Tag Archives: Technology coverage
by Liz Hester
Blackberry announced Monday that it was abandoning plans to sell itself and it would replace CEO Thorsten Heins. The company decided instead to sell $1 billion in convertible debt to current shareholders and remain a public company.
Here’s the story from the Wall Street Journal:
After its months-long sale effort failed, BlackBerry Ltd. Monday abandoned a tentative $4.7 billion plan to go private and instead signaled its intention to continue as a public company with new leadership and a $1 billion investment from a group led by its major shareholder.
While the for-sale sign is down at least temporarily, there remain a host of questions about the future of the Canadian smartphone maker.
Sales of a new line of BlackBerry phones have flopped and the company is burning through its once-comfortable cash pile. Despite its efforts to trim costs by slashing jobs and writing down its inventory of unsold phones, some analysts said the company will need to make even more cuts to stay afloat during a transition period.
Investors also expressed skepticism about the company’s plans, sending the stock down 17% to $6.45 in recent trading in New York.
BlackBerry said it would sell $1 billion of convertible debt to Fairfax Financial Holdings Ltd. and other institutional investors.
The New York Times covered the leadership change, noting that Blackberry’s interim CEO is credited from saving another tech company from bankruptcy:
John S. Chen, the former chief executive of Sybase, will become BlackBerry’s executive chairman and acting chief executive.
Along with the cash infusion into BlackBerry, V. Prem Watsa, the chairman and chief executive of Fairfax, will return to the phone maker’s board. Mr. Watsa had resigned after the company announced that it was reviewing strategic options, including a sale, in the summer.
Mr. Heins, a former Siemens executive in Germany, became chief executive in January 2012 after James L. Balsillie and Mike Lazaridis, the longtime co-chairmen and co-chief executives, resigned in the face of a rapid decline in BlackBerry’s business and the failure of its PlayBook tablet computer.
Formerly the head of the company’s handset business, Mr. Heins heavily promoted the new line of BlackBerry 10 handsets as the company’s salvation. They proved, however, to be a commercial failure.
Mr. Chen led Sybase from 1998 until the company was acquired by SAP of Germany in 2010. He is widely credited with saving Sybase from bankruptcy. When he arrived, Sybase had lost much of its corporate database business to Oracle, IBM and Microsoft. Unprofitable, it had also developed a reputation for producing unreliable software.
After resolving the problems in Sybase’s traditional business, Mr. Chen expanded it into producing software for creating applications, mainly for businesses, for use on wireless mobile devices and to manage wireless networks.
The USA Today story pointed out that Chen’s appointment was a clear signal that Blackberry was still trying to move away from being primarily a device company:
“Putting a non-device person as an interim CEO is a clear sign that the devices business is not what matters anymore,” says Gartner analyst Carolina Milanesi. “The software and services (business) is where they have the assets and where they need to take the company.”
The announcement is the latest twist for the ailing smartphone maker as competitors such as Apple, Google and Samsung continue to dominate. After sales of its smartphones running its new BlackBerry 10 software failed to attract consumers, the company announced it was pursuing ‘strategic alternatives” for its business, including a possible sale.
BlackBerry has a tough battle ahead as it attempts to regain footing in the smartphone market. The company reported a second quarter loss of $965 million, while Microsoft’s Windows Phone operating system has surpassed BlackBerry for third in market share, behind Apple iOS and Google Android.
Reuters offered these details about the convertible share sale:
“Fairfax’s investment will buy the company some time, which it badly needs, but the company needs a new strategy more than ever,” said Jan Dawson, Ovum’s chief telecoms analyst, noting that communication on the strategy must start “very soon”.
Fairfax has agreed to buy $250 million of the seven-year subordinated debentures, which will be convertible into common shares at $10 each. The private placement could eventually increase the number of BlackBerry shares by as much as 20 percent.
BlackBerry did not name the other institutional investors participating in the deal, but Chen said Silver Lake is not one of them.
“I know we have enough ingredients to build a long-term sustainable business,” he told Reuters. “I have done this before and seen the same movie before.”
BlackBerry had been talking with a number of companies, including Cisco Systems Inc, Google, SAP, Lenovo Group Ltd, Samsung Electronics Co Ltd, LG Electronics Inc and Intel Corp about selling parts or all of itself, Reuters reported previously.
But the only public offer came from Fairfax, which announced a tentative $9-a-share bid in late September. Reuters said on Friday that Fairfax was struggling to fund the $4.7 billion bid.
Moody’s said in September that that transaction would hurt Fairfax’s credit profile because it would convert a public equity investment into a private structure.
The current deal is structured to give Fairfax and the other investors flexibility as the financing is in the form of convertible debentures.
The investors have an option to buy up to an additional $250 million worth of debentures within 30 days following closing.
Investors obviously didn’t like the announcement since it does little to solve Blackberry’s problems or outline a clear strategy to do so. The cash infusion will likely be enough to get Chen in place, but whether it buys him enough time to actually make changes and capitalize on Blackberry’s extensive patents and other non-device businesses is anyone’s guess. Pulling back from a sale typically doesn’t help investors’ and analysts’ confidence in the board or the decisions.
by Chris Roush
The Wall Street Journal seeks a columnist to review personal technology products, from the latest smartphones to cool apps, to wearable items and other gadgets.
The successful candidate will have demonstrated an ability to write sharp, engaging and highly useful reviews, representing the consumer in helping them navigate their way to the best buying decisions.
This reviewer also must be comfortable engaging with his or her readers, on social media platforms and elsewhere, and look for creative ways to incorporate crowd-sourced views and information. Comfort with and effectiveness on video and public speaking at conferences is desirable.
Please attach a resume, cover letter and three to five published clips to your online application.
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by Chris Roush
Matthew Ingram of GigaOm writes that well-known tech news writers such as Walter Mossberg and David Pogue are dying out.
Ingram writes, “This is undoubtedly true — technology is much more mainstream and deserves to be treated that way. But I still think Buchanan’s piece is based on the faulty premise that there will be one or two giants who will lead everyone to the promised land of tech reviewing (and while we’re at it, we might even be able to find some that aren’t just the usual gang of old white guys).
“The point is that looking for the next Walt Mossberg is like looking for the next Walter Cronkite: he’s never going to appear because the market dynamics in which that person emerged and came to hold that position simply don’t exist any more. That’s not to say there won’t be prominent tech writers, because there will — in fact, there are probably more of them than there have ever been, covering tech from as broad a range of perspectives as possible.
“And isn’t that better than just one or two mainstream-media superstars? The embarrassment of riches we currently have in tech may not be as easy for product managers or PR departments to navigate, but I would argue that technology users and consumers are ultimately better off.”
Read more here.
by Chris Roush
Matt Buchanan of The New Yorker writes about when the next great technology critic will come along in the wake of The Wall Street Journal’s Walter Mossberg and The New York Times’s David Pogue moving to online jobs.
Buchanan writes, “The questions that consumers face, in other words, are less about what to buy than about how to live. It’s not a matter of which social network or search engine or photo-sharing service to use; it’s who you should friend on Facebook, the best way to Google, and whether or not you should use filters on your Instagram photos.
“The point, ultimately, is that there is more need than ever for regular technology criticism in two of the most important newspapers in the country — but it needs to be deeper, and different, than what Pogue and Mossberg did. There can be beauty in aluminum, glass, and polycarbonate; art in the design of software; and elegance in coding. Or ugliness and chaos. These are rarely, if ever, meaningfully captured in newspaper technology criticism, in the way that, for instance, James Fallows critiqued the productivity software Agenda, or Anthony Lane reviewed the English Poetry Full-Text Database. This is despite the fact that there must be a greater audience than ever — a very mainstream one — for the kind of technology criticism that the Web pioneer Dave Winer seeks, which provides “perspective on what I’ve seen, and more to think about,” much like a movie, book, or any other cultural artifact.
“Both the Journal and the Times are looking to replace the positions held by Mossberg and Pogue. The Journal’s global technology editor, Jonathan Krim, wrote in an e-mail that the paper is ‘actively talking to candidates’ to replace Mossberg as a regular gadget reviewer, and that it ‘intend[s] to give a lot of visibility to personal tech reviews and news.’ The Times did not respond to a request for a comment, but it is currently evaluating replacements for Pogue. They would both do well to reconsider what, precisely, it now means to review ‘personal technology.’”
Read more here.
by Chris Roush
Jeff Bercovici, a media reporter for Forbes magazine out of New York, will be moving to its San Francisco office early next year.
In an email to Talking Biz News, Bercovici writes:
Basically, I’ll be moving out shortly after the new year to become a senior editor in our San Francisco bureau. The focus will be covering the big platform companies like Facebook, Twitter and Yahoo but I’ll be looking for all kinds of interesting stories about the technology business, the people who drive it and the culture around it. It’s a pretty natural transition – two of the three cover stories I’ve done for Forbes have been about Tumblr and Twitter.
Before Forbes, Bercovici was the media columnist for the business website DailyFinance. Before that, he created a media blog for Conde Nast Portfolio.
Earlier, he was part of the re-relaunch team for Radar magazine, where he wrote about media, entertainment and politics, and he also spent a couple of years co-writing the media column in WWD.
He is a Cornell University graduate.
by Liz Hester
In one of the more closely watched technology earnings, Apple Inc. said Monday that profit for the fourth fiscal quarter dropped despite higher iPhone sales. Let’s take a look at the coverage.
The Wall Street Journal has a mostly positive lead, pointing out pricing and sales were stabilizing:
Apple Inc. reported a third consecutive quarter of declining profits, but showed signs that both prices and profit margins are stabilizing despite heightened competition for its iPhone and iPad.
The company said it sold 33.8 million iPhones in the fourth fiscal quarter, ended Sept. 28, up 26% from the same period a year earlier.
The average selling price of an iPhone declined 6.6% from a year earlier, but less than 1% from the preceding quarter.
Revenue from the iPhone rose 17% from a year earlier and represented more than half of Apple’s quarterly total of $37.5 billion, which was up 4.2% from a year earlier. Apple released two new iPhones near the end of the quarter instead of one as in past years.
Those sales couldn’t stem a third consecutive slide in profit from a year ago for the Cupertino, Calif., company. Profit fell nearly 9% to $7.5 billion.
The New York Times story reported that most other companies would be thrilled to earn $7.5 billion – over a lifetime:
Apple’s profit remains the envy of the tech industry — and most other industries. But the slowdown of its growth has become a concern for some investors. Apple is counting on new products to improve its bottom line, especially during the coming holiday season, the most lucrative time of year for hardware makers. In September, the company released two new iPhones, and last week, it introduced new Mac laptops and two new iPads, the company’s popular tablets.
On the earnings call, Timothy D. Cook, Apple’s chief executive, said: “It’s going to be an iPad Christmas.”
And there is little doubt that iPads will sell in huge quantities in the next quarter. But there is doubt about which iPads will sell best — the new iPad Air, which is the larger and more expensive model, or the iPad Mini.
The Mini has become a popular choice among consumers since it was first released last year. But the device has a smaller profit margin than its more expensive cousins, and its high sales may be part of the reason behind a 13 percent decline in overall iPad revenue.
That decline in revenue, combined with flat sales, is particularly troubling at a time when the tablet market is still young and growing quickly. Apple sold 14.1 million iPads over the quarter, up barely from 14 million in the quarter a year ago. That is far from the pace of the market: manufacturers are expected to ship 184.4 million tablets in 2013, up from 120 million last year, according to Gartner.
The Financial Times reported on comments made about cash allocation as activist investor Carl Icahn pushes for more buybacks:
Apple said more than $36bn had been returned to shareholders in the past five quarters through dividends and share buybacks, as the company comes under pressure from activist shareholder Carl Icahn to scale up its cash return programme to $150bn.
Mr Cook said the board was engaged in an “ongoing” discussion about capital reallocation, and would “actively seek” feedback from investors on its future plans. “We will announce any changes to our programme in the first part of the new calendar year,” he said.
Apple said that with more than three-quarters of its cash now held offshore, its domestic cash reserves that are available for paying dividends and buying back shares have “stopped accumulating”.
“We have invested essentially all of the increase in net cash since the beginning of our capital return programme in 2012,” said finance chief Peter Oppenheimer.
Apple gave guidance on revenues for the crucial Christmas quarter of $55bn to $57bn, ahead of Wall Street’s current expectations, but with gross margins of 36.5 per cent to 37.5 per cent, on the lower end of analysts’ expectations.
Its stock initially fell 4 per cent in after-hours trading but then recovered to gain as much as 1 per cent, as Apple explained that margins would be closer to 38.5 per cent if not for the deferred revenues from its software giveaway.
The Forbes headline said that earnings failed to impress but led with the fact that they beat analysts’ expectations:
After reporting earnings that topped analysts estimates on demand for the iPhone and a forecast for the holiday shopping season that disappointed investors, Apple CEO Tim said the company expects that redesigned iPads will help deliver an “iPad Christmas” and said it still expects to release products in new product categories.
“If you look at the skills Apple has from hardware, software and services and an incredible app ecosystem— these set of things are very, very unique,” Cook said today when asked about plans to enter new markets. “We obviously believe that we can use our skills in building other great products that are in categories that represent areas where we do not participate today.”
Apple is being pressed to step up the pace of innovation and roll out new products to fend off new offerings by rivals including Samsung and Google. So far this year, it’s updated its MacBook notebooks, iMac desktop, iPhone, iPad tablets, Mac Pro high-end workstation as well as the software that powers those devices and computers. That software, including the iOS 7 and Macintosh operating systems, and iLife and iWork apps, are now available free to customers, a move that Cook said is aimed at making sure users have the latest version of its programs.
And it’s that ability to innovate that investors are seeking, especially as companies look to holiday sales to boost numbers. Earnings may have been down, but they’re still strong and Apple has room to capture more market share. No matter how you look at it, $7.5 billion is a lot of money.
by Liz Hester
Activist investor Carl Icahn wants Apple Inc. to spend $150 billion on its own stock, returning some of its cash to holders. In a letter on his website to CEO Timothy Cook, Icahn even set the price he wants to see.
Here’s the story from the New York Times:
The investor sought to increase the pressure on Apple on Thursday, posting a letter he had sent to Timothy D. Cook, its chief executive, on his own Web site. The letter, which Mr. Cook received on Wednesday, urged Apple to immediately begin an offer to buy back $150 billion of its shares at $525 a share.
The company has not yet responded to Mr. Icahn’s public calls, which began in August when Mr. Icahn first disclosed he had a stake in the company. He has taken to Twitter and CNBC to agitate for Apple to do something with its large cash reserves.
With a net cash position of $130 billion, analysts say Apple could afford to return more money to shareholders. But the company has already undertaken a $100 billion share buyback and dividend program and may not feel it needs to do anything more for now.
Forbes reported that Icahn said the move would boost Apple’s earnings per share immediately:
According to Icahn, the move would immediately increase earnings per share by 33% (by reducing the share count) and send the stock price to $1,250 within three years. He also said he would pledge n0t to tender any of his shares in the buyback.
The billionaire also took a shot at the board’s lack of investment chops.
“In my opinion, any further delay in executing the buyback we hereby propose will reflect this lack of expertise on the board,” he writes. “My firm’s success and my expertise as an investor would be difficult for anyone to argue.”
Even with his increased stake, Icahn controls just half of one percent of Apple’s outstanding shares. But thanks to the septuagenarian’s current winning streak — including cashing in a bit more than half his Netflix stake for a 457% return this month — his voice carries considerable weight.
The Wall Street Journal pointed out that Icahn increased his stake in the company by 22% before beginning his campaign, which isn’t making everyone happy:
Bill Gross, the founder and managing director of Pacific Investment Management Co. LLC, or Pimco, tweeted that Mr. Icahn should “leave Apple alone & spend more time like Bill Gates. If Icahn’s so smart, use it to help people not yourself.”
When Mr. Icahn first began discussing the buyback, shares of Apple were below $500 a share.
Mr. Icahn said in an interview Thursday that his math still worked even if Apple was forced to buy back shares at above $525, though the recent share gains show why Apple should move quickly.
“A lot of critics just keep saying why doesn’t Icahn just leave our companies alone,” he said. “To me that is like saying: Why didn’t Teddy Roosevelt leave the monopolies alone when they were strangling our economy.”
In an interview with CNBC Thursday, Mr. Icahn said his average cost of the Apple investment was about $440 a share—which would put him in line for over $400 million in paper profits at this point.
Mr. Icahn also said that if Apple didn’t follow his plan he would at least “test the waters” on a potential proxy fight to unseat some board members. He said he himself wouldn’t join the board.
CNBC ran the text of the letter praising Apple’s management team:
In the letter, Icahn praises Cook’s leadership, but says the discussed share buyback needs to be substantial.
“We want to be very clear that we could not be more supportive of you, the existing management team, the culture at Apple and the innovative spirit it engenders. The criticism we have as shareholders has nothing to do with your management leadership or operational strategy,” the letter says. “Our criticism relates to one thing only: the size and timeframe of Apple’s buyback program. It is obvious to us that it should be much bigger and immediate.”
Others are willing to follow Icahn’s lead. The stock price closed at $531.91 Thursday, above the $525 price Icahn is seeking. One interesting point to think about is what a distraction for management this campaign will be. Instead of running the company and building new products, Apple executives will have to weigh the proposal, take time to respond and get ready for a potential proxy fight. That ultimately hurts all stockholders.
by Chris Roush
Sarah Frier, a Bloomberg News tech reporter based out of New York, is moving to California.
Frier tweeted Thursday that she will be joining the Bloomberg bureau in San Francisco to cover Facebook, Twitter, Linkedin and startups.
She has been covering IBM and East Coast technology. Frier has also reported on health insurance companies and the municipal bond market.
Frier, who is a California native, joined Bloomberg in 2011 after graduating from UNC-Chapel Hill, where she was the editor of The Daily Tar Heel. She interned at Bloomberg and at the Bay Area News Group while a student.
While a student, she won a SABEW Best in Business Award.
by Chris Roush
Norman Birnbach writes about what will happen in the aftermath of David Pogue leaving The New York Times and Walt Mossberg and Kara Swisher striking out from The Wall Street Journal at the end of this year.
Birnbach writes, “I do think Pogue, Mossberg and Swisher are replaceable in a way — I mean, we all are, after all. But I do think it will be more difficult for their replacements to establish themselves just as it will take a while for Pogue, Mossberg and Swisher (I’m not going to refer to them by an acronym).
“As it is, one can make a case that the tech reporters getting a lot of attention these days are not the tech reviewers but those who cover startups. That said, consumer tech reviewers will always be important because we need someone to tell us which device is better — the iPhone or the Galaxy.
“No matter what, I think the continuing fragmentation of the media is a lose-lose proposition for reporters, these publications and the readers.
“This fragmentation makes it more challenging to reach a mass audience. It takes more effort to reach more reporters, who themselves reach smaller audiences. (These audiences may be more engaged than traditional print newspaper readers, but they’re still harder to reach.) It takes more time to research and contact reporters…which means we need to spend more time overall to reach fewer people at a time. It’s pretty much a similar story with social media, too. Don’t get me wrong, you’ve got to reach people on different platforms — Facebook, Twitter, LinkedIn, Google+, blogs, and forums, etc. — but it can take more time to reach increasingly niche audiences.
“That, I believe, is the point to keep in mind in terms of the implications for Pogue, Mossberg, Swisher and the rest of us.”
Read more here.
by Chris Roush
Here is what Yahoo CEO Marissa Mayer says about its hiring of tech journalist David Pogue as part of its plan to expand its tech news coverage:
I am thrilled to announce that award-winning columnist, best-selling author, and TV host David Pogue will be joining Yahoo. David will lead a major expansion of consumer tech coverage on Yahoo and will publish columns, blog posts and video stories that demystify the gadgets, apps and technology that powers our users’ daily lives.
Yahoo is in a unique position to bring to life great editorial about the technology consumers are using every day. David is tremendously talented, has a great sense of humor, and is gifted at explaining technology. He also just happens to be one of the nicest and most positive people I’ve met. He has always been one of my favorite journalists, and I can’t think of a better person to make technology more accessible and helpful for the hundreds of millions of people who come to Yahoo every day.
We can’t wait for David’s first pieces.
In a release, Yahoo stated, “David will lead a major expansion of consumer tech coverage on Yahoo and will publish columns, blog posts, video stories and more, starting later this year.”