TECHNOLOGY

 

SAP Sales, Earnings Miss Estimates Amid Shift to Online 

 

SAP AG (SAP), the largest maker of business-management software, is finding it hard to please investors as a sales boost from its shift to online programs is being muted by a slowdown for older products and a strong euro.
The company reported first-quarter sales and earnings that missed analysts’ estimates as it reckons with the costs of an industrywide shift to software delivered as an Internet service. Walldorf, Germany-based SAP’s stock fell 1.2 percent.
SAP and U.S. rival Oracle Corp. (ORCL) are being challenged by Salesforce.com Inc. (CRM) and Workday Inc. products delivered and updated over the Web. That has prompted SAP to spend on developing and acquiring so-called cloud-computing services, pushing back a key profitability goal. At the same time, the strength of the euro is weighing on SAP’s growth, since revenue from outside Europe is worth less when brought home.
“The on-premises software business is getting hurt by the movement to the cloud,” said Rick Sherlund, an analyst at Nomura Holdings Inc. who has a buy rating on the shares. “You have to take a long-term view with SAP.”
Sales rose 2.7 percent to 3.7 billion euros ($5.1 billion), SAP said today, short of the 3.8 billion euro average estimate of analysts surveyed by Bloomberg. Operating profit, excluding some items, added 2 percent to 919 million euros, missing the average estimate of 975 million euros.

SAP, Germany’s biggest technology company, fell to 57.73 euros in Frankfurt trading. It has lost 2 percent in the past year, compared with a 25 percent gain by Germany’s DAX Index.

Currency Impact

On a conference call with analysts, co-Chief Executive Officer Bill McDermott said the company is emphasizing its software’s ability to manage businesses’ most important tasks from their servers or through cloud computing.
“We’re running mission-critical, industry-specific processes in the cloud, which our competitors just don’t do,” he said. McDermott said SAP is “well positioned” to achieve goals of reaching 22 billion euros in annual sales by 2017 -- 3 billion to 3.5 billion euros of which would come from the cloud.
The currency effects weren’t appropriately factored into analysts’ consensus estimates, said Knut Woller, an analyst at Baader Bank AG, who recommends buying the shares. He said a 9 percent increase in software support revenue, excluding currency effects, should give succor to investors worried SAP’s transition from software that runs primarily on customers’ own computers would cause the maintenance fees to fall.
“The underlying trends are OK,” he said. “My investment thesis is intact.”

Software Sales

SAP said currency fluctuations may hurt its full-year operating profit growth by 5 percentage points. At constant currencies, the full-year operating profit will be as much as 6 billion euros, the company reiterated. The euro has advanced about 6 percent against the dollar over the past year.
Sales of new software licenses, an indicator of future revenue, fell 5.2 percent to 623 million euros, compared with the 656.1 million-euro average estimate. Cloud subscriptions rose 32 percent to 221 million euros, compared with the average estimate of 211.6 million euros. Net income rose about 3 percent to 534 million euros.
SAP isn’t the only enterprise computing company being stung by the shift to cloud services. International Business Machines Corp. said yesterday first-quarter sales fell almost 4 percent as the transition to online software means customers are less reliant on buying servers and mainframe capacity.

Goal Delayed

SAP, which supplies programs for managing inventories, deliveries, financial performance and human resources to more than 250,000 companies, in January delayed its goal of reaching a 35 percent operating margin until 2017. Analysts predict 30.6 percent for this year, according to data compiled by Bloomberg.
The company has made acquisitions to buy cloud-computing expertise. On March 26, SAP agreed to buy Fieldglass, a closely held maker of online human resources software. On a conference call with reporters, McDermott said SAP would rely mainly on “organic” growth at the moment rather than large takeovers.
“If at this point something were to happen it would be more in the tuck-in category,” he said.
Revenue from software and related services grew 10 percent in the Americas, excluding currency fluctuations. In the Europe, Middle East and Africa region, growth was 8 percent. The Crimea crisis is affecting business, McDermott said.
“We do see that some things are growing slower there,” he said. “But nothing is lost” and SAP expects the business to restore over time.
Meanwhile business in France and southern Europe is “getting much better,” McDermott said.

Online Rivals

McDermott and co-CEO Jim Hagemann Snabe are positioning the 42-year-old company to deliver products for cloud computing and analyzing large amounts of data, two trends fueling corporate software purchases.
SAP, the world’s third-biggest independent software company after Microsoft Corp. and Oracle, also sells a database program called Hana meant to make its current products run faster.
SAP’s annual license-sales growth will be in the low single-digit percentage through 2017, said Michael Briest, a UBS AG analyst. Oracle hasn’t posted sales growth of more than 5 percent in 10 quarters, and its license and cloud subscriptions grew less than 4 percent in its fiscal third quarter.
By contrast, Salesforce in February reported fiscal fourth-quarter sales that grew 37 percent, and more than 200 deals worth more than $1 million as it moves upmarket. In a recent speech at an investor conference, Salesforce Vice Chairman Keith Block said the company is targeting SAP installations at customers as candidates for replacement.
Workday, which sells a cloud-computing suite of HR and financial software and aims for the same large customers who buy SAP, in February reported fiscal fourth-quarter revenue that grew 74 percent. SAP, Oracle, Salesforce and Workday compete in a $21.6 billion market for cloud-computing applications that’s estimated to grow 19 percent annually through 2017.

 

Mozilla appoints Chris Beard as interim CEO

The former chief marketing officer steps up to fill Brendan Eich's shoes, who was forced to resign just 11 days in the job

 

Mozilla prides itself on corporate ethics. Photograph: Mozilla

Mozilla has named the former chief marketing officer Chris Beard as its interim CEO, replacing Brendan Eich who resigned in early April.
Beard also takes the place of Eich on the Mozilla corporation board.
Eich, the former CEO and creator of Javascript, was forced to step down after just 11 days in the job when it was revealed that he had donated to a campaign to ban same-sex marriage.
According to Mozilla, Beard's membership of the board was mooted even before Eich resigned. "We began exploring the idea of Chris joining the board of directors some months ago," says the executive chairwoman Mitchell Baker on the company's blog.
"Chris has been a Mozillian longer than most," Baker continues. "He’s been actively involved with Mozilla since before we shipped Firefox 1.0, he’s guided and directed many of our innovative projects, and his vision and sense of Mozilla is equal to anyone’s. I have relied on his judgment and advice for nearly a decade. This is an excellent time for Chris to bring his understanding of Mozilla to the Board."
While Beard is currently only interim CEO, holding the reigns while the board searches for someone who can take over Eich's job on a permanent basis, Baker describes him as "a strong candidate for CEO".
Brendan Eich was promoted to chief executive on 24 March. Mozilla immediately faced criticism due to a $1,000 donation Eich had made in 2008 to the campaign for California's Proposition 8, which sought to ban same-sex marriage in the state.
The company prides itself on being an open and inclusive workplace, and many, including developers from within Mozilla, questioned how a CEO who had acted in a private capacity to remove rights from queer employees could uphold those values in the role.
Ten days later, Eich stepped down.
Even with the appointment of an interim chief executive, Mozilla faces a number of institutional challenges ahead. The firm has a desktop browser which is losing relevance as users shift to mobile, an open-source operating system struggling to get adoption, and the bulk of its income comes from one company, Google, which may decide not to renew that arrangement in November 2014.

 

Facebook prepares to launch e-money transfer service in Europe

Firm needs regulatory approval in European base in Ireland to issue digital credits that can be converted into cash by recipients

 

Facebook's Sheryl Sandberg addresses a conference in San Francisco in 2013. The firm already has permission for some forms of money transfer in the US. Photograph: Bloomberg/Getty Images

Facebook is preparing a money transfer service in Europe that would allow it to compete with the likes of Western Union, while giving users the option of storing money with the social network or buying items online.
The US tech firm is seeking regulatory approval in its European base in Ireland for "e-money" status, which would see it issue digital credits that can be converted into cash by recipients.
The firm already has permission for some forms of money transfer in the US, which allow payments within apps, including the Candy Crush Saga and Farmville games, from which Facebook takes a 30% cut. The company facilitated $2.1bn (£1.3bn) in transactions across Facebook in 2013, primarily to games publishers.
Approval in Ireland would allow Facebook to operate an e-money service throughout Europe using "passporting", which allows digital payments to be used across EU member states without having to gain regulatory approval from each one.
Facebook declined to comment on the development, which first emerged in the Financial Times, but the move highlights the scale of the global money transfer market. "The market for money transfer is very, very large," said Taavet Hinrikus, co-founder of TransferWise – one of three payment services reportedly in partnership discussions with Facebook.
Hinrikus declined to comment on the reported partnership discussions but said:
"For remittance alone the market is worth around $500bn, according to the World Bank, but for money moved between developed nations, as well as between developed and developing individuals and business, the market is valued at an estimated $5tn to $10tn, based on our analysis of global money flow data."
Facebook has made mobile platforms the focus of its expansion strategy in developing markets such as India, which accounts for more than 100 million of the firm's 1.2 billion users. Mobile broadband subscribers far outstrip fixed-line ones in developing nations.
"Could Facebook become some sort of utility in the emerging markets? It's certainly possible," said Brian Blau, a director at the research firm Gartner.
"Facebook has a lot of ambition here and they certainly see the benefits of helping the next 2 billion people make it on to the internet, which they're happy to subsidise for a while, but at some point they have to become paying customers."
In developed nations, Facebook is in competition with established technology platforms such as Apple's iTunes and Amazon's online stores, which have millions of customers with credit cards attached to their service.
"Payment schemes are the equivalent to credit cards in emerging markets and here is where Facebook can make progress … especially in those places where banking infrastructure is not as mature as it is in Europe or the US," said Blau.
Regulatory approval from Ireland would subject Facebook to the same controls as a bank, requiring it to segregate funds equivalent to the amount of e-money it issues.
Payments and e-money services are an expanding area of the financial services and technology market, though Facebook's rivals have been more focused on payment systems than money transfers.
Amazon's chief executive, Jeff Bezos, has reportedly made payment systems a priority focus, saying his company's payments team should "go faster" in its efforts to be successful in the space.
Google has made strides in mobile payments, with its Google Wallet services in the US. The search firm is registered as a payments provider in the UK, similar to the authorisation Facebook is seeking in Ireland, although its services have yet to see widespread adoption by consumers.
PayPal has also been moving towards mobile payments with its apps and one-touch payment services, most recently using the fingerprint scanner in the latest Samsung Galaxy S5 smartphone to authorise payment.

 

US Airways apologises for posting pornographic image on Twitter

 American airline tweeted explicit image to unhappy customer by mistake

   – but it took firm nearly an hour to remove post

 

US Airways was forced into a humiliating apology on Monday night after it posted an obscene pornographic image on Twitter in response to a customer.
The American airline tweeted the explicit image to an unhappy customer by mistake – but it took the firm nearly an hour to remove the post.
The pornographic image, which depicted a naked women and a model plane, was included in a response to a customer who complained about her delayed flight from North Carolina to Oregon. The picture was accompanied by the message: "We welcome feedback, Elle. If your travel is complete, you can detail here for review and follow up."
The image was quickly retweeted around the world, spawning dozens of spin-off jokes and – eventually – an apology from US Airways.
The airline said in a statement: "Unfortunately the image was inadvertently included in a response to a customer. We immediately realised the error and removed our tweet.
"We deeply regret the mistake and we are currently reviewing our processes to prevent such errors in the future."
The airline, which has 422,000 followers on Twitter, said it had tried to flag the graphic image as inappropriate after it was tweeted to its account by another user.
The slip came just hours after a 14-year-old Dutch girl was arrested after tweeting a terror threat as a "joke" to American Airlines. The girl was detained by police in Rotterdam on Monday over the hoax tweet, in which she claimed she was a member of al-Qaida and would "do something really big" on 1 June.
The airline immediately responded to the girl to say it "takes these threats very seriously" and would pass her details to the FBI. The girl, known only as Sarah, panicked and replied: "I was joking and it was my friend not me, take her IP address not mine. I'm so scared I'm just a 14-year-old white girl I'm not a terrorist."

 

 

Heartbleed makes 50m Android phones vulnerable, data shows

Devices running Android 4.1.1 could be exploited by 'reverse Heartbleed' to yield user data - including 4m in US alone 

  

Millions of Android smartphones and tablets are vulnerable to 'reverse Heartbleed'. Photograph: Pawel Kopczynski/Reuters

At least 4m Android smartphones in the US, and tens of millions worldwide, could be exploited by a version of the "Heartbleed" security flaw, data provided to the Guardian shows.
Worldwide, the figure could be 50m devices, based on Google's own announcement that any device running a specific variant of its "Jelly Bean" software – Android 4.1.1, released in July 2012 – is vulnerable.
The figure, calculated using data provided exclusively by the analytics firm Chitika, is the first time an accurate estimate has been put on the number of vulnerable devices. Other estimates have suggested it is hundreds of millions, based on the number of devices running versions of Android 4.1. But most of those run 4.1.2, which is not at risk.
Google has not disclosed how many devices are vulnerable, although it has indicated that the figure is "less than 10%" of devices activated worldwide.
But that could be a huge number, given that Google has activated 900m Android devices worldwide. There are also hundreds of millions of handsets in China running Android without Google services, which would not show up on its systems, and which are also likely to be running vulnerable versions.
The figure on the number of vulnerable devices comes from an analysis for the Guardian by the ad network Chitika of US network traffic. Looking at web traffic for the seven-day period between 7 April and 13 April, "Android 4.1.1 users generated 19% of total North American Android 4.1 Web traffic, with users of version 4.1.2 generating an 81% share. Web traffic from devices running Android 4.1.0 made up less than 0.1% of the Android 4.1 total observed, so we did not include for the purposes of clarity," said Andrew Waber, a Chitika representative.
Based on Comscore data which suggests there are 85m Android smartphones in use in the US, that means that there are at least 4m handsets which are vulnerable.
The devices would be vulnerable to a hack described as "reverse Heartbleed" - where a malicious server would be able to exploit the flaw in OpenSSL to grab data from the phone's browser, which could include information about part sessions and logins.
Although the risk is principally theoretical, it has focused attention on the security risk to Android devices which are running older versions of software but which are in effect abandoned by handset manufacturers and mobile operators, both of which have to process and pass on updates. Manufacturers typically provide updates for Android devices for 18 months after their release, despite efforts by Google in the past to provide a co-ordinated update scheme.
Of the smartphones in use, only Android devices are vulnerable to this form of attack. Apple does not use the vulnerable version of OpenSSL on the iPhone or iPad, while Microsoft said that neither Windows Phone nor Windows is affected.
Although the affected devices lie outside the 18-month window under which Google says devices are "traditionally" updated, the company said that "We have also already pushed a fix to manufacturers and operators." But it's unclear how quickly those will be implemented, if ever.
The security firm Lookout, which provides Android security software, has produced a downloadable Android app which lets people check whether their device is vulnerable.
More than 80% of people running Android 4.1.1 who have shared data with Lookout are affected, Marc Rogers, principal security researcher at the San Francisco-based company, told Bloomberg.
The proportion of at-risk devices in Germany is nearly five times higher than in the US, probably because one of the popular devices there uses the 4.1.1 version of Android, Rogers said. Based on Chitika's numbers, that could mean up to 20% of Android smartphones there being vulnerable, a number that would run to millions.
But Rogers also told Bloomberg that there are no signs yet of hackers are trying to attack Android devices through the vulnerability. It would be complex to set up and have a low success rate because the vulnerable devices would have to be targeted one by one, amid all the non-vulnerable ones. "Given that the server attack affects such a larger number of devices and is so much easier to carry out, we don't expect to see any attacks against devices until after the server attacks have been completely exhausted," Rogers told Bloomberg.
Google released the first version of Android 4.1 in July 2012. It was superseded in July 2012 by 4.1.1, which brought a bug fix for Nexus 7 tablets. A final version, 4.1.2, was released in October 2012.
Only 4.1.1 uses the vulnerable version of OpenSSL. While Google noted in a blogpost about vulnerabilities of its products to Heartbleed, it didn't specify what proportion are running 4.1.1, and the numbers are not split out from its Android platform versions information for developers, which combines the data for all three versions of 4.1 to give a headline figure of 34.4%.

 

Yahoo buys more time for turnaround with solid 2014 earnings report

• Slight revenue drop offset by 84% rise in income from 2013
• Investors and analysts divided about Marissa Mayer's strategy

 
Yahoo reported modest revenue growth in the first three months of the year. Photograph: Denis Balibouse/Reuters


Yahoo, the Silicon Valley tech giant that has been under pressure to show it can compete with aggressive rivals like Google, has bought more time for its turnaround with solid earnings and an 84% rise in income.
The company said on Tuesday that it made $186m in income from operations in the first three months of the year – a big jump from only $30m at the same time last year. CEO Marissa Mayer said the company had moved past its period of decline and into growth.
“While we believe the type of growth we’d like to see will take multiple years, this is a good start,” said Mayer on the company’s earnings webcast.
While revenue for all of Yahoo dropped 1% to $1.13bn, the tech company’s investment in China’s Alibaba Group continued to pay off. Alibaba’s revenues jumped 66% to $3.06bn, and its net income soared 110% to $1.4bn.
Yahoo holds a 21% stake in e-commerce site Alibaba.com, which has been a cash cow. The benefits of that, however, are likely to fade later this year as Alibaba goes public and Yahoo has to find another way to grow revenues. On the webcast, chief financial officer Ken Goldman said international markets will be an important source of growth for the company.
Investors have been curious to see whether CEO Marissa Mayer can effect a turnaround as the company competes with Google and others on search traffic, display ads and video.
Yahoo’s display revenue rose 2% to $409m and search revenue grew even more, by 9% to $444m.
Tuesday's earnings show Yahoo crossed into 2014 with something to show for it – though investors and analysts are divided about the company’s overall strategy under Mayer, who joined the company in 2012 after 13 years at Google.
Mayer said last year her priorities for the company were, in order, people, products, traffic and lastly, revenue. In a sales pitch to bring on talent from other tech companies in competitive Silicon Valley, Mayer boasted last year that Yahoo attracted 12,000 resumes a week from job-seekers.
Analysts have tried to puzzle out the company’s strategy, which has been pointed in several different directions, from search to advertising to video. Mayer said on Tuesday that the availability and compatibility of Yahoo on smartphones is key to the company as well, declaring “mobile pivotal to our future growth”. She said the company more than doubled its mobile team and grew mobile users by 30% to 430 million people.
“I would put mobile as one of the key, maybe even the most important of the four businesses to our overall growth,” said Mayer, citing native advertising, social and video as the company’s other sources of growth.
Mayer also alerted investors that Yahoo is interested in creating more original web videos – some original with partners. The company has created 70 original shows, Mayer said. Yahoo, in its quest to compete in video, will be up against giants like Netflix and Amazon.
Yahoo is also focusing on information security, hiring a new chief for the effort in the wake of widespread tech-industry concerns about hacking. “If we offer our users greater security for our products, they will use them more,” Goldman said.
Cantor Fitzgerald analyst Youssef Squali said before earnings were announced that “2013 represented a year of right-sizing, investment and acquisition” for the company, which would indicate that 2014 is the year that Mayer and her team deliver growth.
Of the 38 analysts who follow the company, 19 have a buy rating, which shows enthusiasm about Yahoo’s chances, and 18 recommend “hold”, a neutral judgment that is neither positive nor negative. There is a single “sell” rating.
Yahoo’s stock has been one of the notable casualties in some weakness in the tech industry, dropping 17% over the course of the year. The company has been buying back its own shares to boost the price.
“We have reduced the number of shares we have and we think that has been a very good use of our cash,” Goldman told analysts today.
In the first three months of the year, Yahoo bought back 12m shares for $450m. That brings the tally of buybacks to $6bn since the beginning of

 

Nasa asks members of public to select spacesuit of the future

Space agency asked voters to pick newest iteration of spacesuit with the winning design expected to be built by November



The winning suit will be known as the Z-2, a followup to the previous Z-1 suit. Photograph: /Nasa
Nasa has collected more than 200,000 votes from members of the public who are on a mission to help the space agency select the spacesuit of the future.
Voting ends at midnight ET on Tuesday for the newest iteration of Nasa’s spacesuit. The competition pits three suits – "Biomimicry", "Technology" and "Trends in Society" – against each other before the winner can be tested in Nasa’s facilities.
The winning suit is expected to be built by November will be tested in vacuum chambers, at Nasa’s training pool and a false Mars surface.
The Z-2 prototype follows 2012’s Z-1 suit, which had a design pleasantly reminiscent of the suit Buzz Lightyear wears in Toy Story.

 

 

The Z-1 prototype: Planned for use by astronauts as they travel to new deep-space locations, the next generation suit will incorporate a number of technology advances to shorten preparation time, improve safety and boost astronaut capabilities during spacewalks and surface activities. Photograph: /Nasa

Each prototype is tested for mobility, comfort and performance will be tested to guide the design of the next Z-series suit. The selected design for Z-2 will not be used in space because those suits for space missions require more high-performance technologies and materials than the current designs are capable of incorporating. Instead, the Z-2 designs are used as guides for testing and to eventually create a final product.
The Z-2 designs up for vote all have features that make them luminescent in the dark.

 
Biomimicry'. Photograph: Nasa
The “Biomimicry” design is supposed to be reminiscent of the ocean and “the scaly skin of fish and reptiles.”

 
Technology'. Photograph: Nasa
The “Technology,” design uses light-emitting patches and luminescent wire.

 

'Trends in Society'. Photograph: Nasa

The “Trends in Society” also uses the luminescent wire along with “a bright color scheme to mimic the appearance of sportswear and the emerging world of wearable technologies.”
“After the positive response to the Z-1 suit's visual design we received, we wanted to take the opportunity to provide this new suit with an equally memorable appearance,” said Nasa in a statement.
Nasa will use 3D human laser scans and 3D printing hardware to create the suit.

Google buys drone heavyweight Titan Aerospace

Google talks up opportunities to use drones in delivering internet across the globe

 

Google buys drone manufacturer Titan Aerospace. Photograph: Regis Duvignau/Reuters

Google has bought Titan Aerospace, a maker of solar-powered drones, saying it could help bring Internet access to remote parts of the world as well as solve other problems.
Financial terms have not been disclosed. Google said on Monday that atmospheric satellites could also be used in disaster relief and assessing environmental damage.
Titan's atmospheric satellites, which are still in development and not yet commercially available, can stay in the air for as long as five years, according to reports. Before it was updated Monday to reflect the acquisition, Titan's website cited a wide range of uses for the drones, including atmospheric and weather monitoring, disaster response and voice and data communications.
Facebook was also in talks to buy New Mexico-based Titan earlier this year, but it acquired UK-based solar drone company Ascenta instead.
Both Google and Facebook have launched ambitious projects that aim to get everyone on the planet online. Google's Project Loon sends giant balloons bearing Internet-beaming antennas into the stratosphere.