Daily Tech Snippet: Friday, July 31

• Uber to invest $1 billion in India: FT: Online ride hailing service Uber is set to invest $1 billion in India, which will bring its investment on par with that in China, the Financial Times reported. Uber said that this move would help its service reach 1 million daily rides by March 2016, the first time the company has set such target for India, FT said. Amit Jain, president of Uber India, said the company was "extremely bullish" on the Indian market and that it continues to see a 40 percent monthly growth, FT reported. Jain also added that the company will expand service beyond the 18 cities in which it operates, the largest number in any country outside of the United States. On Wednesday, Uber launched its own auto leasing subsidiary in an effort to sign up more drivers, injecting the fast-growing ride services company directly into the financial services sector for the first time.


• LinkedIn Shares Slip on Concerns Lynda Buy Masks a Slowdown: LinkedIn shares fell after the company attributed a bump in its annual revenue forecast to its acquisition of the education website Lynda.com, raising concerns that growth is slowing in its main business. LinkedIn said full-year sales would be about $2.94 billion, beating the $2.91 billion average of analysts’ estimates compiled by Bloomberg. As part of the forecast, the company more than doubled expectations for revenue from the Lynda.com acquisition to $90 million for the year, raising questions about whether the professional-networking website’s core business was expected to slow. The company acquired Lynda.com for $1.5 billion while it also reorganized its sales force and changed advertising methods -- expensive moves that may take time to produce benefits. The Lynda.com purchase and LinkedIn’s efforts to promote news content are intended to make the website valuable to people even when they aren’t looking for jobs. LinkedIn initially rose as much as 15 percent in extended trading after the earnings were released, only to erase those gains and fall as low as 9 percent to $207 during the company’s conference call with investors. Second-quarter sales increased 33 percent to $711.7 million, while analysts’ estimated $679.9 million. LinkedIn’s loss widened to $67.7 million, or 53 cents, from $1.03 million, or 1 cent, a year earlier, the Mountain View, California-based company said. LinkedIn’s Talent Solutions business was its fastest-growing segment in the quarter, gaining 38 percent to $433 million after the sales force shake-up. The jobs site, which reported 380 million users, said those people spent 60 percent more time on LinkedIn than they did a year earlier. The company reduced the amount of e-mails it sends out by 40 percent to reduce complaints and improve the quality of the experience. The company said its China-based site now has more than 10 million members.


• Social Media Stocks and Their Unforgiving Investors: Several social media stocks took a pummeling on Wednesday, with Yelp plunging 25 percent and Twitter dropping 15 percent after both companies issued quarterly earnings that disappointed investors in one way or another. On top of that, Facebook’s shares fell slightly in after-hours trading after it posted financial results that included a surge in spending and a forecast of slowing revenue growth. Few should be surprised by the stock reaction. Investors have demonstrated for many months that they are unforgiving of any stumble by technology companies that became alluring because they had portrayed themselves as high growth. See what happened last quarter with LinkedIn, Yelp and Twitter, which all plummeted more than 20 percent shortly after reporting results that surprised investors (and not in a good way). At the time, Vindu Goel and Mike Isaac wrote that “shareholders increasingly have little tolerance for the slightest misstep” by social-media companies — something that was once again made very clear this week.


• In rural China, shoppers go online - with a little help: Cheng Yonghao left his village in central Henan province almost 20 years ago, not expecting to return. He's now back home, and this week opened a village store to help locals shop online. Cheng is just one of an army of local recruits who are part of Alibaba Group's big bet on rural e-commerce as China's internet giants invest billions in outpost service hubs to tap a market twice the size of the United States. E-commerce growth in the countryside now outpaces that in major cities, though fewer than one tenth of online purchases made on Alibaba platforms were shipped to rural areas in the first quarter of this year. Alibaba estimates the potential market at 460 billion yuan ($74 billion) by next year. Rival JD.com also says that developing rural e-commerce is a key strategy this year. While the rewards are enticing, few are making money yet. "We don't know when our rural e-commerce operations will become profitable, but there's value in what we're doing, there's consumer demand," Gao Hongbing, director of Alibaba's research arm, told reporters earlier this month. Before it can reap the rewards, Alibaba is having to teach a rural population - which tends to be older, poorer and less comfortable with technology - how to browse and buy. Alibaba has been on a recruitment drive to find and train local 'partners', who set up service centers in their home villages, helping locals shop online. Partners - mostly younger, educated, and more familiar with navigating websites like Taobao, Alibaba's online emporium - go through a written exam, computer test and interview. More than 1,000 applied for one batch of 50 jobs, said one applicant from Henan. Training takes place at local government business offices over 2-3 days in groups of around four dozen. Trainees are asked about their aspirations and how they can reach their potential.


• MakeMyTrip sales growth skids in Q1, lowers revenue guidance for the year: MakeMyTrip reported a slow net revenue growth of just 7.5 per cent (14.7 per cent in constant currency) for the first quarter ended June 30, 2015 over the year-ago period. This was due to a mere 2.8 per cent rise in net revenues from hotels and packages segment (10.4 per cent in constant currency). Net revenues from the air ticketing business rose 10.8 per cent (17.6 per cent in constant currency). Overall net revenue as captured by revenue less service cost, a key metrics for OTAs like MakeMyTrip, rose 27.5 per cent (28.4 per cent in constant currency) in Q4 FY15 and 36.3 per cent in Q1 FY15. Net revenues for the last quarter stood at $38.1 million. Overall revenues declined 1.2. per cent (roe 5.2 per cent in constant currency) to $93.6 million in the quarter while gross bookings, which represent the total amount paid by a customer while booking on its platform, rose 8.3 per cent (15.6 per cent in constant currency) to $467.8 million. In terms if operating stats, booking transactions in its hotels and packages segment rose 14.4 per cent to 430,100. This was overshadowed by a robust 45.6 per cent rise in air ticketing transactions that rose to 1.6 million last quarter. The transaction growth in air ticketing business was largely driven by special fares offered by Indian domestic carriers. The firm also saw its net margins from the air ticketing segment shrink from 5.8 per cent in Q1 FY15 to 5.5 per cent last quarter. Net margins in the hotels and packages segment, however, increased from 11.9 per cent in the quarter ended June 30, 2014 to 13.3 per cent. This was also in line with net revenue margin of 13.2 per cent for the fiscal year ended March 31, 2015. Operating loss almost doubled from $3.4 million to $6.1 million while adjusted operating loss (excluding employee share-based compensation costs, merger and acquisitions related expenses and amortisation of acquisition related intangibles) stood at $1.6 million compared with operating profit of $0.3 million in the quarter ended June 30, 2014


• Baidu Plans $1 Billion Buyback to Bolster Slipping Stock Price: Baidu, China’s biggest Internet search engine company, said on Thursday it will buy back shares worth $1 billion after the company’s stock price slid following a weak earnings report earlier this week. The repurchases will take place over the next 12 months and be funded from the company’s existing cash balance, New York-listed Baidu said in a statement. Baidu shares have fallen 14 percent since July 27, when it reported lower-than-expected second-quarter profit. The company’s plan to spend aggressively on connecting online smartphone users to offline services raised investor concerns on margins, triggering the shares’ worst two-day drop since late 2008. Baidu said last month it would invest $3.2 billion in linking mobile internet users to nearby offline services such as buying cinema tickets, booking taxis, getting restaurant deals. But these O2O services are eroding the healthy margins Baidu enjoyed from its core search business.