Daily Tech Snippet: Thursday, January 14

• Parallels Between Netflix and Amazon: Netflix has grown substantially over the last few years, now claiming more than 70 million subscribers who pay about $8 to $10 a month for access to a large library of movies and TV shows. Last year the streaming service’s stock was the best performing of the Standard & Poor’s 500-stock index, rising 140 percent. And its prospects keep looking brighter: Last week, Reed Hastings, Netflix’s goateed chief executive, announced he would make his movies and TV shows instantly available to almost every country in the world (the big exception, for now, is China). The move nearly doubled Netflix’s potential market — the service is now accessible to more than 540 million households worldwide with broadband Internet access. On paper, Mr. Hastings’s plan to take on the traditional TV industry has long sounded slightly nutty, as delusional as Jeff Bezos’s strategy at Amazon to overrun retailing once seemed. Netflix’s plan is certainly high risk — it is spending billions to create and license content, it is fighting determined media incumbents across the globe, and it owns none of the pipes leading into people’s homes. (Among Netflix’s many competitors is Amazon itself, which has its own growing and well-regarded original-content division) A capacity for surprise is the first and most obvious similarity between Netflix and Amazon. There are lots of others.  Like Amazon, Netflix is amassing a cache of intelligence on what customers want, and it’s using that data to create content that appeals to a wide range of demographics globally. And finally, Netflix, like Amazon, is a flywheel that keeps spinning faster: As it gets more subscribers, it gets more data and more money to fund more content, which in turn helps it bring in more customers, and on and on, ever faster. Netflix barely ekes out a profit now, but the bulls say that as the flywheel spins, it will eventually begin earning enormous sums.

• GoPro Issues Weak Q4 Revenue Estimates, Plans to Cut 7 Percent of Workforce - Stock down 20%: GoPro had a hard time selling cameras in the fourth quarter last year, and there are major layoffs planned at the camera maker and action sports media company. Wall Street did not take the news well. After a brief suspension in trading, the company’s stock is down more than 20 percent in after-hours trading. A release from the company says it anticipated $435 million in Q4 revenue and $1.6 billion in revenue for the 2015 calendar year, coming in way below what was expected. As a result, the company plans to cut 7 percent of its workforce. Additionally, the company’s top media exec, Zander Lurie, is leaving his job and moving onto the GoPro board. In email obtained by Re/code that CEO Nick Woodman sent to GoPro employees, Woodman places the blame for the layoffs on the “launch and pricing” of GoPro’s $399 Hero 4 Session camera last year: "Today’s announcement reflects the issues we faced in 2015, largely related to our launch and pricing of HERO4 Session. While we clearly made a mistake pricing Session at $399 (more specifically I made the mistake, it was my decision), I’m proud of how we responded. We recognized the problem, price adjusted to $299 … recognized that wasn’t enough and price adjusted again to $199 which positioned Session as the best entry-level product we’ve ever made." GoPro’s stock has dropped precipitously over the last year as it has struggled to sell more cameras and develop its media business.

• The big fund manager mistake of 2015? Being de-FANGed:  Missing out on the hot technology stocks known as the "FANG" group last year came back to bite some well-known mutual funds. Funds that avoided Facebook, Amazon.com, Netflix and Google - now Alphabet – dramatically underperformed peers that loaded up with the fast-rising tech stocks, according to a review by Thomson Reuters’ Lipper unit. In fact, despite a volatile year in which active managers faced shifting trends in many sectors, it seems that simply choosing to overweight the FANG group was the path to beating the market. Without them, the S&P 500 Index would have declined 2.7 percent last year; instead it fell 0.7 percent, according to Goldman Sachs Global Investment Research. For the year, among 228 funds reviewed by Lipper, those that had less than 5 percent exposure to the FANG group fell 1.3 percent on average; funds with more than 10 percent exposure rose 6.4 percent. Shares in Amazon and Netflix more than doubled last year as both added more content and subscribers to their competing video-on-demand-services. Facebook rose 34 percent as the social media giant continued to increase mobile ad revenue, while Alphabet also increased revenue and showed more cost discipline, boosting its shares 47 percent. Of the four, all but Amazon have outperformed the S&P 500 so far in 2016 through Tuesday, although it is far too soon to say if the group will repeat its performance for investors in 2016.