TIME Companies

This Video About Samsung’s Crazy History Will Blow Your Mind

It even makes tanks

Samsung may be known as one of the world’s largest producers of computer chips, smartphones and television sets — but that doesn’t even begin to scratch the surface of this ever-expanding conglomerate.

Samsung’s operation is so massive it even includes a defense department that manufactures tanks, according to a YouTube series that tries to get a handle on the what the world’s largest companies actually make.

The South Korean conglomerate proved to be one of the hardest companies to classify, given its sprawl across a variety of industries, including hotels, petrochemicals and life insurance.


TIME Earnings

Expect Another Massive Win for Apple Today

Anticipating a record second quarter, investors have bid the stock up nearly 20% since January


This should be another big one.

Not as big as Apple’s Christmas quarter, the most profitable in U.S. corporate history. But surely Apple’s biggest second quarter yet.

The company told analysts in January to look for total sales in the March quarter somewhere in the range of $52 to $55 billion — representing, at the $53.5 billion midpoint, 22% growth from the same quarter last year.

The consensus among the analysts Fortune polled — 24 professionals and 12 amateurs — is that Apple’s revenue for fiscal Q2 2015 will come in at about $56.45 billion, up nearly 24% year over year.

Anticipating a record Q2, investors have bid up the stock nearly 20% since January. Whether it goes up or down from there depends — at least in theory — on how big last quarter was and what kind of guidance Apple gives for the one that ends in June — the first to include sales of the Apple Watch.

We’ll get that guidance Monday. Tune in after the markets close.

Follow Philip Elmer-DeWitt on Twitter at @philiped. Read his Apple coverage at fortune.com/ped or subscribe via his RSS feed.


This article originally appeared on Fortune.com.


Comcast – Time Warner Cable Deal Officially Terminated

Reports that the deal would be dropped were leaked to the media Thursday

Comcast officially announced Friday that it has abandoned a $45 billion takeover bid for Time Warner Cable, after significant opposition from U.S. regulators. The deal, first reported last February, would have combined America’s two largest cable companies.

Brian L. Roberts, Comcast Chairman and CEO said in a statement: “Today, we move on. Of course, we would have liked to bring our great products to new cities, but we structured this deal so that if the government didn’t agree, we could walk away.”

He thanked his employees and said “I couldn’t be more proud of this company and I am truly excited for what’s next.”

TIME Companies

Bezos Says Amazon Web Services Is a $5 Billion Business

Amazon President, Chairman and CEO Jeff Bezos speaks at the Business Insider's "Ignition Future of Digital" conference in New York City on Dec. 2, 2014.
Mike Segar—Reuters Amazon President, Chairman and CEO Jeff Bezos speaks at the Business Insider's "Ignition Future of Digital" conference in New York City on Dec. 2, 2014.

At long last, we get some details on AWS revenue

The one thing everyone knew about Amazon’s nearly nine-year-old cloud business was that it was massive. But actual details were scarce, to say the least. That changed Thursday when Amazon corporate broke out Amazon Web Services sales and revenue for the very first time on its first quarter earnings call.

Drumroll please. For the quarter, AWS logged $1.57 billion in revenue, up 49 percent from the year-ago period. Perhaps a bigger deal: It logged operating income of $265 million for the quarter, up from $245 million a year ago. And for the first time Amazon CEO Jeff Bezos, put a number on the AWS business. In a statement he characterized Amazon’s cloud as “a $5 billion business and still growing fast — in fact it’s accelerating.”

Up until now, here’s what we knew about AWS: In November, Amazon execs claimed 1 million business customers and a 40 percent year-over-year growth rate. But growth from what number to what number was a closely held secret. AWS figures were buried in the overall North American Sales “Other” category which included branded credit cards and other stuff. Technology Business Research Analyst Jillian Mirandi projected that AWS made up 90 percent of that category, but no one outside of Amazon’s executive suite really knew for sure.

For the record, net sales for that “other” category including AWS was $1.67 billion for the fourth quarter ending January 31, 2014 and $1.204 billion for the first quarter last year.

There were plenty of educated guesses though. Most recently a Deutsche Bank analysts estimated AWS to be $6 billion/year business (albeit an unprofitable one) and roughly 10 times the size of Microsoft’s cloud business.

AWS has been a runaway train in public cloud services—where companies’ workloads share massive pools of computing, storage, and networking infrastructure run by AWS. That’s because it has had that market to itself since 2006 and was noted for launching unilateral price cuts on basic services while also introducing higher end (and more pricey) database and other services. Developers at companies large and small loved AWS because they could quickly—often with their own credit cards—launch new applications and test them very quickly. AWS use spread like wildfire among that substrata of IT users.

But now, AWS is seeing competition from big and very-well funded competitors including Microsoft, Google, IBM, and a cadre of telecommunications companies all pitching cloud services not only to developers but to CEOs, chief information officers, and mucky-mucks at big companies, most of whom get nervous about the idea of “shared” infrastructure when it comes to their precious corporate data and applications.

For its third quarter, Microsoft said its “commercial cloud” business, which includes, but is not limited to Azure, was up 106 percent year over year, and now represents $6.3 billion in annual revenue.

In this race AWS has to compete with other cloud vendors that have entrenched relationships with big customer executives. It registered a seismic coup two years ago when it beat out IBM for a coveted deal to build a CIA cloud even though it bid more than IBM did on that business. That win gave AWS credibility among other security-conscious users and showed a willingness by AWS to adapt its model if the customer was big enough.

Perhaps more important, it is no longer able to call the shots on pricing. Last year Google started undercutting Amazon pricing on some basic services—meaning that, for the first time, AWS had to respond to someone else’s price pressure.

But AWS is no longer alone, and at a time when it’s trying to appeal up market to CEOs and CIOs as well as to its more traditional base of developers and programmers, it is facing stiff competition.

This article originally appeared on Fortune.com

TIME Companies

Comcast Reportedly Dropping Time Warner Cable Deal

The Comcast Corp. logo is seen as Brian Roberts, chairman and chief executive officer of Comcast Corp. (R) speaks during a news conference in Washington on June 11, 2013.
Bloomberg/Getty Images The Comcast Corp. logo is seen as Brian Roberts, chairman and chief executive officer of Comcast Corp. (R) speaks during a news conference in Washington on June 11, 2013.

The deal would have combined the nation’s two largest cable companies

Comcast plans to drop its $45 billion takeover bid for Time Warner Cable in the face of opposition from U.S. regulators, Bloomberg reported on Thursday, citing people with knowledge of the matter.

Comcast could make a formal announcement signaling the end of the deal as soon as Friday, according to a Bloomberg report citing anonymous sources. The deal, which was announced last February, would have combined the nation’s two largest cable companies in a merger with the potential to reshape the media landscape.

The news followed a report from The Wall Street Journal, which said early Thursday that staff at the Federal Communications Commission have recommended that the merger, which requires government approval, be put before an administrative law judge — an indication that the FCC views the potential deal as not being in the public’s best interest.

On Wednesday, executives from the two companies sat down with Justice Department officials to discuss the proposed deal, which was supposed to combine the country’s No. 1 and No. 2 cable providers into one entity, giving them control of nearly 30% of the pay TV market.

The two companies’ bid to unite has been in the works for some time. Here are some of the key moments that led up to the decision to join forces.

This article originally appeared on Fortune.com.

TIME Companies

We’re About to Learn Way More About Amazon’s Cloud Business

Emmanuel Dunand—AFP/Getty Images A view of US multinational Amazon's European headquarters, nestled in the Clausen Valley in Luxembourg, November 10, 2014.

Amazon will finally break the silence on just how much money its cloud service unit has been raking in

Amazon will break out its cloud business in an earnings report for the first time Thursday, revealing more information than previously known about the company’s server operation.

Amazon Web Services (AWS) is widely believed to have a lead over its chief rivals, Microsoft, Google and IBM, in the race to replace local computing with off-site servers, though how big of a lead has always been an open question. Amazon’s spokesperson acknowledged to the Wall Street Journal that AWS is already a “multibillion dollar business,” a significant chunk of change in a market that totaled nearly $10 billion in 2014, according to an analysis by IDC.

But the bigger question mark hovering over Amazon’s disclosure centers on growth. Expectations are running high, given quarterly revenue from its chief rival in cloud services, Microsoft, has consistently expanded by triple digit growth rates. Whether Amazon’s growth matches expectations will be revealed as soon as its financials finally come out of the “other” line.

TIME Technology & Media

Why Facebook Isn’t Ready to Roll Out Video Ads — Yet

Facebook logo shown on an iPhone 5s.
Lukas Schulze—AP Facebook logo shown on an iPhone 5s.

Investors are hungry for more details, yet Facebook doesn’t seem to be in a rush to share

A year ago, Facebook was not a destination for video content. Now, the social media company sees four billion video streams each day, as it noted in its first quarter earnings call today. Almost overnight, Facebook became a video juggernaut. And three quarters of those views occur on mobile.

Video on Facebook has the company’s shareholders excited. The category is seen by many as the holy grail of online advertising. Sight, sound, and motion is a more compelling sales opportunity than a flat banner ad, and advertisers are willing to pay more for it. But Facebook has said little about its efforts to monetize video ads. Pitch decks have leaked. Speculation has abounded. Facebook even held a secret video sales event today, meant to capture advertiser budgets ahead of the “NewFronts,” the digital version of the broadcast industry’s programming “Upfronts.”

In the question-and-answer portion of Facebook’s earnings call, investors repeatedly asked about its plans to make money from video ads. Will Facebook attract big TV advertisers to its platform? How much money will Facebook invest in that platform? What’s the breakdown of video ads versus regular ads? How many of those four billion video views are ads? Will Facebook engage in long-form video? Will it compensate professional video creators?

But CEO Mark Zuckerberg, COO Sheryl Sandberg, and CFO Dave Wehner dodged most of those questions. Listeners learned precious few details.

Sandberg tamped down expectations of video becoming a major source of new revenue. Video ads may not contribute much incremental growth, she noted, because they sometimes take the place of a regular Facebook ad. In other words, a brand a looking to buy video ads may simply purchase a sponsored video in place of purchasing a sponsored post. Both sponsored videos and sponsored posts appear in Facebook’s stream of content. These ads are purchased programmatically through an auction, so there is no price difference between a sponsored video post and a regular sponsored post.

Left to speculate, Josh Olson, a technology analyst with Edward Jones, said he estimates video ads will contribute 5% in incremental revenue in 2015. Facebook does not appear to be in a rush to monetize its explosive growth in video. “They’re taking their time getting there,” he says.

Update: This morning Facebook announced one new detail: Anthology, a program that pairs brands with media partners who will create video ad materials for them to promote on Facebook. Partners include Vice Media, Vox Media, Tastemade, Oh My Disney, The Onion, College Humor, and Funny or Die.


This article originally appeared on Fortune.com.

TIME Companies

Facebook Is Totally Dominating on Mobile

Facebook Removes Feeling Fat
Bloomberg via Getty Images The Facebook Inc. logo is seen on an Apple Inc. iPhone in London, U.K., on May 14, 2012.

The number of mobile daily active users in the first quarter grew 31% year-over-year

Users increasingly using Facebook on their mobile devices helped to lift the company’s first-quarter revenue 42%, but even that fell short of Wall Street lofty expectations. Here are the key points from Wednesday’s earnings release.

What you need to know: Facebook posted first-quarter sales of $3.54 billion, up from $2.5 billion a year ago. Mobile ad sales again accounted for a large chunk of the social networking giant’s overall revenue as more people using mobile devices flocked to the service.

Despite that, Facebook’s profits dipped 20% to $512 million, or 18 cents per share. The company blamed the decline on a 83% increase in spending during the first quarter.

While most companies would be happy with 40% revenue growth, Facebook still managed to disappoint analysts who had predicted $3.56 billion in quarterly sales, according to Thomson Reuters. The company’s overall revenue growth is decelerating with growth in the previous quarter coming in at 49% and 59% in the quarter before that one.

Facebook shares dipped more than 2% in after-hours trading after rising slightly during the afternoon. The company’s stock has gained 8.5% on the year.

In a brief statement included with the earnings release, Facebook CEO Mark Zuckerberg called the company’s first quarter “a strong start to the year.”

The big number: Increasing mobile users has been driving Facebook’s rapid revenue growth over the past year, and the first quarter continued the trend with the number of mobile daily active users (DAUs) growing 31% year-over-year. Meanwhile, mobile monthly active users (MAUs) grew by 24% year-over-year.

That mobile user growth helped to lift mobile ad sales, which accounted for 73% of Facebook’s ad revenue in the first quarter. Mobile ad sales accounted for 59% of overall ad revenue during the same quarter last year and 69% during the preceding quarter.

Counting both mobile and web, DAUs increased 17% in the quarter while MAUs for the same overall category rose 13%.

What you might have missed: Facebook became the latest company to cite the strong U.S. dollar for having a negative impact on sales. If not for money lost from foreign exchange rates, Facebook’s revenue would have increased 49% in the first quarter, the company said.

This article originally appeared on Fortune.com

TIME Companies

McDonald’s Is Closing Hundreds of Stores This Year

Signs are posted on the exterior of a McDonald's restaurant on April 22, 2015 in San Francisco.
Justin Sullivan—Getty Images Signs are posted on the exterior of a McDonald's restaurant on April 22, 2015 in San Francisco.

The fast food giant already closed 350 stores in early 2015

McDonald’s shuttered 350 poorly performing stores in Japan, the United States, and China the first three months of 2015 as part of its plan to boost its sagging profits.

Those previously unannounced closings, disclosed on a conference call with Wall Street analysts on Wednesday, are on top of the 350 shutterings the world’s largest restaurant chain had already targeted for the year. While those 700 store closings this year represent a fraction of the 32,500 or so restaurants worldwide, they show how aggressive McDonald’s is getting in pruning poorly attended locations that are dragging down its results.

Earlier on Wednesday, McDonald’s had reported an 11% decrease in revenue and a 30% drop in profit for the first three months of year, a continuation of its troubles in the last two years as it has struggled to compete with new U.S. competitors, a tough economy in Europe and a food safety scare in Asia.

McDonald’s CFO Kevin Ozan told analysts that the shuttered stores in China, where comparable sales fell 4.8% in the first quarter, had been underperforming for years. In Japan, where McDonald’s is still reeling from the food safety scare last summer, the stores closed stores were “heavy loss maker restaurants.” As for the U.S., comparable sales were down 2.3%, one of their biggest drop in years as chains like Chipotle ate into sales.

On May 4, the company will start detailing its turnaround strategy.

In the last few months, it has made a few moves that telegraph where it is heading, though it is pretty clear how the big the challenge will be for the Golden Arches.

For instance, earlier in April the company announced it is testing out a larger, pricier, third-of-a-pound burger for $5, two years after dropping the similar Angus burger line because they were too pricey for McDonald’s diners. Despite that earlier failure, new CEO Steve Easterbrook expressed confidence his customers would go for premium burgers.

“I often describe McDonald’s as possibly the most democratic — with a small ‘d’ — brand in the world,” he said. “And what customers love the world over, and none more so than here in the U.S., is how they can buy into aspirational quality products, but at a McDonald’s price.”

But he faces an uphill battle in winning over the millions of burger-eaters in the U.S. that have a dim view of McDonald’s offerings: Nation’s Restaurant News published a survey this month rating 111 limited-service chains on 10 attributes including food quality, and McDonald’s was ranked No. 110, ahead only of Chuck E. Cheese. In-N-Out Burger topped the list.

And he also has to get the thousands of franchisees, who own 80% of McDonald’s locations, on board as he works to transform the company, even as many are still smarting from his decision to raise wages at company-owned U.S. restaurants.

“When business is a little tough like it is at the moment in the U.S., with cash flows being challenged, yeah, frustrations do arise,” Easterbrook said.

This article originally appeared on Fortune.com.

TIME Cloud Computing

IBM Is Stumbling Its Way Into the Future

A general view of IBM's 'Watson' computing system at a press conference at the IBM T.J. Watson Research Center on January 13, 2011 in Yorktown Heights, New York.
Ben Hider—Getty Images A general view of IBM's 'Watson' computing system at a press conference at the IBM T.J. Watson Research Center on January 13, 2011 in Yorktown Heights, New York.

Despite ambitious plans for its future, the technology giant faces serious hurdles

The problem with being a tech giant is that, no matter how hard you try to charge into the future, you’re always weighted down by the past. And lately, no company has exemplified this conundrum better than IBM.

In the past few months, IBM has rolled out innovation after promising innovation. The company launched an analytics tool for the healthcare industry based on its Watson artificial-intelligence platform. Watson tools for other industries are on tap, and meanwhile Watson has written a cookbook.

IBM is also building a cloud platform for the Internet of things that companies can use to make sense of data collected from far-flung sensors embedded in a wide variety of devise. The company not only announced its Hybrid Cloud–meshing IBM’s own cloud with a client’s on-premise machines–it signed the US Army up as a key customer. Oh, and it’s building new computers that mimic the human brain.

The company is serious about investing in these new ideas. CEO Ginny Rometty told investors in February IBM would spend $4 billion this year in growth areas like analytics, cloud computing, mobility and security software. These areas accounted for only 27% of IBM’s total revenue in 2014, but Rometty sees revenue growing to $40 billion from $25 billion in four years.

This all sounds encouraging, but now look at the first-quarter earnings report IBM delivered on Monday. Revenue fell 12% year-over-year to $19.6 billion and came in $100 million shy of analysts’ consensus forecast. That marked the 12th straight quarter of falling revenue and the eighth time in the last nine quarters that IBM missed its revenue estimate. In fact, it was IBM’s lowest quarterly revenue since the first quarter of 2002.

Explaining the weak revenue, IBM pointed out that the decline reflected the sale of certain assets like its low-end server unit and the effect of a strong US dollar. (IBM warned that if the dollar stays at current levels it could slice 80 cents a share off full-year EPS.) Excluding those factors, IBM’s revenue was still flat with the year-ago quarter. Net income fell 2.4% to $2.3 billion.

How can IBM have so many promising technologies and such a weak financial performance? The answer is a classic innovator’s dilemma, in which successful companies struggle to stay atop their industries as they face newer, more efficient technologies and business models that slowly drain life from their cash cows.

Enterprise IT giants like IBM, SAP and Oracle face one such threat from cloud computing. The choice they face is an ugly one: Dig in and maintain a profitable but slowly dying business; or invest in those same innovations, thereby cannibalizing their core business. IBM has made the bold choice to invest in the future, even if it’s eating into its present success.

This isn’t new. Throughout its history, IBM has backed out of aging businesses to focus on new areas of growth. In the past four decades, it’s sold off its Selectric typewriters to Lexmark, its copier business to Eastman Kodak, its hard-disk drive unit to Hitachi, and its PC and low-end server divisions to Lenovo. In the late 90s, the company broke from its roots to push into IT services. Under Rometty, IBM is again making a transition into areas it sees as growing for years.

The catch is that areas like cloud-based services are growing because they’re cheaper, lither versions of the legacy services IBM and others have depended on for profits. In a conference call discussing earnings Monday, CFO Martin Schroeter talked about “a pretty dramatic shift of spending within IBM… Some of what you’re seeing in that core business decline is that engineered shift toward the strategic imperatives.”

“Strategic imperatives” is IBM-speak for the growth markets it’s pushing into: data analytics, cloud, mobile and security. Behind the bigger headlines of falling revenue, IBM is actually seeing some success here. Analytics revenue rose more than 20% last quarter. Cloud revenue—including the hardware that lets clients build their own “private cloud”—jumped 75%. This business has brought in $7.7 billion in revenue during the past 12 months.

Looking at cloud as a service alone, revenue totaled less than $1 billion. Again, this represents a tiny portion of IBM’s total revenue. But consider that at an annual rate it’s bringing in $3.8 billion. By way of comparison, Amazon’s Web Services, which focuses on cloud hosting, brought in $4.6 billion in revenue in 2014 with razor-thin margins. From that perspective, it’s not hard to imagine IBM as a rising leader in the emerging cloud economy.

As promising as this future growth sounds, it doesn’t change the fact that slowing revenue has pulled IBM’s stock down 22% in the past two years, a stretch when the S&P 500 has risen 32%. Investors remain patient, however, partly because IBM has doled out $26 billion in stock buybacks over that period, in addition to $8 billion in dividends.

Investors may grumble, but few are rebelling. Earlier this month, Reuters said top shareholders were seeking out activist investors to shake up IBM. But at least two such activist firms balked, in part because they felt Rometty was doing as good a job as could be expected with a tough transition. Another deterrent was Warren Buffett, who seems to support Rometty’s work. Berkshire-Hathaway has been adding to its position in IBM, which now stands at a 7.8% stake.

So go ahead and shake your head at IBM’s earnings. Yes, the company set clear goals for 2015 profits and has fallen short. Yes, revenue is shrinking and may do so in future quarters. But the company deserves credit for the painful work of building a foothold in the future of tech, even at the cost of easy profits today. IBM has chosen to address the investor’s dilemma head on, knowing no giant can endure over time without some pain along the way.

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