Netflix crosses $100 billion market capitalization as subscribers surge

Netflix Inc snagged 2 million more subscribers than Wall Street expected in the final three months of 2017, tripling profits at the online video service that is burning money on new programming to dominate internet television around the world.

The results drove Netflix to a market capitalization of more than $100 billion for the first time. Shares jumped 9 percent to over $248 in after-hours trading on Monday after rallying throughout the month and rising 53 percent last year.

The company has signed up more than half of all U.S. broadband households and is building its customer base in 190 countries by spending billions on programming.

Netflix picked up 6.36 million subscribers in international markets from October through December, when it released new seasons of critically acclaimed shows “Stranger Things” and “The Crown” as well as Will Smith action movie “Bright.” That topped Wall Street expectations of 5.1 million, according to FactSet.

Along with 1.98 million customer additions in the United States, the company ended the year with 117.58 million streaming subscribers around the globe, despite a price hike in October.

“Netflix is pouring more and more money into making content, and it is directly translating into more subscribers,” BTIG analyst Richard Greenfield said. “They see a huge opportunity and they are moving as fast as they can to attack it.”

The company also said it took a $39 million non-cash charge for “unreleased content we’ve decided not to move forward with.” A source familiar with the matter said the charge was related to content starring Kevin Spacey, with whom Netflix cut ties after he was accused of sexual misconduct.

Netflix temporarily halted production of “House of Cards” to write out Spacey’s character and decided not to release the film “Gore,” which starred Spacey as Gore Vidal.

Spacey has apologized to one of his accusers, and according to his representatives is seeking unspecified treatment. Reuters was unable to independently confirm the accusations.

The charge is one of the first signs of costs faced by companies in the wake of a widespread campaign against sexual harassment.

Netflix turned a DVD-by-mail business into an online competitor of movie channel HBO. As it grew it began licensing its own original shows to ensure a stream of new offerings if studio suppliers ended deals.

In fact, Walt Disney Co is making a major push into online streaming and will pull its first-run shows and movies from Netflix in 2019 as Hollywood fights for audiences.

Netflix plans to spend up to $8 billion this year on TV shows and movies to fend off Disney, Amazon.com Inc, studios-owned Hulu and local competitors that are jumping into online video, and it is turning more and more to high-budget projects, such as the roughly $90 million “Bright.”

In 2017, Netflix recorded its first full-year profit in international markets. The company has said it is aiming for steady improvements in profitability overseas this year.

“We believe our big investments in content are paying off,” Netflix said in a quarterly letter to shareholders.

Netflix is raising its marketing budget faster than revenue is growing and will spend about $2 billion this year. The company expects negative cash flow in 2018 of $3 billion to $4 billion, up from $2 billion in 2017.

Last October, Netflix raised prices for two of its three main subscription plans to help fund the substantial content investment. The earnings report showed customers took it in stride.

“Consumers are tolerant as long as something’s improving,” Netflix CEO Reed Hastings, on a post-earnings webcast, said of the price increase.

For the December quarter, Netflix reported diluted earnings-per-share of 41 cents, even with the expectations of analysts polled by Thomson Reuters I/B/E/S.

Revenue for the three months totaled $3.286 billion, in line with forecasts.

Looking ahead, Netflix forecast streaming customer additions of 6.35 million for the first quarter, above analysts’ expectation of 5.01 million, according to FactSet.

Investors appear confident in Netflix’s ability to grow. Netflix recently traded at 91 times expected earnings for the next 12 months, versus Amazon at 152 times earnings and Disney at 17 times earnings, according to Thomson Reuters data.

Netflix also said Monday that Rodolphe Belmer, CEO of global satellite company Eutelsat, had joined the company’s board.

By –Reuters

AI, virtual reality make inroads in tourism sector

A hotel room automatically adjusting to the tastes of each guest, virtual reality headsets as brochures: the tourism sector is starting to embrace new technologies, hoping to benefit from lucrative personal data. In a prototype of the hotel of the future on display at Madrid's Fitur tourism fair, receptionists have disappeared and customers are checked-in via a mirror equipped with facial recognition.

Once the client is identified, the room adapts itself automatically to all demands made at reservation: temperature, lighting, Picasso or Van Gogh in the digital frames hanging on the walls.

"Technology will allow us to know what the client needs before he even knows he wants it," says Alvaro Carrillo de Albornoz, head of Spain's Hotel Technology Institute, which promotes innovation in the sector.

Tracking guests

Some hotels already offer such experiences at a more basic level.

But the room prototype put on show by French technology consultancy Altran, aimed at luxury hotels, has incorporated cutting-edge speech recognition technology, allowing for instance a guest to order a pizza in 40 languages.

"Even the lock is intelligent – it opens and closes via the WhatsApp application on the client's phone," says Carlos Mendez, head of innovation at Altran.

The mattress is equipped with sensors and records the movements of those sleeping, which could prompt hotel staff to offer them a coffee when they wake up. Generally speaking, hotels are hoping to use artificial intelligence (AI) to get better knowledge of their clients via personal data provided on reservation or "beacon" technology used once the client is in the hotel or resort.

Restricted in some countries, the latter involves placing a beacon in the hotel that will detect customers' smartphones, meaning they will know how much time they spend in their rooms, for instance, or at what time they go to the pool.

AI algorithms

Fed with this data, AI algorithms will get to work, determining what the clients' habits are to lure them back again by offering a tailor-made experience, or sell them additional products. If the algorithm "knows that when you come to the hotel with your wife, you don't eat at the restaurant but order room service, it will propose a special room menu with a bottle of champagne," says Carrillo.

"But if you come with your entire family, it will propose a reduction on kids' menus."

For Rodrigo Martinez, head of consultancy Hotel Servicers, these technological tools could also help improve hotels' productivity.

"All purchases can be made automatic," he says.

"For instance, if a huge amount of Brits are coming, the system will know that it has to order more bacon."

Virtual reality

Manufacturers of virtual reality (VR) headsets are also jumping onto the bandwagon.

At various Fitur stands, visitors are able to immerse themselves in the streets of Marrakech or amble along a portion of the Santiago de Compostela pilgrims' trail.

"We're in a completely pioneering phase," says MarcialCorreal, head of the Spanish association for virtual travel agencies, who is promoting this tool to tourism professionals as the brochure of the future, without too much success so far.

"Professionals say 'how amazing' but they don't buy it. It's not in their marketing budget priorities."

Headsets themselves are not too pricey, between €50 and €600 (RM240 and RN2,889), says Cesar Urbina of virtual reality agency Iralta.

"Then there's content production, a little more than a normal video – from €2,000 (RM9,633) up to €150,000 (RM722,497)."

Hotel chain Palladium, however, has decided to give it a go.

Its salespeople no longer have paper brochures on them to present their hotels to travel agents, they carry virtual reality headsets.

Using these, the agents can virtually visit rooms, pools or restaurants at every one of their hotels.

Ivan Corzo, head of marketing for Europe at the group, says this gives travel agents a better idea of what the hotels are really like.

They "tell us it helps them sell," he says.

"It's much more difficult to cheat with VR headsets," adds Urbina.

Morocco's tourism office is also using VR.

"Tourism is linked to experiences, sensitivity," says SihamFettouhi, head of e-marketing at the office.

"Virtual reality can't replace the taste of local cuisine or the smell of the ocean. But it makes you want to explore more."

By– The Star

Xiaomi usurps Samsung to become top smartphone seller in India

Samsung Electronics has lost its crown as the top smartphone seller in India for the first time in six years, as it was outsold by China’s Xiaomi in the final quarter of 2017, data from two tech research firms shows.

Xiaomi’s aggressively priced suite of high-spec handsets and market expansion strategy enabled it to take the top spot in the world’s biggest smartphone market after China, said Tarun Pathak of Counterpoint Research.

The Chinese company, which is exploring a public listing and is now valued at close to $100 billion, entered India just over three years ago.

Its strategy there has so far rested on flash sales on leading homegrown e-commerce player Flipkart and U.S. tech giant Amazon.com’s Indian site, an approach that helped it snatch market share without have to spend heavily on marketing.

Counterpoint pegged Xiaomi’s smartphone market share in India at 25 percent in the fourth quarter based on shipments, ahead of Samsung’s 23 percent. Lenovo, Oppo and Vivo came in behind them, each with about 6 percent market share.

However, it ranked Samsung as the top seller for the year as the South Korean company was well ahead of Xiaomi in the first half of 2017.

Separately, research firm Canalys said Xiaomi shipped 8.2 million smartphones in the fourth quarter, while Samsung shipped 7.3 million.

“Multiple factors have contributed to Xiaomi’s growth, but the key reason for its current success lies in the autonomy that it granted its Indian unit, letting it run the business locally,” said Canalys analyst Ishan Dutt.

Canalys estimates Xiaomi has 27 percent of the Indian market while Samsung is on 25 percent.

“Samsung’s loss comes from its inability to transform its low-cost product portfolio,” said Rushabh Doshi of Canalys.

The South Korean company has been unable to win over cost-conscious buyers, thereby losing market share in the sub-15,000 rupee ($235) segment to Xiaomi quarter after quarter, he said.

Samsung said in a statement that it led Indian smartphone sales in the September to November period, based on data by research firm GfK.

Xiaomi could not immediately be reached for comment.

From – Reuters

Tencent beats Amazon to launch unmanned shop, but lags other Chinese tech rivals

Tencent Holdings has opened an unmanned pop-up store in Shanghai over the weekend which drew more than 30,000 visitors in its first two days of operation, beating Amazon in launching the much-hyped retail idea and catching up with other Chinese tech majors.

The most valuable Chinese tech company joined rivals Alibaba Group Holding, JD.com and Suning, as well as start-up BingoBox to test the water for the “grab-and-go” concept.

After nearly a year’s delay, Amazon Go is finally opening to the public this week in the US as the “no lines, no checkouts, no registers” model that could be a game-changer for the grocery and retail industry, CNBC reported.

The Tencent store, which sells chocolates, bottled water and juices, cookies, and coffee mugs, as well as WeChat merchandise, opened on January 20 in the MixC shopping mall in southwestern Minhang in Shanghai. It will run for 16 days until February 4.

“It’s quite popular especially in the afternoons during the weekends,” said Fele Wang, co-founder of EasyGo, a partner that supports the operation of the pop-up shop for WeChat Pay, the mobile payment services of Tencent.

“We will restock hot selling items to cater to consumer needs in the coming days,” Wang told the South China Morning Post.

To enter the store, consumers need to scan a quick response (QR) code – a type of bar code – with Tencent’s messaging app WeChat on their mobile phones, which bundles with EasyGo, a mini programme on WeChat. They then pick out the items they want, and scan a QR code again at the exit point where the system will automatically detect the items and tally up the purchases.

The procedure was smooth and easy, as tried out by the Post. The system was also able to distinguish new items from previously paid ones should the customer re-enter the store a second time to make further purchases.

Amy Jiang, a visitor to the shop, left empty-handed as she was not interested in the product offering, while another Kelvin Wu, bought a bottle of water for 11 yuan (US$1.72) just to get a taste of the shopping experience.

“I want to experience the unmanned service,” said Wu. “I think consumers [like me] can embrace the concept easily once the services become more common.”

Though touted as unmanned, there are staff available at the shop to assist shoppers.

“I do think China is leading in experimenting with unmanned stores compared with other countries, and has even edged ahead of the US,” said Matthew Crabbe, regional trends director at market research firm Mintel in Asia-Pacific.

Still, he noted that unstaffed stores can only become part of a broader mix of retail formats, which includes traditional manned stores.

“That [manned] service will shift away from ringing up cash registers and restocking shelves – which will increasingly be automated,” he said. “Rather, in-store staff will need to be trained to provide better customer service.”

Last July, Alibaba, owner of the Post, unveiled its Tao Café unmanned shop in Hangzhou, and start-up BingoBox now runs unstaffed convenience stores in mainland.

In Shanghai, Suning, one of China’s biggest retailers, said more than 10,000 consumers visited its unmanned shop in the first 50 days that it was in operation until the end of December, with an average daily sales of 10,000 yuan.

Nearly half of the buyers are the younger millennials, or those born in the 1990s and after.

Suning said it planned to open two to three more unmanned shops in Shanghai.

From – SCMP

SoftBank Leads $865 Million Investment in Construction Tech Startup Katerra

Katerra, now valued at about $3 billion, wants to control every step of the process for designing and constructing buildings.

SoftBank Group Corp. led an $865 million investment in Katerra Inc., a little-known construction-technology startup seeking to shake up the building industry.

Katerra’s valuation is now more than $3 billion, said Michael Marks, the chairman and co-founder. He said the company has about $1.3 billion in bookings for new construction projects.

The investment is the sixth biggest for a U.S. venture-backed company in the past year, according to data from research firm CB Insights. In addition to SoftBank’s Vision Fund, new investors include a fund overseen by Soros Fund Management, the Canada Pension Plan Investment Board, Tavistock Group, and real-estate investment funds Navitas Capital and Divco West. Jeffrey Housenbold, a managing partner at SoftBank Investment Advisers, will join Katerra’s board.

The Vision Fund, with a $100 billion target, has taken stakes in scores of companies over the past year, including Uber Technologies Inc., Slack Technologies Inc., WeWork Cos. and Chinese ride-hailing company Didi Chuxing. In December, the fund put $450 million into Compass, a real-estate tech firm. The fund made about 100 investments last year with a total value of $36 billion, according to research firm Preqin. That’s more than Silicon Valley heavyweights Sequoia Capital and Silver Lake, combined.

Before starting Katerra, Marks led technology manufacturer Flextronics International for 13 years. He took a company with less than $100 million in sales and turned it into the world’s largest maker of electronics, making everything from Xbox game consoles to Hewlett-Packard printers, reaching revenue of about $16 billion. He left Flextronics in 2006, and then was a partner at KKR & Co. and a technology investor.

Marks founded Katerra in Menlo Park, California, with Jim Davidson, a founder of private-equity firm Silver Lake, and Fritz Wolff, executive chairman of a real-estate investment company. Katerra’s goal is to help build construction projects faster and at lower costs by controlling all aspects of the process from design through construction. Materials are meant to arrive at building sites only when they’re needed and are ready to assemble.

The technique will be expensive to pull off. Katerra has raised more than $1 billion of capital just in the last two years from the likes of Foxconn Technology Group and Khosla Ventures. Last year, the company started building a factory in Phoenix to make wall panels, cabinets and countertops for apartments. Katerra also said it’ll build a factory in Eastern Washington for making a type of environmentally friendly engineered timber that should be strong enough to replace concrete and steel.

The construction industry has a different set of challenges from electronics. It involves a patchwork of local building codes, as well as varying weather and seismic conditions, Marks said. Projects take several years and sometimes run out of funding before they’re done. While Katerra will ship pre-assembled walls, floors and cabinets from its factories, there will still be a considerable amount of assembly work on site.

Marks said Katerra can overcome these hurdles and estimated that the business will have sales of $10 billion within the next decade. “It’s very similar to Uber or Airbnb or WeWork,” Marks said. “It’s tech guys in Silicon Valley driving into a new industry that has never had any technology. Construction is one of the worst.”

The company’s business plan lets it take advantage of a housing boom in many U.S. cities, the Trump administration’s focus on infrastructure spending and a desire for more green building materials. At the same time, the construction boom has led to a shortage of skilled workers needed to execute Katerra’s aggressive home building plans.

Katerra is focusing on five types of residential buildings: multifamily, student, senior, hospitality and, starting next year, single-family homes. It will start about 30 projects this year, Marks said. Construction will mainly take place in the U.S., although Katerra is looking at some joint ventures overseas.

From – Bloomberg

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