Daily Tech Snippet: Wednesday, April 15

• Intel Q1 earnings: revenue flat at $12.8B, earnings up 3% at $2B; Shares up 3% on strong sales of chips for data centers, internet-of-things; capex cut: Intel reported that net income rose 3 percent to $2 billion, compared with the year-ago quarter. Intel’s per-share income rose 8 percent, to 41 cents a share, reflecting a smaller number of shares outstanding because of stock buybacks. Revenue was flat, at $12.8 billion. The earnings were about even with Wall Street’s expectations. Analysts forecast that Intel would make 41 cents a share on revenue of $12.9 billion, a survey by Thomson Reuters said. Intel shares increased 3 percent in after-hours trading. The earnings were not surprising, given slow PC sales. Last week, the research firm IDC said that worldwide first-quarter PC shipments were 68.5 million, a decline of 6.7 percent from the year-earlier period. That was slightly better than expected. Chips for PCs and related items make up over half of Intel’s revenue. Intel was slow to move into mobile devices and is overshadowed there by companies like Qualcomm and ARM. Under Mr. Krzanich, who took over two years ago, Intel has redoubled its efforts to get into mobile devices. Progress has been slow, however, with significant financial losses. Other areas of Intel’s business have fared better. Sales of chips for data centers were up 19 percent in the quarter. Intel expects that market to grow about 15 percent annually for several more years. A newer market, chips for the so-called Internet of Things, or appliances and other objects with a two-way network connection, grew 11 percent. That revenue was only $533 million, but Stacy Smith, Intel’s chief financial officer, said annual growth in this area should be about 20 percent for many years. More on margins, mobile, Altera: Strength in the server unit is keeping profit margins healthy. Gross margin, or the percentage of sales left after deducting production costs, will be about 62 percent in the current period, Intel said. Analysts were predicting 61 percent. Last year, Intel’s mobile business racked up operating losses of more than $4 billion as it paid subsidies to customers to build market share in tablet chips. This year, Intel Chief Executive Officer Brian Krzanich has promised to reduce that loss by about $800 million. Smith said the company is on track to meet that goal. As it struggles to boost its mobile business, Intel is seeking to make a bigger bet on the data-center market. The company held discussions to acquire chipmaker Altera Corp., according to people familiar with the talks. Buying Altera would bring in chips that are increasingly being used in data centers and help Intel put its factory network to greater use. Intel made a $54-a-share bid for Altera, which the programmable chipmaker’s board has rejected, breaking off talks, people familiar with the negotiations said last week. Altera is now coming under pressure from its shareholders to reconsider Intel’s offer, because they think it values Altera at more than what it can achieve itself, people with knowledge of the matter said. CapEx cut to improve cash flow: Intel said it would cut 2015 capital expenditures to $8.7 billion from $10 billion, a reduction that analysts said should improve free cash flow.

• IBM makes a big healthcare analytics play, ties up with Apple, J&J and Medtronic: IBM is taking its Watson artificial-intelligence technology into health care in a big way with industry partners, a pair of acquisitions and an ambitious agenda. The initial three industry partners are Apple, Johnson & Johnson and Medtronic. On Monday afternoon, after the close of stock trading, IBM also announced it would buy two start-ups: Explorys, a spin-off from the Cleveland Clinic whose data on 50 million patients is used to spot patterns in diseases, treatments and outcomes; and Phytel, a Dallas maker of software to manage patient care and reduce readmission rates to hospitals. The IBM plan, put simply, is that its Watson technology will be a cloud-based service that taps vast stores of health data and delivers tailored insights to hospitals, physicians, insurers, researchers and potentially even individual patients. “We’re going to enable personalized health care on a huge scale,” said John E. Kelly, a senior vice president who oversees IBM’s research labs and new initiatives. To date, IBM has done some individual projects using Watson technology with leading medical centers, including Memorial Sloan Kettering Cancer Center in New York, the University of Texas MD Anderson Cancer Center in Houston and the Cleveland Clinic. But the creation of the Watson Health unit, Mr. Kelly said, is an effort to apply the technology to the mainstream of health care. And while IBM has been commercializing Watson technology with tools for mining Twitter, weather and Internet of Things data, Mr. Kelly said Watson Health was the first move into a specific industry. The Watson Health announcement is also the latest in flurry of initiatives IBM has announced this year that include new corporate partnerships as well as moves in cloud computing, data analytics and Watson. They are evidence that IBM is intent on investing for future growth, and showing it is doing so, in a year when its financial performance is likely to lag. IBM has reported disappointing earnings recently, and Virginia M. Rometty, IBM’s chief executive, has told industry analysts and investors that 2015 would be a transition year in which new growth businesses like Watson did not yet overcome the profit erosion in some of its traditional hardware and software products.

• Zomato buys cloud-based PoS system; to help restaurants manage inventory, payments: Zomato.com, has acquired MapleGraph Solutions Pvt Ltd, which operated a point-of-sales business, for an undisclosed amount in what is its first acquisition outside its core business of restaurant listings and reviews, it said on Tuesday. Zomato is now launching its own version of the product under Zomato Base which would allow restaurants manage inventory and payments as well as provide real time analytics and more. The move would expand the revenue streams for Zomato, which currently draws bulk of its business from ads from restaurants. The firm has been looking at new ways to generate revenues and is starting an online food ordering and table reservation service. Zomato Base offers inventory and recipe management, analyses sales data to track restaurant’s performance, generates electronic receipts, as well as does payment gateway integration and menu management. Delhi-based MapleGraph was founded in 2011 by Arun Tangri (earlier worked with Microsoft and IBM India), Varun Tangri, (also co-founded Tokkri.com and DealerConnect.in) and Abhishek Rohilla (previously worked with Unisys and Siemens Information Systems). “Technology has seen very little penetration in the restaurant industry, and we are excited to be driving this change at large scale,” said Arun Tangri, co-founder and CEO, MapleGraph. “There is a lot that can be done if we are able to build a technology platform that connects consumers to restaurants and vice versa, and we believe that a world-class cloud-based POS system is the first step towards building that platform,” said Deepinder Goyal, co-founder and CEO, Zomato. Zomato will work on integrating the POS product’s services with the consumer product over the next few months. After the integration, Zomato will start offering Zomato Base to restaurant businesses across the world this fall.

• Opera launches new version of its Opera Mini browser with enhanced data compression; targets 350 million mobile browser users in 2017: Norway's Opera Software on Tuesday launched a new version of the Opera Mini browser for Android phones, hoping to more than double its smartphone user base by the end of 2017. Google's Android is the most widely used operating system among mobile phone makers. With the launch of Mini 8, Opera aims to lift its smartphone user base to 275 million by 2017 from the current 130 million, increasing the total to 350 million when including around 75 million users of less advanced feature phones. The purpose of using Mini, which has become particularly popular in many developing countries, is both to speed up online surfing and to cut costs, as the browser can compress data by up to 90 percent. Smartphone customers generally do much more online surfing, making them far more valuable than users of feature phones although Opera Software doesn't give revenue figures per user. "It's complicated, we have customers in 200 countries and more and more of them are using smartphones and fewer are on feature phones," Opera investor relations chief Petter Lade told Reuters. "Our target is to have 275 million smart phones and 75 million on feature phones, this will be our total target for mobile users for 2017," he added.