1 Microsoft’s $7.5bn Nokia lesson (James B Stewart
in Sydney Morning Herald/NYT) Let's call it the $7.5 billion lesson. That's the
amount Microsoft wrote off on Nokia's phone unit, which it bought a little over
a year ago for what it said was $9.5 billion. Considering that the deal
included $1.5 billion in cash, the write-off means Microsoft now values a
business that once controlled 41 per cent of the global handset market at just
a small fraction of the purchase price.
Thanks in large part to the huge accounting charge,
Microsoft reported its largest quarterly loss ever last week ($3.2 billion). It
was only the third loss in its history as a public company. This being the
technology business, Microsoft's still relatively new chief executive, Satya Nadella,
gets credit for swiftly confronting reality and taking the hit to earnings.
Nadella opposed the proposed deal in an initial poll
of top Microsoft officials. But his predecessor, Steve Ballmer was determined
to push the deal through as a capstone to his long tenure as chief executive.
Microsoft is also in good company. Google abandoned its foray into smartphones
when it sold Motorola Mobility to Lenovo last year. But it has written off just
$378 million related to the $12.5 billion Motorola acquisition. Amazon wrote
off an even more modest $170 million, acknowledging that its Fire phone was a
flop.
But far more was at stake for Microsoft than for
Google or Amazon, since the main point of the Nokia deal was to support
Microsoft's Windows operating system, which, in turn, was a crucial element in
Microsoft's "mobile first" strategy. Now both handset operating
systems and hardware are pretty much global duopolies, with Google and Apple
dominating software and Samsung and Apple dominating hardware. Microsoft has
jettisoned the strategy.
Microsoft has now embarked on what Nadella said is
no less than a "reinvention" of the company. In an email to employees
this month explaining the shift, Nadella said, "We are moving from a
strategy to grow a stand-alone phone business to a strategy to grow and create
a vibrant Windows ecosystem."
2 Why Twitter isn’t shining (Charles Arthur in The
Guardian) How many tech companies are saddled with the problem of enjoying
global fame but struggling with lacklustre performance? Not Facebook, which
revealed in its results that it has nearly 1.5 billion users logging in each
month around the world. Twitter, however, is an example where participation is
lagging behind reputation.
So why is Twitter struggling financially? Last week
the two companies’ results showed their widely divergent fortunes. Facebook’s
second-quarter revenue hit $4bn, up 39% year-on-year, with operating income of
$1.3bn, down 8%. Twitter, by contrast, had revenues of $502m – up 61% from last
year – but an operating loss of $131m. Facebook is gigantic, growing fast and
profitable. Twitter is smaller, growing faster, but loss-making.
Meanwhile, in the past year around 450 people have
left the company. That constitutes about 12% of the firm, and includes senior
figures. Jack Dorsey, a Twitter co-founder, took over as “interim CEO”, a job
that resonates in Silicon Valley because it is the title that Steve Jobs held
for a while after he returned to a wounded Apple in 1996. There he ejected the
incumbent, shook the company back into shape and eventually took on the title
of full CEO.
Investors, and 38-year-old Dorsey, would like a
repeat. Like Jobs, Dorsey was Twitter’s founding chief executive, but was
forced out by Williams in 2008. He returned as executive chairman in 2011,
appointed by Costolo, and then took back the reins, so he is not taking over
from a standing start. But the board has yet to give him the full-time role.
According to Dorsey, using Twitter should be “as
easy as looking out of your window”. He added: “You should expect Twitter to
show you what’s most meaningful in the world, to live it first, before anyone
else and straight from the source. And you should expect Twitter to keep you
informed and updated throughout your day.”
But as Anthony Noto, the chief financial officer,
admitted on the earnings call: “The number one reason users don’t use Twitter
is because they don’t understand why to use Twitter. They don’t understand the
value.” if only resolving that problem was as straightforward as a
140-character tweet.
3 Canada rally for topless rights (BBC) Hundreds of
Canadian woman joined a topless protest march after three sisters were
allegedly stopped by police for cycling without shirts. Saturday's "Bare
with us" march took place in Waterloo, Ontario. The women say that police
told them to cover up whilst cycling in the neighbouring town of Kitchener last
month. They have filed a formal complaint with the police.
It is legal for women to be topless in Ontario after
a court ruling in 1996. Protestors held signs that included the slogans
"They are boobs not bombs, chill out" and "Nudity isn't
sexual." The three sisters, Tameera, Nadia and Alysha Mohamed, say that
they took their shirts off because it was a hot summer day. However, they
allege that a police officer approached them and told them to cover up.
But
when they challenged this, the officer said he was stopping them for bike
safety reasons.
One of the sisters is an award nominated Canadian
singer under her stage name Alysha Brilla.
Ontario passed legislation
confirming the right of women to go topless in 1996, after the Ontario Court of
Appeal overturned a woman's conviction for removing her shirt. Gwen Jacobs had
been fined in 1991, but on appeal the court found that there was "nothing
degrading or dehumanising" about her going topless in public.
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