Category: Business

Big Content coins it in

taylor-swift-is-the-apple-of-musicDespite Big Content telling the world+dog that it was nearly bankrupt due to torrenting pirates, it made an absolute fortune last year.

According to new Futuresource figures, last year was the most successful year the music industry has seen in 15 years.

While people didn’t spend nearly as much on music as they did in the heady days of the early 2000s before digital music, piracy and streaming turned the market upside down. But the amount of money spent by music fans is growing. In 2015, industry revenue grew five percent, reaching nearly $19 billion.

Futuresource looked at revenue from sales of CDs, vinyl and other physical media, of subscription services such as Spotify and Apple Music, and of pay-per-download outlets including iTunes.

A lot of the cash appears to be coming from streaming, which Big Content fought tooth and claw claiming that it would lead to more piracy. Streaming hasn’t been fully adopted worldwide. The Germans and Japanese, for example, still spend most of their music budgets on CDs.

Apple suffers worst week since 2013

main-qimg-b12ab19784276d700467d8bdf085500eApple’s poor business model, which is focused mostly on selling one product which has lower tech than others on the market for more money, is finally being bitten by karma.

Friday ended its worst week on the stock market since 2013 as worries festered about a slowdown in iPhone sales and after influential shareholder Carl Icahn revealed he sold his entire stake.

Shares of Apple have dropped 11 percent in the past five sessions. What is worrying Wall Street is that all those funds which have shedloads of Apple shares because they believed they were always going to rise are suffering.

Confidence in the Cupertino, California company has been shaken since posting its first-ever quarterly decline in iPhone sales and first revenue drop in 13 years. Of course that confidence has been misplaced for the last year, it is not as if they did not have any warning.

The Tame Apple press is claiming that the stock’s relatively low valuation as a key reason to hold onto the stock. Icahn however thinks that Apple has a lot lower to fall mostly because the outfit is going to get a kicking from Chinese authorities.  Apple has been increasingly dependent on China lately because the smartphone industry is fairly saturated in the US.

Revenues from China slumped 26 percent during the March quarter and its iBooks Stores and iTunes Movie service in China were shut down last week after the introduction of new regulations on online publishing.

Over the weekend the Tame Apple Press has been trying to say that shares will pick up when Apple releases a new iPhone 7.  While it might sell, word on the street is that it will not have any new technology onboard and will be pretty much an iPhone 6. Apple seems to think it is a good idea to release a phone with all the new technology next year.

With shareholders jumpy it puts a lot of pressure on the iPhone 7, which even Apple sees as a holding product.

Amazon makes a killing

AmazonOnline bookseller Amazon has made a killing and swept away analysts’ estimates and dusted the mantelpiece of doubts about the online retailer’s investment spree.

JP Morgan analysts muttered in a research note that whatever Amazon was doing it appeared to be working.

“While it’s tempting to try to pull out each component of Amazons  strong 1Q and generally recent performance, we think it’s the combination of many factors – the ‘Amazons Flywheel’, Prime, a growing distribution footprint, getting closer to customers, 3P (third party), AWS … the list goes on,” a JP Morgan analyst grumbled.

The “Amazon Flywheel” was Jeff Bezos’ cunning plan of offering the biggest selection of goods at the lowest prices and providing the best customer experience to create a “positive feedback loop” – whatever that is.

Amazon is also known for making bold investments in new business areas even at the expense of profits – a strategy that is often criticised by investors.

“We believe these results are further evidence that Amazon’s investment in infrastructure, logistics, and Web services is accelerating market share gains, cash flow growth and continued high returns on invested capital,” Goldman Sachs analysts wrote in a client note.

Revenue in Amazon’s three main businesses – online retailing in North America, international online retailing, and cloud business Amazon Web Services – swelled 27 percent, 26 percent and 64 percent respectively.

The company also offered a bright outlook, with revenue guidance for the current quarter of $28 billion to $30.5 billion, compared with the $28.33 billion analysts expected.

AWS, launched 10 years ago, delivered more profit in the first quarter than Amazon’s retail business.

While AWS is Amazon’s fastest-growing business, Amazon Prime and Marketplace, where the company acts as a middleman for third-party vendors, are also gaining momentum.

Amazon’s Prime loyalty program offers one-hour delivery, original TV programming and access to digital entertainment products such as Prime Music and Prime Video for an annual $99.

All this means that Amazon is valued at $317 billion, making it the third-largest U.S.-listed company by market value, behind Apple and Alphabet, both of which posted disappointing quarterly results.

Amazon shares, which have gained 40 percent in the past year, trade at 98.7 times forward earnings, indicating that investors see huge potential for more growth. Apple trades at 10.8 times earnings, while Alphabet trades at 19.9 times.

 

Microsoft doing well thanks to Azure

Microsoft campusSoftware king of the world, Microsoft is still able to coin it in,  thanks mostly to its Azure cloud product.

Microsoft reported earnings for its third fiscal quarter of 2016, including revenues of $22.1 billion. In Q3 2015, Microsoft saw $21.73 billion in revenues and most of the industry is having a snooze at the moment.

Wall Street had expected Microsoft to earn $22.09 billion in revenue so it did a little bit better than they expected.

Microsoft CEO Satya Nadella told the assorted throngs that organisations using digital technology to transform and drive new growth increasingly choose Microsoft as a partner.

“As these organisations turn to us, we’re seeing momentum across Microsoft’s cloud services and with Windows 10, ” he said, perhaps over optimistically.

That said the  results from Office and Office 365 (commercial and consumer customers), grew 1 percent to $6.5 billion. Office 365 had a relatively slow quarter, adding just 1.6 million subscribers to hit 22.2 million. Office commercial products and cloud services revenue grew 7 percent with Office 365 revenue up nearly 63 percent.

Steady Office 365 growth is not much of a surprise, but it does appear to be grinding to a halt. So it looks like Vole’s cunning plan to convert its traditionally most lucrative software business into a subscription revenue stream may be running out of steam.

This segment, which includes results from server products and services (including Windows Server and Azure), grew three percent to $6.1 billion.

Server products and cloud services revenue grew five percent. But Azure revenue, which grew 120 percent. Use of Azure compute and Azure SQL database more than doubled year over year.

Microsoft this quarter also shared that its commercial cloud business exceeded a $10.0 billion. The company previously projected that it expects this number to hit $20 billion by 2018.

Windows licensing and devices (Surface, phones, and Xbox), decreased 1 percent to $9.5 billion. Its OEM revenue also declined two percent. Vole put a brave face on this pointing out that the decline was acceptable because it still “outperforms the PC market.”

Microsoft saw Surface revenue jump from $713 million in Q3 2015 to $1.11 billion in Q3 2016. The Surface Pro 4 and the Surface Book seem to be selling well.

Steve Ballmer’s legacy to the company, its phone business revenue declined 46 percent. In Q3 2016, Microsoft sold 2.3 million Lumia devices, down from 8.6 million in Q3 2015 which is a 73 per cent fall.

Advertising revenue from this group, excluding traffic acquisition costs, grew 18 percent. Microsoft attributed this to Windows 10, which includes tighter Bing integration.

Xbox Live monthly active users grew 26 percent year over year. The service now has 46 million players, which is actually down from 48 million last quarter.

 

Apple fanboy sells his shares in China Crisis

Billionaire activist investor Carl Icahn has sold his entire stake in Apple because he thinks the outfit will get bogged down in China.

Icahn was a huge cheerleader of Apple, acquiring a stake in the company almost three years ago, repeatedly calling the investment a “no brainer.”

He owned 45.8 million Apple shares at the end of last year, but thinks that China’s economic slowdown and worries about how China could become more prohibitive in doing business triggered his decision to exit his position entirely.

“We no longer have a position in Apple. Tim Cook did a great job. I called him this morning to tell him that and he was a little sorry, obviously. But I told him it’s a great company,” Icahn said.

He thinks the Chinese government could “come in and make it very difficult for Apple to sell there … You can do pretty much what you want there,” Icahn said.

Earlier this month, China shut down Apple’s iTunes movies and iBooks stores within the country, following Beijing’s introduction of regulations in March imposing strict curbs on online publishing, particularly for foreign firms.

Icahn made roughly $2 billion off the Apple trade so he is laughing all the way to the bank anway.

Apple on Tuesday posted its first decline in iPhone sales as well as its first revenue drop in 13 years. The company’s sales fell by more than a quarter in China, its most important market after the United States, and it forecast another disappointing quarter for global revenues.

Apple shares have now declined more than 10 percent this week.

Thunderstorm hits Microsoft’s Windows 10 nagware

live_tv_windows_10Microsoft’s Windows 10 nagware is making a public idiot of the company and rendering the software customers have paid for unfit for the purpose.

The latest public humiliation of the company happened during a live TV weather forecast. Instead of the weather map that the television station KCCI wanted, the screen was full of a demand that meteorologist Metinka Slater upgrade to Windows 10 immediately.

Slater was busy trying to warn the good and the bad citizens of Iowa about thunderstorms rolling through Iowa, which was a little more important than a software upgrade.

“Microsoft recommends upgrading to Windows 10. Gosh, what should I do?” Slater asked the viewing public.  Upgrading to Linux instead perhaps? Certainly a TV company can’t risk being seen as being that unprofessional ever again.

Microsoft is increasingly alienating people from its Windows 10 operating system with these sorts of antics. Forced upgrades of any sort are a pain.  We know this because even after you upgrade to Windows you are forced to upgrade on demand even when you do not have enough disk space.  Windows 10 wants to upgrade itself every morning and fills up our hard drive and then insists that it needs 5GB to install itself which the SSD slave drive does not have.

Frankly we hope that the TV Company sues Microsoft, because there does not seem to be any way to make the company understand that nagware on legitimate paid for software is just wrong.

Printer and copier trade slump guts Xerox

Images/Getty Images)Xerox reported a 4.2 percent fall in quarterly revenue due to lower sales of printers and copiers as the company frantically tries to restructure itself out of trouble.

The outfit  said it expects to incur about $100 million in restructuring costs in the second quarter as it splits into two companies, one holding its printer operations, and the other its business process outsourcing unit, which offers business process outsourcing and document outsourcing.

Chief Executive Ursula Burns said that Xerox will appoint its top staff by the middle of the year.

Xerox said revenue from its document technology business, which includes sales of printers and copiers, fell 10 percent to $1.6 billion in the quarter.

Sales of printers and copiers, its mainstay for over half a century, have fallen for more than four years.

Net income attributable to the company fell to $34 million in the first quarter ended March 31, from $225 million last year.

Revenue fell to $4.28 billion from $4.47 billion, compared to analysts’ estimate of $4.24 billion.

About the only thing that Xerox can be happy about is that rival printer makers are also suffering.  Lexmark International has agreed to be taken private by a group of investors led by China-based Apex Technology Co and PAG Asia Capital in a deal valued at $3.6 billion net of cash.

EU will veto O2 mobile deal

mobileEU competition regulators are likely to reject a move by CK Hutchison to buy the UK telco o2 from Telefonica.

CK Hutchison wanted to write a $14.9 billion cheque to buy O2 UK from Spanish group Telefonica to become Britain’s biggest mobile network operator. But the EU is worried that the deal would reduce the number of rival mobile network operators in Britain to three.

It will be the first time that European Competition Commissioner Margrethe Vestager has rejected such a deal, although she has hinted at it in the past. Scandinavian groups Teliasonera and Telenor abandoned plans to merge their Danish mobile subsidiaries in September last year after Vestager said she wanted four network operators in that market.

The European Commission will this week seek the approval from national competition regulators for its decision to reject the Hutchison deal. Such a move is usually a rubber stamp. The EU watchdog has set a May 19 deadline for its decision.

A package of concessions designed to boost smaller rivals failed to address the Commission’s belief that the merger could lead to less competition and higher prices in the UK.

Hutchison will be hoping that the Commission will not come to a similar conclusion in its investigation into its proposed merger in Italy of 3 Italia with Vimpelcom’s Wind. However it should not hold its breath. It involves reducing national market rivalry to just three network operators.

 

Google and Microsoft bury the hatchet

9545Microsoft and  Google have buried the hatchet and reached a deal to withdraw all the regulatory complaints against each other.

A spokesVole said that Microsoft had agreed to withdraw its regulatory complaints against Google, reflecting our changing legal priorities.

“We will continue to focus on competing vigorously for business and for customers,” he said.

Google said the companies would want to compete vigorously based on the merits of their products, not in “legal proceedings”.

The companies in September agreed to bury all patent infringement litigations against each other, settling 18 cases in the United States and Germany.

“… Following our patent agreement, we’ve now agreed to withdraw regulatory complaints against one another,” Google said.

Google’s rivals had reached out to US regulators alleging that the Internet services company unfairly uses its Android system to win online advertising.

The European Commission also accused Google last year of distorting internet search results to favor its shopping service, harming both rivals and consumers.

 

Dutch arrest encrypted network provider

holland1Inspector Knacker of the Rotterdam Yard has fingered the collar of the owner of Ennetcom, a provider of encrypted communications.

Inspector Knacker seems to think that the business is being used for organised crime and shut it down.

Rotterdam judges ordered that Danny Manupassa should be held for 14 days during an ongoing investigation. Prosecutors said he is suspected of money laundering and illegal weapons possession.

“Police and prosecutors believe that they have captured the largest encrypted network used by organized crime in the Netherlands,” prosecutors said in a statement.

Ennetcom said in a statement on its website that the company had been forced to “suspend all operations and services for the time being.”

“Ennetcom regrets this course of events and insinuations towards Ennetcom. It should be clear that Ennetcom stands for freedom of privacy,” the company said.

While Ennetcom and most of its users are in the Netherlands, the bulk of the company’s servers were in Canada. Prosecutors said information on the servers in Canada has been copied in cooperation with Toronto police.

It is not clear if police can decrypt information kept on the servers.

“The company sold modified telephones for about 1,500 euros each and used its own servers for the encrypted data traffic. The phones had been modified so that they could not be used to make calls or use the Internet.”

The phones had turned up repeatedly in investigations into drug cases, criminal motorcycle gangs, and gangland killings, prosecutors said.