Daily Tech Snippet: Tuesday February 3

• Amazon's strong Q4 profits (and slowing revenue) were both driven by a surge in marketplace: "Q4 2014 was whene Amazon flexed its marketplace muscles: After analyzing all the data, this quarter was a real stand out for the Amazon third-party marketplace. In fact, Amazon has started to open the kimono a bit on how much they reveal about the 3P business (particularly FBA) and it was all very strong in Q4. In fact, I’d go so far as to say the marketplace simultaneously drove the improved margin picture at Amazon and the revenue decline (will describe that in a future post). Acceleration – As mentioned above, the 3PM really accelerated to levels we haven’t seen in a long, long time. 33% y/y growth in a 15% e-commerce backdrop is quite impressive. 3P unit share – Another stand out metric from Q4 was Amazon announced that 43% of paid units came from third party sellers. Paid item growth -Paid item growth came in at 20%, flat with Q3. Media share – Media hit a low-water mark of 24% with EGM at a high-water mark of 70% (the missing 6% is other -ads and AWS). Geographical mix - Amazon’s revenues were 64% North American and 36% rest of world (Amazon’s largest regions outside the US are Germany, Japan and UK). See below for the details on geo mix. Active users – If there was a blemish on Q4, it was units/user and active users. Active users grew only 16% y/y to 270 (a slow-down from Q3’s 16% growth rate). Units per user – One interesting metric is the units/user – this metric shows us buyer frequency. In other words, are buyers increasingly active or decreasing activity. Of course, increasing is good and programs like Prime, and recommendations and upsells are working. Units per user was up .6% which is a bit of a slowdown."

• Even-steven: Apple will spend $2B on a data center in Arizona, even as AT&T sells data center assets worth $2B: On Monday, Arizona announced that Apple would invest $2 billion in the creation of a data center at a facility in Mesa after its original plans to produce sapphire, a material tougher than glass, there were abandoned. Apple had contracted GT Advanced Technologies, a sapphire producer, to make sapphire screens for iPhones, among other things. But to Apple’s surprise, GTAT declared bankruptcy last October after failing to meet some of Apple’s demands. As a result, Apple released it latest iPhones without sapphire. While Apple may have abandoned sapphire production at the Arizona facility, the company has not given up on the facility itself, which measures 1.3 million square feet. Apple on Monday said that the multibillion-dollar investment in the data center was one of its most significant investments ever, creating 600 engineering and construction jobs. The center will be partly used as a central command center for monitoring Apple’s other data centers around the world, the company said. AT&T Inc is selling some data centers worth about $2 billion as it continues its streak of asset sales, people familiar with the matter said on Monday. AT&T, the No. 2 U.S wireless provider, has been exploring options to pay down its debt and raise funds for investments in recent months. The company declined to comment. The three sources requested anonymity because the matter is not public. AT&T and its rival Verizon have been selling non-core assets in recent months. Verizon is close to announcing divestitures of wireless towers and wireline markets worth $10 billion, the Wall Street Journal reported on Monday. AT&T hired a financial adviser to assist in the sale. Following spectrum investments and pending acquisitions, AT&T's debt ratio may rise in the near term, the company said last week after spending close to half of the total bids in the record-setting $44.9 billion spectrum sale that concluded last week. AT&T emerged the top bidder in the AWS-3 spectrum auction by bagging 251 licenses worth $18.2 billion.

• Apple sold $6.5 billion in bonds on strong demand..: after boosting the deal by 30 percent, in the iPhone maker’s fourth major debt offering in the past two years as it preserves its overseas cash hoard. The company sold the securities in five parts, with the longest portion maturing in 30 years, according to data compiled by Bloomberg. The deal will be used for stock repurchases, dividend payments and debt repayments, according to a person with knowledge of the matter. Apple has issued the equivalent of $39 billion of bonds since April 2013, when it sold $17 billion in what at the time was the biggest corporate-bond offering ever. The Cupertino, California-based company’s previous debt deal was a sale of 2.8 billion euros ($3.17 billion) in November that allowed it to fund shareholder rewards without using cash from abroad that would be subject to U.S. repatriation taxes. “The company is building on the momentum of a strong past couple of weeks,” Jody Lurie, a corporate credit analyst at Janney Montgomery Scott LLC in Philadelphia, which manages $61 billion in assets, said in a telephone interview. “They are being advantageous with the current environment.” The company issued $2 billion of 3.45 percent 30-year notes at a yield of 125 basis points more than similar-dated Treasuries, Bloomberg data show. That’s more than the relative yield of 100 basis points the company paid on 30-year bonds in the April 2013 offering. The shortest maturity portions included $1.25 billion of 1.55 percent five-year bonds that yielded 42 basis points more than comparable Treasuries. A basis point is 0.01 percentage point. Apple’s bonds have returned 13.6 percent since the start of last year, outperforming the 10.3 percent gain in debt of similarly rated companies, and more than quadruple the 3.2 percent return on speculative-grade bonds, according to Bank of America Merrill Lynch Indexes

• ..even as Netflix plans to raise $1B in borrowing despite a ratings downgrade: Netflix today said it plans to offer $1 billion in senior notes and plans to use the proceeds for “general corporate purposes, which may include content acquisitions, capital expenditures, investments, working capital and potential acquisitions and strategic transactions.” Markets are not entirely thrilled with the move. Netflix’s stock is trading down slightly, and S&P has downgraded the company’s debt rating to B+ from BB-. S&P notes that Netflix already has $9.5 billion streaming content commitment as of December 31, 2014, up from $7.3 billion a year earlier. “We expect that streaming content commitments will continue to increase and that Netflix’s pursuit of more original programming with global rights will increase its cash flow deficits,” it concludes.

• Twitter out-performed Facebook during the Super Bowl, say some analysts: Twitter appears to still be the place for live social media commentary, especially for brands that have to pay to get the most out of their Facebook activity. However, Facebook has made major efforts to capture the discussion, introducing trending topics (much like Twitter) and creating a Super Bowl hub for game chatter. Last night placed the two platforms head-to-head in a way that shows the benefits and drawbacks of both. In some areas, Twitter dominates, and Facebook controls others. Half the ads in the Super Bowl featured hashtags, while Facebook was mentioned four times. There were 265 million posts, comments and likes related to the Super Bowl on Facebook, the company said. Update: There were 36 million tweets related to the Super Bowl, up from about 25 million last year, and they recieved 2.5 billion impressions, according to Twitter.The conversation was most active on both platforms at the end of the game when New England sealed the victory with a last-second interception. Facebook said 1.36 million people per minute were discussing the Patriots' win by the end of the game. Twitter calculated 395,000 tweets per minute on the interception. Katy Perry's halftime show generated 3 million tweets. Meanwhile, Facebook said more than 1 million people per minute discussed the performance in real time.

• Google maybe getting ready to launch a competitor to Uber: Google Ventures, the search giant's venture capital arm, invested $258 million in Uber in August 2013. It was Google Ventures' largest investment deal ever, and the company put more money into Uber's next funding round less than a year later. Back then, it was easy for observers to imagine Google teaming closely with Uber, or even one day acquiring it. David Drummond, Google’s chief legal officer and senior vice president of corporate development, joined the Uber board of directors in 2013 and has served on it ever since. Now there are signs that the companies are more likely to be ferocious competitors than allies. Google is preparing to offer its own ride-hailing service, most likely in conjunction with its long-in-development driverless car project. Drummond has informed Uber's board of this possibility, according to a person close to the Uber board, and Uber executives have seen screenshots of what appears to be a Google ride-sharing app that is currently being used by Google employees. This person, who requested not to be named because the talks are private, said the Uber board is now weighing whether to ask Drummond to resign his position as an Uber board member. have left executives at Uber deeply concerned—for good reason. Google is a deep-pocketed, technically sophisticated competitor, and Uber’s dependence on the search giant goes far beyond capital. Uber’s smartphone applications for drivers and riders are based on Google Maps, which gives Google a fire hose of data about transportation patterns within cities. Uber would be crippled if it lost access to the industry-leading mapping application, and alternatives— such as AOL's MapQuest, Apple Maps, and a host of regional players—are widely seen as inferior. Google’s entrance into the ride-sharing market would also leave Uber without a partner in the suddenly plausible future in which cars without steering wheels roam the streets. Uber will either have to develop the technology itself or form an alliance with a company that can if it wants to offer autonomous vehicles within its fleet. Mercedes, Audi, Tesla, and other carmakers have said they are developing driverless cars, though it's not clear that any is as advanced as Google's.

• Lenovo Q4 earnings beat expectations on smartphone strength: revenue $14.1B, +31% Y/Y, net income $253M, down from $265M: Lenovo Group Ltd (0992.HK), the world's leading PC maker, said on Tuesday its third-quarter revenue rose 31 percent to $14.1 bln, beating investor expectations, as its smartphone division sales more than doubled. The company said net profit was $253 million, down from $265 million a year prior due to ballooning operating expenses associated with two multi-billion dollar acquisitions completed in recent months. The results beat expectations of $13.71 billion in revenue and $200 million in net profit, according to analysts polled by Thomson Reuters SmartEstimates. The Beijing-based company acquired American phone brand Motorola for $2.91 billion and IBM's low-end server unit for $2.1 billion to expand its business beyond the declining PC market. Lenovo, which closed the Motorola purchase in late October and included two months of Motorola's results in this quarter's earnings, touted the American handset brand's early performance and said it achieved "hyper growth" in emerging markets outside China. Motorola sold more than 10 million handsets during the quarter, a company record, and its purchase by Lenovo made the combined company the world No. 3 smartphone maker with 6.6 percent market share, Lenovo said. Total sales from the mobile division rose 109 percent to $3.39 bln, or a quarter of the company's sales. Lenovo continued to consolidate its hold on the shrinking PC market, reaching a record 20 percent share during the quarter with sales of $9.15 billion. Shipments rose 5 percent compared to a 3 percent decline in the broader industry, with growth particularly strong in Eastern Europe, Lenovo said.