Category: Business

Alphabet sorts out its advertising soup

Alphabet Soup-001Alphabet, the outfit formally known as Google, which has somehow becomes Google’s parent has said that its efforts to push its vast advertising business toward mobile is paying off.

The company posted second quarter earnings which beat Wall Street’s expectations and put to rest lingering concerns about how the rise of mobile might impact Google which has relied on desktop search traffic to power its profits.

Alphabet said revenue grew by 21.3 percent to $21.5 billion, while earnings jumped to $4.88 billion from $3.93 billion for the comparable period a year ago.

The company’s shares rose 6.5 percent to $816 in after-hours trading on Thursday.

Google Chief Executive Officer Sundar Pichai said during a call with investors that videos were also doing well. Over the past year, Google, Facebook and Twitter have all doubled down on video, a format where advertisers are willing to pay a premium for a few seconds of users’ undivided attention.

Google has used artificial intelligence to improve video recommendations to users, driving more engagement on the site, Pichai said.

“Video is a huge component of digital content, and YouTube continues to shine,” he said. “It’s a thriving home for creators.”

Google and other tech players are hoping to siphon advertising dollars from traditional television, where advertisers will spend a projected $70.6 billion in the U.S. this year, according to market research firm eMarketer. YouTube is in a prime position to strike, with an audience of more than 1 billion users, including more 18-34 and 18-49 year-olds than any U.S. cable network.

Revenue at Alphabet’s Other Bets business rose 150 percent to $185 million, while operating losses widened to $859 million.

The division includes broadband business Google Fiber, home automation products Nest, self-driving cars and X – the research facility that works on “moon shot” ventures.

Google’s ad revenue rose 19.5 percent to $19.14 billion, while it notched a 29 percent rise in paid clicks, where advertisers pay the company only if a user clicks on the ad.

Google’s other revenue surged 33 percent, driven by gains in the cloud computing business, in which Google competes with Microsoft and Amazon to rent computer servers to other companies.


Economist calls Apple a tax fraud

taxmanNobel economist Joseph Stiglitz has dubbed the fruity cargo cult Apple’s attempts to squirrel away cash in Ireland a tax “fraud”.

He said that the US tax law that allows Apple hold a large amount of cash abroad is “obviously deficient” and called the company’s attribution of significant earnings to a comparatively small overseas unit a “fraud”.

Stiglitz, who advises Hillary Clinton’s presidential campaign, said that the current tax system encourages companies to keep their money abroad and opens up a vast loophole through what is called the transfer-pricing system that allows them not only to keep their money abroad but, effectively, to escape taxation.

He was responding to a question about whether policy makers like Clinton and Senator Elizabeth Warren, a Democrat from Massachusetts, could develop a plan to encourage companies like Apple to bring their accumulated foreign earnings back to the US Under current law, companies can defer US income tax on their foreign earnings until they repatriate them, or return them to the US.

About $215 billion of Apple’s total $232 billion in cash is held outside of the country, third-quarter earnings results showed this week.

Jobs’ Mob is making use of existing gaps in the US tax system to shift its U.S. taxable earnings overseas to low-tax Ireland.  Stiglitz said that Apple was America’s  largest corporation claiming that most of its profits originate from about a few hundred people working in Ireland — that’s a fraud.

Stiglitz said. “A tax law that encourages American firms to keep jobs abroad is wrong, and I think we can get a consensus in America to get that changed.”

Apple has a corporate structure that allows it to transfer money to low-tax jurisdictions, and one of those is Ireland, where the corporate tax rate is 12.5 percent — far below the U.S. top statutory rate of 35 percent. The European Commission, the European Union’s executive arm, is probing whether Ireland violated the bloc’s state-aid rules by helping Apple lower its Irish tax liability.

Apple, which declined to comment on Stiglitz’s remarks, has firmly denied using any tax gimmicks, telling an EU tax panel in March that it had paid all of its taxes due in Ireland. Apple employs 5,500 people in Ireland, according to its website.

In Senate testimony in 2013, Apple Chief Executive Officer Tim Cook advocated a change to the corporate tax code which would “eliminate all corporate tax expenditures, lower corporate income-tax rates and implement a reasonable tax on foreign earnings that allows the free flow of capital back to the U.S.,” adding that such legislation would increase Apple’s US taxes.  In otherwords if you stop asking us for so much tax money Apple might consider paying its bills.  Of course the government could just change the law forcing Apple to pay the same tax as everyone else.

Thin Client rides again


Larry Ellison rode the “thin client” architecture back in the mid 1990s. Called the diskless desktop among various other names it amounted to a “smart terminal”. It was a tad premature.

Given another two decades the arrival of the Cloud as a “connected” computational facility for not so capable smartphones has belatedly arrived. And with that arrival Oracle is now in the mode of beefing up their “Cloud” capabilities with the announcement of its purchase of NetSuite Inc. for $9.3 billion. Oracle has been lagging the competition in cloud-based services, and is essentially buying market share according to several analysts based in San Francisco.

Oracle is a company caught between extending the viability of its installed hardware based system-software hegemony and the emerging Open Systems that most Cloud vendors are engaging. Their investment in the purchase of Sun Microsystems has not been primary to the company’s earnings potential. There was a time when Intel was non-persona grata at Oracle – that began to change two years ago.

The deal has been rumored for months, because the relationship between Oracle and NetSuite goes back decades. Oracle co-founder Larry Ellison has been a NetSuite investor since he co-founded the company with Evan Goldberg in 1998. Ellison and his family own about 45.4 percent of NetSuite’s common stock, according to a recent company filing. Zach Nelson, NetSuite’s CEO, ran Oracle’s marketing operations in the 1990s.

As Ellison and his family are part owners of Net Suite, a group of independent Oracle directors (excluding Ellison) helped evaluate and negotiate the deal with NetSuite. For NetSuite, approving the deal will mean getting clearance that sidesteps the large stockholder. The company said a majority of shares not owned by Ellison and his family; or by directors and executive officers; must vote in favor of the deal for it to be acquired.

If the deal is not approved there will be more than just a few amazed people to say the very least.

Salesforce Next?

Salesforce’s name has a marker on Oracle’s takeover radar. According to several sources this has reached the level of a personal vendetta with Larry Ellison – and Larry does like to win. So please standby…,

Flash Memory Summit 2016 – Consolidation?

FMS2016_BannerAd_300x250The Flash Memory Summit 16 will be convening at the Santa Clara Convention Center over August 9 -11, 2016. Flash memory is now established as a key technology enabling new designs for many products in the consumer, computer and enterprise markets.

Storage Crossover

The industry is at a critical juncture where the total cost of ownership for flash based SSD’s achieved crossover with hard disk drive equivalents last September as the enterprise storage medium of choice.

The fact that the number of producers is limited has altered the landscape of consumption with some analysts indicating that serious shortages will exist for some time to come. An interesting, but mitigating fact is that most of the analysts are not technical – the ones that we’ve talked to that have a technical bent are not so sanguine about the availability mix. One item that stands in the road to profits is the need for this next generation storage device to not only retain data but do so interactively without losing bits. The unrecoverable bit boogie man is now staring the industry down. The ability to store immense amounts of “ready data” for execution now depends on the technologies ability to reliably retain data.

All Flash Array producers are now entering the “really big data storage array” market – the battle has dropped down to the cost of storage per dollar creating a whole new category of marketing lows. 3D Flash is now so dense that failure modes are now dependent upon being aware of “how and when” the bits were used during the entire lifetime of the device.

Cork, Ireland NVMdurance was the first to understand this phenomenon and is now firmly embedded in their first customer Altera (now Intel). Pure and Nimble Storage are offering their services for their AFAs – seems that leasing AFA memory is a probable in the future of solid state storage. We’re still left reading the indemnification clauses of their contracts.

Poison Pill

Micron Technology filed with the SEC a poison pill last Friday. The buzz is that the company is once again in play. The likely suitor is none other than Intel according to the lead rumor. We will be talking with Micron and Intel at FMS 16 and although they’ll not say anything about what’s going on we’ll at the very least get to look into their pupils while they’re telling us…,

Facebook still growing like topsy

what-we-learned-about-facebook-ceo-mark-zucke-L-gl5gYRSocial notworking outfit Facebook is raking in money and surprised Wall Street with its estimates, sending its shares to an all-time high.

Facebook now has more than 1.7 billion monthly users, well ahead of any rivals.

Analysts say the company has managed to transform itself from when it first went public.  It managed to leap from desktop to mobile and find advertisers to back it.

Mobile advertising revenue accounted for 84 percent of the company’s total advertising revenue, compared with 76 percent a year earlier.

Total advertising revenue surged 63 percent to $6.24 billion, beating the average analyst estimate of $5.80 billion.

The company also saw strong growth in monthly active users, now boasting 1.71 billion as of June 30, up from 1.49 billion a year earlier. Time spent on its suite of apps, including the main Facebook app, Instagram and Messenger, increased “double digit percentages,” Chief Executive Mark Zuckerberg said on a conference call with analysts.

David Wehner, Facebook’s chief financial officer, pointed to Asia-Pacific, especially India, as one of the most promising areas for continued user growth. The region “has been a consistently good performer for us over the last several quarters and we will continue to invest our global sales resources to drive opportunities there,” Wehner said in an interview with Reuters.

Facebook is one of the biggest beneficiaries as advertisers move money away from television to the internet and mobile platforms.

The company is also courting advertisers to experiment with Facebook Live, its recently launched live video feature. Executives said they were working to become a “video first” platform, and identified private messaging as a growing focus.

Zuckerberg reiterated his company’s glorious 10-year plan on the call with analysts. He said that over the next three years, it will focus on continuing to grow its massive user base, especially in developed nations, and over the next 10 years it will look to build new technology to get more people online and using Facebook through internet-beaming drones.

Meanwhile, Facebook still has several untapped areas for revenue opportunities, including its WhatsApp and Messenger apps, both of which have more than 1 billion users.

Facebook also owns picture-sharing app Instagram, which recently announced it has more than 500 million users. Facebook has yet to say how much money Instagram makes, but research firm eMarketer predicts it will make $1.5 billion in revenue this year.

Net income attributable to Facebook’s stockholders rose to $2.05 billioncompared with $715 million last year. Total revenue rose 59.2 percent to $6.44 billion, ahead of analysts’ average estimate of $6.02 billion.

Twitter results disappoint Wall Street

Wall Street is very disappointed with TwTwitteritter and is talking about the outfit being sold or at very least its CEO Jack Dorsey being forced to walk the plank.

Twitter announced second quarter earnings that missed estimates and the company provided a  lower than expected outlook.

Its share price fell almost 15 percent and Twitter shares are down 50 percent since Dorsey returned last summer to the helm of the social media company he co-founded.

In fact Twitter continues to show almost no growth in its user base of a little over 300 million and its  advertising revenues are softer than a baby’s bottom.

The company cut its forward revenue estimate for the next quarter to $590 million- $610 million, while analysts had been expecting $681 million.

At a market cap of about $11 billon, compared with more than $40 billion at its peak, Twitter could now be a more attractive takeover target.

Verizon, which owns AOL, this week said it would buy Yahoo for $4.8 billion. Google, Disney and Apple have also been mentioned as possible acquirers of Twitter.

Twitter surged briefly earlier this month after Microsoft announced its acquisition of LinkedIn, as investors hoped for a similar deal for Twitter, but it seemed that Vole was not going to be that silly.


Apple spins former glories

ElderlyspinneraDesperate to spin its way out of its iPhone mess, Apple has started picking up numbers out of the air to be reported by its Tame Apple Press chums.

For those who came in late, Apple’s cash cow, the iPhone, seems to be off her grass and sales are slumping. To make matters worse, Apple is not going to release  a new phone with any new features until next year. The iPhone 7 contains few features that anyone will want, and most of them can be found in other phones at a cheaper price.

This has led cynics to suggest that Apple has lost the plot and is fast becoming yesterday’s company and Apple has been attempting to spin its way out of the problem.

Firstly, we were treated to the sight of Apple CEO Tim Cook claiming that its company was going big on artificial reality when it is known that Apple is nowhere near having a product in the market. Instead he talked about Pokemon Go which is a product that Apple does not make, and does not make any money from.

Now the latest is that rarity from Apple “a press release” which is designed to remind the world that it still makes iPhones.

The press release talks about how Apple has coincidently “just made” its billionth iPhone. Isn’t that lucky?  Just when the iPhone is being talked about as a dead cash cow, the Tame Apple Press can run a story implying that Apple has made a billion of them.

True that is not a billon this year, it is a billion since Apple started making them, but nothing makes a dying phone look popular again like a headline “Apple sells its billionth smartphone”.

There is no indication when and where this magical phone was made, but there is an awful lot of puff in the press release about how wonderful it is. The story might be true, but sorry the timing makes it a little too convenient particularly as no one can really say it is not true and Apple can’t point to a phone and say that is number one billion.

iPhone sales continue to slide as press spins

disappointment-valleyThe Tame Apple Press is in full spin mode this morning after Apple admitted that sales of its iPhone continued to slide.

Some desperate press even suggested that the fall of the iPhone was not “real” because sales of the iPhone 6 were so high it just made the slide look worse.  Others quoted CEO Tim Cook saying that Apple was going to come up with some super, cool, technology to replace the iPhone as Apple’s cash cow.

However at the end of the day Apple’s iPhone business has hit a wall and there is no opening in sight.  March-quarter units’ sales this year came in at 51.2 million iPhones, which was down from 61.2 million units in the same quarter last year.

It will get worse too because this year’s new iPhones will hardly be an upgrade and some of us are predicting further iPhone sales declines that reach well into 2017.  If that happens Apple is going to have a devil of a job clawing back sales.

The Tame Apple Press did its best to spin the figures too.  Jobs’ Mob earned $7.8 billion in net income, on sales totalling $42.4 billion. That is a slide from $49.6 billion.  The press tells us that figure was a record and should not be used to gauge Jobs’ Mob’s current performance.  It was better than analysts had predicted, it claimed.  Given that analysts were expect it to be $42.1 billion we are not talking a big difference. It was also in the middle of what Apple itself had expected (although at the time the Tame Apple Press assured us that Apple guidance’s were always on the conservative side) .

All this promotion did help Apple avoid any slide in share price, but Cook’s attempts to calm long term investors were less successful.

Cook stressed that Apple is high on augmented reality for the long-run” and investing heavily. Augmented reality, in which computer-generated content is overlaid on the real world, is one of the latest fixations in the technology business, with Pokemon GO among the first applications to catch on.

Cook also highlighted Apple’s investment in artificial intelligence, which the company now uses to recommend content to users and even spot usage patterns to improve a device’s battery life.

However, the comments were weird. Apple has no AI or AR products in the works yet and if they were they are a long way away. In fact, Augmented reality and artificial intelligence don’t really work for Apple. It really is not an innovative company, it needs other people to create it before it appears on the market and claims to have invented it.

Analyst Bob O’Donnell of TECHnalysis Research said that Apple was wanting the world to know that they are working on it, but they have nothing to show for it.  Which is basically what in the real press we call “spin”.


Two factor ID is insecure

back-door-to-hellA US government standards body has released a draft version of the Digital Authentication Guideline that contains language hinting at a future ban of SMS-based Two-Factor Authentication on the grounds of poor security.

For those who came in late, two-factor security is rather popular with the likes of Google who seem to use it to ask for you to provide them with your mobile phone number as part of a way of identifying you.

But the  US National Institute for Standards and Technology (NIST) which sets the rules used by software makers to build secure services, and by government and private agencies to assess the security of their services and software is not happy with the method.

It says that while SMS-based 2FA still acceptable, it will not be for long.

NIST officials are discouraging companies from using SMS-based authentication, even saying that SMS-based 2FA might be considered insecure in future versions of the guideline. Basically,  SMS-based two-factor authentication is an insecure process because the phone may not always be in possession of the phone.

While the guideline recommends that apps use tokens and software cryptographic authenticators, these may also take the form of phone apps or devices that can be stolen or “temporarily borrowed” as well, just like phones.

The NIST guideline says this risk as acceptable, but unlike tokens and cryptographic authenticators, SMS is considered insecure, especially on VoIP connections. Some VoIP services allow the hijacking of SMS messages.

Instead it suggests that biometrics might be a more secure way of dealing with all this. In the meantime it is probably better not to give Google your mobile number.


Salesforce would have paid more for Linkedin

SalesforceThere is a bit of head scratching going on over why Linkedin chose Microsoft’s lower offer for its company over a bigger one offered by Salesforce.

Microsoft wrote a cheque for  $26.2 billion for the social notworking site, which was lower than what was offered by Salesforce.  However Salesforce CEO Marc Benioff said that he was willing to go much higher and would have changed other terms of the bid if he had been given the chance.

In a filing with regulators on Friday, LinkedIn said a board committee met on 7 July  to discuss an email from Salesforce CEO Marc Benioff.

“The email indicated that Party A would have bid much higher and made changes to the stock/cash components of its offers, but it was acting without communications from LinkedIn,” LinkedIn said in the updated filing with the Securities and Exchange Commission.

LinkedIn has said its board was concerned about other problems with a Salesforce bid, including the fact that a deal would have required approval from its shareholders. LinkedIn could still go with another bid if one comes in, but its deal with Microsoft contains a $725 million breakup fee provision.

Salesforce was the only serious rival to Microsoft.