SAN FRANCISCO (Reuters) - Apple Inc said on Monday its iPhone software chief and its head of retail would leave, a major executive shake-up that follows embarrassing problems with the company's new mapping software and disappointing quarterly results.
The moves, which come a little more than a year into Tim Cook's tenure as Apple's chief executive, were described by the company as a way to increase 'collaboration' across its hardware, software and services business.
Apple said that Scott Forstall, one of the original architects of the Mac operating system and head of its smartphone software, would leave next year. It said he would serve as an advisor to Cook in the interim.
Forstall was the executive behind the panned Apple Maps app, and Apple said responsibility for maps and Siri, the voice search assistant, would be taken over by another longtime executive, Eddy Cue.
Critics of the maps debacle, which led CEO Tim Cook to apologize to customers, had been calling for Forstall's head. 'Does Apple have a Scott Forstall problem?' Fortune editor Philip Elmer-Dewitt wrote on Sept 29.
Apple said a search is underway for a new retail chief to replace John Browett and that the retail team would report directly to Cook.
Browett took over as head of Apple's retail stores earlier this year, replacing Ron Johnson, who went on to become the CEO of JC Penney.
Last week Apple delivered a second straight quarter of disappointing financial results, and iPad sales fell short of Wall Street's targets, marring its record of consistently blowing past investors' expectations.
(Reporting by Alexei Oreskovic; Editing by Richard Chang)
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Monday, October 29, 2012
Google unveils first 10-inch Nexus tablet
SAN FRANCISCO (Reuters) - Google Inc unveiled a larger version of its Nexus-branded tablet computer on Monday, and updated its mobile gadget and online content offerings as competition with Apple Inc, Amazon.com Inc and Microsoft Corp heats up ahead of the holiday sales season.
The device follows a spate of new product launches by the technology leaders in recent weeks, including Apple's iPad Mini last week and software-maker Microsoft's first-ever home-built tablet, the Surface.
Google, the world's No.1 Internet search engine, has pushed deeper into the hardware business at a time when consumers are increasingly accessing the Web on mobile devices.
Google's new Nexus 10, made in partnership with consumer electronics company Samsung Electronics Co, is the first 10-inch tablet to come to market under Google's Nexus brand. The device, with prices starting at $299, will be available on November 13 in the United States and seven other countries, Google said in its official blog on Monday.
Google was scheduled to introduce the device at a media event in New York on Monday, but was forced to cancel because of Hurricane Sandy.
Google also said it was expanding its online movie and music retail businesses to several countries in Europe.
And the company introduced an improvement to its online-music storage service. The new 'matching' feature scans songs in a consumer's music collection and automatically creates an online or 'cloud-based' library of the same tracks which consumers can access from any device or computer.
Google said the music matching feature, which only works with tracks that are part of the Google Play store's music catalog, will be available in Europe on November 13 and in the United States soon after.
Google also updated its smaller, Nexus 7 tablet released earlier this year. It increased the storage on the $199 version of the device to 16GB from 8GB, and introduced a new $299 version of the Nexus 7 with a cellular data service option. Google also unveiled a new Nexus 4 smartphone, made in partnership with LG Electronics, that features a quad-core processor and a 4.7-inch display.
(Reporting by Alexei Oreskovic; Editing by Richard Chang)
This article is brought to you by AFFORDABLE COMPUTERS.
The device follows a spate of new product launches by the technology leaders in recent weeks, including Apple's iPad Mini last week and software-maker Microsoft's first-ever home-built tablet, the Surface.
Google, the world's No.1 Internet search engine, has pushed deeper into the hardware business at a time when consumers are increasingly accessing the Web on mobile devices.
Google's new Nexus 10, made in partnership with consumer electronics company Samsung Electronics Co, is the first 10-inch tablet to come to market under Google's Nexus brand. The device, with prices starting at $299, will be available on November 13 in the United States and seven other countries, Google said in its official blog on Monday.
Google was scheduled to introduce the device at a media event in New York on Monday, but was forced to cancel because of Hurricane Sandy.
Google also said it was expanding its online movie and music retail businesses to several countries in Europe.
And the company introduced an improvement to its online-music storage service. The new 'matching' feature scans songs in a consumer's music collection and automatically creates an online or 'cloud-based' library of the same tracks which consumers can access from any device or computer.
Google said the music matching feature, which only works with tracks that are part of the Google Play store's music catalog, will be available in Europe on November 13 and in the United States soon after.
Google also updated its smaller, Nexus 7 tablet released earlier this year. It increased the storage on the $199 version of the device to 16GB from 8GB, and introduced a new $299 version of the Nexus 7 with a cellular data service option. Google also unveiled a new Nexus 4 smartphone, made in partnership with LG Electronics, that features a quad-core processor and a 4.7-inch display.
(Reporting by Alexei Oreskovic; Editing by Richard Chang)
This article is brought to you by AFFORDABLE COMPUTERS.
Sunday, October 28, 2012
In San Francisco, tech investor leads a political makeover
SAN FRANCISCO (Reuters) - One morning in April, Ron Conway, the billionaire technology investor, sat in a conference room on the second floor of San Francisco's City Hall with about 50 representatives from the city's business community.
On the agenda was a sweeping proposal by Mayor Ed Lee to reform the city's payroll tax, a plan that would favor companies with many employees but little revenue - tech start-ups, namely - while shifting the burden to the real estate and financial industries.
The head of the San Francisco Chamber of Commerce was arguing against the proposal when Conway abruptly cut him off.
'The tech industry is producing all the jobs in this city,' Conway snapped, according to four people present, his voice rising as he insisted that old-line businesses 'need to get on board.'
In the end, they did get on board - and San Francisco voters on November 6 will decide whether to approve the change in the tax code.
Conway's success with the tax initiative demonstrates the profound transformation playing out in San Francisco's business corridors and its halls of power. As start-ups blossom, attracting a wave of entrepreneurs and investment dollars, the tech industry is wielding newfound clout in local politics - largely thanks to Conway, its brash, silver-haired champion.
The shift, local political experts say, harks back to the turn of the last century, when financial institutions like the Bank of Italy - forebear to present-day Bank of America - gradually eroded the railroad barons' grip over California politics.
Now the tech industry, led by Conway, is beginning to overshadow long-dominant local business lobbies, said Chris Lehane, a political consultant and former adviser in the Clinton White House.
'When you have a new business entity that really hasn't existed in the past and becomes a real player in local politics, that changes the balance a bit,' said Lehane, who is based in San Francisco. 'People like Ron Conway, he's an angel investor in companies but also an angel supporter of politicians he cares about.'
Not everyone in this famously liberal city is enthused about the new tech boom, which is driving up rents and threatening to price out all but the wealthy.
'As someone who lived through the tech boom in the '90s and watched countless friends and community members get pushed out of their homes, only for the bubble to disintegrate, this is painful to watch,' said Gabriel Haaland, political director for the SEIU Local 1021, the largest union in the city. 'Those times are here again.'
Last month, when San Francisco Magazine published an article bemoaning tech-driven gentrification, traffic on the magazine's website broke all records.
'It touched on an issue that people have been thinking about for a while,' said Jon Steinberg, the magazine's editor.
Conway and Lee make no apologies.
'Tech added 13,000 out of the 25,000 new jobs we created the last couple years, which helped us bring the unemployment rate to the third-lowest in the state,' Lee, a Democrat, said in an interview. 'We have to work with the new jobs creators, and that's what I believe the public wants me to do.'
Conway, who made his name in the 1990s by betting on small, early-stage companies and scoring a huge win with Google, says a key goal of a new civic organization he has started, San Francisco Citizens Initiative for Technology & Innovation, is to provide service jobs in tech for long-term residents and the unemployed.
'It would be great if we could create a few hundred jobs in the $50,000 to $80,000 income bracket,' said Conway. 'We're here to improve the living conditions for all of San Francisco. That's the responsibility tech wants to take.'
ODD COUPLE
Conway and Lee have an exceptionally close relationship, one that has captivated the city's political set even while attracting accusations of favoritism from the mayor's rivals.
The two make an odd couple. Lee was a publicity-shy city bureaucrat and civil rights lawyer for decades before being named caretaker mayor of this Democratic bastion in 2011 after his predecessor was elected lieutenant governor. Conway, until recently a registered Republican, counts Tiger Woods and Henry Kissinger among his investors and considers a start-up tour with Ashton Kutcher in tow just another day's work.
In a city that faces chronic budget deficits even as it enjoys a comparatively strong economy, the relationship is symbiotic. Conway taps his access to Lee to promote his companies, from Twitter to Zynga to Airbnb; Lee persuades Conway to rally tech leaders to help fund the police, the schools, the parks.
Their alliance began only last year. As interim mayor, Lee impressed Conway when he pushed through a tax exemption for Twitter, which had considered moving out of the city to avoid the tax bill that would have resulted from an initial public offering. San Francisco imposes a 1.5 percent payroll tax on local companies, a levy that applies to any gains in an IPO.
When Lee ran for a full four-year term several months later, Conway formed an independent political action committee on his behalf. He rustled up almost $700,000 from the likes of entrepreneur Sean Parker; Zynga CEO Mark Pincus; Salesforce CEO Marc Benioff; venture capitalists John Doerr and Tom Byers; and Credit Suisse banker Bill Brady.
He also enlisted Portal A, a video production outfit consisting of three twentysomething hitmakers, to create a YouTube video that featured rapper MC Hammer, Yahoo CEO Marissa Mayer and San Francisco Giants pitcher Brian Wilson dancing on Conway's rooftop. The clip went viral and effectively drowned out ads from Lee's rivals.
A year later, Conway rated the mayor's performance a '9.5 out of 10.'
'I have a tremendous respect for Mayor Lee,' he said. 'He listens to people. He builds consensus, and that's an improvement from the past.'
Conway said he and Lee are 'too busy with our day jobs' to socialize frequently. Neither likes to publicly discuss their relationship. But when the mayor turned 60 in May, Lee and his family sat down for a three-hour private dinner with Conway and his wife, Gayle, at an Italian restaurant in North Beach, according to the San Francisco Chronicle's gossip columnists.
For Conway - whose calls to the mayor's office are considered the highest priority, City Hall insiders say - no issue facing his portfolio companies is too insignificant for him to get involved. In one instance this year, after social media company Pinterest moved to San Francisco, Conway pressed officials to repaint curbs to allow employee parking near the start-up's offices, according to two people with knowledge of the matter. The city refused; Conway denied that the incident occurred.
While some cities have cracked down on services like Airbnb, which lets residents rent out spare bedrooms and can run afoul of local lodging ordinances, Lee has taken the opposite tack. This year he formed a policy-making group to consider how to regulate and foster such companies, which are part of what's known in Silicon Valley as the 'sharing economy.'
The mayor has also urged Conway to help city initiatives. Conway recently contributed $100,000 toward a campaign to approve bonds to restore the city's parks, and gave $25,000 to a charity founded by Lee that funds impoverished public schools. When a group of software developers tried recently to create an app that would improve public bus performance but lacked funds for a pilot program, SF Citi stepped in and cut a check.
Lee said he hoped Conway would fill a void left by recently deceased philanthropists such as Gap Inc founder Don Fisher, real estate mogul Walter Shorenstein and private equity investor Warren Hellman.
'The tech guys like Conway usually want to meet presidents and such. You never see them play so deep in local government,' said one Democratic fundraiser. 'It's unusual.'
But the tech world says the headlong plunge into local politics is classic Conway.
'When Ron is passionate about an issue or a company or a person, it's never a secret,' said Twitter CEO Dick Costolo. 'He's passionate about San Francisco right now, and it's exhibiting itself in the way he helps companies in the city, the way he helps the city. It's fantastic to see.'
CHANGING TAX POLICY
Conway says his top priority is passage of the payroll tax reform initiative on November 6.
The measure would tax local businesses based on their gross receipts instead of the size of their payroll, which benefits low-revenue, high-headcount companies like startups. Financial, insurance and real estate companies would see their local taxes rise by 30 percent, while taxes will remain flat for most scientific and technical companies.
Crucially, the measure would also mean that proceeds from an IPO would not be subject to taxes.
Landlords, and to a lesser extent financial services companies, conceded that they had lost their first political fight with the tech industry, but took the long view.
'We knew we were going to be socked in a big way, and we worked early and long and hard with the city for a rate that was fair,' said Ken Cleaveland of the Building Owners and Managers Association. 'In the end it wasn't in our best interest to fight our tenants.'
(Reporting by Gerry Shih; Editing by Jonathan Weber, Douglas Royalty and Dale Hudson)
This article is brought to you by BUY A NEW COMPUTER.
On the agenda was a sweeping proposal by Mayor Ed Lee to reform the city's payroll tax, a plan that would favor companies with many employees but little revenue - tech start-ups, namely - while shifting the burden to the real estate and financial industries.
The head of the San Francisco Chamber of Commerce was arguing against the proposal when Conway abruptly cut him off.
'The tech industry is producing all the jobs in this city,' Conway snapped, according to four people present, his voice rising as he insisted that old-line businesses 'need to get on board.'
In the end, they did get on board - and San Francisco voters on November 6 will decide whether to approve the change in the tax code.
Conway's success with the tax initiative demonstrates the profound transformation playing out in San Francisco's business corridors and its halls of power. As start-ups blossom, attracting a wave of entrepreneurs and investment dollars, the tech industry is wielding newfound clout in local politics - largely thanks to Conway, its brash, silver-haired champion.
The shift, local political experts say, harks back to the turn of the last century, when financial institutions like the Bank of Italy - forebear to present-day Bank of America - gradually eroded the railroad barons' grip over California politics.
Now the tech industry, led by Conway, is beginning to overshadow long-dominant local business lobbies, said Chris Lehane, a political consultant and former adviser in the Clinton White House.
'When you have a new business entity that really hasn't existed in the past and becomes a real player in local politics, that changes the balance a bit,' said Lehane, who is based in San Francisco. 'People like Ron Conway, he's an angel investor in companies but also an angel supporter of politicians he cares about.'
Not everyone in this famously liberal city is enthused about the new tech boom, which is driving up rents and threatening to price out all but the wealthy.
'As someone who lived through the tech boom in the '90s and watched countless friends and community members get pushed out of their homes, only for the bubble to disintegrate, this is painful to watch,' said Gabriel Haaland, political director for the SEIU Local 1021, the largest union in the city. 'Those times are here again.'
Last month, when San Francisco Magazine published an article bemoaning tech-driven gentrification, traffic on the magazine's website broke all records.
'It touched on an issue that people have been thinking about for a while,' said Jon Steinberg, the magazine's editor.
Conway and Lee make no apologies.
'Tech added 13,000 out of the 25,000 new jobs we created the last couple years, which helped us bring the unemployment rate to the third-lowest in the state,' Lee, a Democrat, said in an interview. 'We have to work with the new jobs creators, and that's what I believe the public wants me to do.'
Conway, who made his name in the 1990s by betting on small, early-stage companies and scoring a huge win with Google, says a key goal of a new civic organization he has started, San Francisco Citizens Initiative for Technology & Innovation, is to provide service jobs in tech for long-term residents and the unemployed.
'It would be great if we could create a few hundred jobs in the $50,000 to $80,000 income bracket,' said Conway. 'We're here to improve the living conditions for all of San Francisco. That's the responsibility tech wants to take.'
ODD COUPLE
Conway and Lee have an exceptionally close relationship, one that has captivated the city's political set even while attracting accusations of favoritism from the mayor's rivals.
The two make an odd couple. Lee was a publicity-shy city bureaucrat and civil rights lawyer for decades before being named caretaker mayor of this Democratic bastion in 2011 after his predecessor was elected lieutenant governor. Conway, until recently a registered Republican, counts Tiger Woods and Henry Kissinger among his investors and considers a start-up tour with Ashton Kutcher in tow just another day's work.
In a city that faces chronic budget deficits even as it enjoys a comparatively strong economy, the relationship is symbiotic. Conway taps his access to Lee to promote his companies, from Twitter to Zynga to Airbnb; Lee persuades Conway to rally tech leaders to help fund the police, the schools, the parks.
Their alliance began only last year. As interim mayor, Lee impressed Conway when he pushed through a tax exemption for Twitter, which had considered moving out of the city to avoid the tax bill that would have resulted from an initial public offering. San Francisco imposes a 1.5 percent payroll tax on local companies, a levy that applies to any gains in an IPO.
When Lee ran for a full four-year term several months later, Conway formed an independent political action committee on his behalf. He rustled up almost $700,000 from the likes of entrepreneur Sean Parker; Zynga CEO Mark Pincus; Salesforce CEO Marc Benioff; venture capitalists John Doerr and Tom Byers; and Credit Suisse banker Bill Brady.
He also enlisted Portal A, a video production outfit consisting of three twentysomething hitmakers, to create a YouTube video that featured rapper MC Hammer, Yahoo CEO Marissa Mayer and San Francisco Giants pitcher Brian Wilson dancing on Conway's rooftop. The clip went viral and effectively drowned out ads from Lee's rivals.
A year later, Conway rated the mayor's performance a '9.5 out of 10.'
'I have a tremendous respect for Mayor Lee,' he said. 'He listens to people. He builds consensus, and that's an improvement from the past.'
Conway said he and Lee are 'too busy with our day jobs' to socialize frequently. Neither likes to publicly discuss their relationship. But when the mayor turned 60 in May, Lee and his family sat down for a three-hour private dinner with Conway and his wife, Gayle, at an Italian restaurant in North Beach, according to the San Francisco Chronicle's gossip columnists.
For Conway - whose calls to the mayor's office are considered the highest priority, City Hall insiders say - no issue facing his portfolio companies is too insignificant for him to get involved. In one instance this year, after social media company Pinterest moved to San Francisco, Conway pressed officials to repaint curbs to allow employee parking near the start-up's offices, according to two people with knowledge of the matter. The city refused; Conway denied that the incident occurred.
While some cities have cracked down on services like Airbnb, which lets residents rent out spare bedrooms and can run afoul of local lodging ordinances, Lee has taken the opposite tack. This year he formed a policy-making group to consider how to regulate and foster such companies, which are part of what's known in Silicon Valley as the 'sharing economy.'
The mayor has also urged Conway to help city initiatives. Conway recently contributed $100,000 toward a campaign to approve bonds to restore the city's parks, and gave $25,000 to a charity founded by Lee that funds impoverished public schools. When a group of software developers tried recently to create an app that would improve public bus performance but lacked funds for a pilot program, SF Citi stepped in and cut a check.
Lee said he hoped Conway would fill a void left by recently deceased philanthropists such as Gap Inc founder Don Fisher, real estate mogul Walter Shorenstein and private equity investor Warren Hellman.
'The tech guys like Conway usually want to meet presidents and such. You never see them play so deep in local government,' said one Democratic fundraiser. 'It's unusual.'
But the tech world says the headlong plunge into local politics is classic Conway.
'When Ron is passionate about an issue or a company or a person, it's never a secret,' said Twitter CEO Dick Costolo. 'He's passionate about San Francisco right now, and it's exhibiting itself in the way he helps companies in the city, the way he helps the city. It's fantastic to see.'
CHANGING TAX POLICY
Conway says his top priority is passage of the payroll tax reform initiative on November 6.
The measure would tax local businesses based on their gross receipts instead of the size of their payroll, which benefits low-revenue, high-headcount companies like startups. Financial, insurance and real estate companies would see their local taxes rise by 30 percent, while taxes will remain flat for most scientific and technical companies.
Crucially, the measure would also mean that proceeds from an IPO would not be subject to taxes.
Landlords, and to a lesser extent financial services companies, conceded that they had lost their first political fight with the tech industry, but took the long view.
'We knew we were going to be socked in a big way, and we worked early and long and hard with the city for a rate that was fair,' said Ken Cleaveland of the Building Owners and Managers Association. 'In the end it wasn't in our best interest to fight our tenants.'
(Reporting by Gerry Shih; Editing by Jonathan Weber, Douglas Royalty and Dale Hudson)
This article is brought to you by BUY A NEW COMPUTER.
SAP eyes "long" period of high sales growth: report
BERLIN (Reuters) - Germany's SAP may be able to sustain high sales from software and related services for a 'very long time,' co-chief executive Bill McDermott told a German newspaper.
'It's our ambition to grow with double-digit numbers for a very long time to come,' Euro am Sonntag quoted McDermott as saying in an interview published on Sunday.
'I believe that's possible.'
The newspaper also cited the co-CEO as saying SAP currently has no plans for further acquisitions following the purchases of cloud-computing company Ariba and Success Factors.
(Reporting By Andreas Cremer; Editing by Hans-Juergen Peters)
This article is brought to you by BUY A NEW COMPUTER.
'It's our ambition to grow with double-digit numbers for a very long time to come,' Euro am Sonntag quoted McDermott as saying in an interview published on Sunday.
'I believe that's possible.'
The newspaper also cited the co-CEO as saying SAP currently has no plans for further acquisitions following the purchases of cloud-computing company Ariba and Success Factors.
(Reporting By Andreas Cremer; Editing by Hans-Juergen Peters)
This article is brought to you by BUY A NEW COMPUTER.
Friday, October 26, 2012
Star Silicon Valley analyst felled by Facebook IPO fallout
SAN FRANCISCO (Reuters) - The firing of Citigroup stock analyst Mark Mahaney on Friday in the regulatory fallout from Facebook Inc's initial public offering was greeted with shock and dismay in Silicon Valley, where Mahaney was a well-known and well-liked figure.
'Pretty shocked,' was the reaction of Jacob Funds Chief Executive Ryan Jacob, who described Mahaney as one of the most respected financial analysts covering the Internet industry.
'I'd put him at the top. If not at the top, then near the top,' said Jacob. 'He really knew what to look for.'
In addition to firing Mahaney, Citigroup paid a $2 million fine to Massachusetts regulators to settle charges that the bank improperly disclosed research on Facebook ahead of its $16 billion IPO in May.
The settlement agreement said Mahaney failed to supervise a junior analyst who improperly shared Facebook research with the TechCrunch news website. (Settlement agreement: http://r.reuters.com/pyj63t)
The settlement agreement also outlined an incident in which Mahaney failed to get approval before responding to a journalist's questions about Google Inc -- and told a Citigroup compliance staffer that the conversation had not occurred -- even after being warned about unauthorized conversations with the media.
Mahaney declined to comment.
Mahaney got his start in the late 1990s, during the first dot-com boom where he worked at Morgan Stanley for Mary Meeker, one of the star analysts of the time. He went on to work at hedge fund Galleon Group before moving to Citigroup in 2005. Unlike most of his New York-based peers in the analyst world, Mahaney worked in San Francisco's financial district, close to the companies and personalities at the heart of the tech industry.
Earlier this month, Mahaney was named the top Internet analyst for the fifth straight year by Institutional Investor. The review cited fans of Mahaney who praised a 'systematic' investment approach that allows him to avoid the 'waffling' often evidenced by other analysts.
Mahaney's Buy rating on IAC/InteractiveCorp in April 2011, when the stock traded at $33.32, allowed investors to lock in a 51 percent gain before he downgraded the stock to a Hold at $50.31 a few months later, according to Institutional Investor.
But it wasn't only his stock picks that put him in good stead. He earned kudos for simply being a nice guy.
'He's a kind and thoughtful person and that's evident in the way he deals with people,' said Jason Jones of Internet investment firm HighStep Capital. 'He's very well liked on Wall Street because of that.'
A CAUTIOUS VIEW ON FACEBOOK
Mahaney was only indirectly involved in the incident involving the Facebook research, according to the settlement agreement by Massachusetts regulators released on Friday. But the actions of the junior analyst who worked for him provide an unusual glimpse into the type of behind-the-scenes information trading that regulators are attempting to rein in.
While the Massachusetts regulators did not identify any of the individuals by name, Reuters has learned that the incident involved TechCrunch reporters Josh Constine and Kim-Mai Cutler as well as Citi junior analyst Eric Jacobs.
Jacobs, Constine and Cutler all did not respond to requests for comments.
In early May, shortly before Facebook's IPO, Jacobs sent an email to Cutler and Constine. Constine attended Stanford University at the same time as Jacobs.
Constine, who studied social networks such as Facebook and Twitter for his 2009 Master's degree in cybersociology at Stanford, had a close friendship with Jacobs, according to the settlement agreement.
'I am ramping up coverage on FB and thought you guys might like to see how the street is thinking about it (and our estimates),' Jacobs wrote in the email. The email included an 'outline' that Jacobs said would eventually become the firm's 30-40 page initiation report on Facebook.
He also included a 'Facebook One Pager' document, which contained confidential, non-public information that Citigroup obtained in order to help begin covering Facebook after the IPO.
Asked by Constine if the information could be published and attributed to an anonymous source, Jacobs responded that 'my boss would eat me alive,' the agreement said.
A spokeswoman for AOL Inc, which owns TechCrunch, declined to answer questions on the matter, saying only that 'We are looking into the matter and have no comment at this time.'
Ironically, Mahaney was one of a small group of analysts at the many banks underwriting Facebook's IPO who had cautious views of the richly valued offering. Mahaney initiated coverage of the company with a neutral rating.
Analysts at the top three underwriters on Facebook's IPO - Morgan Stanley, Goldman Sachs and J.P. Morgan - started the stock with overweight or buy recommendations.
Earlier this year, Reuters reported that Facebook had pre-briefed analysts for its underwriters ahead of its IPO, advising them to reduce their profit and revenue forecasts.
Facebook, whose stock was priced at $38 a share in the IPO, closed Friday's regular session at $21.94 and has traded as low as $17.55.
'There were tens of billions of dollars in losses based on hyping the name, a lack of skeptical information and misunderstanding the company,' said Max Wolff, chief economist and senior analyst at research firm GreenCrest Capital.
'It's highly unfortunate and darkly ironic that one of the signature regulatory actions from this IPO so far involves punishing analysts for disseminating cautious information about Facebook,' he added.
(Editing by Jonathan Weber, Mary Milliken and Lisa Shumaker)
This news article is brought to you by TAXES BLOG - where latest news are our top priority.
'Pretty shocked,' was the reaction of Jacob Funds Chief Executive Ryan Jacob, who described Mahaney as one of the most respected financial analysts covering the Internet industry.
'I'd put him at the top. If not at the top, then near the top,' said Jacob. 'He really knew what to look for.'
In addition to firing Mahaney, Citigroup paid a $2 million fine to Massachusetts regulators to settle charges that the bank improperly disclosed research on Facebook ahead of its $16 billion IPO in May.
The settlement agreement said Mahaney failed to supervise a junior analyst who improperly shared Facebook research with the TechCrunch news website. (Settlement agreement: http://r.reuters.com/pyj63t)
The settlement agreement also outlined an incident in which Mahaney failed to get approval before responding to a journalist's questions about Google Inc -- and told a Citigroup compliance staffer that the conversation had not occurred -- even after being warned about unauthorized conversations with the media.
Mahaney declined to comment.
Mahaney got his start in the late 1990s, during the first dot-com boom where he worked at Morgan Stanley for Mary Meeker, one of the star analysts of the time. He went on to work at hedge fund Galleon Group before moving to Citigroup in 2005. Unlike most of his New York-based peers in the analyst world, Mahaney worked in San Francisco's financial district, close to the companies and personalities at the heart of the tech industry.
Earlier this month, Mahaney was named the top Internet analyst for the fifth straight year by Institutional Investor. The review cited fans of Mahaney who praised a 'systematic' investment approach that allows him to avoid the 'waffling' often evidenced by other analysts.
Mahaney's Buy rating on IAC/InteractiveCorp in April 2011, when the stock traded at $33.32, allowed investors to lock in a 51 percent gain before he downgraded the stock to a Hold at $50.31 a few months later, according to Institutional Investor.
But it wasn't only his stock picks that put him in good stead. He earned kudos for simply being a nice guy.
'He's a kind and thoughtful person and that's evident in the way he deals with people,' said Jason Jones of Internet investment firm HighStep Capital. 'He's very well liked on Wall Street because of that.'
A CAUTIOUS VIEW ON FACEBOOK
Mahaney was only indirectly involved in the incident involving the Facebook research, according to the settlement agreement by Massachusetts regulators released on Friday. But the actions of the junior analyst who worked for him provide an unusual glimpse into the type of behind-the-scenes information trading that regulators are attempting to rein in.
While the Massachusetts regulators did not identify any of the individuals by name, Reuters has learned that the incident involved TechCrunch reporters Josh Constine and Kim-Mai Cutler as well as Citi junior analyst Eric Jacobs.
Jacobs, Constine and Cutler all did not respond to requests for comments.
In early May, shortly before Facebook's IPO, Jacobs sent an email to Cutler and Constine. Constine attended Stanford University at the same time as Jacobs.
Constine, who studied social networks such as Facebook and Twitter for his 2009 Master's degree in cybersociology at Stanford, had a close friendship with Jacobs, according to the settlement agreement.
'I am ramping up coverage on FB and thought you guys might like to see how the street is thinking about it (and our estimates),' Jacobs wrote in the email. The email included an 'outline' that Jacobs said would eventually become the firm's 30-40 page initiation report on Facebook.
He also included a 'Facebook One Pager' document, which contained confidential, non-public information that Citigroup obtained in order to help begin covering Facebook after the IPO.
Asked by Constine if the information could be published and attributed to an anonymous source, Jacobs responded that 'my boss would eat me alive,' the agreement said.
A spokeswoman for AOL Inc, which owns TechCrunch, declined to answer questions on the matter, saying only that 'We are looking into the matter and have no comment at this time.'
Ironically, Mahaney was one of a small group of analysts at the many banks underwriting Facebook's IPO who had cautious views of the richly valued offering. Mahaney initiated coverage of the company with a neutral rating.
Analysts at the top three underwriters on Facebook's IPO - Morgan Stanley, Goldman Sachs and J.P. Morgan - started the stock with overweight or buy recommendations.
Earlier this year, Reuters reported that Facebook had pre-briefed analysts for its underwriters ahead of its IPO, advising them to reduce their profit and revenue forecasts.
Facebook, whose stock was priced at $38 a share in the IPO, closed Friday's regular session at $21.94 and has traded as low as $17.55.
'There were tens of billions of dollars in losses based on hyping the name, a lack of skeptical information and misunderstanding the company,' said Max Wolff, chief economist and senior analyst at research firm GreenCrest Capital.
'It's highly unfortunate and darkly ironic that one of the signature regulatory actions from this IPO so far involves punishing analysts for disseminating cautious information about Facebook,' he added.
(Editing by Jonathan Weber, Mary Milliken and Lisa Shumaker)
This news article is brought to you by TAXES BLOG - where latest news are our top priority.
Surface tablet buzz starts, but Windows 8 excitement muted
SEATTLE (Reuters) - U.S. shoppers woke up with mild Surface fever on Friday, lining up in moderate numbers to buy Microsoft's groundbreaking tablet computer designed to challenge Apple's iPad.
The global debut of the Windows 8 operating system was greeted with pockets of enthusiasm, but not the mania reserved for some previous Apple Inc launches.
Microsoft is positioning the slick new computing device, which runs a limited version of Windows and Office with a thin, click-on keyboard cover, as a perfect combination of PC and tablet that is good for work as well as entertainment.
"I like the flexibility of having the keyboard and the touch capability," said Mike Gipe, 50, who works in sales for bank Barclays, and was planning to buy a Surface tablet at Microsoft's pop-up store in Times Square in New York.
"It's the combination of having the consumer stuff and the work stuff," he said, looking forward to using Excel spreadsheets and PowerPoint presentations on the new device.
The Times Square store was the first to sell the Surface -- Microsoft's first ever own-brand computer -- and other Windows 8 devices late on Thursday and will be open through the holiday shopping season. On Friday morning it was crowded with a mix of tourists and local office workers, but the cash tills were not jammed.
"With the other tablets you're a consumer. With this you can have input," said Peter Townsend, on vacation in New York from Australia with his wife, who bought a Surface tablet because he liked the keyboard.
Mark Pauluch, 28, who works for a New York private equity firm, said he would like a Surface because he does not want to take a laptop on a plane, but was disappointed when the sales representative told him the wifi-only Surface would not work with Cisco VPN networking.
"I can't use this to replace my work laptop unless it supports VPN," he said.
MIDWEST, WEST COAST
Elsewhere in the United States, there was solid but not overwhelming interest for the Surface.
"It's a good tablet. I am not a huge i-anything fan, I like Windows," said Matt Shanahan, a software developer who drove four hours to the tiny Michigan Avenue pop-up store in Chicago from Grand Rapids, Michigan to buy a Surface. "My friend and I are software developers and this gives us an opportunity to develop new apps," he said.
In a pop-up store at the San Francisco Centre mall about 50 people lined up to buy the new Surface.
"On an iPad you have to use half the screen for a keyboard, or buy an accessory. I love that the Surface is so integrated, that you can type and use Word and all my other programs," said Malte von Sehested, a textbook creator who bought a Surface.
"With the Surface you get a steeper learning curve -- I had to get someone to show me how to side-swipe, swipe out to get the menus for instance," he said. "It may take a week, before it all becomes natural. That could be a problem for Microsoft. My old dad, he would get hit by that steeper learning curve."
ANALYSTS PATIENT
Wall Street and tech industry experts failed to show great enthusiasm for Windows 8, but were prepared to give Microsoft time to succeed.
"Microsoft did not come out with Windows 8 thinking it will be an overnight success," said Daniel Ives, an analyst at FBR Capital Markets. "But there's hope that this could be the silver bullet of growth (for Microsoft) as well as giving the PC industry some optimism that there's better days ahead."
The next six to 12 months is a "crucial period" for Microsoft to get traction with consumers, added Ives.
Sarah Rotman Epps, an analyst at tech research firm Forrester, said consumers may be best served waiting for tablets running the full Windows 8 Pro and Intel Corp chips, which are due out early next year.
"Windows 8 has a lot of great features, but RT has a long way to go," she said, citing a lack of apps and poor video performance on the Surface.
"It's not really a PC. RT is too restricted. Some people will be happier with the full Windows 8," she said.
Microsoft shares were up 33 cents at $28.21 on Nasdaq on Friday. Apple shares were down slightly after disappointing earnings on Thursday.
(Reporting By Nivedita Bhattacharjee in Chicago, Sinead Carew and Nicola Leske in New York, Edwin Chan in San Francisco; Editing by Alden Bentley)
This news article is brought to you by SEXUAL HEALTH NEWS - where latest news are our top priority.
The global debut of the Windows 8 operating system was greeted with pockets of enthusiasm, but not the mania reserved for some previous Apple Inc launches.
Microsoft is positioning the slick new computing device, which runs a limited version of Windows and Office with a thin, click-on keyboard cover, as a perfect combination of PC and tablet that is good for work as well as entertainment.
"I like the flexibility of having the keyboard and the touch capability," said Mike Gipe, 50, who works in sales for bank Barclays, and was planning to buy a Surface tablet at Microsoft's pop-up store in Times Square in New York.
"It's the combination of having the consumer stuff and the work stuff," he said, looking forward to using Excel spreadsheets and PowerPoint presentations on the new device.
The Times Square store was the first to sell the Surface -- Microsoft's first ever own-brand computer -- and other Windows 8 devices late on Thursday and will be open through the holiday shopping season. On Friday morning it was crowded with a mix of tourists and local office workers, but the cash tills were not jammed.
"With the other tablets you're a consumer. With this you can have input," said Peter Townsend, on vacation in New York from Australia with his wife, who bought a Surface tablet because he liked the keyboard.
Mark Pauluch, 28, who works for a New York private equity firm, said he would like a Surface because he does not want to take a laptop on a plane, but was disappointed when the sales representative told him the wifi-only Surface would not work with Cisco VPN networking.
"I can't use this to replace my work laptop unless it supports VPN," he said.
MIDWEST, WEST COAST
Elsewhere in the United States, there was solid but not overwhelming interest for the Surface.
"It's a good tablet. I am not a huge i-anything fan, I like Windows," said Matt Shanahan, a software developer who drove four hours to the tiny Michigan Avenue pop-up store in Chicago from Grand Rapids, Michigan to buy a Surface. "My friend and I are software developers and this gives us an opportunity to develop new apps," he said.
In a pop-up store at the San Francisco Centre mall about 50 people lined up to buy the new Surface.
"On an iPad you have to use half the screen for a keyboard, or buy an accessory. I love that the Surface is so integrated, that you can type and use Word and all my other programs," said Malte von Sehested, a textbook creator who bought a Surface.
"With the Surface you get a steeper learning curve -- I had to get someone to show me how to side-swipe, swipe out to get the menus for instance," he said. "It may take a week, before it all becomes natural. That could be a problem for Microsoft. My old dad, he would get hit by that steeper learning curve."
ANALYSTS PATIENT
Wall Street and tech industry experts failed to show great enthusiasm for Windows 8, but were prepared to give Microsoft time to succeed.
"Microsoft did not come out with Windows 8 thinking it will be an overnight success," said Daniel Ives, an analyst at FBR Capital Markets. "But there's hope that this could be the silver bullet of growth (for Microsoft) as well as giving the PC industry some optimism that there's better days ahead."
The next six to 12 months is a "crucial period" for Microsoft to get traction with consumers, added Ives.
Sarah Rotman Epps, an analyst at tech research firm Forrester, said consumers may be best served waiting for tablets running the full Windows 8 Pro and Intel Corp chips, which are due out early next year.
"Windows 8 has a lot of great features, but RT has a long way to go," she said, citing a lack of apps and poor video performance on the Surface.
"It's not really a PC. RT is too restricted. Some people will be happier with the full Windows 8," she said.
Microsoft shares were up 33 cents at $28.21 on Nasdaq on Friday. Apple shares were down slightly after disappointing earnings on Thursday.
(Reporting By Nivedita Bhattacharjee in Chicago, Sinead Carew and Nicola Leske in New York, Edwin Chan in San Francisco; Editing by Alden Bentley)
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Thursday, October 25, 2012
Apple iPad sales disappoint, Street eyes the holidays
SAN FRANCISCO (Reuters) - Apple Inc delivered a second straight quarter of disappointing results and iPad sales fell well short of Wall Street's targets, marring its record of consistently blowing past investors' expectations.
Shares in the world's most valuable technology company briefly dipped to levels not seen since the start of August, after it delivered a 27 percent rise in revenue for its fourth quarter while earnings rose 24 percent.
The numbers, while in line with expectations, lacked the positive surprises that investors had grown used to and came after Apple undershot revenue targets in the previous quarter. Its shares bounced back, however, after CEO Tim Cook told analysts on a conference call that the latest iPhone 5 was heavily backlogged but the company had mostly worked out kinks in its iPhone supply chain.
Apple shipped 26.9 million iPhones in the last quarter, somewhat higher than the 25 million to 26 million that Wall Street analysts had predicted. But sales of the iPad came in at 14 million, well below lowered forecasts for the tablet as the economy remained weak and consumers awaited the iPad mini, which will hit store shelves next month.
Analysts say the real test for the company will come during the crucial holiday shopping season, when competition will reach fever-pitch with Apple, Amazon.com Inc, Google Inc and Microsoft Corp all fielding new gadgets.
'Going into earnings we were wondering if the slowing economy will catch up with Wall Street and it has,' said Channing Smith, co-manager of the Capital Advisors Growth Fund.
'Apple is very well-positioned with the iPad and now the iPad mini. It has a great smartphone and we expect the iPhone 5 to sell very well. The outlook is conservative but that's not surprising. Err on the side of caution is a proven formula.'
Just hours after Apple's results, its main smartphone rival Samsung Electronics Co reported a near doubling in quarterly earnings, and while it did not detail smartphone shipments, they are estimated to have surged to 58 million.
Apple heads into the current quarter after refreshing almost all of its product lines, including introducing an upgraded, fourth-generation full-sized iPad. The December quarter will show how well consumers respond to Apple's latest gamble - the iPad mini that will go on sale on November 2.
CAR THAT FLIES AND FLOATS
For the December quarter, Apple forecast revenue of $52 billion, below the average estimate of $55 billion, according to Thomson Reuters I/B/E/S. It is expecting margins to come in at 36 percent, far lower than analysts' expected 43 percent.
Apple Chief Financial Officer Peter Oppenheimer mostly attributed the lower margin and conservative guidance to a combination of a stronger dollar, higher costs associated with new products, and the fact that Apple's next fiscal quarter has one less week than the same period a year ago.
Apple's stock was holding steady at $609.40 in extended trade after flirting with the $600 level. The shares had ended regular trade at $609.54.
Supply constraints holding up sales of the iPad and iPhone dominated discussions between analysts and Apple executives during the post-results conference call. Apple had struggled to deliver large quantities of the iPhone 5 since its launch in late September, with the waitlist for the device at one point stretching to three weeks in some regions.
'Our supply output is significantly higher than it was earlier in October,' Cook said, referring to the iPhone 5. 'And I'm confident that we'll be able to supply quite a few during the quarter.'
Cook also opined on Microsoft's new Windows 8-based Surface tablet that will hit stores in the wee hours of Friday.
'I haven't personally played with the Surface yet, but what we're reading about it, is that it's a fairly compromised, confusing product,' he said. 'I suppose you could design a car that flies and floats, but I don't think it would do all of those things very well.'
Despite the lackluster fourth quarter, Apple put up big numbers for the year. It ended its fiscal 2012 with a 45 percent increase in revenue to $156.5 billion, while net income was up 61 percent at $41.7 billion.
For the final fiscal quarter, it posted net income of $8.2 billion or $8.67 a diluted share in the fiscal fourth quarter on revenue of $35.96 billion, versus $6.6 billion or $7.05 a share a year earlier. Analysts had expected on average that Apple would earn $8.75 per share.
Apple ended the quarter with $121.3 billion in cash and securities, of which $83 billion was offshore.
(Reporting by Poornima Gupta; Editing by Richard Chang and Edmund Klamann)
This article is brought to you by COMPUTERS FOR SALE.
Shares in the world's most valuable technology company briefly dipped to levels not seen since the start of August, after it delivered a 27 percent rise in revenue for its fourth quarter while earnings rose 24 percent.
The numbers, while in line with expectations, lacked the positive surprises that investors had grown used to and came after Apple undershot revenue targets in the previous quarter. Its shares bounced back, however, after CEO Tim Cook told analysts on a conference call that the latest iPhone 5 was heavily backlogged but the company had mostly worked out kinks in its iPhone supply chain.
Apple shipped 26.9 million iPhones in the last quarter, somewhat higher than the 25 million to 26 million that Wall Street analysts had predicted. But sales of the iPad came in at 14 million, well below lowered forecasts for the tablet as the economy remained weak and consumers awaited the iPad mini, which will hit store shelves next month.
Analysts say the real test for the company will come during the crucial holiday shopping season, when competition will reach fever-pitch with Apple, Amazon.com Inc, Google Inc and Microsoft Corp all fielding new gadgets.
'Going into earnings we were wondering if the slowing economy will catch up with Wall Street and it has,' said Channing Smith, co-manager of the Capital Advisors Growth Fund.
'Apple is very well-positioned with the iPad and now the iPad mini. It has a great smartphone and we expect the iPhone 5 to sell very well. The outlook is conservative but that's not surprising. Err on the side of caution is a proven formula.'
Just hours after Apple's results, its main smartphone rival Samsung Electronics Co reported a near doubling in quarterly earnings, and while it did not detail smartphone shipments, they are estimated to have surged to 58 million.
Apple heads into the current quarter after refreshing almost all of its product lines, including introducing an upgraded, fourth-generation full-sized iPad. The December quarter will show how well consumers respond to Apple's latest gamble - the iPad mini that will go on sale on November 2.
CAR THAT FLIES AND FLOATS
For the December quarter, Apple forecast revenue of $52 billion, below the average estimate of $55 billion, according to Thomson Reuters I/B/E/S. It is expecting margins to come in at 36 percent, far lower than analysts' expected 43 percent.
Apple Chief Financial Officer Peter Oppenheimer mostly attributed the lower margin and conservative guidance to a combination of a stronger dollar, higher costs associated with new products, and the fact that Apple's next fiscal quarter has one less week than the same period a year ago.
Apple's stock was holding steady at $609.40 in extended trade after flirting with the $600 level. The shares had ended regular trade at $609.54.
Supply constraints holding up sales of the iPad and iPhone dominated discussions between analysts and Apple executives during the post-results conference call. Apple had struggled to deliver large quantities of the iPhone 5 since its launch in late September, with the waitlist for the device at one point stretching to three weeks in some regions.
'Our supply output is significantly higher than it was earlier in October,' Cook said, referring to the iPhone 5. 'And I'm confident that we'll be able to supply quite a few during the quarter.'
Cook also opined on Microsoft's new Windows 8-based Surface tablet that will hit stores in the wee hours of Friday.
'I haven't personally played with the Surface yet, but what we're reading about it, is that it's a fairly compromised, confusing product,' he said. 'I suppose you could design a car that flies and floats, but I don't think it would do all of those things very well.'
Despite the lackluster fourth quarter, Apple put up big numbers for the year. It ended its fiscal 2012 with a 45 percent increase in revenue to $156.5 billion, while net income was up 61 percent at $41.7 billion.
For the final fiscal quarter, it posted net income of $8.2 billion or $8.67 a diluted share in the fiscal fourth quarter on revenue of $35.96 billion, versus $6.6 billion or $7.05 a share a year earlier. Analysts had expected on average that Apple would earn $8.75 per share.
Apple ended the quarter with $121.3 billion in cash and securities, of which $83 billion was offshore.
(Reporting by Poornima Gupta; Editing by Richard Chang and Edmund Klamann)
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