- Alphabet’s Earnings Miss Forecasts: European regulators brought the hammer down on Google this week, and investors barely blinked. But when the company’s first-quarter numbers came in a little light on Thursday afternoon, its stock immediately plummeted. Both revenue and profit rose sharply from 2015 but missed analysts’ forecasts. Revenue, at $20.26 billion, was about $120 million less than expected. Earnings per share, excluding certain items, were $7.50 when the consensus estimate was $7.96. The result: The stock fell about $46, or about 6 percent, in after-hours trading. Shares of Google were priced for perfection, and the first quarter was a little less than perfect. Whether that means anything substantive is more doubtful.Revenue from what the company calls “Other Bets” — including its fiber business and the Nest thermostat — was $166 million, more than double what it was in the first quarter of 2015. Losses for Other Bets rose to $802 million from $633 million. The number of employees jumped to 64,000 from 55,000 last year. “The vast majority” of them, the company stressed, were engineers and product managers. A question hanging over Google is its ventures in cloud computing. This is the growth market where Amazon is far ahead of everyone. Amazon Web Services is more exciting to investors than the retailer’s core business. Microsoft, meanwhile, is mounting an aggressive challenge. Google is far behind at No. 3, or perhaps even No. 4 after IBM, said John R. Rymer, an analyst at Forrester Research. Last fall, Google hired Diane Greene, an industry veteran, to run all of its cloud businesses.
- Microsoft’s Cloud Business, Seen as a Salvation, Falls Short of Investors’ Hopes: Cloud computing is seen by many investors as Microsoft’s salvation, the growing business that has convinced many there’s a bright future for the company beyond the troubled PC market. But Microsoft’s cloud business didn’t grow quite fast enough during its last quarter to keep investors happy. The company missed Wall Street estimates, though Microsoft executives said it would have beaten them without the impact of unexpectedly high taxes. For its fiscal third quarter, which ended March 31, Microsoft reported net income of $3.76 billion, or 47 cents a share, down from $4.99 billion, or 61 cents a share, a year ago. Revenue fell to $20.53 billion, from $21.73 billion. Microsoft’s traditional profit engines, like Windows, have weakened considerably as sales in the PC market have remained in a multiyear slump. Last week, the research firm Gartner reported that worldwide PC shipments in the first quarter fell 9.6 percent from a year ago. Yet Microsoft has convinced many investors that it has found a way to adapt to technology changes, in part by vigorously embracing cloud computing. Shares of Microsoft, which is based in Redmond, Wash., are still trading near their price in 1999, their high, even with a 5 percent drop in value Thursday evening. The optimism stems from its success in transitioning legacy software businesses like Office to a cloud business model in which customers subscribe to the applications. There are now 22.2 million subscribers to Office 365, the subscription version of its Office business, up from 12.4 million a year ago.
- Ev Williams’s Medium raised $57 million in September — now it’s raised another $50 million: You may have heard there’s a tech funding crunch, especially for companies that have yet to generate significant revenue. Not for Medium: The publishing platform says it raised another $50 million — just a few months after it raised $57 million. Update: Investors valued the company at $600 million in the current round, said a person familiar with the financing. This round was led by Spark Capital and includes previous investors Andreessen Horowitz and Google Ventures. CEO Ev Williams, whose stake in Twitter has made him a billionaire, is also putting money into his own company
- Amazon is shutting down its Gilt Groupe competitor MyHabit: Another unhappy ending for a flash-sale shopping site. Three months after Gilt Groupe sold for a fraction of its valuation, Amazon has decided to shut down its fashion discount competitor MyHabit, according to a person familiar with the move. Amazon launched the website five years ago near the height of the flash-sale craze, but MyHabit has struggled in recent years as the one-time popular fashion niche has become less popular and Amazon has prioritized other fashion initiatives. Women’s Wear Daily reported employees have been told that the site will shutter at the end of May (subscription). In January, the CEO of MyHabit took on a new role at Amazon as general manager of its new private-label fashion business, according to his LinkedIn profile.Flash sales, on the other hand, has become an increasingly difficult business in recent years. The model exploded in popularity following the last recession, as designer brands were desperate to sell excess inventory in any way they could. But as the economy rebounded, there was less excess inventory to go around and some brands got smarter about how much inventory they produced.
- WhatsApp completes end-to-end encryption rollout: It’s a security project that’s taken around a year and a half to complete, but messaging giant WhatsApp has now fully implemented strong end-to-end encryption on its platform and across all mobile platforms for which it offers apps. This means users of the latest versions of the messaging app will have their comms and media end-to-end encrypted by default. And there are a lot of WhatsApp users; earlier this year the Facebook owned company announced it had passed a billion active users. Securing cross-platform video comms was the last piece of the puzzle, according to a WhatsApp spokesman. End-to-end encryption means the content of communications are not stored in plaintext on WhatsApp’s servers. Nor is the company able to decrypt users’ messages to access them since it does not hold the encryption keys. So WhatsApp will be unable to be compelled to hand over messaging data — even if served with a warrant by authorities demanding access.
- Virtual Reality Check: Rating the HTC Vive and the Oculus Rift: JUST a week after Facebook released the Oculus Rift, the first high-powered virtual reality device for consumers, a less publicized contender has arrived: the HTC Vive. Similar to the Rift, the Vive — a joint development by the Taiwanese manufacturer HTC and the video game distribution company Valve — is a virtual reality headset that connects to a powerful computer. The Vive is even more expensive than the Rift — it costs $799 for the headset and $1,000 to $2,000 for a compatible computer. Facebook’sOculus sells the Rift headset for $599, or $1,500 when the system is bundled with a computer. The main advantage of the HTC Vive headset is that it comes with motion controllers, which let you effectively reach out and grab objects in virtual reality. This kind of interaction feels much more natural for virtual reality than the game controller included with the Rift. Also, the Vive’s motion-sensing base stations capture richer movements, enabling people to walk around in a larger space or crouch and grab something while using virtual reality; the Rift’s camera can detect movements, too, but the Rift was primarily designed to be used while standing or sitting. Another benefit of the Vive is that the headset fits better. With the Rift, I could always see a small gap in the space beneath the nose. The Vive headset completely blocks the outside world. HTC also includes a piece of foam that can be inserted into the Vive for a better fit for a narrower face. But a major downside of the Vive is the setup, which is more demanding than the Rift’s. HTC recommends that you drill mounts into the ceiling to install the motion-sensing base stations to ensure that the sensors have a clear line of sight with the headset and your body. In other words, to take full advantage of the Vive, you probably need to dedicate a room to virtual reality; to use the Rift, you can get away with clearing out a bit of standing space. The other obvious downside of the Vive is the higher cost. With a computer and accessories included in the total price, the Vive will cost roughly $300 more than the Rift. Then again, if you are willing to spend more than $1,000 for virtual reality, that extra $300 might not matter much. This is Year 1 of powerful and capable virtual reality systems coming to the mainstream. Over time, the content that will become available for these devices will define their worth. There isn’t much to do with either system yet, and consumers would be wise to wait to see if any killer virtual reality apps or games emerge for the systems.
- After a Pause, Nutanix Signals IPO Plans Are Back on Track: Nutanix, a supplier of storage products for data centers, just updated its paperwork with the U.S. Securities and Exchange Commission, signaling that its plans for an initial public offering may no longer be on hold. The new filing shows that Nutanix, based in San Jose, Calif., nearly doubled its revenue in the six-month period ended Jan. 31, to $190 million from $102 million in the year-ago period. It ran a net loss of nearly $72 million, which increased from $56 million a year ago. Operating expenses rose to $190 million from $112 million previously. The company first filed for an IPO in December, but was reported to have put those plans on hold in February after markets turned south. After the Dell-owned security company SecureWorks, which is expected to offer about 20 percent of its shares in an IPO later this month, Nutanix would appear to be on track to be the second tech IPO of 2016.
- Amazon Acquires Image Analysis Startup Orbeus: The acquisition took place in the fall of 2015, said the person who asked not to be identified because Amazon hasn’t announced the deal. Orbeus developed photo-recognition technology based on a powerful type of AI called neural networks and made this available as a consumer application, as well as a service for other companies and developers called ReKognition. It automatically categorized and identified the contents of photos. Orbeus’s app, PhotoTime, came out before Google launched its successful AI-based Photos app. "ReKognition API is no longer taking new customers," Orbeus says on its website. "But we’re up to new/exciting things." Other startups applying neural networks to image-recognition and related computer-vision tasks include New York-based Clarifai Inc. and Palo Alto-based MetaMind. Big technology companies are interested in this field, and other areas of AI. Salesforce.com Inc. said Monday it acquired MetaMind, while Apple Inc. said in January it purchased Emotient Inc., which specialized in facial-recognition technology.
- Medium Chases Revenue With Promoted Stories; Adds Subscriptions: Medium, the 4-year-old online publishing platform from Twitter Inc. co-founder Ev Williams, now has a plan to pay the bills. The company will make money in much the same way Twitter and Facebook Inc. do -- by allowing brands to post stories and pay for them to be promoted to a wider audience through prominent placement in the news feed. Alphabet Inc.’s Nest and Intel Corp. are among the first advertisers taking this approach to reach Medium’s 25 million unique readers. The blogging site also plans to extend its tools for media publishers, so they can host their entire website within Medium, helping the companies save money on technology costs. The Awl and Pacific Standard are among new publications coming to Medium starting Tuesday. Publishers can also choose to put some stories behind a members-only paywall. On Medium, people can publish and annotate long-form articles and follow networks of authors. The company, backed by investors including Andreessen Horowitz, Greylock Partners and Google Ventures, last raised $57 million in September at a $400 million valuation, according to a person familiar with the matter.
- Twitter Built a New Button So You’ll Send More Private Messages: Reply. Retweet. Like. And now Send. Twitter is adding a new button to the bottom of each tweet so that it’s simpler to send that tweet to another user within a private message. The new icon, a small envelope right next to the heart-shaped Like button, automatically attaches the tweet to a private message which you can then address to another user. But the fact that Twitter is putting a new button onto each tweet is a pretty good indication of how important direct messaging is to the company. Twitter was late to building out its messaging service and as a result has always lagged behind other messaging apps like Facebook’s Messenger or Snapchat. But Twitter DMs are increasing in popularity — Twitter claims that 60 percent more messages were sent in 2015 than 2014. Adding a new button to encourage more private messages should bump that number even higher. It should also make it easier for users to send tweets to brands or retailers, a customer service use case Twitter is starting to build features for. It’s one of the reasons the company removed the 140-character text limit for direct messages last summer; it’s hard to have a conversation with a customer service agent when you can’t send more then two sentences at a time. The customer service use case was also one of the reasons Twitter has considered spinning DMs into its own app. It ultimately decided against the idea.
