Daily Tech Snippet: Monday, August 24

On Friday, US Stocks Fell Most in 4 Years as China Dread Sank Global Markets: Turbulence in financial markets gathered momentum amid intensifying concern over slowing global growth, pushing the Dow Jones Industrial Average into a correction and giving other stock gauges their worst losses since 2011. Oil sank below $40 a barrel for the first time since 2009 and was set for its longest losing streak since 1986. More than $3.3 trillion has been erased from the value of global equities after China’s decision to devalue its currency spurred a wave of selling across emerging markets. The worries over slower economic growth come as a strong dollar and plunge in oil prices take a toll on corporate earnings at the same time the Federal Reserve is contemplating the first boost to interest rates since 2006. Investors are selling the biggest winners of 2015. Companies that have come to be known as the Fab Five -- Netflix, Facebook, Amazon, Google and Apple --have seen $97 billion in market value erased over two days. Losses have pushed the Nasdaq 100 Index down 7 percent, the biggest two-day decline since 2008. Apple entered a bear market, dropping 20 percent from a February high.

Hewlett-Packard Bucks Market’s Plunge After Earnings Report: Hewlett-Packard squeezed out a gain amid Friday’s market plunge after issuing an earnings report that kept negative surprises to a minimum.“For the first time in several quarters HP did not mention unexpected bad news,” Jim Suva, an analyst at Citigroup Inc., wrote in a note to investors advising they buy the stock. “Previous quarters HP reduced cash flows, stated higher separation costs, more unplanned restructuring and costs, etc. We now believe the bad news is over.” Hewlett-Packard’s shares rose less than 1 percent to close at $27.47 after advancing as much as 7.6 percent earlier in the day. The stock gave up most of the increase as the Standard & Poor’s 500 Index tumbled 3.2 percent, marking the gauge’s worst day in almost four years. Hewlett-Packard sales declined across most divisions in the fiscal third quarter. PC shipments fell 9.5 percent in the second quarter, and companies are spending less on software and services.

A small Canadian city tries to drag intersections into the 21st century: Have you ever sat pointlessly at a red light? There’s no cross-traffic, but the traffic light is clueless, so you’re forced to wait. Miovision chief executive Kurtis McBride feels your pain. “I can’t count the number of times I’ve been sitting at a red light with no cars around me and just wondering, ‘Why am I stuck in this situation,’ ” McBride said. His Canadian start-up is bringing modern technology to an industry that is years behind. Smart intersections could learn the traffic patterns and adjust the length of red and green lights to optimize the flow of traffic. Sitting at a pointless red light would be a thing of the past. Miovision envisions full automated intersections that are powered by algorithms. One Canadian transportation agency is currently testing Miovision’s technology in seven intersections on major arteries in Cambridge, Canada. The Waterloo Region wasn’t ready to go all-in on automated intersections, but is trying the technology to learn of malfunctioning lights, and adjust the timing of its lights. Miovision, which is based near Waterloo, raised $30 million earlier this year from investors.

Apple Raises $1.6 Billion in Record Corporate Bond Deal: Apple raised A$2.25 billion ($1.6 billion) with a debut Australian debt sale that’s the largest bond deal ever Down Under by a non-financial company. The iPhone maker sold A$1.15 billion of seven-year notes at a yield of 110 basis points more than swap rates and A$1.1 billion of four-year securities at a 65 basis point spread. Apple, which until November had only sold U.S. currency bonds, has since expanded its debt issuance to euros, yen, pounds and Swiss francs as well as Aussie dollars. The proceeds of Apple’s Kangaroo bond sale may be used to return capital to shareholders through stock buybacks and dividends, sale managers said in an earlier statement announcing plans to do an Aussie transaction. The Cupertino, California-based company announced in April it was boosting its capital-return program by $70 billion through March 2017 and would be accessing both U.S. and international debt markets to help pay for it. All of the longer maturity notes from Apple will be fixed-rate securities, while at the shorter tenor they are set to issue a fixed-rate portion of A$400 million and a floating-rate tranche of A$700 million. Initial price guidance on the four-year debt was for a spread of about 70 basis points, while the price talk on the seven-year notes was a gap of about 115 basis points.

Mobile language apps help millions learn less, more often: Smartphone apps that help people learn languages for free or nearly free, a few sentences at a time, are piling pressure on established education firms and setting the pace for how to make lessons more engaging. Phone and tablet-based mobile products from newcomers like Germany's Babbel, Britain's Memrise and U.S.-based Duolingo have overtaken names like Berlitz and computer self-learning pioneer Rosetta Stone in terms of audience, if not yet sales or teaching sophistication, market researchers say. Tens of millions of users are being drawn to the flexibility of practising vocabulary or conversation on the go, either as part of a serious course of study or simply a more productive alternative to casual video gaming. "It is a matter of incremental convenience: smartphone apps offer a wide selection of content that is more easily accessible, anytime, anywhere," said Ed Cooke, founder of London-based Memrise, whose language apps are mostly free. "Binge learners tend not to come back," he said. "People who learn a little tend to come back more regularly."The best mobile apps use voice recognition, email reminders and insights from the psychology of mobile games and cognitive science to keep entry-level as well as advanced users coming back for a few minutes of practice each day. Under pressure from new competitors, Rosetta Stone, which popularized language self-learning with CD boxsets selling for$200, has been restructuring to focus more on business and school sales rather than consumers. To catch up in mobile, it bought LiveMocha, a free online learning site, and created Apple and Android phone apps that give away a bit of content for free in a bid to draw intermediate users to commit to longer courses. Virginia-based Rosetta's share price has plunged 77 percent since its stock market flotation in 2009. Recently, it saw its second-quarter revenue fall 10 percent to $51.4 million, with sales at its consumer business dropping 26 percent.

Dropbox’s Wall Street Challenge: Dropbox boasts a valuation in the $10 billion range. Last February the company hired a new CFO, which for many startups is a signal that their IPO moment is coming sooner rather than later. Nobody knows for sure of course, and Dropbox isn’t talking, but if the company does decide to move forward with a flotation, it could face several challenges in spite of its strong market presence. Dropbox could still have trouble persuading a doubtful Wall Street money machine, which has shown little love for cloud companies, that it can overcome several hurdles: For starters, it will need to convince them that the subscription business model with a different reporting methodology is viable. It must defend its hybrid consumer/enterprise approach — and perhaps face questions where it will concentrate its resources moving forward. Finally, the company with its core business in storage and file syncing has to find a way to overcome the commoditization of these services and the race to the bottom with some of the biggest names in the business.

One of Tech’s Best Investors Keeps Passing on Deals Because Valuations Are Too Damn High: Jeremy Levine knows a good deal when he sees one. As a top venture capitalist at Bessemer Venture Partners, he has invested in Pinterest, LinkedIn, Yelp and Shopify well before they reached peak popularity and watched as the last three went public. But over the last 20 months, Levine has led just one new investment, which has yet to be announced. The reason for the pause? Valuations are still just too damn high, he says. “Prices — especially for late stage deals — have been extraordinarily high for a while now and demand flawless execution and a lot of luck,” Levine said in an email following an in-person meeting. “The former is extremely hard to achieve, and the latter is obviously outside anyone’s control. Therefore, I believe a lot of the private deals that have [been] getting done recently are providing very poor risk-adjusted-returns for investors.” “Perhaps the dramatic cool-off in the public markets over the last week will start to change things in the private markets,” he added.

Farewell To Flash: What It Means For Digital Video Publishers: It’s been more than five years since Steve Jobs wrote his infamous “Thoughts on Flash” letter citing the high level of energy consumption, lack of performance on mobile and poor security as the reasons his company’s products would not support Adobe Flash technology. Finally, it appears we’re getting closer to the curtain closing on Flash. Over the years, Flash has become famous for a few less-than flattering features that can all play a role in hindering user experience, including intrusive experiences, increasing page-load times, lowering a site’s search engine optimization (SEO) and security flaws. Despite all these grievances, the digital-video advertising industry has been forced to use Flash because of VPAID (Video Player-Ad Interface Definition), a standard that allows a video ad and a video player to communicate with each other. VPAID provides a way to dynamically swap or customize video-ad creative based on ad decisions, and has long been used for Flash-based video ads on desktops. When you consider the fact that Flash needs to be installed (as opposed to HTML5, which requires no installation), it’s easy to see why in the long term, it didn’t stand a chance. This means that if publishers don’t upgrade their format specification, some or all of their video content may no longer be available for people to view; this will certainly affect viewer loyalty and monetization efforts. For example, Flash video ads served in a desktop Chrome browser will load in a paused state, then the user will have to click the ad for it to play. These ads will still register as impressions. However, it won’t take long for programmatic buyers to scale back their bids on video ad inventory garnering a high number of impressions with no quartiles. Publishers need to urge their buyers to prepare for the upcoming Flash-pocalypse because, despite the publishers‘ level of preparation, if their buyers don’t have the proper HTML5 creative assets, it will impact their ability to transact, having an impact on publisher revenue and the ability to successfully implement advertiser campaigns. The most crucial thing for publishers is going to be ensuring that their advertisers and demand partners (ad networks, ad exchanges and advertisers) are providing and hosting HTML5 ad creatives moving forward. Publishers themselves will also need to migrate their tech stack. Not having a complete HTML5 advertising technology stack can potentially impact their ad revenue as buyer bids will eventually subside for non-compatible inventory.

The ‘Unicorn’ Club, Now Admitting New Members: The $1 billion valuation metric was popularized two years ago by the venture investor Aileen Lee. She found that many of the start-ups that reaped the hugest riches for venture capital investors — Facebook and LinkedIn, for example — often reached a valuation of $1 billion or more while they were privately held. Because of their rarity, Ms. Lee called those companies “unicorns,” after the mythical creatures. Since then, numerous start-ups have attained the $1 billion distinction — and topped it. With investors rushing to bet on the next big thing, the ride-hailing service Uber received a valuation of around $51 billion, while Airbnb, the online room-rental service, is pegged at about $24 billion. And every month, more companies are jumping into the unicorn echelon. To find out which companies might be next to ascend, CB Insights, which tracks venture capital and start-ups, conducted an analysis for The New York Times. CB Insights used a proprietary software tool called Mosaic, which analyzes dozens of factors about a start-up, including the amount of money raised by a company, employee turnover, news and social media mentions, awards, customer growth and partnerships. It also examines the overall health of the industry in which the start-up competes, as well as what can be known about the quality of a company’s investors. CB Insights won a grant from the National Science Foundation to build Mosaic, using machine learning and data science to turn unstructured text into a quantitative tool to measure company health. The CB Insights analysis resulted in a list of 50 companies that cover the globe and span different tech sectors but speak to some of the trends from the current boom. Half of the companies on the list are based in San Francisco and Silicon Valley, the cradle of tech start-ups, but 10 are international, with several hailing from China and India. Ms. Lee, who coined the term unicorn, said there were more $1 billion private companies these days partly because big industries like hotels and taxis were now considered fair game for start-ups. The thing to watch, she said, is whether companies meet the expectations and goals they set when they became unicorns before they burn through the money they raised. “If they don’t do that, they’re in a dangerous position,” she said.