Daily Tech Snippet: Friday, January 29

• Amazon shares plunge as record profit still misses estimates: Amazon.com Inc posted its most profitable quarter ever on Thursday but the world's No. 1 online retailer still managed to disappoint Wall Street by badly missing estimates, sending its shares down more than 13 percent in after-hours trading. The results, as well as the company's determination to invest more in new areas and its extremely low profit margins, brought back perennial questions for investors about the company's ability to consistently earn money. Amazon's net profit for the fourth quarter, which includes the holiday shopping season, rose to $482 million, or $1.00 per share, in the quarter ended Dec. 31, up from $214 million, or 45 cents per share, a year earlier. Net sales rose 21.8 percent to $35.75 billion, but missed analysts' expectations of $35.93 billion. Net sales from its cloud services business, Amazon Web Services, rose 69.4 percent to $2.41 billion, compared with a growth of more than 78 percent in the third quarter. AWS continues to be the fastest growing division within Amazon. The company's total operating expenses rose more than 20 percent to $34.64 billion in the fourth quarter.

• Microsoft beats Wall Street view on high demand for cloud products: Microsoft Corp reported quarterly revenue and profit that beat analysts' expectations, driven by aggressive cost cutting and growing demand for its cloud products and services.Total revenue, however, fell 10.1 percent to $23.80 billion, squeezed by a strong dollar as well as a weak personal computer market that has reduced demand for Microsoft's Windows operating system. On an adjusted basis, revenue fell to $25.69 billion but beat analysts' estimates. Microsoft generates more than half of its revenue from outside the United States. Microsoft's net income fell to $5 billion, or 62 cents per share, in its second-quarter ended Dec. 31 from $5.86 billion, or 71 cents per share, a year earlier. Revenue from the "intelligent cloud" business, which includes products such as its Azure cloud infrastructure and services business along with other non-cloud products such as traditional servers, rose 5 percent to $6.3 billion. Perhaps a better indicator of its cloud strength is what the company calls its combined cloud business, on track for $9.4 billion in annual revenue, the company said. That measure, which includes Azure plus other businesses like Office 365, is up 15 percent from the $8.2 billion revenue it estimated last quarter. "They nailed the cloud," said Matt Howard, a venture capitalist at Norwest Ventures who monitors Microsoft closely.

• Alibaba Falls as Sales Volume Slows, Adding to China Concern: Alibaba Group Holding Ltd. shares fell after the Chinese online retailer reported flagging growth in sales on its marketplaces, adding to concerns about the country’s economic slowdown. The shares dropped 3.8 percent to $66.92 in New York, bringing their loss for the year to 18 percent. While gross merchandise volume on Alibaba’s Chinese retail marketplaces rose 22 percent to 964 billion yuan ($147 billion) in the three months ended December 31, that’s less than the 28 percent increase in the prior quarter.  Revenue and earnings per share beat analysts’ estimates in the fourth quarter because Alibaba was able to sell more ads to its merchants and better capitalize on its Tmall and Taobao platforms, he said. What’s troubling is the decelerated growth in GMV, most worryingly at Tmall, where it was 37 percent this quarter, compared with 56 percent growth the previous period, Cordwell said. Plus, the boost in sales from advertising came from Alibaba catching up on monetizing its mobile platforms, a phenomenon that will end, he said. Sales of 34.5 billion yuan ($5.2 billion) rose 32%, and outpaced expectations for a 27-percent rise. The proportion of revenue Alibaba gets from outside China fell to 6 percent 

• Facebook to Shut Down Parse, Its Platform for Mobile Developers: Facebook acquired Parse, a toolkit and support system for mobile developers, in 2013. At the time, the social network’s ambitions were high: Parse would be Facebook’s way into one day harnessing developers to become a true cloud business, competing alongside the likes of Amazon, Google and Microsoft. Those ambitions, it seems, have fallen back to earth. On Thursday, Facebook said it plans to shut down Parse, the services platform for which it paid upwards of a reported $85 million. At one point, Facebook was willing to take those risks. When Facebook bought Parse in 2013, Facebook’s stock was below its initial public offering price of $38. The company had not grown a robust mobile advertising yet, and Facebook was eager to seek out other lines of business in hopes of future profits, according to two people with knowledge of the company’s plans at the time who requested anonymity because they were not authorized to speak for the company. Parse seemed like a good opportunity for expansion. At the time, Internet businesses were in the midst of a major industry change, as users were shifting away from desktop computing and increasingly relying on mobile devices. Parse, the thinking went, could provide Facebook the opportunity to be the foundation of a whole new generation of developers building mobile apps in the age of the smartphone. Things have changed. Facebook is generating record profits and its mobile advertising business is booming; 80 percent of the company’s advertising revenue now comes from mobile devices. As Facebook’s fortunes have turned, it has shown less interest in pursuing other lines of business outside of what it does best. Instead, the company appears intent on building things that somehow, someday, will feed Facebook’s core ad-based business — and those bets are going to have to get bigger and weirder Facebook also would have had to invest untold millions of dollars in capital and, more importantly, engineering talent, to get the Parse business fully off the ground to have a better chance at making a dent in competitors like Amazon, Microsoft and Google.

• Walgreens Halts Use Of Theranos’ California Lab: More bad news for blood analysis startup Theranos – Walgreens has suspended use of the company’s Newark, California lab, following news the Centers for Medicare & Medicaid Services said that lab posed “immediate jeopardy” to patients. Walgreens partners with Theranos, allowing the startup to collect blood draws out of many of the drug store’s Arizona locations and one in Palo Alto. The blood samples are then sent to Theranos labs. Walgreens sent a statement to explain the action: "In light of the letter dated Jan. 25 from the Centers for Medicare and Medicaid Services (CMS) to Theranos, Inc., Walgreens said today that it has informed Theranos that it must immediately cease sending any clinical laboratory tests provided through Theranos Wellness Centers at Walgreens to the Theranos lab in Newark, Calif., for analysis. In addition, Walgreens is suspending Theranos laboratory services at its Palo Alto, Calif., store, effective immediately."