstimate poll of 16 analysts. Coupled with a 3.4 percent decline in net profit from the previous year, this prompted shares to slide 2.6 percent in trading after market close in New York. Baidu said it expected second-quarter revenue to be between 16.37 billion yuan and 16.75 billion yuan. A hiring spree for research and development also pushed the department's expenses up 79.1 percent to $368.8 million. Baidu's net income, its lowest in two years, was 2.4 billion yuan for the first three months of 2015. Profit margins of 19 percent were the lowest in almost a decade.
- Flipkart acquires Delhi-based analytics and visual A/B testing platform Appiterate: India’s largest e-commerce platform Flipkart has acquired Delhi- and San Francisco-based DSYN Technologies Pvt Ltd, which provides a native mobile analytics and A/B testing platform for app developers and enterprises under the brand name Appiterate. The terms of the transaction were not disclosed. The acquisition is in line with Flipkart’s ‘mobile first’ focus, the firm said on Wednesday. Post the acquisition, Appiterate’s mobile marketing automation platform will be integrated with Flipkart’s mobile app which will help the e-commerce firm in targeting users based on their activity on the app and website. Appiterate is a WYSIWYG (what you see is what you get) A/B testing platform for native mobile apps. It allows app publishers to A/B test and iteratively optimise the designs (UX) and functionality of their mobile apps to improve in-app purchases, user engagement and conversion metrics. It also allows app publishers to run tests based on user segments and see real-time conversion metrics. The company says it has been delivering more than 100 million personalised notifications each month through its platform for leading e-commerce companies. Last year, it raised Rs 3 crore in seed funding from SAIF Partners, with participation from a group of individuals, including Greg Badros, former VP (product & engineering) at Facebook and Prashant Malik, former tech lead at Facebook and co-creator of Apache Cassandra.
- Twitter Troubles Lie in Marketers’ Reluctance to Buy New Kind of Ad: As a company, Twitter is an adolescent — gangly, starry-eyed, growing like a weed and unpredictable. No wonder advertisers and investors are having trouble figuring it out. The social networking company shocked Wall Street on Tuesday by reporting slower-than-expected growth in advertising sales, which account for nearly all of its revenue. Shares of Twitter, which fell 18 percent on Tuesday after the first-quarter results were disclosed, dropped an additional 9 percent on Wednesday. Although revenue rose a brisk 74 percent in the quarter compared with the same quarter a year ago, it was less growth than in Twitter’s five previous quarters and well below the high bar that the company had set. Twitter attributed the disappointment to advertisers’ reluctance to spend heavily on ads that prompt the viewer to take an action, like download a smartphone app or apply for a credit card. This type of ad, known as direct response, is a newer area for Twitter, which originally focused on general brand image ads. Marketers say they are indeed more cautious about Twitter’s direct-response ads because the microblogging service has not yet shown that it can target or track those ads with the level of precision that advertisers want. Compared with mature rivals like Google and Facebook, Twitter doesn’t know as much about its users, and it is more difficult to measure results. Facebook has so much data on its users, “you could actually target a premium credit card to a businessman you know is traveling all the time,” said Bryan Wiener, chairman of 360i, a digital marketing agency that works with brands like Capital One, NBCUniversal, Spotify, Oreo and Oscar Mayer. “That’s the kind of information that’s missing from Twitter,” he said. “There’s not this rich history of your holistic life.” As a result, he said, many brands are unwilling to commit big money to Twitter ad campaigns. Mr. Freeman said that, in general, Twitter is best for building brand awareness and recall. Its weakness is the ability to measure direct-response effectiveness. “A lot of times, brands don’t really know what to do with it,” he said. “And that was Twitter’s fault because I don’t think they had a very clear direction.”
