- Pinterest Follows Rivals Into Selling Video Ads: Pinterest is finally taking the plunge that many other tech companies already have: It has started selling video advertising. Video ads from brands like Kate Spade and bareMinerals will start appearing in the virtual scrapbook-like Pinterest feed on Wednesday and into the coming weeks, and Pinterest is hopeful that ads from other brands will soon follow. The new ads will show up in a silent, GIF-like format within Pinterest’s feed, and will play with sound once clicked. Users will be able to click images, or pins, of featured products next to the videos. That could, for instance, bring them to a brand’s website or allow them to buy the product without leaving Pinterest. The move puts the social-bookmarking site in competition with the likes of Facebook, Twitter and Snapchat, as well as large digital publishers, which are all vying for the increasingly large amounts of marketers’ digital ad dollars. Pinterest allows people to save links to images and videos, known as pins, to aesthetically pleasing virtual bulletin boards, and to follow the boards created by others. It has become a popular destination for consumers looking to buy goods, particularly in areas like home improvement and cooking, and for the brands looking to reach them. Pinterest says 75 percent of the content people consume on its site comes from businesses. Pinterest, which says it has more than 100 million visitors a month, has largely been absent from conversations about videos, even as such content has boomed in popularity on its site. The company said it had seen a 60 percent increase in the number of videos saved by users in the last year. Last year, Etsy was the website with the greatest number of links from Pinterest’s Save button. Now, it is YouTube. “Candidly, the company just in general has underinvested until now in video as a platform,” Jon Kaplan, the head of global sales at Pinterest, said in an interview. “We wanted to make sure it was customized and specific to the way people use our platform. What you’re going to see going forward is a very big investment in video.”
- An Expert in Valuation Says Uber Is Only Worth $28 Billion, Not $62.5 Billion: According to Aswath Damodaran, a professor who specializes in equity valuation at NYU's Stern School of Business, Uber is running up against the roadblock that has thwarted many upstart businesses: Profit. While Damodaran thinks Uber and riding sharing will continue to expand, albeit at a slower pace, he's concerned about whether revenues will follow. China especially worries him given Uber's recent sale of its operations in that country to Didi Chuxing, its biggest rival there. The decision to exit "even if it was the right one from the perspective of saving itself from a cash war, will reduce its potential revenues in the future." In the other places where Uber does continue to operate, there are often large discounts for riders and other special promotions. This is proof that the business model is challenged, according to Damodaran. "I believe that a significant portion of their expenses are associating with maintaining revenues rather than growing them," he says. "In effect, it looks like the business model that has brought these companies as far as they have in such a short time period are flawed, because what allowed these companies to grow incredibly fast is getting in the way of converting revenues to profits, since there are no moats to defend." Damodaran says that young companies all face a point in time that he calls the "Bar Mitzvah Moment," when the focus shifts from growth to evidence that the business model can be profitable. In his mind, that moment is right now for ride sharing. "After an initial life, where investors have been easily sated with reports of more ride sharing usage (number of cities served, rides, drivers etc.), these investors are starting to ask the tough questions about how ride sharing companies propose turning these impressive usage statistics into profits."
- Lenovo's first-quarter profit jumps 64 percent, beating estimates: China's Lenovo Group Ltd, the world's biggest personal computer (PC) maker, said on Thursday its first-quarter net profit rose 64 percent, beating estimates as solid PC sales offset tepid smartphone demand. Beijing-based Lenovo said in a filing that net profit grew to $173 million for the quarter ended June from $105 million in the same period a year earlier. That was more than the $130.1 million average of analysts polled by Thomson Reuters SmartEstimates. First-quarter revenue dropped 6 percent to $10.05 billion from a year earlier, compared with an average of $9.63 billion estimated by analysts. Lenovo consolidated its hold on the slowing PC market during the quarter. PC shipments fell 2 percent year-on-year, compared with a 4 percent decline in the broader industry. Like peer Xiaomi Inc, Lenovo has been focusing on diversifying away from intense competition in low-margin devices in China - still the world's largest handset market but affected by the slowing Chinese economy.According to researcher TrendForce, Lenovo had a 4.5 percent share of the global smartphone market in April-June, leaving it a distant seventh after top player Samsung Electronics Co Ltd's 24 percent and Apple Inc's 15 percent.
- European Tech Scene Begins to Feel Silicon Valley’s Woes: At the offices of Deliveroo, a food delivery start-up with headquarters in an upmarket neighborhood here, signs of activity are everywhere. The communal kitchen hums with 20-something developers. A gold-painted scooter, which the co-founder William Shu once used to make deliveries, stands in the center of the office as people bustle about. The frenetic pace belies a more cautious approach that Mr. Shu, 36, a former Morgan Stanley investment banker, has recently started taking at the start-up.Over the last year, Mr. Shu has urged colleagues to be more circumspect with growth plans, forgoing rapid expansion in competitive markets like the United States to focus on places where Deliveroo already has a loyal following. And while the start-up has raised almost $200 million, employs roughly 400 people worldwide and operates in 12 countries, Mr. Shu says profitability — and not just aggressive growth to beat rivals to new markets — is increasingly important as the company moves beyond its British roots. The focus at Deliveroo is symptomatic of a change across many European start-ups. Just as in Silicon Valley, where a number of privately held tech companies have been stung by lower valuations and investor questions about their sustainability, that same unease has now reached Europe’s tech community, in a sign that a move away from soaring boom times in start-ups is going global. Driving the pullback are some of the same forces that have caused a change in Silicon Valley’s start-up scene. Tech stocks are gyrating because of fears of a global economic slowdown — exacerbated in Europe by the region’s migrant crisis and persistent financial problems. Valuations of some start-ups worldwide got ahead of themselves. As a result, venture capitalists in Europe and farther afield are becoming more cautious about funding local start-ups that do not have proven business ideas. “When Silicon Valley sneezes, the rest of the world catches a cold,” said Fred Destin, a partner at the London office of Accel Partners, a venture capital firm. “It’s only a matter of time before Europe faces the same issues that we’re seeing on the West Coast.” In Europe, that is leading to situations like that of Powa Technologies. Last week , Powa, an e-commerce company based in London, entered into administration, a form of bankruptcy. The start-up had raised $175 million since 2013 but had failed to win enough customers for its mobile shopping technology. Deloitte, which is overseeing the sale of the company’s assets, says it is now working to find buyers for the business. Truecaller, a Swedish start-up that had raised around $80 million for its caller ID smartphone application, recently laid off about 20 percent of its staff. A company spokesman declined to comment on the layoffs and said Truecaller remained committed to its business. And SwiftKey, a popular predictive typing smartphone application used by more than 300 million people worldwide, was bought by Microsoft this month for a reported $250 million, which was significantly less than what many of SwiftKey’s investors had expected. “You can already see more hesitance and lower valuations,” Christian Reber, founder of 6Wunderkinder, a German start-up bought by Microsoft last year, said in an email. “The market correction will continue, and that’s not necessarily a bad thing.”
- MasterCard will let you to take a selfie to complete purchases: MasterCard wants to use your face to help fend off fraudsters. Using a new system called MasterCard Identity Check -- or, colloquially, "selfie pay" -- the credit card company will use biometric methods like face recognition and fingerprint scans to better secure online shopping. Right now, Mastercard offers a feature that financial institutions can enable that lets customers set up a password for online payments to help prevent fraud. The new system will use the same principle, but instead of relying on a password that could be forgotten or stolen, it uses your face or fingerprint. Consumers will go through all the normal steps of filling out credit card information when making an online purchase, but this feature adds another step: The website will send a notification through an app on customers' smartphones that asks them to verify their identity. This can be done either through a fingerprint scan or by using the phone's camera to take a brief, selfie-like, video. When taking the "selfie," the user will have to blink to prove that it's a live person and not just an old photo being used to spoof the system.
- Lenovo aims at mature markets with new 'augmented reality' phone: China's Lenovo Group is ready to break into mature markets this summer with the launch of its new smartphone which sports 'augmented reality' features developed under Google's Tango project, its chief executive said on Tuesday. The device, which was announced at the 2016 CES consumer electronics show in Las Vegas in January, will launch in July, Chief Executive Yang Yuanqing said in an interview at Mobile World Congress in Barcelona. Declining to give additional information he said that the phone will include Google's Project Tango technology and more. Project Tango combines 3D motion tracking with depth sensors to give a mobile device the ability to know where it is and how it moves through an area, creating the potential to use augmented reality features on the phone. Augmented reality software then overlays text or graphics on the real-life image. It differs from virtual reality, which seeks to simulate real-world views.
- Tech IPO Freeze Is Sign of Investor Reality Check: The tech IPO market is frozen. Storage vendor Nutanix is further proof. It's been over three months since Square and Match Group debuted, and not a single software or Internet company has followed. Seven of the past 10 technology companies to go public are trading below their offer price, and four are down by at least 20 percent, according to FactSet. Nutanix, which filed its IPO prospectus in December, is holding off on selling shares until the stock market volatility wanes, said sources familiar with the matter. The developer of data center technology that wraps together storage, servers and virtualization was set to go public in late January, but has been advised by its bankers to wait for the market to calm, said the sources, who asked not to be named because the discussions are private. No other high-profile tech companies are publicly on file. Last month, online lender Elevate Credit delayed its IPO due to market conditions, as January marked the worst month for the Nasdaq since 2010. The index is still down 8.5 percent to start the year even after rallying over the past week. For Silicon Valley's financiers, this is all troubling. Big IPOs are their lifeblood. That's how venture investors make outsized profits and justify the billions of dollars they pour annually into start-ups that ultimately go bust or fail to generate returns. Last year should have been a banner year for IPOs. The Nasdaq topped 5,000 for the first time since 2000, and rose for the fourth consecutive year. Investors expressed appetite for risk, bidding up Amazon.comand Netflix, the year's two best large-cap performers. Yet, tech companies went public at the slowest pace since 2009. Instead of IPOs, the highest growth companies were raising mega-rounds of cash in the private market at valuations and revenue multiples that exceeded what public investors were paying. Hedge funds and private equity firms distorted the IPO cycle, putting piles of cash into companies but without rewarding early investors and employees the way public offerings do. Late-stage private financing almost doubled from $8.9 billion in 2013 to $16 billion last year, according to the National Venture Capital Association, with companies including Uber, Airbnb, SpaceX and SoFi each reeling in at least $1 billion. That could mean a painfully dilutive private investment round, selling the business at a loss to some investors or going public at a price below what earlier investors paid. "People just have to get real," said Golden, a managing partner at Revolution Ventures in San Francisco and former director of JPMorgan's technology investment banking practice. "When markets are speaking, we may not like what they're saying but we have to listen."
- Etsy Shares Spike 13% As It Reports Strong Revenue In Fourth Quarter: Etsy didn’t have a good 2015, but it was still able to finish on the stronger side. Today the company reported its fourth-quarter results, coming in at $87.9 million in revenue and a loss of 4 cents per share. Analysts were expecting a loss of 1 cent per share on revenue of $86.5 million. Another important number to track here was the company’s gross merchandise sales (GMS), which rose 21.3% to $741.5 million from $611.5 million in the fourth quarter last year. Shares of Etsy were up as much as 13% in extended trading following the report. Still, it’s partially a recovery from the day where shares ended down around 7% before the company reported earnings. t’s also a strong finish amid the fresh 2015 IPOs, which was one of the weakest years for the IPO market since 2009. Even with the strong showing, Etsy is still trading well below its IPO price — but it is certainly not alone. The fourth quarter was an important one for Etsy — it had to show investors that it could post a strong holiday quarter and bring in new people who would buy gifts and other products on Etsy. It looks like investors were pleased by its ability to beat on revenue and bring in some new buyers and sellers. It also had to show that it could continue to bring those buyers and sellers in through despite its brand as an artisanal marketplace that is quite different from others like eBay. Etsy is also continuing to navigate a shift to more mobile sales, with mobile visits accounting for 61% of the company’s overall visits, and 44% of gross merchandise sales coming from mobile devices. This is all pretty good news for the company. In general, Etsy has not had a good year. Shortly after its IPO the stock hit around $30, but has since cratered to under $8. Today, obviously, didn’t help. To be sure, a lot of companies haven’t been having a good year due to a few things outside their control — like global economic issues and foreign exchange problems — but Etsy in particular is getting hit hard by investors.
- Lenovo Tumbles as Sputtering PC, Phone Demand Hammers Sales: Lenovo Group Ltd. plunged in Hong Kong trading after quarterly revenue declined for the first time in more than six years on stalling demand for phones and computers. Shares fell 10 percent in their biggest decline in two years. The world’s largest PC maker said revenue dropped 8 percent in the three months ended December, even as broadening cost cuts delivered a surprise rise in net income. Lenovo is relying on cutting $1.35 billion from annual costs and eliminating 3,200 jobs to shield its earnings from intensifying smartphone competition and a shrinking market for PCs. While it’s expanding into other businesses, the company still gets more than half of revenue from a market that Intel Corp. last month warned was off to a “soft” start in 2016 amid tepid economic growth. Focusing internationally helped Lenovo lift the proportion of smartphone shipments from outside China to 83 percent from 59 percent. Expansion into markets from India to the U.S. helped shore up margins even as its global market share slipped about 1.5 percentage points to 5.1 percent in the period. The company once hailed as a symbol of global ambitions for Chinese corporations now faces the twin challenges of a competitive global smartphone and PC environment and a home country growing at its slowest pace in a quarter-century.
- GoPro forecasts revenue below estimates, names new CFO: GoPro forecast current-quarter revenue well below analysts' estimates on weak demand for its wearable cameras and the company named Brian McGee as its new chief financial officer. GoPro said McGee, who joined the company from Qualcomm in 2015, would succeed Jack Lazar as CFO on March 11. The camera maker's shares fell 10 percent in extended trading on Wednesday. Demand for GoPro's helmet- and body-mounted cameras has been declining as rivals such as China's Xiaomi XTC.UL offer cheaper products and smartphone cameras turn increasingly advanced. GoPro forecast revenue of $160 million to $180 million for the first quarter ending March. The company's revenue fell 31 percent to $436.6 million in the fourth quarter ended Dec. 31, missing the average analyst estimate of $496.1 million. GoPro, which had already released its quarterly numbers last month, reported an adjusted loss of 8 cents per share. Analysts had expected the company to break even on a per-share basis. The company's shares were trading at $9.72 after the bell. Up to Wednesday's close, the stock had fallen more than 80 percent in the past 12 months.
- Cisco to pay $1.4 billion for Internet of Things firm Jasper: Cisco Systems Inc said on Wednesday it was buying Jasper Technologies Inc, a startup that connects devices like cars and medical devices to the Internet, for $1.4 billion in cash and equity awards, its largest acquisition since 2013. Legacy technology companies like Cisco have been trying to find paths for growth while new technology developments, such as the rise of cloud computing, threaten their core businesses. The so called Internet of Things, the area Jasper specializes in, offers Cisco a chance to offer cutting-edge technology to its current customers such as telecommunications companies. Jasper connects devices like cars, jet engines and pacemakers to the Internet and also makes a software platform that helps monitor these devices once they are online. Jasper had been planning an initial public offering and had banks to help it prepare. Its investors such as Singapore's Temasek, Sequoia Capital and Benchmark Capital, will now get a chance to cash out without having to brave the rocky equity markets which have seen no technology IPOs this year. Jasper's chief executive Jahangir Mohammed will stay on with Cisco and run a new Internet of Things Software Business Unit once the deal closes in the third quarter.
- Dropbox May Not Be LeBron James, but It Is Still in the Game: There are no obvious signs of distress at the lavish San Francisco headquarters of the cloud storage company Dropbox, where on any given day, its hallways bustle with upbeat, well-compensated tech workers enjoying the customary trappings of start-up life. Dropbox is not laying off workers or shrinking; it hired nearly 500 people last year, 75 since the start of this year, and it plans to soon move into a sprawling, custom-designed office building for which it has signed a long-term lease. But that isn’t the image of Dropbox you’d encounter in the news media. Two years ago, the company raised a round of financing that valued it at $10 billion, making it one of the most highly prized start-ups of the tech boom. Now it faces a stock market that has turned unfriendly to initial public offerings of tech companies, not to mention stiff competition from publicly traded companies like Microsoft, Google and Box, the similarly named firm in a similar line of business. As a result, Dropbox’s valuation has been battered by a series of “markdowns” from large investors who appear to have turned skeptical about its future. For instance, the mutual fund manager T. Rowe Price now considers Dropbox’s shares to be worth half what they were at the time of the last fund-raising round. So what’s really going on at Dropbox? Is it thriving or dying? Neither one, yet. When you look inside the company, you find something that defies Silicon Valley’s typical straight-up or straight-down narrative: a complicated story of incremental and potentially accelerating success, but one clouded by outsize dreams of yesteryear. It’s a fate that other Silicon Valley start-ups may be facing, especially with the dip in public and private markets for funding tech ventures. Dropbox’s problems have less to do with the strength of its current business than with a delay, so far, in realizing the towering expectations that once surrounded the company. The start-up is like the college basketball star who manages to turn pro but is still regarded with doubt because everyone has now realized he might never be the next LeBron James. What happens to a company once thought to be worth $10 billion when it turns out to be worth only $5 billion, or $2 billion? According to Dropbox’s executives, nothing too terrible — it can just wait out the market freeze and perhaps grow into its $10 billion valuation. In other words, Dropbox can keep working and may yet turn into LeBron. The murkier issue is not whether Dropbox can build a good business, but whether it can ever become the $10 billion goose that investors had once seen it as. Reports of Dropbox’s demise are premature. But so are reports of its comeback.
- Amit Singhal, head of Search, to retire - will be repaced by head of AI: Amit Singhal, the company’s senior vice president for search, and one of the earliest builders of its global computer system, announced that he would retire on Feb. 26. He has been involved with many of the technologies that have made Alphabet an engineering powerhouse and one of the world’s most valuable companies. His replacement, John Giannandrea, currently works in artificial intelligence, or A.I., at Alphabet. A.I. has been increasingly important to Google and other companies like Amazon, as they seek to build products that can do things like respond to voice commands, deliver complex alerts about changes to a user’s schedule, or drive a car. In a post to the Google Plus social network, Mr. Singhal indicated that he wished to spend time with his family and intended to give away some of his fortune. “It has always been a priority for me to give back to people who are less fortunate, and make time for my family,” he wrote. Mr. Singhal, 48, joined Google in 2000 as employee No. 176. A native of India, he has a doctorate in computer science from Cornell and worked at AT&T Labs before Google. One of his earliest jobs at Google was rewriting the initial breakthrough algorithms developed by Google’s co-founders, Larry Page and Sergey Brin. Google was one of many search engines, but it distinguished itself both in the quality of its results and in building features like spell check, which could offer correct answers to misspelled queries. The early engineering team also developed search-related tools for its advertising, which quickly turned into a very profitable business. Unlike some other early Google employees who scaled back their efforts or left the company altogether, Mr. Singhal appeared to remain fully engaged in advancing search. In an interview last summer, he described his job as looking at “what’s beyond the horizon,” particularly in building ways that people can easily get information from mobile devices. Mr. Giannandrea, 50, came to Google from the 2010 acquisition of another company, Metaweb Technologies. He has played an important role in incorporating machine learning into various Google products, like the image recognition in Google Photos and smart replies in Gmail’s Inbox. In addition to Mr. Singhal’s stated philanthropic and family interests, it is likely that his skills in building large computer networks and in A.I. will still be in demand.
Foxconn, Alibaba, others invest $500M in Snapdeal; eBay pares stake: Online marketplace Snapdeal raised $500 million in fresh funding led by iPhone manufacturer Foxconn, Chinese e-commerce giant Alibaba and existing investor SoftBank. Its other existing investors Temasek, BlackRock, Myriad and PremjiInvest also participated in this round, as per a press statement. Separately, e-commerce giant eBay said it has sold a portion of its holding in Snapdeal, 18 months after leading a $134 million funding round in the Gurgaon-based company. Snapdeal will use the money to expand geographical reach and enhance services in a bid to better compete with well-funded rivals such as US-headquartered Amazon and Bangalore-based Flipkart. The announcement confirms a previous report that said Snapdeal has raised $500 million, citing sources. With the latest funding, Alibaba is now backing two companies (Snapdeal and Paytm) who are directly slugging it out for supremacy in India’s consumer internet space.
Upstarts Raid Giants for Talent in Silicon Valley: The unicorns, a class of hot start-ups valued at $1 billion or more, are all aggressively pursuing the best and brightest minds in Silicon Valley with promises of talked-about workplaces and eye-popping payouts. Amid a general scramble for talent, Google, the Internet search company, has undergone specific raids from unicorns for engineers who specialize in crucial technologies like mapping. In particular, Uber — the largest unicorn, with a valuation of more than $50 billion — has plundered Google’s mapping unit over the last 12 months, aiming to bolster its own map research. Airbnb, the popular short-term rental start-up, has gone on a more general hiring spree, poaching more than 100 workers. While the unicorns typically pick off small groups of engineers at a time, making little impression on a large company’s total employee numbers, the poaching attacks are often aimed at siphoning off the best talent in strategic technologies. That can sting the likes of a Google, where executives have said one skilled engineer can be worth many times the average. To snag employees from large rivals, unicorns have a simple recruiting pitch: They are on a path to success, as illustrated by their rising valuations. Many offer generous equity packages of restricted stock units that can later translate to big paydays for employees if the unicorn goes public or is sold — a lure that neither Google nor any other public tech company can dangle. Also, the unicorns say they are far more fleet-footed and cutting-edge than large organizations.
Alibaba Cash-Burning Buybacks Make Internet Bonds China’s Worst: China’s Internet bonds are lagging behind as disappointing earnings and plans for buybacks to shore up slumping shares fuel concern finances will deteriorate. Alibaba, China’s largest e-commerce company, announced a $4 billion share repurchase last week, while Baidu, its most-popular search engine, unveiled a $1 billion plan in July. Their bonds have contributed to a 0.4 percent loss on technology notes this quarter, the worst sector in a Bank of America Merrill Lynch investment-grade dollar note index for China that gained 0.4 percent. That’s a turnaround after Baidu’s 2012 debut in global debt markets gave it a self-proclaimed “war chest” and Alibaba’s $8 billion sale in 2014 became Asia’s biggest corporate dollar bond offering. The companies’ shares have slumped at least 9 percent this quarter as authorities tighten controls on Web content and crack down on fake goods online. “Companies such as Baidu and Alibaba came out with weaker results, and have announced cash-burning buybacks or acquisitions, which triggered a sell-off,” said Anthony Leung, a credit analyst at Nomura Holdings Inc. in Hong Kong, said. “In addition, regular negative headlines such as the sale of counterfeit goods, have hurt their bonds.”
Lenovo Joins Smartphone Compatriots for ’Make in India’: Lenovo started making smartphones in India, becoming the largest Chinese company to produce mobile devices there after the government raised import taxes. Lenovo will use contract manufacturer Flex’s factory outside the southeastern city of Chennai for its Lenovo and Motorola brands, Amar Babu, chairman of Lenovo India, said Tuesday in a phone interview. The brands will have a combined annual capacity of 6 million units, Lenovo said in a statement. Foxconn Technology Group this year began producing smartphones in India for China’s Xiaomi and OnePlus after the Indian government raised taxes on some foreign-made goods to attract investment in manufacturing. Lenovo’s announcement marks the largest Chinese name yet to be lured by Prime Minister Narendra Modi’s Make in India campaign as competitors vie for a share of the world’s third-largest smartphone market. “Output from the plants is focused mainly on serving the Indian market,” Babu said. Lenovo has no immediate plans to develop phones specifically for India, he said. Lenovo considered adding smartphone manufacturing to its own personal-computer plant in Puducherry in the southeast before deciding to outsource to Flex’s existing factory in Sriperumbudur, Babu said.
Airbnb partners with China Broadband, Sequoia to expand in China: Online home-rental marketplace Airbnb Inc said on Tuesday it was partnering with investment firms China Broadband Capital and Sequoia China to expand into the Chinese market and find a chief executive for its operations in the country. The company, which was recently reported to have completed a $1.5 billion private funding round, said in a blog post it was also working with a larger group of investors, including Horizon Ventures, GGV Capital and China-based Hillhouse Capital. Airbnb, which matches people wishing to rent out all or part of their homes to temporary guests, has grown quickly and is valued at more than $20 billion. Airbnb said the number of outbound Chinese travelers using its service grew 700 percent in the past year. China Broadband and Sequoia China will help it customize technology for the Chinese market and establish a "localized presence" in the country, it added.
Twitter to accelerate push for content partnerships in Asia: Twitter said on Tuesday it plans to accelerate its push for content partnerships in Asia Pacific and the Middle East. It has appointed a Singapore-based executive, Rishi Jaitly, to boost teams in major markets such as Australia, India, and Japan as well as to expand into Greater China and Southeast Asia, the company said in a statement. Jaitly was previously Twitter's market director for India and Southeast Asia. Twitter has been aggressively expanding its capabilities to carry pictures, video and interactive content.
Kik Takes $50 Million Investment From WeChat Parent Company Tencent, Hits $1 Billion Valuation: Kik Takes $50 Million Investment From WeChat Parent Company Tencent, Hits $1 Billion Valuation. The app has 240 million registered users and claims that 40 percent of American teenagers are actively on Kik. The deal doesn’t mean the two apps are planning to integrate, but they will have a strategic partnership moving forward, according to Kik co-founder Chris Best. That means sharing things like data and app information, he added. He also said that Kik won’t be targeting China anytime soon (seems obvious now given WeChat’s foothold there) but plans to use the money to grow the company’s employee base.
Alibaba Skids as Revenue Growth Slowest in Three Years; $4 Billion Stock Buyback Is Planned as Stock Plunges 5% to New Low: Alibaba Group Holding Ltd's shares fell to a record low after China's biggest e-commerce company posted its slowest revenue growth in over three years as its strategy to shift more services to mobile devices hurt advertising sales. The company's shares declined as much as 8 percent to $71.03 - just shy of their IPO price of $68 - wiping off nearly $16 billion from its market value on Wednesday. The stock has lost declined nearly 30 percent this year, up to Wednesday's close. Alibaba also announced a $4 billion share repurchase program over two years, aimed at offsetting the impact of its share-based compensation programs. The company's results come at a time when China's economy is expected to grow at its slowest pace in a quarter of a century. Adding to investor concerns, China devalued the yuan on Tuesday, guiding the currency to its lowest point in almost three years. mobile was still less profitable than business via personal computers, where profitability also decreased. Revenue for the three months through June rose 28 percent to $3.27 billion, well below forecast. Gross merchandise volume (GMV) -- the total value of goods transacted across Alibaba's platforms -- rose 34 percent to 673 billion yuan ($105 billion), also the slowest growth in more than three years.
Online grocer BigBasket raises $50M from Bessemer, others: Online grocery retailer BigBasket.com, has raised $50 million in a fresh round of funding led by existing investor Bessemer Venture Partners. The Times of India, which first reported the development citing BigBasket CEO Hari Menon, said BigBasket has also mandated Citigroup to raise $150 million (Rs 950 crore) from new investors. The new round of funding, which values BigBasket at $1 billion, will power the company’s plans to enter 50 more Tier-II cities, the report said. BigBasket.com is an online grocery store with operations in Bangalore, Hyderabad, Mumbai, Pune, Chennai, Delhi-NCR and Mysore. It was founded by a team of five in 2011. The team has both offline and online retail experience, as it had earlier set up India’s first e-commerce site FabMart.com in 1999, and then established the Fabmall-Trinethra chain of more than 200 grocery supermarket stores in southern India. Trinethra was sold to Aditya Birla Group in 2006 and currently operates under the brand name ‘More’. The startup has investments from Bessemer Venture Partners, Helion Venture Partners and Zodius Capital. It was valued at Rs 1,400 crore when it last raised funds in January. The company is understood to have closed fiscal 2015 with a top-line of Rs 250 crore and a run-rate of 6,000 orders a day with average billing of Rs 1,500 per customer.
Strong U.S. sales help Cisco beat estimates: Network equipment maker Cisco Systems Inc reported higher-than-expected quarterly revenue and profit as strong demand for its products in the United States more than offset weakness elsewhere. Shares of Cisco, considered a bellwether for the performance of the broader network gear industry, rose nearly 4 percent in extended trading on Wednesday. The company is the market leader in selling network equipment to businesses, controlling about half of the $38 billion global market and overshadowing rivals Hewlett-Packard and China's Huawei, according to market research firm Gartner. For the fourth quarter, the company earned 59 cents per share on an adjusted basis, while revenue rose nearly 4 percent to $12.84 billion. Cisco's latest results also underscore an ongoing recovery in sales of the company's switches and routers, which were hit by a slowdown in spending by telecom carriers, its traditional customers, in the second half of 2014. The company has also been investing in new products and services such as data analytics software, security and cloud-management tools. Cisco said in June it would buy cloud-based security firm OpenDNS for $635 million. The company also said revenue from telecom providers rose 2 percent in the quarter but added that it did not expect an increase in capital spending by its traditional customers.
Lenovo quarterly revenue misses expectations, announces 10% cuts: Lenovo missed quarterly revenue expectations on Thursday and said it plans to lay off about 10 percent of its global non-manufacturing workforce, after posting a steep sales decline in its mobile division. The world's No. 1 PC maker said it plans to cut about 3,200 non-manufacturing positions to save $650 million in the second half of 2015 and about $1.35 billion on an annual basis, reflecting intense competition among global smartphone makers. Chief executive Yuanqing Yang said Lenovo would also restructure its lagging smartphone business at a one-time cost of $600 million, and was facing its "toughest market environment in recent years". Lenovo, which last year spent $2.91 billion to buy handset brand Motorola from Google in a bid to solidify its position in smartphones, pointed to "intensifying competition and long product development lifecycles" in the business.
Tinder Invokes North Korea in Strange Response to Vanity Fair Article, then Backtracks: Like a person scorned after a bad date, the tech company Tinder went a little bit crazy on social media on Tuesday after Vanity Fair published an article blaming technology for the death of dating. The article, “Tinder and the Dawn of the ‘Dating Apocalypse,’ ” was not just about Tinder — there is a wider Internet at work, the writer Nancy Jo Sales suggested. But the app, which lets users quickly swipe left to signal rejection or right to signal interest, was used to illustrate the problems young daters face when technology fuses short attention spans with too many options. On its official Twitter account, Tinder took issue with the report’s suggestion that its dating app was fueling a culture of casual sex. Tinder’s defense continued for more than 30 posts. The outrage was not lost on Twitter users, who relished the opportunity to point out that Tinder was being awfully thin-skinned. One post came under particular scorn. Tinder said it helped people find friends and make connections in places where Internet use is restricted. The claim that Tinder had “many users” in North Korea prompted a few creative memes featuring that country’s leader, Kim Jong-un, and many derisive questions about the extent of Tinder’s user base in China and North Korea. Both countries maintain strict controls on the Internet, and information in general. On Wednesday, Tinder issued a statement acknowledging its outburst. “Our intention was to highlight the many statistics and amazing stories that are sometimes left unpublished, and, in doing so, we overreacted,” the company said
WeChat’s Growth Shows Why Messaging Apps Attract Big Valuations: For an idea of why messaging applications are attracting valuations in the tens of billions of dollars, look no further than WeChat, a 600 million-user messaging application that’s part of Tencent. WeChat, a smartphone instant-messenger, digital wallet and car-booking service rolled up into one, is probably worth $83.6 billion1, or about half of TenCent's value, according to HSBC. As people spend more and more time sending short messages to each other—instead of, say, browsing websites or shopping online—such services have become some of the hottest technology businesses around. WeChat's user count jumped by 37 percent in the latest quarter, according to Tencent's results—and it isn't even the Internet company’s biggest messaging product. That honor goes to QQ, which has 843 million users. Facebook’s own Messenger has 700 million users. Skype, the Internet calling service operated by Microsoft Corp., also lets people exchange messages and boasts 300 million users. By comparison, Twitter Inc., which is projected to generate $2.24 billion in revenue this year, only has 316 million users. When it comes to innovation, however, WeChat may be far ahead of the pack in terms of money-making opportunities. It already includes shopping and in-app games, features that other services are rushing to replicate, according to Adley Bowden, senior director of analysis at Pitchbook Inc. "WeChat's success is a little bit of a game-changer in the take on messaging as a platform," Bowden said. Line, a messaging app popular in Japan, may soon offer a better picture of how investors are valuing messaging apps. The company, controlled by South Korean search portal Naver Corp., is preparing for a dual listing in Tokyo and New York next month, people with knowledge of the matter said in May. Line, which makes money by selling teddy bear icons and games to its 211 million users, had $223.9 million in revenue in the latest quarter. Competition for users remains fierce. Viber, a popular messaging app, has 249 million users. Kik, a Canadian messaging service, has more than 200 million, while South Korea’s KakaoTalk has 48 million people exchanging messages and photos. Eventually, within three to five years, there will be a few winners that survive, said Gartner's Blau. That will probably involve more acquisitions by the biggest messaging service providers, with the main question being how much further valuations can go.
- Amazon's strong Q4 profits (and slowing revenue) were both driven by a surge in marketplace: "Q4 2014 was whene Amazon flexed its marketplace muscles: After analyzing all the data, this quarter was a real stand out for the Amazon third-party marketplace. In fact, Amazon has started to open the kimono a bit on how much they reveal about the 3P business (particularly FBA) and it was all very strong in Q4. In fact, I’d go so far as to say the marketplace simultaneously drove the improved margin picture at Amazon and the revenue decline (will describe that in a future post). Acceleration – As mentioned above, the 3PM really accelerated to levels we haven’t seen in a long, long time. 33% y/y growth in a 15% e-commerce backdrop is quite impressive. 3P unit share – Another stand out metric from Q4 was Amazon announced that 43% of paid units came from third party sellers. Paid item growth -Paid item growth came in at 20%, flat with Q3. Media share – Media hit a low-water mark of 24% with EGM at a high-water mark of 70% (the missing 6% is other -ads and AWS). Geographical mix - Amazon’s revenues were 64% North American and 36% rest of world (Amazon’s largest regions outside the US are Germany, Japan and UK). See below for the details on geo mix. Active users – If there was a blemish on Q4, it was units/user and active users. Active users grew only 16% y/y to 270 (a slow-down from Q3’s 16% growth rate). Units per user – One interesting metric is the units/user – this metric shows us buyer frequency. In other words, are buyers increasingly active or decreasing activity. Of course, increasing is good and programs like Prime, and recommendations and upsells are working. Units per user was up .6% which is a bit of a slowdown."
- Even-steven: Apple will spend $2B on a data center in Arizona, even as AT&T sells data center assets worth $2B: On Monday, Arizona announced that Apple would invest $2 billion in the creation of a data center at a facility in Mesa after its original plans to produce sapphire, a material tougher than glass, there were abandoned. Apple had contracted GT Advanced Technologies, a sapphire producer, to make sapphire screens for iPhones, among other things. But to Apple’s surprise, GTAT declared bankruptcy last October after failing to meet some of Apple’s demands. As a result, Apple released it latest iPhones without sapphire. While Apple may have abandoned sapphire production at the Arizona facility, the company has not given up on the facility itself, which measures 1.3 million square feet. Apple on Monday said that the multibillion-dollar investment in the data center was one of its most significant investments ever, creating 600 engineering and construction jobs. The center will be partly used as a central command center for monitoring Apple’s other data centers around the world, the company said. AT&T Inc is selling some data centers worth about $2 billion as it continues its streak of asset sales, people familiar with the matter said on Monday. AT&T, the No. 2 U.S wireless provider, has been exploring options to pay down its debt and raise funds for investments in recent months. The company declined to comment. The three sources requested anonymity because the matter is not public. AT&T and its rival Verizon have been selling non-core assets in recent months. Verizon is close to announcing divestitures of wireless towers and wireline markets worth $10 billion, the Wall Street Journal reported on Monday. AT&T hired a financial adviser to assist in the sale. Following spectrum investments and pending acquisitions, AT&T's debt ratio may rise in the near term, the company said last week after spending close to half of the total bids in the record-setting $44.9 billion spectrum sale that concluded last week. AT&T emerged the top bidder in the AWS-3 spectrum auction by bagging 251 licenses worth $18.2 billion.
- Apple sold $6.5 billion in bonds on strong demand..: after boosting the deal by 30 percent, in the iPhone maker’s fourth major debt offering in the past two years as it preserves its overseas cash hoard. The company sold the securities in five parts, with the longest portion maturing in 30 years, according to data compiled by Bloomberg. The deal will be used for stock repurchases, dividend payments and debt repayments, according to a person with knowledge of the matter. Apple has issued the equivalent of $39 billion of bonds since April 2013, when it sold $17 billion in what at the time was the biggest corporate-bond offering ever. The Cupertino, California-based company’s previous debt deal was a sale of 2.8 billion euros ($3.17 billion) in November that allowed it to fund shareholder rewards without using cash from abroad that would be subject to U.S. repatriation taxes. “The company is building on the momentum of a strong past couple of weeks,” Jody Lurie, a corporate credit analyst at Janney Montgomery Scott LLC in Philadelphia, which manages $61 billion in assets, said in a telephone interview. “They are being advantageous with the current environment.” The company issued $2 billion of 3.45 percent 30-year notes at a yield of 125 basis points more than similar-dated Treasuries, Bloomberg data show. That’s more than the relative yield of 100 basis points the company paid on 30-year bonds in the April 2013 offering. The shortest maturity portions included $1.25 billion of 1.55 percent five-year bonds that yielded 42 basis points more than comparable Treasuries. A basis point is 0.01 percentage point. Apple’s bonds have returned 13.6 percent since the start of last year, outperforming the 10.3 percent gain in debt of similarly rated companies, and more than quadruple the 3.2 percent return on speculative-grade bonds, according to Bank of America Merrill Lynch Indexes
- ..even as Netflix plans to raise $1B in borrowing despite a ratings downgrade: Netflix today said it plans to offer $1 billion in senior notes and plans to use the proceeds for “general corporate purposes, which may include content acquisitions, capital expenditures, investments, working capital and potential acquisitions and strategic transactions.” Markets are not entirely thrilled with the move. Netflix’s stock is trading down slightly, and S&P has downgraded the company’s debt rating to B+ from BB-. S&P notes that Netflix already has $9.5 billion streaming content commitment as of December 31, 2014, up from $7.3 billion a year earlier. “We expect that streaming content commitments will continue to increase and that Netflix’s pursuit of more original programming with global rights will increase its cash flow deficits,” it concludes.
- Twitter out-performed Facebook during the Super Bowl, say some analysts: Twitter appears to still be the place for live social media commentary, especially for brands that have to pay to get the most out of their Facebook activity. However, Facebook has made major efforts to capture the discussion, introducing trending topics (much like Twitter) and creating a Super Bowl hub for game chatter. Last night placed the two platforms head-to-head in a way that shows the benefits and drawbacks of both. In some areas, Twitter dominates, and Facebook controls others. Half the ads in the Super Bowl featured hashtags, while Facebook was mentioned four times. There were 265 million posts, comments and likes related to the Super Bowl on Facebook, the company said. Update: There were 36 million tweets related to the Super Bowl, up from about 25 million last year, and they recieved 2.5 billion impressions, according to Twitter.The conversation was most active on both platforms at the end of the game when New England sealed the victory with a last-second interception. Facebook said 1.36 million people per minute were discussing the Patriots' win by the end of the game. Twitter calculated 395,000 tweets per minute on the interception. Katy Perry's halftime show generated 3 million tweets. Meanwhile, Facebook said more than 1 million people per minute discussed the performance in real time.
- Google maybe getting ready to launch a competitor to Uber: Google Ventures, the search giant's venture capital arm, invested $258 million in Uber in August 2013. It was Google Ventures' largest investment deal ever, and the company put more money into Uber's next funding round less than a year later. Back then, it was easy for observers to imagine Google teaming closely with Uber, or even one day acquiring it. David Drummond, Google’s chief legal officer and senior vice president of corporate development, joined the Uber board of directors in 2013 and has served on it ever since. Now there are signs that the companies are more likely to be ferocious competitors than allies. Google is preparing to offer its own ride-hailing service, most likely in conjunction with its long-in-development driverless car project. Drummond has informed Uber's board of this possibility, according to a person close to the Uber board, and Uber executives have seen screenshots of what appears to be a Google ride-sharing app that is currently being used by Google employees. This person, who requested not to be named because the talks are private, said the Uber board is now weighing whether to ask Drummond to resign his position as an Uber board member. have left executives at Uber deeply concerned—for good reason. Google is a deep-pocketed, technically sophisticated competitor, and Uber’s dependence on the search giant goes far beyond capital. Uber’s smartphone applications for drivers and riders are based on Google Maps, which gives Google a fire hose of data about transportation patterns within cities. Uber would be crippled if it lost access to the industry-leading mapping application, and alternatives— such as AOL's MapQuest, Apple Maps, and a host of regional players—are widely seen as inferior. Google’s entrance into the ride-sharing market would also leave Uber without a partner in the suddenly plausible future in which cars without steering wheels roam the streets. Uber will either have to develop the technology itself or form an alliance with a company that can if it wants to offer autonomous vehicles within its fleet. Mercedes, Audi, Tesla, and other carmakers have said they are developing driverless cars, though it's not clear that any is as advanced as Google's.
- Lenovo Q4 earnings beat expectations on smartphone strength: revenue $14.1B, +31% Y/Y, net income $253M, down from $265M: Lenovo Group Ltd (0992.HK), the world's leading PC maker, said on Tuesday its third-quarter revenue rose 31 percent to $14.1 bln, beating investor expectations, as its smartphone division sales more than doubled. The company said net profit was $253 million, down from $265 million a year prior due to ballooning operating expenses associated with two multi-billion dollar acquisitions completed in recent months. The results beat expectations of $13.71 billion in revenue and $200 million in net profit, according to analysts polled by Thomson Reuters SmartEstimates. The Beijing-based company acquired American phone brand Motorola for $2.91 billion and IBM's low-end server unit for $2.1 billion to expand its business beyond the declining PC market. Lenovo, which closed the Motorola purchase in late October and included two months of Motorola's results in this quarter's earnings, touted the American handset brand's early performance and said it achieved "hyper growth" in emerging markets outside China. Motorola sold more than 10 million handsets during the quarter, a company record, and its purchase by Lenovo made the combined company the world No. 3 smartphone maker with 6.6 percent market share, Lenovo said. Total sales from the mobile division rose 109 percent to $3.39 bln, or a quarter of the company's sales. Lenovo continued to consolidate its hold on the shrinking PC market, reaching a record 20 percent share during the quarter with sales of $9.15 billion. Shipments rose 5 percent compared to a 3 percent decline in the broader industry, with growth particularly strong in Eastern Europe, Lenovo said.
Single's Day Stats for Alibaba: GMV US$9.3 billion (up 60% Y/Y from last year’s full-day tally of US$5.8 billion). Mobile accounted for 42.6% of GMV (up from 21% last year). Orders: 278.5 million. Top brands: Xiaomi in top spot (Xiaomi sold 720K smartphones in 10 hours), Huawei second, and Haier third. Japan’s Uniqlo was next up in fourth place. Discounts were steep: Merchants were pressured to discount by at least 50%, or to the lowest point in the last 60 days, else face steep drops in listings rank.
Caveat: GMV may have been (heavily) inflated by a 'Pre-Sales Initiative' this year: Alibaba is employing what it calls a "pre-sale initiative", under which merchants advertise products at their discounted Singles' Day price from as early as Oct. 15. Tmall lets customers put down a deposit for the order but only allows merchants to process the full payment and ship the products on Nov. 11. The company said it had used such a scheme since 2012, since it helps merchants plan the logistics of shipping such large volumes of goods. Merchants said this year it was used much more widely, and was aimed at boosting Alibaba's figures. "This is a way they can actually count that volume all transacted in one day," said one online store manager who asked not to be named in case it damaged his business. "They've never done a company-wide policy like this." Merchants said Alibaba ensures discounts are genuine by having vendors discount their products from their lowest price within the 60 days before and after Singles' Day.
Lenovo's results were disappointing (Q2 rev: $10.5B, net income $262M), and company said hypergrowth in China smartphone sales is ending: Lenovo’s sales in the quarter were $10.5 billion, compared with the $11.3 billion average of 16 analyst estimates compiled by Bloomberg. Second-quarter net income rose 19 percent to $262.1 million, beating the $259.8 million average of 12 analyst estimates compiled by Bloomberg, as Yang took advantage of Lenovo’s expanding scale to boost profit at more than twice the pace of sales Lenovo fell to third in China, trailing Xiaomi and Samsung, according to researcher Canalys. Smartphone sales in China are projected to hit 426 million units this year, compared with about 214 million two years ago, according to a forecast from International Data Corp. Lenovo Group Ltd. (992) said the era of “hypergrowth” is over in China’s smartphone market after the company reported its slowest sales growth in six quarters. Shares fell to their lowest since June 24 on an intraday basis after Lenovo’s revenue rose 7.2 percent in the three months ended September, the smallest increase since March 2013 and missing analysts’ estimates.
Amazon's AWS business is slowing, facing commoditization and increasing competition from Microsoft and Google:Sales growth at AWS has been declining. AWS is categorized in Amazon’s financial statements in “North America, Other.” That grouping brought in $1.34 billion in the third quarter, up from $960 million a year ago. Yet sales growth fell to 39 percent from a year earlier, down from 57 percent a year before. The cloud industry has become increasingly competitive this year, with Google Inc. and Microsoft slashing costs of their offerings and boosting cloud products. Earlier this month, Google said it was reducing the price of some cloud features -- including storage and networking options -- by 23 percent to 79 percent. Microsoft has also trimmed prices this year and last month said it was increasing cloud services with packages of hardware and software. “Commodification is kind of washing at the foundations of what they do,” said Carl Brooks, an analyst with 451 Group. Amazon remains the dominant cloud provider, with a 27 percent share of the worldwide market for cloud infrastructure services, according to a report last month from Synergy Research Group Inc. Microsoft has around 10 percent, while International Business Machines Corp. has 7 percent.
Going cheap rates for website visits in China show why traffic figures from Chinese sites might be unreliable: : A screenshot from a Chinese website that’s selling web traffic: The cheapest option, visits from 1,000 unique IPs per day, will run you just RMB 2.46 (US$0.40) a day. 8,000 visits a day costs just RMB 19.68 (US$3.22). The site in question, which we won’t link to as we don’t wish to contribute to the site’s business, is something that Tech in Asia found easily by searching Baidu, and it claims that it can even help webmasters increase their Alexa ranking.
