- Snapchat Passes Twitter in Daily Usage: Snapchat has 150 million people using the service each day, said people familiar with the matter. That makes the four-year-old messaging app more popular than Twitter Inc. by daily active users. Snapchat has been growing quickly, boosted by its popularity among young people. The app had 110 million daily users in December, said the people, who asked not to be named because they weren’t authorized to speak about the numbers. Twitter, which was founded in 2006, has less than 140 million users interacting with the service daily, according to an average of analysts’ estimates surveyed by Bloomberg. The short-messaging service was once the largest social network after Facebook Inc. but has since been surpassed by Facebook’s other apps, including Instagram, Messenger, and WhatsApp. Twitter has 310 million monthly active users, according to its most recent earnings report. The company doesn’t disclose how many of those people check in daily, but in the third quarter, it said about 44 percent of monthly users are active each day in the service’s top 20 markets. Twitter Chief Financial Officer Anthony Noto said at the time that the percentage had been stable but that “we’ll be sure to disclose” if there was a significant change. The company hasn’t given an update since then. This implies a daily active user count of 136 million. Snapchat has made communicating more of a game by letting people send annotated selfies and short videos. It has allowed people to use its imaging software to swap faces in a photo, transform themselves into puppies, and barf rainbows. (In March, Facebook said it acquired the startup behind an app called Masquerade, which offers similar photo-manipulation tools.) Snapchat encourages people to visit the app frequently with features such as the "Snapstreak," which counts the number of consecutive days they’ve been communicating with their closest friends. Snapchat’s other content, such as news and Live Stories, disappear after 24 hours.
- The incredibly brilliant way people are now paying for things in Asia: When Apple first rolled out Apple Pay in 2014, it was billed as a simpler way to buy goods and services. You take your phone out, tap it to the credit card reader, and off you go. Seems convenient, right? But some consumers in Asia think there's an even better way to pay. In recent years, millions of people have grown accustomed to using messaging apps to communicate. Some of these apps now support person-to-person digital cash transfers. So the next step is pretty logical: Asian retailers have begun using these same messaging platforms to sell everything from clothing to hamburgers to train tickets. And as a consumer, you never have to leave the app to pay. On the surface, this alternative sounds a lot like Apple Pay (or Samsung Pay, or Android Pay, etc.). But conducting real-life and online transactions through messaging apps stands to change retail like none of these other services have. What we're seeing in Asia is the rise of mobile payments that run primarily on software, not hardware as we've tried to implement here in the United States. And that simple distinction may be the key to everything from accelerating the spread of mobile payments to unlocking deep, digital interactions with customers in brick-and-mortar stores to democratizing e-commerce away from giant online businesses like Amazon.To buy a meal with WeChat, which in China goes by the name Weixin, customers simply pull up a QR code in the app that's connected to their credit card or other financial account. Once the cashier scans the code, that's it — no further action is needed. Retailers in China will typically offerdiscounts to WeChat users as an incentive to pay with the app.
- No Uber IPO in Sight After $3.5 Billion From Saudi Arabia: Once upon a time, Silicon Valley startups raised money from venture capitalists and then, with some luck and a promising business, held an IPO to cash in and expand. Uber has no need for such traditions. The San Francisco-based company, founded in 2009 and valued at $62.5 billion, has now raised $11 billion as it spends heavily to expand globally and battle well-funded rivals such as Lyft Inc. and China’s Didi. The ride-hailing company’s latest infusion of cash -- a record $3.5 billion from Saudi Arabia’s sovereign wealth fund -- means Chief Executive Officer Travis Kalanick has the finances to continue avoiding a listing of his company any time soon. "I’m going to make sure it happens as late as possible," he told CNBC earlier this year. The money from Saudi Arabia is a new wrinkle in the shifting way the world’s largest technology startups are being funded. The $3.5 billion raised by Uber Technologies Inc. this week is far larger than what most companies are able raise when they hold public offerings: Twitter Inc. netted $1.82 billion during its 2013 IPO and First Data Corp. raised $2.56 billion in the largest technology IPO of the past 12 months. In 2004, Google raised $1.67 billion during its stock-market debut.
- Facebook considers letting users add a tip jar to make money from posts: Facebook is exploring new ways for individual users to profit from their posts on the network, The Verge has learned. A user survey distributed this week hints at a broad range of ways that users could make money or promote a cause, including a tip jar, branded content and taking a cut of the ad revenue Facebook earns from posts. The survey also asked users to indicate their interest in a “call to action” button, a way to let followers make donations and a “sponsor marketplace” to match users with advertisers. It’s unclear whether Facebook is considering making these options available to all users; the language of the survey indicated it is targeted at verified users. The survey was spotted on the page of a verified user with a relatively small following. (Okay, it was me.) Facebook does not currently offer individual users a way to earn money by posting on Facebook. It has allowed publishers to sell advertising inside its fast-loading Instant Articles format, and recently clarified rules allowing posts sponsored by brands to be shared by verified pages. Facebook is also testing ads within the suggestions that pop up after you watch a video, sharing money with publishers. But recently, the company has taken steps to make its publishing tools more widely available. In February, the company began letting anyone publish Instant Articles.
- Line's Plan to Outflank Facebook in Asia: Think Local: Line Corp. has an instant message for Facebook Inc.: Asia is ours. Country by country, the chat app from Japan is signing up new users by adopting a different strategy in each place. In its home market, cute bunny and bear stickers drew in everyone from schoolgirls to suit-clad businessmen. In Indonesia, Line built a classmate-connecting service after learning that alumni networks are a powerful social glue there. In Muslim countries, Line rolled out special features for people observing the Ramadan fast. All of this is aimed at getting new users hooked onto Line before they have a chance to become loyal to a rival service, such as Facebook's Messenger and WhatsApp, or China's WeChat. That, along with Line's knack for making money from its app, bolsters the company's plan to hold an initial public offering as soon as this year. Line, a subsidiary of South Korean Internet company Naver Corp, now has more than 215 million monthly active users. One of Line's biggest foes in Asia is Tencent Holdings's WeChat, which boasts 697 million users. In some ways, WeChat is more than a just messaging service, with a myriad of features that let people book car rides, find dates and exchange money—all from within the app. Line isn't just good at reeling in new users, it also knows how to make money off of them. A third of the company's 120.7 billion yen ($1.1 billion) in 2015 revenue came from virtual-sticker sales. Idezawa also appears to have figured out how to make advertising work inside a messaging app. Under one marketing program, companies can pay 40 million yen to give customers access to sponsored stickers for two weeks. People are more likely to pay attention to ads if they appear while chatting with friends, Idezawa says. Line is also targeting other Southeast Asian countries, the Middle East and even South America. The company now has 3,800 employees (average age, 31) supporting services in 19 languages. In order to snag local users, Idezawa dispatches teams of engineers, designers, marketers and business developers to each new country—they are empowered to come up with new features and services that appeal to those markets. For example, in Latin America, Line rolled out a selfie app called B612, which now has more than 50 million users. Facebook, for its part, is keeping WhatsApp—a no-frills service with 1 billion users—just the way it is, even after buying the messaging app for $22 billion in 2014. At the same time, Facebook has started to add features to Messenger, the companion to its social-networking website, letting people book car rides, read news and, yes, download stickers.
- Got a Hot Seller on Amazon? Prepare for E-Tailer to Make One Too: Rain Design has been selling an aluminum laptop stand on Amazon.com Inc. for more than a decade. A best-seller in its category, the $43 product has a 5-star rating and 2,460 customer reviews. In July, a similar stand appeared at about half the price. The brand: AmazonBasics. Since then, sales of the Rain Design original have slipped. “We don’t feel good about it,” says Harvey Tai, the company’s general manager. “But there’s nothing we can do because they didn’t violate the patent.” Rain Design’s experience shows how Amazon is using insights gleaned from its vast Web store to build a private-label juggernaut that now includes more than 3,000 products -- from women’s blouses and men’s khakis to fire pits and camera tripods. The strategy is a digital twist on one used for years by department stores and big-box chains to edge out middlemen and go direct to consumers -- boosting loyalty and profits. At first, AmazonBasics -- launched in 2009 -- focused on batteries, recordable DVDs and such. Then for several years, the house brand “slept quietly as it retained data about other sellers’ successes,” according to the report. But in the past couple of years, AmazonBasics has stepped up the pace, rolling out a range of products that seem perfectly tailored to customer demand. In his annual shareholder letter earlier this month, Chief Executive Officer Jeff Bezos said Amazon is the “best place in the world to fail.” That philosophy applies to private-label products, which quickly disappear if they receive poor customer ratings. About 96 percent of AmazonBasics products had a rating of 3.5 stars or more, according to the Skubana report. The authors’ advice to merchants: “If you have a product that is lower than 3.5 stars, that product is dead to you and your customers. Liquidate and move on.” Amazon’s size gives it an advantage over so-called direct-to-consumer startups such as mattress seller Casper and eyewear merchant Warby Parker because Amazon can experiment with one product rather than having to build out an entire line. If an item flops, it’s no big deal. Amazon isn’t only copying products made by small, little-known merchants like Rain Design. Its private-label lines are increasingly competing with name brands, and nowhere is that happening more than in apparel.
- Review: Curb, energy monitoring for an entire home: Curb is a comprehensive household energy monitoring system. The system monitors the entire home by using sensors installed in the circuit breaker. For many consumers this means being able to monitor the energy consumed by a clothes dryer or electric range or all the outlets and lights in a bedroom. It cannot, however, easily monitor and report how much energy is consumed by a computer or espresso machine. I had the system installed in my house over a month ago. It took licensed electrician about three hours. He had to install a sensor on each breaker and configure the system through an iPad app. This is not something an average homeowner can install themselves and that’s kind of the point. Curb aims to serve a homeowner with data not previously available. Other energy monitoring services either monitor the entire home or individual outlets. Curb sits in the middle of the two at the circuit break box. Each breaker gets a sensor and an app can display real-time consumption information as well as a dollar approximation of how much the energy is costing the homeowner. But what do I do with all this data? That’s where the system stops being useful. Obviously I can stop using my electric dryer and hang the clothes outside. Or teach my kids to turn off their lights. But I need help from there. The system should be able to display more historical data. Right now all it can do is show how much energy a particular circuit consumed — but now a total amount of watts. It can show how much power a home has consumed over a set of dates and also what the average was during that period. But what about the individual circuits? I want the system to let me dial down to a granule level. The web and smartphone app are basic at this point. The founder tells me the company is working towards implementing new features. The team is also playing with weekly emails that gives the consumer a breakdown of their energy usage and if anything abnormal occurred. Apparently, according to him, the system can identify when an appliance is consuming extra electricity, which could be a sign that it is nearing the end of its life. Currently, just after launch, the user experience of Curb leaves me wanting more. It is collecting so much information about my energy usage yet I feel it’s not benefiting me in a major way. Of course I should use appliances less.Yet the system shows a lot of promise in surprising ways. A few weeks family and I were standing in line for the Easter Bunny. This was the day before Easter so we were in line for over an hour. And like any good parent, I spent the time putzing around on my phone. Mindlessly, I opened the Curb app and discovered the stove was drawing power though I thought I had turned if off. I texted my neighbor who went over and discovered the oven was still on.
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.
- Xiaomi takes baby steps in the US - where Apple rules, and carrier-sales + phone subsidies blunt cost advantages; also nears manufacturing deal in Brazil: Xiaomi will begin selling headphones, smart wristbands and other accessories online in the United States in coming months, taking its first tentative step onto Apple Inc's home turf without its signature Mi mobile devices. The company also said it is close to securing a manufacturing partner in Brazil, which will help it skirt punishing tariffs on imported electronics when it begins sales in Latin America's largest economy in the first half of this year. Xiaomi, a five-year-old upstart whose name means "Little Rice," came out of nowhere to become China's fastest-selling mobile brand. It has been rapidly expanding its global footprint through direct, online sales. The company was valued at $45 billion in a December funding round that drew investors ranging from Singapore's sovereign wealth fund to a private capital firm backed by Alibaba Group Holding Ltd co-founder Jack Ma. Its Mi devices, which scored with Chinese users because of their low cost and the company's heavy reliance on user interaction and feedback, are now sold online across Asia, including most recently India. Brazil marks the company's first foray with smartphones outside of its home continent. Global operations vice president Hugo Barra said Xiaomi intends to begin selling its phones there in the first half of this year. The company is in "extremely advanced discussions" with at least half a dozen manufacturing partners there, Barra, a former Google Inc executive, said without revealing names, which will help it side-step a roughly 60 percent tax on foreign electronics. The company is eschewing bigger-ticket items like phones and tablets for now partly because of the United States' carrier-sales and phone subsidy structure, which eliminates Xiaomi's cost advantage. More generally, Bin and Barra talked about the time and effort needed to tailor its MIUI Android-based operating systems for individual markets and obtain certification, among other things. Xiaomi's main intention for now is to engage American consumers and try and build a community there the same way it has in China and India - through fan events, interaction with users on social media such as a dedicated Facebook page, and gradually coming to know both local preferences and building its brand. For example, Barra told Reuters how Xiaomi might put its self-branded headphones in front of U.S. audiophiles and tweak the product depending on their detailed feedback.
- Pinterest launches App Pins, aimed at boosting app discovery on Apple's app store (1.4M apps and counting): There are more than 1.4 million mobile applications in Apple’s App Store, so unless you have a good idea of what you’re looking for, it can be tough to stumble upon novel, surprising items among Apple’s sprawling garden of apps. Pinterest, the popular social bookmarking start-up, thinks it has a fix for this. The company is unveiling a new product on Thursday that could make it easier for people to discover new smartphone apps without even having to go into Apple’s App Store. The product, called App Pins, aims to do the same thing for smartphone apps that Pinterest’s service has done for photos, recipes and many other types of websites. In short, the service is a type of digital corkboard that lets visitors save, or “pin,” items they like or places they want to go. Pinterest’s philosophy is that it can help nudge people into doing things — be it buying a coffee maker or trying a new recipe — by letting the site’s 70 million estimated regular visitors search for and save for later the things that interest them. Pinterest believes it is better positioned to help promote apps because of the nature of the service. People come to Pinterest, the company says, to find new things to do, see and buy. That is unlike Facebook, which has been used to connect with friends, or even Twitter, which is often about public discourse and news. In addition, more than 75 percent of Pinterest’s use comes from mobile users, a crowd more able and willing to download new apps. It is also a significant move for Apple, which has long surfaced popular smartphone apps via the “featured” section of its App Store. If an app is placed in Apple’s featured section, which is carefully curated by Apple employees, it is much more visible than the hundreds of thousands of other apps in the company’s gigantic repository. In the past, Apple has had some difficulty with providing adequate app search to its customers, and has made several moves to better surface apps. In 2012, Apple bought Chomp, an app search company, and it has also introduced a host of new features to the app store ace apps, including a menu that shows which apps are trending in popularity at the moment, and also gave users the ability to search by categories and sub-categories of apps. Along with Pinterest’s App Pins initiative, Apple will introduce its own curated App Store account on Pinterest, featuring multiple boards on the service on Thursday; it will use its in-house team to promote apps that will vary by season, theme and even the choices of so-called “guest pinners.” Pinterest said it did not yet have any plans to make money directly from App Pins. However, if Pinterest aims to follow in the footsteps of other social networks, App Pins could be significant for Pinterest’s business.
- Contrasting routes to staying relevant: Texas Instruments ('small and spread out') and Cisco ('big and comprehensive'): Texas Instruments, a 63-year-old company that produced the first silicon transistor, ran into trouble several years ago selling digital chips for wireless products. The company refocused on cheaper and less sophisticated nondigital chips. Done well, these chips have exceptional profit margins, and Texas Instruments’ stock has gained 143 percent in the past five years. The Dow Jones industrial average is up 78 percent over the same period. The chips also turn out to be profitable at a time when seemingly everything is acquiring some kind of machine intelligence. Performance improvements that used to happen with better mechanical engineering now come from closer monitoring and computer analysis. Mr. Templeton foresaw Texas Instruments as targeting a lot of small manufacturers, the kinds of places with 50 employees turning out just a few products, that never came near his business before. The reason is that almost every part of the manufactured world, including things like outboard motors or novelty doorbells, is going to have to include machine intelligence to monitor its performance. He plans to sell it to small manufacturers through an online catalog of parts, with salespeople touching the larger accounts. “It’ll be difficult for you and your world to analyze,” he warned a room full of Wall Street bankers. “It’s literally hundreds of thousands of customers, very disaggregated.” On Wednesday, Cisco Systems reported second-quarter earnings well above what Wall Street expected. Revenue was $11.9 billion, versus a consensus estimate of $11.8 billion published in a survey by Thomson Reuters. Adjusted net income was $2.7 billion, or 53 cents a share, compared with an expected 51 cents a share. For John T. Chambers, Cisco’s chief, it seemed a vindication for several years of struggle. “I’m not sure people outside Cisco appreciate the magnitude of the changes we have made in the past years,” he said in an interview. Cisco, he said, had changed 30 percent of its leadership, moved 40 percent of its employees from traditional businesses like computer networking hardware, and into software, industry-specific applications, collaboration and cloud computing. Cisco laid off 6,000 people from its ranks of 74,000, but also hired 6,000 people for other jobs. All those changes were similar to what Texas Instruments had gone through: The old company was retooling for a world in which machine intelligence is everywhere. So far, however, Cisco’s “big and comprehensive” approach does not have the payoff of T.I.’s “small and spread out” style. These things have a way of swinging, of course, and the first rule for any incumbent facing change is the same: Find a way to survive that works for what you’ve got.
- Indian startup action: Housing.com in talks to acquire PropEquity, a real estate data analytics firm: Housing.com, is in talks to acquire Delhi-based P.E. Analytics Pvt Ltd, which owns a real estate data product PropEquity, sources close to the development told Techcircle.in. According to industry sources, Housing.com is believed to have offered around Rs 80 crore for the company. PropEquity recorded revenues of Rs 13.7 crore in 2014 and losses of Rs 70 lakh. The company has been in losses for the last three years as it had made investments in building a B2C product, according to sources. The deal will give Housing.com a ready revenue stream from B2B clients as the heavily funded company will come under increasing pressure to show revenues. PropEquity’s data and analytics enable clients – mainly real estate private equity investors, developers, and BFSI industry – to spot market trends, and generate macro/micro analytics. It claims of covering over 45,000 projects of 8,200 developers across over 40 cities in India and adding about 500 projects every month. Presently, the company has over 250 employees. On the other hand, Housing.com is a B2C product primarily with tools to sieve through mountains of data to develop indices and metrics that help consumer search for homes. PropEquity is majority owned by entities belonging to American hedge fund Och-Ziff Capital Management Group.
- Struggling to expand beyond Japan, Taiwan and Thailand, Line attempts to become a messaging platform for businesses (as WeChat has already done): Messaging app company Line has released a new service that will allow brands, SMEs and other business users to tap into its platform communicate with customers and consumers. The Line@ app – which is available for iOS and Android — is essentially an enterprise-focused version of Line’s chat app, which has 170 million active users worldwide. Line@ plugs into the existing chat service and lets us users exchange message with regular Line users and post content to the social network-like ‘Timeline’, but it is designed for communicating with people who are not friends, for example clients, customers or fans. “The Line@ service will greatly expand the potential of Line, for example allowing stores and facilities, as well as brand, media, and online business operators to promote new information, communicate with clients and other business contacts, create service usage reservations, and more. Designs, artists, magazine models, and other freelance talent can also utilize the service to communicate with fans,” Line explained. The new service is free to use, but Line is charging users for a vanity ID ($24 for the first year, $12 thereafter) while free accounts are limited to sending 1,000 messages per month. Those wishing to go for more can pay $50 per month for 50,000 messages, messages beyond that bundle cost $0.01 each. Line is already open to brands and business via its ‘official’ (branded) account option, but it costs tens of thousands of dollars to create and use a branded account leaving many business users priced out. In countries like Japan, Thailand and Taiwan — where Line is the dominant chat app — small merchants and SMEs have long adopted the consumer version of the app for their business, but in dong so they mix personal and work contacts in the same place. That’s exactly the issue that Line@ is designed to cater to, and it allows users to have a personal and business profile on the service. WeChat, the dominant chat app in China that counts nearly 500 million active users, has already made its app friendly to business users. Enterprise accounts were opened to all businesses last September, and earlier in 2014 the service added a mobile store platform and released its payment service to all businesses — combined together, those three elements allow companies to run their business and communications via the service. Line has introduced payment too, and though it is dabbling in its own version of shopping, it is pushing an online-to-offline strategy that allows companies to interact with fans via its mobile messaging platform — giving them a dedicated point of access, beyond the expensive official accounts, is an important step. However, Line has struggled to dominate markets beyond Japan, Taiwan and Thailand. A lack of users in a country makes it harder to sell the need for Line@ to businesses and brands, so it remains to be seen how this new app will be adopted.
- Two gaming companies result: Zynga Q4 earnings miss: bookings $182M, stock down 10%; King Q4 earnings beat: bookings $586M, stock up 18%: The fickleness of the gaming industry was on full display in the earnings reports of "FarmVille" creator Zynga Inc and "Candy Crush" maker King Digital Entertainment Plc. Zynga's shares fell 10 percent while King Digital's soared 18 percent in extended trading on Thursday after the companies reported contrasting fortunes in a key industry metric. King's total gross bookings, an indicator of future revenue, increased 8 percent to $586 million in the fourth quarter, about $45 million more than the average analyst forecast. Zynga reported bookings of $182.4 million, about $19 million less than expected, according to research firm StreetAccount. The company, whose market value hit more than $14 billion in 2012, lost most of its shine after failing to come up with new games to match the popularity of "FarmVille". It was also caught off guard by mobile-focused rivals such as Dublin-based King Digital and Supercell, the maker of "Clash of Clans" and is now valued at about $2.4 billion. King, which went public last March, has a market value of about $4.6 billion. That helped it to avoid the fate of Zynga and "Angry Birds" developer Rovio Corp, which is also struggling to grow. King Digital's revenue and profit easily trumped market estimates as its newer games more than made up for the declining popularity of older titles. Zynga's main launch, the multi-player word game "Words with Friends", failed to excite gamers and launches aimed at the Chinese market failed to live up to expectations. The company said it would close its Beijing office and lay off all 71 employees. Zynga's forecast for bookings in the current quarter also fell far short of estimates, according to StreetAccount. Up to Thursday's close of $14.74, King Digital's shares had risen 10 percent in the past six months. Zynga's shares had fallen 7 percent to $2.66.
- Groupon Q4 revenue $926M, +20% Y/Y, stock flat: Groupon gave a forecast for first-quarter results that fell short of Wall Street's expectations on Thursday, as the online commerce company confirmed that several parties have expressed interest in acquiring its South Korean subsidiary Ticket Monster. Those parties had opened discussions with Groupon about possibly buying the loss-making Asian e-commerce firm, which sells tickets online and is valued at about $1 billion, The Wall Street Journal reported last month. Groupon said it was too early to comment on the likelihood of such a deal, though it continues to explore alternatives for its various Asian businesses. Groupon bought Ticket Monster from rival LivingSocial Inc about a year ago for $260 million. On Thursday, Groupon, which once dominated the fast-growing online coupons arena, forecast revenue of $790 million to $840 million in the March quarter, up 13 percent from a year earlier on a foreign exchange-neutral basis. That lagged Groupon's target for 15 percent growth on the same basis in 2015. It also fell short of an average analyst estimate of $856.14 million. Revenue was up 20 percent at $925.4 million during the three-month holiday period. Shares in the company slid 1 percent to $7.38 in after-hours trade.
- Microsoft Q4 earnings: revenue $26.5B, +8% Y/Y, profit $5.86B, shares fell 3% on earnings miss: (more coverage here, here and here): Microsoft reported profit of $5.86 billion, or 71 cents per share for the latest quarter, compared with $6.56 billion, or 78 cents per share, in the year-ago quarter. Sales rose 8 percent to $26.47 billion, largely due to the acquisition of Nokia's phone handset business last year. Analysts had expected revenue of $26.3 billion and earnings of 71 cents per share, on average, including some restructuring costs. Shares of the world's largest software company, which have surged to 14 year highs in the past few months, fell 3 percent in after-hours trading, to $45.63. The company ended the quarter with $90.25 billion in cash and equivalents. According to Microsoft, its commercial cloud revenue grew 114 percent compared to the year-ago period. In the sequentially preceding quarter, the company noted a 128 percent rise. It ended the current quarter on a $5.5 billion run rate.
- Long overshadowed by its rival Alibaba, JD has emerged as China’s other online goliath by carving out its own distinct identity: While Alibaba’s marketplace serves as a platform to connect buyers and sellers, JD buys goods from manufacturers and distributors and holds the inventory in its own warehouses, in a model that echoes Amazon’s. It then arranges for quick delivery of virtually everything from television sets and refrigerators to socks and T-shirts, using motorbikes that weave in and out of traffic in some of the country’s biggest cities. Like Amazon, JD has invested heavily in infrastructure, pumping more than $1.5 billion into building and leasing warehouses and order-fulfillment centers around China. But JD has gone even further, venturing into home delivery with its own fleet of trucks and more than 20,000 couriers, all in the hope of capturing what is projected to be a $1 trillion Chinese e-commerce market by 2020. JD, which is publicly traded in the United States, is now China’s biggest direct-sales retailer, with 46 million active users and an estimated $20 billion in revenue last year. “This isn’t a business model for everyone, but they were smart to build it,” said Elinor Leung, a Hong Kong-based Internet analyst at CLSA, an investment bank. “Now, their traffic is exploding.” And yet this costly approach to building an online retailer has worried some analysts, who say that JD could be weighed down by its physical assets and mounting debt. Several analysts say the company won’t turn a profit before 2017. Competitors like Jack Ma, chairman of Alibaba, have even disparaged the company’s business model, calling it tragically flawed. “It’s not that we are better,” Mr. Ma said in a recently published interview. “It’s an issue of direction. So, I tell my people: Definitely do not get involved with JD.com. Don’t come blaming us if you die one day.” He later apologized for his comments. Executives at JD, which is based in Beijing, insist they are building a company that will eventually have a commanding advantage in e-commerce, with strong customer service, speedy delivery and assurances that the products it ships are authentic, not counterfeit. Among the biggest challenges now, they say, is keeping up with an enormous volume of online orders, which have doubled in each of the last three years. “If we wanted, we could be profitable right now,” said Shen Haoyu, chief executive of JD Mall, the company’s biggest division. “But our immediate goal is to grow our customer base.” the company boasts seven fulfillment centers and 118 warehouses in 39 cities. There are also 1,045 smaller pickup centers in about 500 cities. And since 2010, the company has pledged that most online orders placed before 11 at night will be delivered by 3 p.m. the next day. Morgan Stanley calls JD’s business model a combination of Amazon and UPS; other analysts say the company is beginning to look like Walmart, steeped in logistics and infrastructure and backed by a website.
- Verizon’s mobile ‘supercookies’ show how telcos are monetizing user data: Verizon is now at the forefront of telecommunications companies selling intelligence about their customers to advertisers. AT&T experimented last year with a similar ad-targeting program, which involved inserting a unique numeric code into a subscriber’s web requests. But after scrutiny in the news media, AT&T said it was halting its program, at least until it came up with a better approach. The ad-targeting experiments by Verizon and AT&T are striking examples of the data-mining opportunities open to phone carriers now that they have become the nexus of the information universe, providing a connection to the Internet for people anywhere they go, at any time. Verizon’s marketing efforts are part of a high-frequency digital ad trading system called real-time bidding, in which many kinds of players track and analyze users’ online activities to identify the characteristics of those who would be most receptive to certain ads. A Verizon service called Relevant Mobile Advertising, for instance, combines details obtained from information resellers like Acxiom and Experian with the wireless carrier’s own data to classify its mobile subscribers by gender, income, interests or other criteria; the company allows its subscribers to opt out of receiving ads customized through this program. Another service, called Verizon Selects — which consumers can opt in to in exchange for reward points — segments subscribers based on their web browsing and use of apps. Verizon says its customer categorization programs offer an advantage to advertisers because the company has a direct relationship with subscribers and it can understand their general location based on the places from which they make calls or send texts. The services use a unique alphanumeric code for each subscriber, rather than real names or contact information, to group them into ad clusters. Mr. Atreya, the Verizon director, says the company changes these customer codes every few days.
- Microsoft buys R startup Revolution Analytics to boost the data analytics offering of its cloud suite: Microsoft bought Revolution Analytics which makes tools to sift through data, to help the company build up its cloud-services business. Terms weren’t disclosed. The deal was driven by the growing volumes of data that companies are contending with and the need for more software that can help analyze the information, Microsoft said in a blog post on Friday. Revolution Analytics, based in Mountain View, California, makes a statistics programming language called R that helps analyze data. David Smith, chief community officer at Revolution Analytics, said in a blog post that the deal will spread the usage of advanced analytics within Microsoft products, including the Azure cloud service. Revolution Analytics counts financial companies such as American Century Investments and Northern Trust as customers, according to the company’s website. The R programming language is widely used by statisticians and scientists and has surged in popularity as people have turned to it to manipulate large pools of data. R was the world’s 18th most popular programming language in January, according to a study conducted by Tiobe Software, compared to 44th a year earlier. In a separate study, researcher RedMonk put R as the world’s 13th most popular programming language in January, up from 15th in 2014.
- The line between eCommerce and messaging is blurring, as messaging apps are increasingly becoming distribution and moneymaking platforms: Developers have been expanding the uses of the apps, making new functions possible. And investors, seeing huge potential, have driven the apps to ever-higher valuations. “The most popular apps that sustain themselves day after day, month after month, at the top of the leader board, are messengers,” said Fred Wilson, managing partner at Union Square Ventures and an investor in Kik, a messaging app popular with young users. “That’s a reflection of what people do on their phones.” He added, “Once they become full-blown ‘portals’ for mobile content and mobile commerce, we will really see how massive this opportunity is.” The initial appeal of the apps is simple. They are faster to use than email, and they generally allow you to send text, links, video and photos to friends more cheaply than traditional texting services offered by wireless carriers like Verizon or AT&T. The uses are multiplying, though. On the app KakaoTalk, for example, people can discover other new smartphone apps and share them with their friends. On Snapchat, users can send money to one another inside the app. And Line, a messaging app popular in Japan, lets people pay for things at brick-and-mortar retail stores using Line Pay, the company’s payments service. Soon, media outlets like ESPN, Vice and CNN will be publishing original content directly to a new editorial section in Snapchat, according to people familiar with the matter who spoke on condition of anonymity because they were not authorized to speak publicly. “Media and communication are converging,” said Jonah Peretti, chief executive of BuzzFeed. “Some of what we’re all creating now will be a huge part of these messaging apps over the next one or two years.” Some of the most popular options are Viber, which says it has more than 200 million monthly visitors; Line, Japan’s most popular messaging app, with 170 million users; and WhatsApp, the leading service, which has more than 700 million regular visitors. For now, though, not all of the apps are generating big revenue. WhatsApp, which is owned by Facebook, reported just $10.2 million in sales in 2013. The revenue came from the small fraction of users who paid $1 to use the app. Still, the valuations of many messaging start-ups continue to rise. In February, Rakuten, the big Japanese online retailer, bought Viber for $900 million. The next month, the Chinese e-commerce behemoth the Alibaba Group led a $280 million investment in Tango, valuing the nearly six-year-old start-up at about $1 billion. Facebook paid $21.8 billion for WhatsApp in February. For investors, the thesis is a Silicon Valley adage: Get millions of people to use the service first, and eventually it will find a way to make money. Many entrepreneurs see WeChat, the hugely popular Chinese service run by the Internet giant Tencent, as the ideal model for building a business in messaging. Released four years ago, the app now claims nearly 500 million monthly active users — who not only send image-laden messages, but play games and book car rides and plane tickets. The rapid growth in messaging apps, some say, has been a response to the more public nature of popular apps like Twitter and Facebook, where status updates and posts are visible to the many rather than the few. “It’s a much more intimate experience,” said Marissa Campise, a partner at SoftBank Capital, the venture arm of Japanese telecom giant SoftBank. “Messaging apps are smaller and less visible than the public networks and far more engaged and trusted. It often feels like a more controlled, real-time replacement for email,” she said. Messaging users tend on average to pick up their phones several times an hour, Talmon Marco, the chief executive of Viber, noted in an interview late last year. That makes messaging apps an ideal place to introduce other offerings like games, virtual stickers or even physical goods. Asia has been a particularly fertile breeding ground for expanding the uses of the apps. In 2013, for example, WeChat joined Xiaomi, the Chinese smartphone giant, to offer a limited quantity of the company’s newest phone for purchase on the chat app. Users could reserve and then buy the new smartphone entirely inside the WeChat app using Tenpay, the payments service owned by Tencent. Xiaomi said it sold 150,000 phones in less than 10 minutes.
- Online Storage Company Box Has Strong Debut in First Day of Trading: Although questions had arisen about how Box’s initial public offering would fare, public investors gave the company a warm welcome on Friday, its first day of trading. Shares in Box, the online file storage company, opened at $20.20 on Friday morning, 44 percent higher than its I.P.O. price of $14 a share. The stock continued to surge to close the day at $23.23, up nearly 66 percent, giving the company a market value of $2.7 billion. At that level, the start-up has surpassed the $2.4 billion valuation that it fetched in its most recent private financing round last summer. Its strong first-day performance may ease some concerns among investors that highflying Silicon Valley start-ups were looking overvalued. Now that it has gone public, nearly a year after kicking off the process during a period of market upheaval, Box can focus on a more pressing issue: standing out in an industry that has quickly filled with competition, particularly from much bigger rivals like Google and Microsoft.
- Yahoo likely to announce plans to avoid huge tax hit on Alibaba windfall - two possible structures considered plausible: Yahoo on Tuesday is expected to reveal something most companies usually try to keep secret: how it plans to avoid a multibillion-dollar tax bill. The Web portal has spent more than a year figuring out how to cash out a chunk of its $40 billion stake in China-based Alibaba Group Holding Ltd. Typically, a U.S. company faces a federal tax bill of about 35 percent when it sells stock in another enterprise for cash. Yahoo took a $3 billion tax hit last year when it sold about $10 billion in Alibaba shares. This time around, activist investors are leaning on the Sunnyvale, California-based company to be more savvy. Marissa Mayer, Yahoo’s chief executive officer, probably will maintain at least part of the Alibaba holding to keep a finger in China’s fast-growing Web market. Were Yahoo to sell the entire stake, it could face a federal tax bill of as much as $14 billion.Here are some of Yahoo’s options to avoid capital-gains tax, both legal: Option One: Last summer, John Malone’s Liberty Ventures wanted to avoid taxes on selling its stake in travel website TripAdvisor Inc. Liberty did so by transferring that stake, as well as online costume-retailer BuySeasons, to a new unit created specifically for the deal. Under the plan, the new unit took out a $400 million bank loan. Most of that cash was destined for Liberty and the new unit’s stock spun off to Liberty shareholders. The expectation was that TripAdvisor would acquire the new unit in exchange for the travel site’s own stock. TripAdvisor also agreed to repay the $400 million loan. When it’s all wrapped up, Liberty Ventures gets cash and exits TripAdvisor -- without incurring the tax bill a straight sale would trigger. Liberty’s shareholders get stock in TripAdvisor as though Liberty had distributed its holding in the site to its own investors. Liberty’s investors also don’t face taxes on the deal. In Yahoo’s case, it would spin off its stake into a new entity, which would borrow money and distribute the cash to the Internet company. “The tax savings sort of gets carved up between the two parties and they each get a chunk,” Option Two: Another option is to follow Warren Buffett’s lead, with what’s known in tax circles as the cash-rich split. Berkshire Hathaway Inc. and Graham Holdings Co. last March agreed to a deal that lets Buffett’s company unload its stake in the former Washington Post Co. while avoiding capital-gains tax. That deal called for Graham to transfer cash and a Miami television business -- combined, roughly equal to Berkshire Hathaway’s investment -- into a new subsidiary. Graham then shifts stock in that new unit to Berkshire Hathaway, while Buffett’s company moves its Graham stake back to the media company. Economically, it’s as though Berkshire Hathaway sold its Graham stake for cash -- and a TV station. But because the deal is structured as an exchange of shares, not a straight-up sale, it gets tax-free treatment. Were Yahoo to follow this route, it would exchange Alibaba shares for a stake in a new unit that would consist mostly of cash. Alibaba would have to shed some assets for Yahoo to get the advantage of such a deal; a cash-only transaction probably would trigger a tax bill. Accounting experts say it shouldn’t be difficult to find something to throw in the pot.
- As Alibaba and Chinese investors pour into Israel, the nation's high-tech startups scored big exits in 2014: With nearly $15 billion in exits through mergers and acquisitions and public offerings, 2014 was an all-time record year for the Israeli hi-tech industry, compared with a mere $1.2 billion raised in 2013, according to a PwC report for 2014. The exits were spread out between a variety of tech industries, including Internet, IT, life sciences, communications and semiconductors. Semiconductors had a 38% of the share, but just one semiconductor IPO out of the 18 in total. The road accident avoidance technology developerMobilEye raised $1.023 billion in its August IPO, a record an Israeli company. As for new giant exits emerging, most argue that Israel’s hi-tech diversity is its strength. “While there seems to be a general hype around IoT, security and fintech, I find Israel to be a very unique place in the fact that entrepreneurs don’t tend to have group think and as such, we are seeing ventures tackling a very wide array of industries.” said Yaron Carni, the founder of two Israeli VC fundsMaverick Ventures and Tel Aviv Angel Group. And more international companies are beginning to take notice of Israel’s technological strengths. In fact, 2014 ended with a news item that might indicate China’s increasingly hefty presence in the Israeli hi-tech sector. Last year might be remembered as the time when Chinese technology companies embraced Israeli startups in a big way. On December 20, The Chinese eCommerce giant Alibaba invested in Visualead, a company that specializes in QR code generation. Based in Herzliya, the Israeli equivalent of Silicon Valley, the 15-person start-up was Aliababa’s first Israeli acquisition. Last September, China’s Yuanda Enterprise Group bought AutoAgronome, a maker of smart irrigation and fertilization systems for $20 million in order to move into high-tech agriculture.
Amazon and Hachette announced an end to their dispute: Hachette, the fourth largest publisher, won the ability to set the prices for its e-books, which was a major contention in the fight. Neither side gave details of the deal, but both pronounced themselves happy with the terms.
Uber in India has tied up with local mobile payments provider Paytm to sort out its problem with the RBI. Uber has been sweating in India ever since local taxi services complained to the RBI that Uber was violating Indian foreign exchange regulations by routing credit card payments from customers to Netherlands-based Uber BV. Most of it was converted back to Indian currency when payments were routed to cab drivers’ accounts in India, after adjusting for commissions, promotions, etc. But the RBI agreed with local competitors like Meru that such transactions violated rules meant to prevent fraud or flight of capital from the country, and that foreign players could not be allowed to bypass a two-stage credit card authentication process required for digital payments in India. Uber was initially given until October 31 to fall in line with these requirements, but the deadline was extended to the end of November. Now Uber has added Paytm’s digital wallet to its payment options. India is the first country where it has made such an arrangement. Those who have already registered with Paytm can just link their accounts with Uber. Others will need to sign up with Paytm which involves regulatory steps like verification of a phone number and email address.
The launch of WeChat's free VOIP calling app was marred by problems; Tencent apologized, attributing the crashes to excessive demand: The folks behind China’s new WeChat Phonebook were left apologizing on Thursday after its Wednesday launch was marred by severe technical problems. WeChat Phonebook has garnered a lot of interest in China as a way to make your phone smarter and cheaper. The app offers free VOIP calling (as long as you’re on wifi) and a variety of convenient services like automatic contact list backup, syncing WeChat avatar images with your contact list, easy group texting, etc. The 1.0 version of the app hit China’s Android and iOS app stores yesterday, and while it immediately shot to the top of the charts, it hasn’t actually been working for many users. Users have reported being unable to register, log in, recieve confirmation text messages, and make phone calls, among other problems. Since making phone calls is the app’s main purpose, that’s kind of a big deal. On Thursday, WeChat apologized via the app’s official Weibo account for the issues. The cause, it says, is that the app had too many users, leading to service instability.
Alibaba plans to raise $8 billion in a U.S. bond sale, just two months after its IPO: Asia’s largest Internet company is working to issue its first-ever U.S. dollar-denominated notes to refinance its credit facilities, according to a statement today. The bonds have been rated A+, or the fifth highest investment-grade rating, by Standard & Poor’s and an equivalent A1 by Moody’s Investors Service. The debt issue would be on top of the $25 billion that it collected in a September initial stock offering, which was the biggest share sale on record. The Hangzhou, China-based e-commerce company, with a market capitalization of almost $300 billion, has $11 billion in loans and credit lines, according to data compiled by Bloomberg.“They’re pretty flush with capital. It’s another example of companies being opportunistic and trying to take advantage of low rates while they can.” The company will be able to maintain a conservative capital structure with a strong net cash position in the next few years, while it keeps its ratio of debt to cash flow below 1.5 times, according to Fitch. A $4 billion term loan that the company obtained last year pays 2.75 percentage points more than the London interbank offered rate. Libor, the rate at which banks say they can borrow from each other, is at about 0.23 percentage point.
