AT&T Reports Solid Numbers in Q2 2012; Net Profit Grows to $4 Billion

AT&T has reported its earnings for the second quarter of 2012, with its total operating revenue growing marginally to $31.5 billion, and its net profit increasing 8.4% to almost $4 billion.

Its wireless division accounted for most of its revenue, around $14.8 billion, while data and voice services came in next at $7.9 billion and $5.7 billion respectively. However, its operating and net profit margins have increased quite a bit since last year.

It ended the quarter with close to $2.15 billion in cash and cash equivalents and current debt of around $3.4 billion.

Its customer metrics seem to have improved quite a bit, with postpaid, prepaid and total wireless churn rates at their best-ever levels yet. It added close to 1.3 million new net customers this quarter, with 320,000 postpaid net additions.

AT&T sold around 5.1 million smartphones in Q2, and smartphones accounted for close to 77% of all postpaid device sales. Since AT&T generates a much higher ARPU from smartphone users, this bodes well for its future earnings as well.

It activated around 3.7 million iPhones last quarter, with 22% of the subscribers being new to the network.

Randall Stephenson, AT&T’s Chairman and CEO said:

“We executed well across the business and posted another strong quarter with growing revenues, expanding margins and double-digit earnings growth. Our mobile Internet leadership continues, with solid gains in smartphones and tablets, plus our wireless margins have never been better. And most impressive, with this growth, we also achieved our best-ever postpaid wireless churn, which points to the premier experience customers receive on our network. All of these things add to our confidence and enthusiasm looking ahead.”

via SEC – AT&T

Facebook Unveils New Marketing Tools for Pages

Facebook has rolled out additional marketing tools for Pages on its platform. It has added features like scheduled page posts, unpublished page posts, limited page admin permissions for apps etc., through which it aims to make managing Facebook Pages easier for companies and brands who have a social presence on the social network.

Scheduled Page Posts

Using this feature, users can now schedule posts on their brand pages. This could previously be done only with third party Facebook clients. Once a post has been scheduled, it can also be deleted or rescheduled.

Unpublished Page Posts

This is another useful feature which can be used to create posts which aren’t posted on the page timeline. It can be used to create posts which are targeted only at a segment of the audience, without exposing it to the entire fan base of the brand. This could be ideal to create sponsored page posts targeted at only certain segments of the brand’s fans on Facebook.

Page Admin Permissions

This is a very useful tool which can be used to assign limited permissions to third party tools which are used for content creation, moderation, engagement, analytics or advertising by brand pages on Facebook.

This could be very useful to brand pages which use multiple tools to manage their social presence and are concerned about security.

Facebook has also updated its Pages Graph API to include support for developers to build services and apps which can use these new features.

via Facebook Developers

VMware Acquires Nicira for $1.26 Billion

VMware has acquired Nicira, a software defined networking startup which specializes in open source software for virtualized networking. VMware, which is one of the largest players in the server and data center virtualization space is now looking to expand in the network virtualization space. Nicira was one of the best acquisitions it could have made to get a quick headstart in a space which is bound to get very competitive in the coming years.

Nicira is a relative newbie in the enterprise networking market, which is dominated primarily by the likes of Cisco and Juniper.

Nicira was backed by top VC firms including Andreessen Horowitz. According to Ben Horowitz, the synergies VMware will derive from this acquisition are well worth the acquisition price.

“In one bold step, VMware moves from a footnote in the networking market to the clear technology leader in Software Defined Networking and more specifically—and importantly—Cloud Networking.

By combining Nicira’s technology with VMware’s market-leading server virtualization and cloud products, VMware today creates a clear path to becoming the most important infrastructure company across servers, networks and storage for the next 10 years.

As current networking architectures migrate to cloud architectures, VMware has the opportunity to eat a good portion of the $37B data networking market. In that light, $1.26B is a great price.”

With Nicira’s technology, VMware can leverage its expertise in server virtualization and become a major player in the rapidly growing networking space. Nicira already has a pretty sizable roster of clients like AT&T, eBay and Fidelity for its Nicira Network Virtualization Platform.

via Ben Horowitz & ZDNet

Apple Q3 FY12 Earnings: What to Expect?

Apple will be reporting its financials for the third quarter of fiscal 2012 on July 24. Here are some insights into what to expect from the consumer electronics giant this earnings season.


The iPhone 4S was launched last October and drove Apple’s revenue growth for the following two quarters. However, as consumers gear up for the launch of the next iPhone — the iPhone 5 — in October 2012, iPhone sales in the last quarter are expected to be relatively lower.

Apple always offers low guidance numbers, and then positively surprises analysts with better actual figures. However, it will be difficult for it to beat Wall Street consensus analyst estimates, given a slowdown in iPhone sales as well as a general macroeconomic weakness in China and Europe.

Since the iPhone accounts for a major portion of Apple’s overall profits, this will probably lead to significantly lower revenue numbers compared to last quarter.


The iPad 3 has been seeing some crazy sales numbers since its launch in March. This will be the first full quarter since the launch of the tablet, and we expect the revenue growth to be driven primarily by the launch of the iPad 3.

The iPad’s launch in China, particularly, could drive a huge jump in revenues.

Estimates suggest that Apple sold nearly 29 million iPhones in the June quarter, down from 35 million in the March quarter. However, it is expected to have sold around 15 million iPads this quarter, which could potentially compensate for the fall in iPhone sales.

The coming year is going to be very eventful for Apple, as it launches the next iPhone in October, possibly the iPad Mini before the end of the year, as well as the next version of the iPad in March 2013.

Other Stuff

Apple will also have sold a ton of Macs, iPods and other auxiliary stuff, and will also generate some revenue from iTunes and the App Store, but that is insignificant compared to its iPhone and iPad sales.

Analyst expectations point to estimated revenue of $37.2 billion in Q3 FY12, with earnings per share of $10.35.

via Reuters

Scott Thompson, Ex-Yahoo CEO, Appointed CEO of ShopRunner

Yahoo has been in a state of flux for more than a year, with a number of major reshuffles at the top management levels. After Carol Bartz was booted out for failing to turn around Yahoo, Scott Thompson handled the reins at the ailing Internet giant.

However, even he was shown the door rather quickly after it was discovered that he had fudged some details on his resume, falsely stating that he had a computer science degree instead of an accounting one. Soon after that Ross Levinsohn took over as interim CEO, and last week, Marissa Mayer finally took over as CEO and Yahoo seems to hopefully be on the road to recovery.

Anyway, despite his not having a computer science degree, Scott Thompson had some stellar experience as President of PayPal, and helped grow the global business significantly.

Today, it was revealed that he has been appointed the CEO of ShopRunner.

The official statement says:

“ShopRunner, the leading shopping network of merchants joined together to deliver powerful multi-channel shopping services for consumers, today announced that it has named Internet and payments executive Scott Thompson its Chief Executive Officer. Scott joins ShopRunner at a time when the company is enjoying a fast growth trajectory and represents the ideal time to bring on a new leader to further accelerate the company’s expansion. Current CEO and co-founder Mike Golden will continue with the company as its president.”

Apparently, he was already on the Board of Directors of ShopRunner.

He also has an updated bio, which skirts clear of any mention of his Yahoo! debacle or his college degree.

“Most recently, Scott Thompson was CEO of Yahoo!. His career includes leadership positions in the Internet and payment industries including serving as the President of PayPal with overall responsibility for growing the global payment brand. Under his leadership, Thompson turned PayPal into a massive force, growing its user base from 50 million to 104 million active users across 190 countries and having over 8 million merchant partners in its network. Thompson also held positions as PayPal’s senior vice president and chief technology officer, overseeing information technology, product development, and PayPal’s architecture. Prior to PayPal, Mr. Thompson held executive positions with Inovant, a subsidiary of Visa, Barclays Global Investors and Coopers and Lybrand.”

ShopRunner combines a network of retailers to deliver better shopping services and faster shipping to paying customers. It offers free two day shipping across the network of retailers, as well as easier returns.

Press Release

July 26: Facebook’s Day of Reckoning

Facebook has seen its share price drop precariously since it went public in May. It stands near its all time low at around $28, depressed mostly by concerns that its advertising business may not be as lucrative as it was initially projected to be, and that its socially targeted ads may not be as effective as Google’s search based ones.

On July 26, it will report its earnings for Q2 2012, its first since its IPO. That should give us some indication as to where it’s headed in the coming years.

While Google delivers ads based on what users search for (explicit intent), Facebook targets ads using the tons of social data it has on each user — preferences, likes, shares, etc.

In the last year, Facebook has focused exclusively on its ad business — demonstrating ROI for advertisers, rolling out more effective advertising units, and finding ways to monetize its massive mobile audience.

It is apparently planning to launch a real-time ad bidding exchange for users, and may also enable advertisers to publish ads on its partner websites, outside its walled garden.

It also plans to focus on its Payments offering, which could see it generate a significant amount of revenue going forward, if it manages to displace the top players in the online payments and transactions space by leveraging its 900 million strong active user base.

While Facebook is expected to reach more than a billion users by the end of the year, most of the growth will come from developing countries, which hardly generate much revenue for Facebook. Monetizing them should pose another set of challenges for the social networking giant.

via NYT

Rumor: Amazon Working on 5-6 Kindle Fire 2 Variants

Amazon may be planning to launch more than five different variants of the Kindle Fire, all with different display sizes, including a 10 inch model.

The original Kindle Fire had a 7 inch display, and was a fairly huge hit. However, with Google launching the Nexus 7, and Apple reportedly working on an iPad Mini, Amazon may feel the need to compete in different segments.

If it does decide to launch multiple tablets, we expect them to be priced extremely cheaply, at just about break-even levels. Amazon aims to make money not by selling tablet hardware, but by selling digital content to its tablet users.

It has been building out its digital content ecosystem over the last couple of years, and that could generate a significant amount of revenue in the coming years, boosting its low margins.

Since the launch of the Kindle Fire, Amazon’s share of the online video and music market has increased significantly. Amazon may also be planning to launch a smartphone soon, to compete with the iPhone and other Android smartphones.

We certainly expect to see at least a smartphone, a 7 inch Kindle Fire and a 10 inch Kindle Fire before the end of the year. However, 5 to 6 different models may be a long shot. In any case, we will know soon.

via Reuters

Nokia Working on Carrier Partnerships in Europe for Windows Phone 8

Nokia is apparently planning to enter partnerships with multiple European carriers and share revenue with them for sales of its upcoming Windows Phone 8 handsets to create dedicated support channels for its phones. It plans to enter those markets by partnering with top carriers like Apple does with AT&T and Verizon in the U.S., instead of just selling phones which work with all carriers.

By offering revenue shares to carriers, Nokia could get them to back its devices by giving them a stake in the success of its Windows Phone 8 phones, which going by the rather lackluster showing of its Windows Phone 7 devices, would probably hardly rack up many sales.

One of the main reasons why Windows Phone has failed to gain much traction yet is because iPhones sell themselves while most carriers and store salesmen back Android devices due to their affordability and familiarity. By giving them a lucrative stake in the success of its Windows Phone devices, Nokia could turn over some carriers to its side, and gain some much needed traction to get to the tipping point, after which Windows Phone 8 devices would start selling themselves.

Nokia has already tried this in the U.S. with AT&T and the Lumia 900, and has seen some success with it. It wouldn’t be much of a leap for it to do in Europe as well.

Nokia could be the first device maker to launch a Windows Phone 8 smartphone, which could give it a slight lead over other competitors and an initial boost in sales. It lost nearly a billion dollars last quarter, and we expect it to continue to bleed cash in the coming quarters until it eventually gets back in the game, it at all it does.

via Reuters

Beats Electronics Buys Back 25% Stake from HTC

HTC acquired a majority stake in Beats Electronics for $300 million last year, as part of a strategic partnership which involved HTC integrating Beats audio technology into its smartphones. Since then, HTC has launched a number of Beats enabled smartphones, not many of which have been very successful. However, it seems that Beats has bought back nearly 25% of its total shares from HTC for around $150 million.

Following the share buyback, Beats now owns around 75% of its total shares while HTC remains the largest external shareholder with a 25% stake.

HTC will continue to have exclusive rights to use Beats audio technology in its phones.

Here’s the official statement:

“HTC and Beats today announced a realignment of their business agreement that provides Beats with more flexibility for global expansion while maintaining HTC’s major stake and commercial exclusivity in mobile.
Under the terms of the agreement, the founding members of Beats will buy back 25% of its total shares for a total of approximately 75% ownership, with HTC remaining the largest outside shareholder with approximately 25%.
Over the last year, HTC and Beats have made great progress in sound innovation, product integration and brand awareness with successes like the HTC One. HTC and Beats will continue to work closely, including a joint global marketing campaign later this year.”

This could be beneficial for both HTC and Beats, as it doesn’t impact HTC’s technology deal much and gives it some cash back, but also provides Beats with the flexibility to expand internationally.

via Engadget

Kodak Fails at Patent Trolling; Loses Lawsuit Against Apple & RIM

Kodak has been in dire straits for more than a year. Ever since it filed for bankruptcy, it has been trying to somehow monetize its massive patent portfolio which covers a lot of digital imaging applications, a space which Kodak was a leader in.

It had sued a lot of mobile industry leaders like Apple, HTC, RIM and Samsung for patent infringement relating to the use of digital cameras in smartphones.

This week, it lost a patent case against Apple and Research in Motion, as the presiding judge ruled that the patent in question was invalid. The judge also ruled that neither Apple or RIM had violated any trade laws, and so no injunction could be enforced against the sale of any of their products.

The patent, which was related to previewing images with a digital camera, was one of Kodak’s most important patents. It has signed licensing deals for image previewing patents with multiple companies including Samsung and LG.

If the patent is indeed invalid, Kodak’s patent auction last month may fail, and it may not be able to raise the “billions of dollars” that it thinks its patent portfolio is worth.

Kodak has obviously stated that it will appeal the ruling. After all, its entire value depends on how much it can get from its patent portfolio now.

via WSJ