Reuters blog archive

from Breakingviews:

Rakuten’s $1bln U.S. buy stretches loyalty logic

By Una Galani

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Rakuten’s latest acquisition stretches loyalty logic. Buying U.S. cash back site Ebates for $1 billion will help Japan’s largest e-commerce group beef up abroad. It also underscores Rakuten’s determination to use loyalty schemes to distinguish itself from rivals like eBay and China’s Alibaba. Yet, as with Rakuten’s other recent chunky deals, it’s unclear how all the parts fit together.

Ebates is essentially an online discounter. The firm makes money by directing its 2.5 million active members to 1,700-plus online retail partners which include Wal-Mart Stores and Macy’s. Retailers pay Ebates a commission on every purchase, which it then shares with its members. This can be worth anything from 1 percent to 28 percent of the value of the purchase.

Rakuten’s online retail business has been operating outside Japan since 2008 and is now present in a dozen other markets. Yet overseas sales remain low. Buying Ebates will lift non-Japanese gross merchandise sales to 16 percent, from 6 percent in 2013. That’s a big step towards its target of generating 20 percent from cross-border sales by 2020.

from Breakingviews:

China smartphones set to pick off global giants

By Ethan Bilby

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. 

Not everyone is able to spend $500 on a smartphone. For those lacking funds or wanting better value for money, China’s handset makers increasingly appeal. Today, most of their sales are domestic. Yet low costs are helping them dial in new emerging market customers.'

from Breakingviews:

Snapchat’s valuation soars on tech-land pixie dust

By Robert Cyran

The author is a Reuters Breakingviews columnist. The opinions expressed are his own

Snapchat’s valuation is soaring on tech-land pixie dust. The disappearing-photo business has turned 100 million users, strong demand for chat services and the $20 million sale of a tiny equity stake into a $10 billion price tag. Trouble is, the company lacks revenue – and none is in sight. It’s a reminder that Silicon Valley dreams often trump real economics.

from Breakingviews:

U.S.-backed China tech shows investment curb folly

By Robyn Mak

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

China’s tech companies may be Beijing’s darlings, but they have U.S. dollar funding to thank. The next generation of upstarts look likely to continue the pattern. Foreign currency funds poured $5 billion into venture capital the first half of this year – three times more than local funds raised. The economic benefits these foreign investors bring make the rules keeping them out harder to justify.

from Breakingviews:

Line’s $13 bln valuation shows chat app exuberance

By Robyn Mak and Una Galani

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Line’s apparent $13 billion valuation sends a strong signal about chat app exuberance. The Japanese mobile messaging app’s quarterly revenue jumped 26 percent from the previous three months, its parent company reported on July 31. That pushes up valuation expectations ahead of its planned initial public offering. Yet Line’s valuation hangs on the assumption that new overseas users will spend like those back home. That seems like wishful thinking.

from Breakingviews:

Apple winds up earnings hope for new gadgets

By Rob Cyran

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Apple is winding up investors’ earnings hopes for new gadgets. The $570 billion iPhone maker racked up another period of so-so growth in the quarter to June 28, but still with astonishing cash flow. The lower share count may fuel a stock run-up if Apple soon unveils another must-have device.

from Data Dive:

A Cynking ship

This is a chart of the share price and trading volume of Cynk, a technology company that was listed at $0.05 per share in May. Its $13.90 share price today makes it worth about $4 billion on paper (it was, at one point, up to $6 billion, but has since dropped). It has never had any revenues and no one is quite sure what it does.

This morning, the SEC and FINRA suspended trading on the stock because of concerns over market manipulation.

from Breakingviews:

Chinese internet stocks deserve their discount

By Robyn Mak 

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

China’s internet stocks are red hot but investors would rather pay more for their U.S. counterparts. Shares of Chinese companies including gaming and social media giant Tencent and search engine Baidu trade at lower multiples than those of Facebook, Google and other American dotcoms when expected earnings growth is taken into account. The discount is deserved.

from The Great Debate UK:

Old Street is old news: Don’t shackle Europe’s tech start-ups

--Irfon Watkins is CEO of Coull. The opinions expressed are his own.--

London Tech Week created some interesting conversations and predictions. The stand out being a claim from Oxford Economics that in the next decade London’s tech scene will increase by over 11,000 businesses, creating 46,000 new jobs and generating £12 billion. There are signs that London is on the verge of becoming Europe’s tech hub and that it may even overtake Silicon Valley. The calls for Europe’s tech talent to migrate have gone out. However, while the figures suggest this will bolster the city’s economy, it could end up doing more harm than good when it comes to Europe’s technology sector overall.

For me, bringing all of the Europe’s talent together in one city and placing them around one roundabout goes entirely against the new working world that technology has created. Isn’t it meant to be about “anywhere working”? Technology has allowed us to do meetings from home and secure billion dollar contracts while lying on a beach. Yet to be a successful start-up we’re now making out that you have to be in London. Worse still, you have to be at Silicon Roundabout. It just doesn’t make sense.

from Breakingviews:

Oracle deal provides partly cloudy forecast

By Kevin Allison

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Oracle’s $5.3 billion deal for Micros Systems provides a cloudy forecast for shareholders in the database giant. Even if it’s the start of a new deal binge by Chief Executive Larry Ellison – which is possible – it’s not at a crazy valuation. But longtime partner Micros is more of an add-on than a way to supercharge Oracle’s effort in the cloud.