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Fortune: Apple may see first quarter of negative income growth since 2003
Apple investors may want to brace themselves for an onslaught of negative headlines when Apple reports its Q2 2013 earnings in the coming month. According to Philip Elmer-DeWitt of Fortune's Apple 2.0 blog, Apple is expected to report its first year-over-year decline in income in 10 years. Much of this decline can attributed to lowered gross margins on products. As noted by DeWitt, Apple's gross margin in Q2 2012 sat at an impressive 47.37 percent, while analyst estimates for the 2013 quarter suggest it could fall to as low as 37.5 percent. Though Apple is projected to deliver another quarter of record revenue, this drop in profit margin threatens to drag down Apple's quarterly income. You can read a brief analysis on Fortune's Apple 2.0 blog and then hop over to Posts At Eventide for a detailed analysis of Apple's current quarter from Robert Paul Leitao.
Apple investors 'return to senses' with big rally today
A massive sell-off in Apple shares that's been going on for about eight weeks now appears to have been nipped in the bud with a rally from Friday's close of US$527.68 to a high around $560. While the news out of Washington, DC about possible action on the upcoming "fiscal cliff" appears to be driving a broader market rally today, John Paczkowski at AllThingsD points out the real driver behind the AAPL rally -- Wall Street analysts are pointing out the stock slide as "unmerited". This morning, Topeka Capital Markets' Brian White sent a note to clients stating that "The sell-off in Apple's stock over the past eight weeks has gotten to the point of being 'insanely insane' given the depressed valuation, new blockbuster products for the holiday season, the attractive long-term growth opportunities that lie ahead and the company's ability to distribute significant cash flow to investors." Over the weekend, Paczkowski pointed out that the pre-holiday decline in Apple share price is a "historical pattern ... Apple shares slip late in the year amid profit-taking and some irrationality or other. And then the company reports monster first-quarter earnings in January and they spike."
New TechCrunch app combines the best of TechCrunch and CrunchBase
TechCrunch took its popular iPad app, shrunk it down and ported it to the iPhone. The essential research app for tech entrepreneurs shares the same features as the iPad version, but has a UI that's optimized for the iPhone's smaller screen. You can read breaking news stories, follow what top journalists are saying about hot tech topics and browse CrunchBase for information on startups, entrepreneurs and venture capitalists. There's also a new video feature that'll let you watch TechCrunch TV. The iPhone version of TechCrunch is bundled with the iPad version in a universal app that's available now for free from the iOS App Store.
Yahoo starts selling half of its Alibaba stake as promised, sends $3.65 billion to giddy shareholders
Anyone who's been holding on to Yahoo shares through thick and thin is about to reap the rewards of that patience. As the company promised, it's starting to sell back half its stake in Alibaba, closing the first stage of the deal with the equivalent of $7.6 billion in pure revenue. The struggling search and content firm 'only' pockets a net $4.3 billion after taxes and other overhead costs, but it won't even see that much in its bank account: it's purposefully sending $3.65 billion of that money to shareholders, both to inspire new confidence and (unofficially) to head off activist investors like Dan Loeb that might otherwise want a coup d'état. If share owners plan on using the second stage of the sale to fund a vacation to Maui, though, they'll need to wait. Yahoo's deal prevents it from selling half of its remaining 23 percent stake unless Alibaba files for an initial public offering, and there's no guarantee that investors will see another dime of the proceeds.
Best Buy founder ever closer to finalizing company buyout bid
Best Buy founder Richard Schulze may have stepped down as chairman of the board, but he's certainly not out. His plan to buy the turbulent company has reached the next step -- an agreement which pre-empts the formal offer. Schulze now has access to all the private numbers he'll need to put together an investor group within the 60-day timeframe. And, if this round is unsuccessful, it'll be next January before another bid can go to the Board of Directors, followed by direct shareholder offers if the second attempt fails. Given that Schulze owns 20 percent of Best Buy, he gets two seats-worth of voting power as long as he sticks to the agreed process. So, with a new CEO taking the reigns in September and the acquisition machinery in top gear, is there fresh hope for the big box retailer?
Discovery Bay Games raises $15M for iOS "Appcessories"
Seattle-based Discovery Bay Games, a board game company turned iOS accessory maker, announced today it has raised $15 million in Series B funding, according to a report in TechCrunch. Big name investors include accessory maker Logitech and Trilogy Equity Partners, an investment firm led by Clearwire board chairman John Stanton. The company will use this money to further its line of iPhone, iPad and iPod touch accessories. Discovery Bay Games has been making iPad accessories since December 2010 and is most well-known for its Duo iPad game controller. The company also recently announced a partnership with Gameloft which will bring Gameloft's games to the Duo line of accessories.
Forbes: Activision's dependence on declining WoW subs 'potential for a catastrophic situation'
With the recent news of World of Warcraft's struggling subscription numbers fresh on our minds, Forbes investigated WoW's primary shareholder and predicted trouble on the horizon for investors. "After looking into Activision Blizzard, Inc., we discovered an amazing looking company that is unfortunately almost completely sustained by the revenue it reaps from one game, World of Warcraft," the authors notes. "When considering that the same company has a 60% majority shareholder (Vivendi) looking to sell its shares in the company you get the potential for a catastrophic situation." Because Vivendi is having difficulty unloading Activision, Forbes says that any sharp decline in World of Warcraft's revenue will drag down Vivendi's stock severely. The authors also note that the company will suffer from the launch of Guild Wars 2: "The bottom line here is that gamers like to start on level playing fields. Gamers love to save money. Gamers are always in a frantic rush to play superior games. These three factors are the main reasons why Guild Wars 2 will win over market share from WoW." [Thanks to Mike for the tip!]
Beats buyout of MOG worth $14 million, splits company not-so-neatly into two
More official details are emerging from Beats Electronics' acquisition of MOG, and they paint a considerably messier picture of the deal than we saw just a day ago. HTC (which has a big stake in Beats) has confirmed that the move into streaming music was worth $14 million -- not a whole lot considering that MOG had raised $33 million through its entire independent lifetime. The low price might come as the result of Beats being very surgical with its deal. The Jimmy Iovine- and Dr. Dre-founded outfit is taking control of the core audio service as a separately-managed company, while the ad and music blog components are mostly left untouched. MOG's loss of independence is coming on a very ignominious note as a result, but it could be good news for subscribers anxious about the service's future as well as HTC phone owners wondering just where Sense UI's Beats integration might go next.
THQ suspected of misleading investors about uDraw
A Georgia law firm is investigating THQ to determine if it misled investors about the stagnant demand for its uDraw tablet, before discontinuing its production in February. Holzer Holzer & Fistel assert that THQ may have withheld information about decreased demand for the uDraw, and may have made "false and misleading" statements about its progress, Gamasutra reports.If THQ employed any of these tactics, it could be in violation of federal securities laws.This investigation follows a slew of financial issues at THQ as well as the sale of its UFC franchise rights to competitor Electronic Arts.
Gambitious launching itself as a game-focused crowdsourcing center
Crowdsourcing is becoming the new trend, with Kickstarter projects serving as the new hotness for getting a game start-up funded. So it's not hard to understand why Gambitious is promoting itself as an alternative to Kickstarter, specifically as a means to fund game development via crowdsourced projects. Gambitious has more to it than just the idea being a game-focused alternative to the Kickstarter giant, however; it includes an option for investors and backers to take part in equity funding. Traditionally, Kickstarter backers receive only a few bonuses for funding a project, and if that project goes on to wild success after the initial funding, the backers are left out. Equity funding allows people to play a more traditional venture capitalist role, investing money in return for dividends on successful projects. While this option is available only in Europe at the moment due to legal issues, it's a new take on funding a game, and depending on future developments, Gambitious might make a name for itself in the indie gaming market.
Facebook CEO Mark Zuckerberg says mobile apps the top focus, we say it's about time
Facebook has been making a lot of promises during a tour to drum up interest in its ever-nearing IPO, but the one gadget-heads have been wanting to hear the most, a commitment to its mobile apps, has been elusive -- until now. Everyone's favorite hooded CEO, Mark Zuckerberg, is telling investors in his home 'burg of the San Francisco Bay that mobile is front and center in his company's plans. We're hoping that means new app features, although Zuck is likely referring to money-making as well: shareholders are jittery knowing that Facebook makes most of its money on web ads that it's not running on smartphones and tablets. Paid titles in App Center will go a long way towards scratching that itch, mind you. As for us, we'll just be happy if Facebook takes less than a year and a half to produce a major tablet app.
Chinese customers investing in Apple's suppliers
It's a gold rush in China as investors line up to cash in on Apple's success by buying up shares in Apple's Asian suppliers, says a report in Reuters. Chinese law prevents investors from buying Apple directly, so many are turning to firms Apple mentioned on its recent supplier list. Even companies rumored to be an Apple supplier are benefitting from this enthusiasm for anything related to the Cupertino company. Analyst Zhou Feng of Donghai Securities Co. said, "Investors want to share in Apple's growth as they believe sales of iPhones and iPads will remain strong." We will see how strong these sales are later today when Apple announces its quarterly earnings for Q2 2012.
Larry Page looks back at a year of leading Google, promises velocity, execution and focus in the future
A year and a day after taking over the reins at Mountain View, Google co-founder and Chief Executive Officer Larry Page has plenty to say about where the company has been recently, and where it's going. While there aren't any Project Glass bombs dropped, in this open letter he's promising a Google that will achieve even more, and faster, as it goes forward. First, a spoiler alert: he really likes Google's products. From Google+, to tighter integration with results for things like weather and airfare to that little Android side project there's plenty of praise to go around. One of the longest segments is dedicated to the "love and trust" Google desires to deserve from its users, mentioning that creating "a much better, more intuitive experience across Google" is a focus for 2012. Hit the source link to have your own look at the Google boss' innermost thoughts -- do you think he's on the right track?
God save the green: Deal makes Jagex a US company
Jagex is trading up the Union Jack for the Stars and Stripes, as controlling interest in the studio has changed hands to a US firm. Insight Venture Partners, a venture capital firm from the US, completed a deal last year to increase its ownership to 55% of the UK-based company. Previously, the firm had 35% interest in Jagex. Now that the scales have tipped to the new ownership, this technically makes Jagex a US-controlled company and has US investors leading its board of directors. While revenues were up 2% for Jagex in 2011, both operating and net profits were significantly down from the previous financial year. Jagex is a major player in the MMO free-to-play market, with RuneScape, Transformers Universe, and 8Realms as part of its project portfilio. Develop reports that the controlling interest was made possible by Jagex co-founder Andrew Gower selling off his ownership claims to the firm for $115.65 million. As part of the deal, Jagex paid $3.85 million in expenses. The studio will remain in Cambridge while its controlling firm is in NYC.
The agonizing wait for Star Wars: The Old Republic's launch date continues [Updated]
The multi-million dollar question that's been on every Star Wars: The Old Republic fan's lips can be summed up in one word: When? While we still don't know a precise date, we may be a step or two closer to finding out today. SWTOR fansite Darth Hater combed through a recent EA Q&A session with investors to pull a few pertinent details from CFO Eric Brown. When asked about the launch date for The Old Republic, Brown replied, "We haven't given a street date yet. We won't do so for some time, possibly at our next upcoming earnings call towards the end of October." This earnings call will take place on October 25th. EA also continues to stand by its backup plan of a launch delay if SWTOR isn't ready, giving the title room to possibly slip from holiday 2011 to early 2012. Brown explained the conditions that would trigger such a slip: "We did hold out a slight possibility that it could slip to our March quarter. And the factors that would cause a slip is, for example, us not being completely satisfied with the scalability testing, and wanting to tune it for several extra weeks." [Update: SWTOR's Stephen Reid has posted on the forums urging fans not to read too much between the lines of investor calls. "We are still very much aiming to ship in the holiday 2011 window (AKA, before the end of the year)," he says.] [Update#2: The transcript was actually done by Darth Hater, which Ask a Jedi copied and pasted. The correct source is now linked.]
Netflix admits it will end up with fewer subscribers than predicted, shrinks DVD-only count
Back in July, after announcing it would decouple unlimited movie streaming from unlimited DVD rentals and charge more to keep both, Netflix predicted it would end up with 25 million subscribers at the end of Q3. This morning it advised investors that prediction has been slashed by 1 million, however most of that shortfall is predicted to come from fewer DVD-only customers than expected, which is expected to come up 800,000 short. While we'll still have to wait for the actual Q3 results to see how things pan out, the company still claims its projection of 12 million subscribers to both services is right on. While it backtracked on the total numbers, it also outlined its reasoning for raising prices by improving the DVD business, raising more cash to spend on streaming licensing and ultimately "remain price aggressive" and keep its individual offerings at $7.99 each. Much of the kicking and screaming online indicted Netflix's streaming library for failing to live up to the new price, anyone surprised many cutters seem to be coming from the DVD-only side?
Peel iOS remote raises $16 million in funding
We've posted about the Peel universal IR remote before. It's an interesting setup using a third-party unit that looks almost like a pear, designed to fit right into your living room wirelessly. It connects to an iOS app and turns your iDevice into a universal remote for any other units you might happen to have. In addition to the slick design, there's a nice bit of TV browsing functionality included. It's a remote designed not only to help you control your TV, but also give you an idea of what you actually want to do with it. It's that kind of overall thinking that got the unit into Apple Stores, and now the hard work has paid off. Peel has picked up a round of funding to the tune of over US$16 million. There have been a few other ways to connect the iPhone up to IR remotes (the Redeye has been another popular solution), but this is the biggest vote of confidence we've seen in such a device yet. Peel certainly isn't quite a mainstream device, but this funding is definitely a leg up. There's been a trend toward using smartphones to interact with and control other devices, and Peel looks to be in exactly the right place to take advantage. If nothing else, hopefully this will help Peel get some units out the door; Amazon currently lists the product as shipping "within 1 to 2 months." $16 million should help out with that.
Controlling share in Bigpoint purchased for $350 million
The prolific MMO developer Bigpoint is answering to couple of new bosses today. According to Gamasutra, Summit Partners and TA Associates have banded together to heavily invest in the company -- and by doing so, to take a controlling share in Bigpoint. The two firms, which are now on the board of directors, have jointly invested $350 million into Bigpoint. These funds will recapitalize the studio and expand its presence worldwide. Bigpoint founder and CEO Heiko Hubertz, who controls 30 percent of the company, appears optimistic: "The investment by TA Associates and Summit Partners is a validation of Bigpoint's leadership position within the gaming industry, and will give us a huge boost toward becoming one of the most successful gaming companies worldwide." Bigpoint has a wide portfolio of titles including Battlestar Galactica Online, DarkOrbit, and the upcoming Drakensang Online.
Two years after Fred Wilson dumped AAPL...
We all make predictions that don't turn out as planned. For example, this morning I said I'd have a few beers, enjoy a barbeque in the sun with friends and perhaps go to the cinema tonight. Turns out I have two daughters under the age of 3, so there went my day. But at least I'm not kicking myself like Fred Wilson must be. Wilson is the venture capitalist managing partner of Union Square Ventures who, two years ago, famously announced that he was selling all his shares in Apple because he didn't believe the company was "being straight with investors" over Steve Jobs's health. "My average price on my entire position in Apple is US$96, so I'll take a small loss on this and a small gain on the stock I bought during the meltdown last fall." He sold at $91.36 -- and at close yesterday, Apple shares were at $338.08, up $246.72 or 270 percent. He sold Google at the same time but announced a short time later he was buying back into the search giant. See the chart above for how that one worked out for him. Maybe he only had one share in Apple (although $246.72 would go nearly halfway towards a new iPad 2). Maybe he's happy with that 50 percent-plus gain in Google's value. Or maybe he's still kicking himself now. Me, I think we'll have that barbeque tomorrow. [Via Daring Fireball]
Fusion-io IPO filing discloses list of prestigious clients, led by Facebook
Before last week, we'd gone well over a year without discussing solid state storage purveyors Fusion-io -- and their extremely expensive and expeditious flash drives -- but things seem to have been ticking along just fine behind the scenes. While the company's unlikely to have sold many ioDrives to good old Joe Consumer, its upcoming IPO application features an impressive list of corporate clients, highlighted by Facebook, its biggest customer, IBM, HP, and Credit Suisse -- the latter using Fusion-io technology to speed up the mathematical alchemy of making money where there was none before. Taken together with strategic investments from Samsung and Dell, these deals paint a rosy outlook for the Woz-employing startup, however it's worth noting that profitability is still a decent way away. Fusion-io's rapid growth is costing it more than it's making at the moment, which is most likely to have catalyzed its current decision to go public and collect its biggest round of investments yet. Let's hope the investor prospectus includes a forecast for when things like the ioXtreme might actually become affordable to non-millionaires, eh?
