Daily Tech Snippet: Friday, May 22

• HP sells $2.3 billion China unit stake to forge partnership with elite Chinese university-linked group: Hewlett-Packard Co (HPQ.N) will sell a controlling 51 percent stake in its China-based data-networking business to China's Tsinghua Unigroup for at least $2.3 billion, forming a partnership designed to create a Chinese technology powerhouse. State-backed Tsinghua Holdings' subsidiary Unisplendour Corp Ltd 000938.SZ will acquire 51 percent of HP's H3C Technologies for at least $2.3 billion, Unisplendour said in a statement to the Shenzhen stock exchange late on Thursday. The U.S. company also said in a statement on Thursday it will form a partnership with Tsinghua Holdings, affiliated with China's elite Tsinghua University, to create a group in China to house H3C's networking operation alongside its China-based server, data-storage and technology-services businesses.

• Report/Rumor: CommonFloor and Quikr in preliminary talks which may lead to a merger: After recent mergers in India’s e-commerce and taxi businesses, it appears that online real estate is set to see a winnowing of weaker players. Bengaluru-based Maxheap Technologies Pvt Ltd, which owns online real estate portal CommonFloor, is believed to be in preliminary conversations with classifieds company Quikr about teaming up, according to three people familiar with the developing situation.

• PayPal’s Instant Checkout “One Touch” Aims to Boost Conversion Rates on Mobile, No Longer Requires PayPal’s App: PayPal’s instant checkout service called OneTouch is now being extended to support all merchants using the e-commerce platform Bigcommerce, as well as on mobile devices – even in cases where the consumer doesn’t have the PayPal native application installed. The service, which allows customers to check out from an online merchant without having to enter their username and password, launched publicly last fall on mobile devices then expanded to the web in April. One Touch was originally designed to improve the conversion rates for online transactions. On mobile in particular, consumers tend to abandon purchases simply because of the challenges associated with entering in their personal information payment card details on mobile’s small screen. PayPal’s move to counter this trend was OneTouch for Mobile, which allows a customer’s information to be stored and shared between supported apps. That means that customers would only have to enter their PayPal credentials for their first mobile purchase, but subsequent purchases could be made with just one tap. The system is currently being used by a number of merchants including Jane.com, ParkWhiz, StubHub, Threadless, Airbnb, Lyft and Munchery, for example. In April, PayPal announced that it would offer similar functionality to web-based merchants as well, which meant the product now had the potential to reach PayPal’s 165 million customers. Despite being an older player in the ever-changing payments industry where newer contenders including Stripe, and now Apple Pay, are finding their ways into mobile apps and online stores, PayPal’s payments business is still growing. The company reported its net total payment volume rose 18 percent to $61 billion, it said in April, and it added 3.6 million new accounts in the quarter. The company says that today, online and mobile shopping accounts for $2.5 trillion in annual retail sales, and PayPal processes nearly 12.5 million payments for its customers daily. The move towards digital payments over physical payments is also a factor in PayPal’s growth. It notes that a couple of years ago, half of transactions involved checks or cash, but in a couple years’ time, they’ll account for only 25 percent of transactions.

• HP earnings: quarterly revenue $25.5B, down 7% Y/Y; earnings down too as company prepares for split; shares up 2.3% on asset sales: Hewlett-Packard, the computer and printer giant, reported continued declines in profit and sales on Thursday as it prepared to split into two companies later this year. HP, based in Palo Alto, Calif., said on Thursday that net income in the fiscal second quarter fell 21 percent to $1 billion, or 55 cents a share, from the same quarter a year earlier. Revenue fell 7 percent to $25.5 billion. Sales fell short of Wall Street analysts’ revenue expectations of $25.63 billion for the quarter, according to a survey by Thomson Reuters. Excluding some items, the company reported a profit of 87 cents a share, beating analyst estimates on that same basis of 86 cents. The results give investors a progress report on Ms. Whitman’s plan to split HP into two companies: One will focus on enterprise-computing technologies like servers, and the other will sell products like personal computers and printers. The separation is set to happen at the end of October. HP said the split remained on track and would initially incur operations costs of $400 million to $450 million. The two independent companies will each be large enough to enter the Fortune 500 and may be better able to react quickly to changing markets than within a large organization. Yet investors question whether the split will slow HP’s product creation and sales, as assets and roles are allocated, and whether competitors will exploit customer confusion to seize market share. Since announcing the plan to split, HP has reported declining profit. In March, the company sharply lowered its outlook for annual earnings. In anticipation of the separation, HP is shedding some assets. The company said on Thursday that it sold a 51 percent stake in its Chinese network business to Tsinghua University for about $2.3 billion. The move lets HP continue to sell equipment to businesses in China, which face government restrictions on use of foreign technologies. Shares were up 2.3%.

• Two IPOs: Shopify pops 69%, Alibaba-backed Baozun's shares gyrate after overly aggressive IPO pricing: Canadian software maker Shopify valued at $2 billion in U.S. debut: Canadian e-commerce software maker Shopify Inc's (SHOP.N) (SH.TO) shares rose as much as 69 percent in their U.S. debut, valuing the company at about $2.14 billion. Shopify, which also debuted on the Toronto Stock Exchange on Thursday, is the first Canadian company to be listed on a U.S. exchange this year. Alibaba-backed Baozun's shares seesaw in choppy debut: Shares of China's Baozun Inc, in which Alibaba holds a nearly 20 percent stake, traded erratically in their debut on Thursday, sending the e-commerce services company's valuation seesawing. The company's American Depository Shares (ADSs) touched a high of $11.28, valuing it at $548.3 million, before reversing course all the way down to $9.23 per ADS. The 11 million ADSs offered were priced at $10 each, well below the $12-$14 range initially set by the underwriters. "They priced it too aggressively," Francis Gaskins, president of IPO research firm IPOpremium.com said, adding that at the midpoint of the initial range, the shares would have been valued at 500 times annual earnings. Baozun provides website design, digital marketing and logistics services for retailers and brands hopping onto China's e-commerce bandwagon. It counts Haagen Dazs, Nike, Guess and Microsoft among its more than 100 clients that are competing fiercely in China's thriving online market, dominated by Alibaba Group Holding Ltd. Alibaba's investment arm is Baozun's top shareholder, with an 18.2 percent stake. The company, which raised $110 million from the IPO, falling well short of its initial $129 million target, said it intended to split the proceeds between improving existing operations and making acquisitions. The company reported a net loss attributable to ordinary shareholders of about $25.1 million and total net revenues of about $255.4 million last year.

• New patent lawsuits are down for the first time in five years on tighter patent processes. For months, Congress has moved steadily toward a bill that targets patent trolls — companies that own patents but don't make any products with them. The problem, critics say, is that the patent holders will sue innocent companies in hopes they'll simply settle for a bunch of cash. But even as firms like Etsy and Kickstarter hit Capitol Hill this week to press the case against abusive patent lawsuits, a new study shows that the pace of litigation has actually slipped — for the first time in five years. This is a big deal for a whole range of industries, not just the tech sector. It's happening at a time when the spotlight on frivolous patent lawsuits has never been brighter. And that makes it a surprising find. You can see that in 2014, there was a sharp drop in the number of new patent cases. There were about 5,700 filed last year, according to PwC. That might sound like a lot, but it's actually a 13 percent drop from the year before. We haven't seen anything like this since 2009 — which is about when many companies started getting hit with their first demand letters. The letters are often vague about which patents have allegedly been infringed, leading to confusion and fear among the victims about what they may have done wrong. They can fight the suit and go to court, but defending a case is costly and unaffordable for many companies. The congressional legislation being debated would try to address some of these issues. But here's what else could wind up curtailing patent litigation: The Supreme Court. According to PwC, the sharp decline in new patent lawsuits can be traced almost directly to the outcome of a major case last year known as Alice Corp. v. CLS Bank. Most analysts at the time said that Alice didn't matter much. The Court ruled that the software patent Alice Corp. used to sue CLS didn't pass the smell test. That much was obvious to many people watching the case; what they really wanted from the Court decision was a more concrete outline as to what kinds of software patent were patentable. But the fact that Alice put some limits on software patents at all appears to have put major pressure on those who are considering bringing a patent lawsuit, said PwC.Alice effectively "raised the bar for patentability and enforcement of software patents," PwC's report reads.