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| | January 27, 2016 | |
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| | It is a time-honored tradition for public companies experiencing pressure in their business to change the subject. Just as the Wizard of Oz urged Dorothy & Co. to pay no attention to that man behind the curtain, Apple asked its investors Tuesday to look past its flat revenue, profits, and iPhone shipments. Instead, Apple pleaded, consider its revenue from services, all of which is recurring and therefore more predictable than device sales. What's more, the success of services—including iTunes, Apple Music, iCloud, and Apple Pay—wouldn't exist without the billion Apple devices in use. Translation: Apple device owners use Apple services, which begets more device purchases. The services diversion is legitimate. Excluding a gain from a patent-infringement settlement, Apple's services revenue was $5.5 billion in its first fiscal quarter, up 15% from the year before. This is about 7% of overall revenue, a respectable sidelight that nevertheless won't move the needle for Apple. That's especially true when the Mac and iPad are declining, the iPhone isn't growing, China is concerning, and a car is years away. Apple's omissions speak as loudly as its boasts, including CEO Tim Cook's assertion that the company's performance constituted a "huge accomplishment for our company, especially considering the turbulent world around us." For example, Apple gave no unit metrics for its fledgling Apple Watch or Apple TV products. The situation is hardly bleak, even if it may take some time for Apple's growth to return. The company earned $18 billion in the quarter. It ended the period (on the day after Christmas) with $216 billion in cash and marketable securities. Cook lauded this as the "mother of all balance sheets." He reiterated that Apple plans to use that cash hoard and the company's impressive cash flow to invest patiently during down times, as it has before. Exactly what products will Apple make with all that money? Sorry, that information is hidden firmly behind the curtain. *** Yesterday, I incorrectly described the time period storage and sharing service Box has been focused on business customers instead of consumers. Box pivoted away from selling to individuals in 2007, two years after it started.
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| | BITS AND BYTES | |
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| | VMware books reorg charge, swaps CFOs. VMware, a specialist in software for virtualizing data center servers, beat profit and sales expectations for its fourth quarter. That news was overshadowed by the $55 million to $65 million charge it will take for laying off close to 800 workers and the resignation of CFO Jonathan Chadwick. He'll be replaced by none other than Zane Rowe, who was CFO of VMware's majority investor, EMC. VMware's fate is tied up in EMC's complex $67 billion acquisition by Dell. (Fortune, Reuters) SAP furthers Chinese aspirations with Lenovo's help. Under their new partnership, the hardware company will produce computer servers configured to run SAP's next-generation business application technology, HANA, more efficiently. The German software giant's presence in the Asia Pacific region is relatively modest, at just 12% of revenue in its last fiscal year. (Re/code) Is the Lyft labor dispute over? Under a proposal filed Tuesday in San Francisco, the ride-hailing company will pay $12.3 million to end a class-action lawsuit brought by former drivers who claimed they should be treated as employees, not contractors, when it came to reimbursement for expenses like gas and car maintenance. The proposed settlement, to be considered by a federal judge on Feb. 18, doesn't require Lyft to change its current employment policy. That could be a boon for other companies fighting similar lawsuits, including Uber. (Fortune) Meanwhile, Lyft maps relationship with Google's Waze group. Lyft will use the traffic and location information behind the popular navigation tool to show its drivers the best routes to destinations requested by their passengers. The idea is to help complete trips more quickly, offering a possible edge over rival services, such as the increasingly ubiquitous Uber. (TechCrunch) Ford CEO Mark Fields joins IBM's board. Fields, who worked briefly at the technology giant at the start of his career, will become a director on March 1. Two long-time board members, Warburg Pincus managing director Alain Belda and Salk Institute President William Brody, are retiring. The move underscores the rabid interest in connected cars and self-driving vehicles. Incidentally, Ford's former CEO Alan Mullaly has been a Google director for two years. (Reuters) Fired IT workers sue Disney over outsourcing practices. When the media and entertainment giant replaced its 25o-person Florida team of tech workers with contract help from India last year, it required the laid-off employees to train their replacements. That didn't sit well. Two have filed a class-action complaint on the group's behalf, challenging Disney's decision to use workers holding H-1B visas to displace similarly qualified Americans. (Fortune) Former Twitter exec heads for Instagram. It looks like Kevin Weil, one of four high-level executives who resigned earlier this week, is about to become head of product for Facebook's Instagram division, reports the New York Times. It's a bigger job: the popular photo-sharing app claims 400 million monthly active users, compared with Twitter's 320 million count as of December. (New York Times) Plus, more earnings highlights. EMC's growth stalls in fourth quarter. (The company is holding its analyst call this morning.) AT&T's buyout of DirectTV pays off with 22% fourth-quarter revenue boost. Sprint raises guidance after big increase in new wireless subscribers. (Reuters, Wall Street Journal) | |
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| | THE DOWNLOAD | |
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| | Inside Foursquare's plan to become profitable. Most people know New York-based Foursquare as the "check-in" company, the primary purpose of its original, eponymous mobile application. The idea: Check in to a location, such as a pizza shop or movie theater, and let your friends know where you are. It was a novel idea in the early days of the smartphone. That feature quickly became ubiquitous, forcing the company to shift strategies to maintain its growth, even as it collected plenty of location data along the way. Today, Foursquare is a "location intelligence company," according to newly appointed Foursquare CEO Jeff Glueck. Instead of making money from consumers it's looking to big businesses. Glueck stopped by Fortune's New York headquarters last week to discuss his plans to make the seven-year-old company profitable. (Fortune) | |
| | IN CASE YOU MISSED IT | |
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| | At RSA Conference, 'cyber' is hot, 'crypto' is not by Robert Hackett Slack hires Foursquare exec for artificial intelligence push Pitney Bowes signs, seals, and delivers on smart postage machines Amazon's PayPal competitor is growing by Leena Rao Amazon and Netflix are spending big at Sundance, and they are winning by Mathew Ingram Uber is tracking drivers to catch dangerous driving by Kia Kokalitcheva Do people actually watch marketing videos? Canadian startup Vidyard can tell by Heather Clancy Walmart says it can cut your cloud costs by Barb Darrow Your biggest potential data leak isn't your Nest, it's your ISP Atlassian raids Groupon for first CTO by Heather Clancy | |
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| | ONE MORE THING | |
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| | Attack on Israel's power authority hints at future of cyber breaches. Hackers paralyzed the agency's computer systems. Although there was no direct attack on the electric grid (at least none that has been confirmed), the incident comes just five weeks after hackers disrupted power operations in the Ukraine and raises concerns over the vulnerability of critical infrastructure. (Ars Technica, Fortune) | |
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| | This edition of Data Sheet was curated by Heather Clancy:
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