Daily Tech Snippet: Wednesday January 28

• Apple Earnings: revenue $74.6B +30% Y/Y, profit $18B: Apple Just Had The Most Profitable Quarter Of Any Company Ever: Apple quarterly results smashed Wall Street expectations with record sales of big-screen iPhones in the holiday shopping season and a 70 percent rise in China sales, powering the company to the largest profit in corporate history. The company sold 74.5 million iPhones in its fiscal first quarter ended Dec. 27, while many analysts had expected fewer than 70 million. Revenue rose to $74.6 billion from $57.6 billion a year earlier. Profit of $18 billion was the biggest ever reported by a public company, worldwide, according to S&P analyst Howard Silverblatt. Apple's cash pile is now $178 billion, enough to buy IBM (IBM.N) or the equivalent to $556 for every American. Apple's cash pile is now $178 billion, enough to buy IBM (IBM.N) or the equivalent to $556 for every American. Shares rose about 5 percent to $114.90 in after-hours trade.

• Apple Pay is “doing exceptionally well,” Steve Weinstein, an analyst at ITG Investment Research Inc., said in an interview before the earnings. “Once somebody uses it, it becomes a little over 5 percent of transactions that they were doing. It’s a lot. It’s really surprising, because you can’t even use Apple Pay in that many locations.” Twenty percent to 30 percent of people who buy the new iPhones activate Apple Pay, Weinstein said. A smaller percentage uses the service regularly. “It seems that Apple Pay was a motivating factor for people buying the iPhone,” Nick Holland, an analyst at financial-services consultant Javelin Strategy & Research, said in an interview. A “double-digit” percentage of about 2,000 consumers Javelin surveyed last year after the service debuted said Apple Pay was part of the reason for their decision to buy a new Apple device.

• Apple is now the No. 1 smartphone maker in CHina: Apple is famous for setting trends. In China, though, Apple has found success by following one. For years, Apple rivals like Samsung offered large-screen smartphones. Although the bigger phones sold well in China, Apple held off on releasing a similar model, and the country remained a weak spot. But Apple introduced its own versions last September, and now the sales spigot is wide open. The company on Tuesday reported $16.1 billion in revenue from “greater China” — which includes mainland China, Hong Kong and Taiwan — in its first fiscal quarter, up 70 percent from the same period a year ago. Canalys, a research firm, estimates that Apple is now the No. 1 smartphone maker in China. The success in China helped push Apple to a blockbuster first quarter, increasing overall profit to $18 billion and revenue to $74.6 billion. In the same quarter a year ago, the company had profit of $13.1 billion and revenue of $57.6 billion. 

• Apple is increasingly reliant on the iPhone however, as Macs and iPads become less important: Overall sales of iPhones shattered analysts’ predictions. Apple said it sold 74.5 million iPhones in the quarter, as many as 12 million more than expected. The company’s overall revenue, almost $75 billion, easily beat analysts’ average estimates of $67.7 billion, according to a poll by Thomson Reuters. The company’s shares, which have gained more than 50 percent in the last year, rose more than 5 percent in after-hours trading. Strong sales of Macs also contributed to the company’s growth. The company said it sold 5.5 million of the computers in the quarter, up from 4.8 million in the same quarter of last year. But iPad sales continued to shrink. The company sold 21.4 million iPads in the quarter, down 18 percent from 26 million in the quarter a year ago. Increasingly, though, the company’s fortunes rely on the iPhone. Sales of iPhones accounted for 69 percent of the company’s revenue in the quarter, up from 56 percent in the same quarter a year ago. “A bet on Apple is increasingly a bet on the iPhone,” said Toni Sacconaghi, a financial analyst for Sanford C. Bernstein & Company. “The good news is, iPhones are great. The bad news is, right now that’s driving over 100 percent of the revenue growth of the company.”

• Apple is getting consumers to pay more for phones even as industry trends move in the other direction: Apple's sales figures are all the more impressive because they come at a time when the worldwide market for expensive smartphones is dropping. According to research from the Consumer Electronics Association, the average selling price of a smartphone has fallen from $440 to an expected $275 in just five years. The full price of the cheapest iPhone is $649. In fact, the average price of an iPhone actually went up, thanks to the popularity of the iPhone 6 Plus, which starts at $749. That's right; Apple's actually getting us to pay more for our phones. (Of course, most are purchased at subsidized prices through wireless carriers).

• Yahoo reports weak earnings (revenue $1.18B, -1.8% Y/Y), but tax-efficient spin-off of Alibaba stake sends shares up 7% despite weakness in the rump of Yahoo: Marissa Mayer, chief executive of Yahoo, said on Tuesday that the Internet company would spin off its 15.4 percent stake in Alibaba, China’s leading e-commerce company, into a separate company. The decision, which Wall Street has been waiting for since Ms. Mayer joined the company in 2012, cheered shareholders because they will directly reap all the remaining profit from Yahoo’s prescient investment, which cost almost nothing a decade ago but is now worth about $39.5 billion. In the process, Yahoo will avoid any taxes on the transaction but will be stripped of its single most valuable asset. The Alibaba stake alone now makes up nearly 85 percent of Yahoo’s market value. Ms. Mayer delivered a report card on her turnaround plan on Tuesday, noting that overall revenue and profit fell in the fourth quarter. But the company’s mobile businesses, as well as other newer initiatives, like so-called native ads, showed rapid growth. Still, the immediate reaction to the Alibaba announcement was positive, with investors driving Yahoo’s stock up about 7 percent in after-hours trading after disclosure of the plan. Yahoo reported revenue of $1.25 billion and adjusted profit of 30 cents a share in the quarter, slightly exceeding Wall Street’s expectations. Analysts had on average expected the company to report revenue of $1.18 billion and adjusted earnings of 29 cents a share, according to data collected by S&P Capital IQ. The company’s net income was $166 million, or 17 cents a share, in the fourth quarter, compared with $348 million, or 33 cents a share, in the same quarter a year ago. Yahoo sold a hefty chunk of its stake in Alibaba in September when the Chinese company sold shares in an initial public offering. Yahoo had a $10.3 billion gain from the sale, but nearly 40 percent of that was eaten up by taxes. Yahoo executives promised shareholders that they would find a way to dispose of the rest of the Alibaba stake in a way that incurred a much lower tax bill. Their solution — a spinoff of the Alibaba stake and a Yahoo operating business — avoids $16 billion in corporate taxes that Yahoo would have owed if it had simply sold the stake, executives said. Investors will receive shares in the spun-off company in proportion to their stakes in Yahoo, and will pay taxes on their capital gains when they sell those shares. But the plan will not give Yahoo a new pile of cash with which it could make big acquisitions. The spinoff is expected to be completed in the fourth quarter.

• Remarketing goes offline with beacon technology: By now you've probably heard of "beacons," and how they allow advertisers to send targeted messages and offers to shoppers' smartphones as soon as they enter a physical store. Today a deal has been struck which is about to make beacons a whole lot more interesting - and useful - for advertisers for when the shopper steps out of that store. Norway-based startup media platform and ad server Unacast and California-based Total Communicator Solutions (a company that specializes in location-based marketing and claims to have more beacon installations than any other company. It counts P&G among its clients.) have today announced a global partnership to launch what they claim is an industry first: The ability for brands to "re-target" online and mobile ads to shoppers based on the actual items they have been looking at in-store. Here's how it will work: A shopper with a retailer's app installed on their phone and Bluetooth turned on walks into a shoe store. If they've opted in for beacon messages, they're greeted with a personalized message on their phone's display. They walk over to the men's shoe department and are then served with a new message about the new line of designer brogues that have just arrived in-store. And here's the new bit: A day, a week, or a month later when that same customer goes online to have a look at a YouTube video. They are served a pre-roll video ad for that very same brand of brogues they were looking at in-store. They check the headlines on a newspaper website: Again, the very same shoes he was looking at appear in an ad, which says they're available to buy now. That's huge. Until now, the utility of beacons has been limited to allowing retailers and brands to communicate with shoppers whilst they are in the store. Now beacons are acting as the data collector to inform post-shopping ad campaigns. Unacast is looking to sign up more beacon companies (known as proximity solution providers/PSPs) to create a global network to anonymously group and standardize beacon data to allow advertisers and retailers to retarget consumers online, based on their offline interactions.

• Twitter adds video, group messaging features: Twitter on Tuesday introduced a feature that lets you record up to 30 seconds of video to share on its micro-blogging site. You can shoot, edit and share video from within the app. The feature complements Twitter's Vine video app, which lets users make looping six-second clips to share. The social network also announced that users will be able to send direct messages to more than one person at a time, making it more useful for setting up dinner plans or group movie dates without letting the whole world know about it. The features are rolling out to all users over the next few weeks, the company said in an official blog post. Both moves better position Twitter to take on the growing number of messaging apps that let users communicate privately -- one of the most popular app categories on the market right now. They also follow a number of product improvements in recent months that are aimed at attracting an audience beyond the super-plugged-in, constantly updating crowd that it has right now. For example, last week the company introduced a "while you were away" digest-like feature that offers summaries of messages users may have missed while not logged on to Twitter. The practical features are being called the brainchildren of Twitter's new product manager, Kevin Weil, who was appointed in October with the mandate to give Twitter a wider appeal in the face of new social competitors such as WhatsApp and Snapchat.

• Facebook and Instagram were inaccessible for about an hour Tuesday, but cause was an internal malfunction rather than a cyberattack. Facebook users began reporting problems in gaining access to the social media site on Tuesday morning, Hong Kong time. On Twitter, users posted images of an error message from Facebook that read: ‘‘Sorry, something went wrong. We’re working on it and we’ll get it fixed as soon as we can.’’ Both Facebook’s mobile application and its website were inaccessible. Facebook owns Instagram. ‘‘Earlier this evening many people had trouble accessing Facebook and Instagram,’’ Facebook said from its California headquarters. ‘‘This was not the result of a third party attack but instead occurred after we introduced a change that affected our configuration systems. We moved quickly to fix the problem, and both services are back to 100 percent for everyone.’’