Benner on Tech: A for Apple! B for Yahoo! C for Microsoft :(
People are Talking About…
A tale of two earnings: Apple and Yahoo.
So much ink will be spilled on Apple’s blowout quarter. Bloomberg News’ Tim Higgins spent his birthday covering the announcement and gathering all the numbers together right here. (Please send gifts of cake and cash to be split with his coworkers in the San Francisco bureau.) There’s really no way to exaggerate how good the quarter was or how much investors could no longer care about Apple’s massive cash hoard right now. Selling 34,000 iPhones every hour, 24 hours day, for an entire quarter is one way to get the activist hedge funds to shut it already.
I argued in a column for Bloomberg View that Apple has clearly created its own tech economy that chugs along and throws off tons of cash in addition to the money that Apple mints for itself. It’s an ecosystem of companies that partner with, build on top of and sell to the Cupertino juggernaut, which in and of itself has probably done as much to drive useful innovation and interest in tech than a whole bunch of moonshots.
And Yahoo. Sweet Yahoo. Chief executive Marissa Mayer silenced her many critics by giving them what they wanted – a full spin off of its stake in Alibaba, into an entity dubbed SpinCo. The stock rose. The detractors hushed. And my BloombergView colleague Matt Levine explains why this move likely (someday, many quarters in the future) ends with Alibaba buying SpinCo to get its stock back. Alibaba might even buy the shares at a discount. Everyone wins!
Well, maybe everyone except for Yahoo, which will soon be a smaller company with a struggling ad sales business. To improve the advertising situation, Mayer is focusing on what she calls the company’s MaVeNS, a tortured acronym that stands for mobile, video, native and social.
Mayer hopes that MaVeNS-related ad revenue will someday offset the decline in the company’s traditional display ad revenue. This plan will almost definitely work if shareholders give Yahoo years and years to execute and no big competitors try to horn in on Mayer’s MaVeNS game, like, you know, Facebook or Google or YouTube or Snapchat.
But the great thing for Mayer is that Yahoo shares could do reasonably well through the end of the year because Yahoo shareholders will get SpinCo shares. The buffer of a decent stock price should keep the private equity guys at bay (Yahoo would just be too expensive) and give her some time to show some MaVeNS results.
** Earnings round up:
* Microsoft's quarterly profit fell in line with Wall Street expectations, Bloomberg reports, largely due to muted demand for Windows software. The Wall Street Journal’s Shira Ovide argues that the bloom is now off the Satya Nadella rose because it’s clear that it won't be easy for him to revive the company's core business.
* Virtualization software company VMware says that 2015 sales will miss Wall Street estimates due to currency shifts and the popularity of cloud software, Bloomberg reports. Quarterly earnings beat expectations.
* AT&T beat profit and sales expectations thanks to phone and tablet deals, reports Bloomberg.
* Electronic Arts reported quarterly earnings of $1.22 a share, beating Wall Street earnings forecasts, Bloomberg reports.
Earnest, a financial tech company that develops new online loan products, raised $17 million, Bloomberg reports. The company also released a new online student loan refinancing product.
Lyft won’t confirm that it’s raising another huge funding round, but it will tell the New York Times that it plans to grow. I suppose that’s better than planning to fail.
Misfit’s fitness tracker will soon be able to act as a remote control for smart home products like thermostats and lights, CNET reports.
Pinterest says it is expanding its “promoted pins” advertising program and that more users will see ads in their home feeds.
Roadie, a ride sharing delivery company, has raised a $10 million Series A round from investors including UPS and TomorrowVentures, reports Forbes.
Wickr, a disappearing message app startup, now lets users share secure photos that self destruct with friends on Facebook, the Next Web reports.
Not all on-demand workers are happy. The Wall Street Journal says that disgruntled employees don’t yet “pose an existential threat to companies using on-demand labor, but they highlight the ambivalence that many workers feel toward the platforms that supply or supplement their income.”
** Related: The Wall Street Journal asks whether there should be a new category of worker to reflect the impact that companies like Uber and Handy have had on the economy.
Prynt is something that I would greatly like to own. This case essentially turns your smartphone into a polaroid camera, and it’s available for pre-order on Kickstarter for $49, Techcrunch reports.
People and Personnel Moves
Yuri Milner, best known for investing in Facebook and Alibaba, is a one-man venture capitalist show; and a recent profile in the Information says that he’s only in early innings. Milner says of his investment vehicle DST, “DST is essentially a startup. All the big, really incredible institutions have been around for much longer. It is really sort of the beginning.”
The company released a group messaging function and a new mobile video tool that lets users capture, edit and share videos from the Twitter app.
The Electronic Frontier Foundation wants to stop mass surveillance and the organization has an eight-point plan to get the job done.
Netflix and the case for curation. The New Yorker’s Tim Wu argues that a human curator, the company’s chief content officer Ted Sarandos, is as important to the company’s content success as all the data that Netflix likes to tout.
This month’s iteration of the Steve Jobs movie includes Michael Fassbender as Jobs and Seth Rogan as Steve Wozniak, the Verge reports.
News and Notes
France wants to make Internet companies hate-speech accomplices if they host extremist messages, reports Bloomberg.
Pop culture critic Anita Sarkeesian published a week’s worth of Twitter-hate and it’s pretty screwed up. As you probably recall, Sarkeesian is a feminist cultural critic who became a #gamergate target.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
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Timothy L. O'Brien at email@example.com