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- Snapchat Said to Be Valued at $16 Billion in New Fundraising: Snapchat raised $537.6 million in a sale of common stock, with the funding round valuing the messaging startup at about $16 billion. The company may raise as much as $650 million in the round, according to a filing Friday with the Securities and Exchange Commission. That would bring Snapchat’s total financing to more than $1.2 billion, according to Crunchbase, as the company builds its business in pursuit of an eventual initial public offering. By raising the latest funding in common stock, Snapchat is bucking convention for later-stage venture deals, which tend to include preferred-stock provisions that allow investors to decrease their risk. “Investing in common stock, especially at a $16 billion valuation, is not normal,” said Anand Sanwal, chief executive officer of venture-capital data firm CB Insights. “It highlights the leverage that Snapchat had in these negotiations because the investors aren’t getting the protections they normally ask for.”
- Intel is close to clinching a takeover of fellow chip maker Altera for more than $15 billion, the latest sign of consolidation in the semiconductor industry. Intel is expected to pay about $54 a share for Altera, whose specialized chip designs would help Intel expand beyond chips for personal computers. An agreement could be announced as early next week, though sources cautioned that talks are continuing and might still collapse. The two sides had been in talks already this year, though the discussions were eventually delayed when Altera rejected an offer in the ballpark of $54 a share. But after the talks ended, Altera reported quarterly earnings that fell below expectations. Meanwhile, one investor, TIG Advisors, began to publicly campaign for a resumption of talks with Intel. If completed, a takeover would be the latest among chip makers as companies seek larger scale and more diversified offerings. Growing and having more products can give those manufacturers greater savings and negotiating leverage with customers. On Thursday, Avago Technologies struck a roughly $37 billion acquisition of Broadcom to break into the top tier of semiconductor companies. Intel and Altera both make semiconductors, but vastly different types. Intel is known primarily for the standard chips that go into personal computers and computer servers. They consist of millions of transistors, and once created, their performance can be adjusted only slightly by changing the software that works with them. Altera’s chips — known as field programmable gate arrays, or F.P.G.A.s — are lower in power and performance but can be altered after manufacturing to carry out different functions. That gives them far greater flexibility. Intel may be seeking Altera to create computers that combine the power of a standard semiconductor with the flexibility of an F.P.G.A., by means of a board with both types of chip. This could potentially give Intel the ability to build, for example, a computer server that can add functions so it lasts longer inside a corporate data center. This move would reflect several recent trends in the industry. Giant cloud computing centers have become an increasingly large part of Intel’s business, made even more significant as smartphones have lowered the demand for “Intel Inside” personal computers. Intel now has dedicated sales teams working with big chip consumers, like Amazon.com, that tell the company its specific computing needs for its giant cloud systems. In addition, Intel is now concentrating on at least 200 companies that are building significant computing clouds. Adding F.P.G.A.s might be a good way to help companies customize those data centers.
- Social Networking App Path Sells Itself To Korean Messaging Heavyweight Daum Kakao. It isn’t often that a company in Asia acquires a U.S. rival, particularly one that has surfed a wave of hype in Silicon Valley. But that’s exactly what happened this week after Path announced the sale of its flagship app to Korea’s Daum Kakao. The deal is undisclosed, but, as a real acquisition involving two consumer messaging apps, it is notable, particularly as the mobile messaging space transitions from a period of hyper growth to one of consolidation and services. Most people interested in tech are familiar with Path. The five-year-old service burst onto the scene as a beautifully designed, mobile-first alternative to Facebook with a number of features to set it apart from the social network. Ultimately, Path didn’t break out of Silicon Valley and go mainstream in the U.S., but it did make inroads in Asia — particularly in Indonesia. The company is said to have 23 million registered users, four million of whom are in the Southeast Asia country, as of October last year. Path began to focus more intently on Asia with its redesign in 2013, while it took money from Indonesia’s Bakrie Global Group as part of a $25 million Series C last year. Daum Kakao is less known, particularly in the U.S.. The organization was formed when Korean internet firm Daum merged with domestic messaging app company Kakao in a $2.9 billion deal last year. The company’s Kakao Talk app is perhaps the best example of how a messaging app has impacted media and internet distribution — which is where the trend is moving in the U.S. and other countries. Though it has a small global presence — its 160 million registered userbase is far lower than key rivals — the app is installed on over 95 percent of smartphones in its native Korea, where it offers free texts and calls, games, a payment service, taxi-hailing and more. The 2015 Mary Meeker internet trends report, released this week, ranked Kakao Talk as the top messaging app worldwide based on user engagement. Another indicator of its stickiness is that its games business utterly dominates Korea’s iOS and Android app stores, according to data from App Annie. Indonesia is the largest country in Southeast Asia with a population of over 250 million. It was well-known for being the last major market where BlackBerry had any kind of mainstream presence but that’s changed now. The rise of affordable Android smartphones — particularly glamorous sub-$300 devices from the likes of Xiaomi — sent BlackBerry’s sales plummeting. But, the result of BlackBerry’s years of dominance is that there is no single messaging app that dominates Indonesia. That’s unlike other parts of Asia — China (WeChat), India, Singapore and Malaysia (WhatsApp), Japan, Thailand and Taiwan (Line), Philippines (Viber) — where the leadership has been established. With a large population up for grabs and the sizable following that Path enjoys in the country, Daum Kakao is buying itself a larger chunk of the market with this deal. It may also bolster its presence in other parts of Asia, where Daum Kakao claimed Path has 10 million registered users.
- Netflix now accounts for almost 37 percent of American Internet traffic: Netflix's share of Internet traffic is exploding. The streaming service now accounts for 36.5 percent of all bandwidth consumed by North American Web users during primetime, according to the Canada-based network firm Sandvine. That's way up from even last November, when Sandvine estimated Netflix's bandwidth footprint at 34.9 percent of Internet traffic. Sandvine's regular reports on Internet usage — based on traffic as it passes through its systems — have become a reliable indicator of which services are taking up the most bandwidth. Both the season five premiere of "Game of Thrones" and the most recent "Call of Duty" downloadable content led to massive spikes in data consumption, the latest report also finds.
- Netflix, for better or worse, has become the symbol for net neutrality, which has become a key issue in how regulators analyze proposed cable and telecom mergers. To many in the cable and broadband businesses, the invisible hand of Netflix has been apparent in the failed Comcast-Time Warner Cable combination; in likely restrictions on the merger between AT&T and DirecTV; and in the Obama administration’s embrace of net neutrality, to cite just three prominent examples. A pivotal moment in the net neutrality struggle came last year when Netflix agreed to pay Comcast so-called interconnection fees, a deal that Netflix’s Mr. Hastings last month called a “deal with the devil.” (While Comcast has drawn the brunt of Mr. Hastings’s ire, Netflix also reached similar interconnection deals with every other major Internet service provider.) But securing payment from Netflix for fast and more reliable access may have been a Pyrrhic victory for Comcast and the other the broadband providers. Until then the notion of net neutrality had been something of an abstraction. But when Netflix subscribers found their programs constantly interrupted for “buffering” (an interruption to download more data), the ability of Internet providers to play favorites seemed all too real. Once Netflix started paying fees to Comcast, its customers suddenly found their service improved substantially. Netflix’s experience with Comcast became Exhibit A with the F.C.C. when Netflix opposed the proposed Comcast-Time Warner Cable merger. “The combined company would possess even more anti-competitive leverage to charge arbitrary interconnection tolls for access to their customers,” Netflix said in a letter to shareholders opposing the merger. It probably didn’t hurt Netflix’s case that just about everyone in Washington watches the hit Netflix series “House of Cards,” and Comcast is the dominant Internet provider there. Tom Wheeler, the F.C.C. chairman, said he, too, had suffered buffering problems, which he called “exasperating.”
