Will Apple Report Revenue Decline Again?

The slowing iPhone sales are likely to negatively affect on the tech giant's revenue

For the first time since the launch of the iPhone, Apple Inc. will be reporting its year-over-year revenue decline after the bells ring at Tuesday market. Since 2003 –the time when the tech giant’s released third generation iPod along with iTunes music store –the tech titan has only been reporting growth. This make up 51 consecutive quarters of growth.

But, after a sudden fall in the sales of the company’s core product –iPhone –the second quarter revenue is expected to decrease by a substantial 10%. The sales of the iPhone make up around two-thirds of the Cupertino, Calif. business.

According to the poll taken by Thomson Reuters, the analysts have projected a decline in revenue from year-ago period’s $58 billion to $52 billion for the current quarter. The EPS is also expected to fall from $2.33 to $1.99.

This decline in the revenue is mainly because of slow upgrade observed in the current year. Back in 2014 when the tech giant released iPhone 6 and later the wider 6 Plus made up the Silicon Valley’s tech giant’s best-selling smartphone line. Piper Jaffray analyst, Gene Munster, had expected iPhone 6 to achieve a 15% sales increase over iPhone 5 line but the phone generated 30% increase.

Munster acknowledged that the iPhone 6 had been the greatest release and that the slowing sales is also natural after having a period of high demand. Munster recommends buying Apple stock and has set a price target of $172. He added that the consecutive second quarter revenue decline shouldn’t be taken as a basis for considering the revenue drop a trend. The iPhones are released in two-year cycles and for the year, the device sales is likely to increase in mid-to high single digits.

The latest  iPhone SE was launched at the end of March so the figures pertaining to its sales are likely to be highlighted in this quarter’s results. The next generation iPhone is expected to be released sometime later this year. According to FactSet, the analysts have projected that in the fiscal 2017 the iPhone sales are likely to jump 4.3% after declining by 7.1%.

The smartphone’s market maturity has raised skepticism and doubt for the Apple’s growth. Many analysts are concerned whether the tech giant will be able to release a product which outshines among its rivals’. This skepticism has resulted in the company’s stock to decline by 18% over the past year.

Moreover, the tech giant may also face another hurdle in its sales –longer upgrade cycles, according to Pacific Crest Securities. In a report forwarded on April 19, the firm told that the consumers had been holding on to their devices longer as to upgrade new features becomes challenging for the consumers.

Although iPhones are the core product of the tech giants however there are signs for the company to perform better in its segments including iCloud, iTunes, and app store business along with the revenue generated through subscriptions.

Last week, Munster had stated in a report that the tech giant’s service business is “underappreciated” whereas Credit Suisse published a note stating that by 2020, the tech giant’s service unit is likely to double its profit contribution.

Last year, the revenue from services jumped up to $19.9 billion which accounts for 8.5% of the total sales. Munster added that after the introduction of TV subscription product and Apple Music, the investors are likely to consider the company’s software business too.

Appointment of Kathy Chen By Twitter Creates Stir Among Chinese Users

The Chinese Twitter users fear that their privacy can be jeopardized after the appointment of the executive

Last week, U.S. popular social networking site, Twitter announced the appointment of Kathy Chen as a managing director for its Chinese operations. This move has triggered an air of fear among the Chinese users who are skeptical that the executive’s past experiences and strong background of working with country’s military and state security devices may put the current consumers’ privacy in jeopardy.

Even though Twitter is blocked in China however it has been massively used by the Chinese living abroad. The app is a widely used platform by the Chinese consumers to express their thoughts freely in their native language. Even though China has also developed the alternative of Twitter, dubbed as “Weibo” however the government has strict surveillance over the content shared on the site by the users and regulates and controls what is being said on the site and by whom.

He Qinglian, a renowned Chinese political activist, living overseas, has urged the U.S. Congress to organize a hearing over Chen’s appointment. She elaborated her viewpoint saying that Twitter has a colossal amount of data and considering that in the past, U.S. tech firms did kneel down to China and that the executive has strong military background then “it’s only reasonable for the Chinese users of Twitter to be worried about the future.”

Chen was first appointed as a technical engineer in 1987 for a military research institute. She has graduated from North Jiaotong University, in the same year, with a degree in computer science, according to Chinese media reports. Later she went on to work for 123COM, DEC, Compaq and finally lead Jinchen –the anti-virus software company whose local partner was indirectly owned by the Ministry of Public Security.

A U.S. based political nonconformist, Wen Yunchao, highlighted on his Twitter account that, in addition to above mentioned jobs, the newly elected personnel has also served around seven years for the People’s Liberation Army therefore “it’s only reasonable to question the direction of the company by its personnel decisions.”

The U.S. popular micro blogging site has responded via an email statement stating that back in 1980s it was quite common for the Chinese government to appoint graduates for the jobs. The company added that Chen’s graduation degree accentuate her chances of working as a junior engineer in People’s Liberation Army.

Twitter further elaborated that in 1990s when Chinese economy opened up with reform, then Chen preferred to continue with her technology career and in 1994 switched to private sector. It added that Kathy’s responsibility in Jinchen was to be the representative of the shareholders of U.S. tech firm, Computer Associates. Twitter clarified that she has “never worked for the Ministry of Public Security.”

Before joining Twitter’s team, Kathy Chen had been an executive with Microsoft Asia-Pacific Research and Development Group. She has expressed her excitement of working for the social networking site but she has not given public statement on the concerns of the Twitter’s Chinese consumers.

At the market which closed on Friday, Twitter stock stood at a price of $17.58. The 52 week range of the stock is $14 to $53.

Apple Campus 2: The Hub Of Innovation

Apple Campus 2 becomes a new buzzword in tech fraternity

Apple Inc. is on the verge of coming up with Apple Campus 2. The company is striving hard to come up with a state of the art campus thus; for the same reason they have also revealed the architectural renderings for some buildings within the campus. The company also surfaced the footage for the building, which will be in ring shape. The drone footage depicts the extensive measures taken by the company to complete construction by 2017.

The architectural renderings for the upcoming campus highlights about the construction of various food shacks, maintenance sheds, and reception centers within the premise. The tech giant has presented this to the Cupertino City Council where they are optimistic about getting the approval during the hearing.

The company is constructing the reception buildings, one of which is at Tantau Avenue and the other will be at Wolfe Road. The idea behind constructing this is to promote the remaining ring shaped campus. Two food centers and maintenance shed spanning an area of 5,776 square feet will be made. These facilities will be devoted to guests and employees. The recent initiative is in accordance to its strategy of having similarity in all its buildings.

The campus will also boast of an on-field theatre service, an underground auditorium that is 120,000 square foot, new glass panes for windows, circular outbuilding, a massive parking space, a fitness center spanning 100,000 square foot, outdoor dining area and a lot more. All this clearly indicates that the campus will be a pleasant addition to the company’s stature. People will be kept in consideration and all the steps of completion will be promptly delivered to Apple fans via Mr. Sinfield’s drone footages.

Now, the development of the 2.8 million square foot campus continues. Mr. Tim Cook believes that the first batch of employees to move to the campus will begin in 2017. According to the Silicon Valley Business Journal, the City Council has demanded two changes in the campus which is the movement of the fence that can be seen from the reception building at Tantau Avenue and a redesigned fence.

It is quite evident that Apple is particular about all the details regarding its campus. This campus is expected to be an architectural wonder equipped with futuristic technology. The company does not just care about the aesthetics of its campuses but it can also been seen in the way Apple Stores have been designed. Mr. Jony Ive and Ms. Angela Ahrendts, the retail chief need to be given credit for their precision and eye for details. The company wants to remain ahead of all its competitors and the same devotion can be seen in the way they care about the smallest details. Apple Campus 2 is looked forward by the entire tech fraternity. 

Aliaba Invests $1 Billion In Lazada Group

Alibaba has announced to invest $1 billion in the Singaporean e-commerce firm to expand its international footprints

Alibaba Group Holding has said to not stop investing in the South Asian markets. The online retailing giant realizes the importance of the new lucrative consumer markets in which it is constantly making deals and acquisitions to strengthen its position. On top of that, the company wants improve its international market presence as at this moment it is currently very low or negligible. Alibaba holds an 80 percent market share in China but it has now switched its mind towards the international markets specifically India, South Korea, and United States of America.

For that matter, the company has announced to agree a deal for buying a controlling stake in Lazada which is a Southeast Asian online retailer. The move comes as a part of its vigorous international market expansion plans. It is believed that the agreed deal is worth at a massive $1 billion from which the newly issued shared in Lazada worth half the investment and the remaining half would be used in acquiring shares from the existing shareholders. Michael Evans, the President of Alibaba, said in a statement that this investment will assist the company to expand its footprints in the Southeast Asia.

He said, “With the investment in Lazada, Alibaba gains access to a platform with a large and growing consumer base outside China, a proven management team and a solid foundation for future growth in one of the most promising regions for e-commerce globally.”

The CEO of Lazada Group, Max Bittner, is also excited with this opportunity and said that he is thrilled with the deal offered by Alibaba Group. He said that the transaction would help Lazada to move closer towards its goal of providing access to more than 560 million customers in the region to the ‘broadest and most unique assortment of products’.

Rocket Internet of Germany had a 17.9 percent stake in Lazada of which it has agreed to sell 9.1 percent stake for $137 million in cash only. It will still keep a hold to the remaining 8.8 percent of its stake in Lazada. Apart from this, Tesco which is one of the supermarket giants in the UK decided to sell 8.6 percent equity stake in the e-commerce firm for $129 million. It keeps the remaining of 8.3 percent stake.

The reason behind buying Lazada is that the e-commerce giant Alibaba wants the buyers and sellers on its platforms to expand their reach of products in the Southeast Asian market. And Lazada has acted quickly acted upon the deal. Reportedly, it has already set up a delivery service, payment options, and supply chains in the regions in which it is doing business.

Marie Sun, who is a senior equity analyst at Morningstar, said in an interview to CNBC that she believes that the e-commerce market in the Southeast Asia is still at an infancy stage and is not developed as of yet if compared to the likes of China and United States. She added, “So if they can dominate the market when the mobile internet penetration increases in the region, Alibaba can benefit in the longer term.”

Alibaba Completes Acquisition Of Youku Tudou

Alibaba has paid $4 billion for the outstanding shares in order to complete the acquisition of the Chinese video giant, Youku Tudou

Alibaba Group Holding is constantly looking for opportunities to expand and improve its media division by making deals and acquisitions. The company was said to acquire the YouTube of China in order to not only bolster the media presence but also generate more traffic to its e-commerce marketplaces. This is not only being done from the video sector but the company expects its financial subsidiary and its movie and film subsidiary to bring more traffic to its online platforms one way or another.

Youku Tudou is known as the YouTube of China which is leading the online video site which has the majority market share of China. Alibaba Group already had a stake in the video platform and it was expected to either buy more stakes or go for a takeover in the coming times. The Chinese e-commerce giant recently revealed that it has completed the takeover of ‘Youku Tudou’. 

Youku Tudou is the result of a merger of the two Chinese firms happened back in 2012 which initially formed the online video platform. Ever since then, it is the number one destination for all Chinese users to stream content.

The negotiations as well as the deal were private which it revealed in November last year. The shareholders of Youku approved the sale of the video streaming giant in March. Youku Tudou was valued at $5.40 billion in the market and Alibaba had to pay $27.6 per New York Stock Exchange (NYSE) listed ads. Alibaba and its owner ‘Jack Ma’ previously owned close to a fifth of company through the funding of Yunfeng fund. Hence the online retailer paid for the outstanding shares only which accounted to $4 billion via YK subsidiary.

The online video streaming platform defines itself as a “leading multi-screen entertainment and media company in China” and as “China’s leading Internet television platform.”

The streaming businesses in China are constantly striving to build and gain market share by improving technology one way or another. Their main aim is to capitalize the mobile market but the revenue growth has ‘outstripped’ profitability. Variety reported, “For the 2014 calendar year Youku Tudou reported losses of $135 million (RMB837 million), up from a loss of $92 million (RMB600 million) in 2014.”

Youku does face competition from a domestic rival named iQIYI, which is experiencing loss in the market. Due to not keeping up with the market pace, the company might be subject for a buyout proposal in the coming times, which would see the founder Gong Yu and Robin Li (founder of Baidu) to pay $2.8 billion in order to remove it from the parent company. iQIYI’s parent company is Baidu.

Alibaba Group is increasing its status in the media division and its product portfolio is expanding day by day. The company’s interests include Alibaba Pictures Group, which is a producer and investor in films domain, stake in Wasu Media, and Hong Kong’s leading newspaper South China Morning Post.

Boeing Gets New Orders For 747

Boeing has managed to receive four new orders for 747, worth $1.5 billion

Boeing Corporation manages to get order for its 747 jumbo jets worth $1.5 billion, which is a major step it as it was struggling to attain sales for its products. The airplane maker has not disclosed who the client is for this jumbo aircraft but it can be assumed that this mystery customer might be an airline, it made confirmation of these orders on April 8.

The aerospace company has made huge job cuts recently in order to save costs, reduce the prices of its products, and beat its major rivals in the market such as Airbus. Boeing confirmed the good news of receiving orders on Thursday, which is big for the company as it could not deliver the jet a year before. The first new order was disclosed of the 747-8F in December, it leased this product to a Russian firm, AirBridgeCargo, which signed for 20 of the airplane makers jets.

Boeing Co. website has the data of the order and it can be accessed bot the customer is not mentioned yet. This is a major step forward for the company for the 747-8, which has been in the market since the 1970s. In 2015, it only received two orders for this product at a price of $379 million. It has even reduced the production for this product at rate of six planes each year, as the company was not getting the right amount of orders to mass-produce the jet.

The commercial airplane, 747 has now managed to receive 23 orders since March out of which two of these jumbo jets have been manufactured for Transaero Airlines. Next week will mark this jumbo jets birthday, it had made it in the market for 50 years. The US jet maker managed to deliver 121 of its plane, 737 in the first quarter, which was the same as last year. It has reported 139 orders rather than 116; it is now focusing on making the deliveries on time.

Boeing was manufacturing 12 '747' jumbo jets each year, the number has gone down to 6 per year now. It has received numerous orders from the US Air Force as it focuses to renew its fleet and fighter planes. The US jet manufacturer is now expecting orders and trades globally within this year increasing the air cargo demand by 4% according to the marketing vice president of the organization, Randy Tinseth. It is now hoping to increase the power of its management and make the decision making as efficient as possible. It is facing its competition head to head, making efforts to lower its prices and attract as many customers as possible. 

Amazon Inc. Is On A Role

Amazon's cloud computing division has crossed 1 million users and will soon become $10 billion business

Amazon Inc. is on a roll. It does not matter whether it is the main e-commerce business or the cloud computing business or even the streaming service, Amazon is killing it in all the divisions. The company is already the uncrowned king of the online retail industry and it is thriving and striving to become the biggest and largest cloud computing division in as well in the tech sector. Last year, the CEO of the company Jeff Bezos said that its cloud computing business known as Amazon Web Services (AWS) is a $5 billion business.

Being a $5 billion business in the cloud market is a huge achievement and a company whose main business is e-commerce is giving a very tough time to the likes of the companies including Microsoft and Google etc.  However, Amazon’s businesses are significantly thriving in the market. For that matter, it is believed that Amazon Web Services (AWS) will soon be a $10 billion business this year. Jeff Bezos wrote this in a letter to shareholders.

According to the note written by Bezos, it is believed that “While Amazon as a whole "became the fastest company ever to reach $100 billion in annual sales in 2015, Amazon Web Services will hit the $10 billion mark at a pace even faster than Amazon achieved that milestone. AWS is used by more than 1 million people from organizations of every size across nearly every industry.”

Amazon Web Services was launched back in March 2006 hence it is now a 10 years old cloud computing division which has prospered well enough to become one of the main businesses of the company. It initially began as Simple Storage Service (S3) provider and then later expanded with the Elastic Compute Cloud (EC2) months later. Its basic task was to allow the clients to give access of the virtual machines over the internet on rental basis. Furthermore, AWS’ services also allowed developers to obtain enough computing capacity without operating their own servers. Numerous startups have also built their businesses on Amazon’s cloud only.

However it is not just small companies to which Amazon Web Services offer its services to but the big name of today’s industry such as Adobe, Capital One, GE, MLB Advanced Media, Netflix, and Pinterest.

Bezos added, “Today, AWS offers more than 70 services for compute, storage, databases, analytics, mobile, Internet of Things, and enterprise applications. We also offer 33 Availability Zones across 12 geographic regions worldwide, with another five regions and 11 Availability Zones in Canada, China, India, the US, and the UK to be available in the coming year.”