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from Breakingviews:

Square swipes a hollow-looking $6 bln valuation

By Robert Cyran

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

Square is starting to look oddly hollow. The payments company set up and run by Jack Dorsey is set to raise $200 million in new funding, according to Bloomberg. That would value the company at $6 billion. While big, it’s a deflated figure, considering Square’s former hype, the small amount raised, and tech rivals’ ease securing higher valuations.

Square’s credit card readers for smartphones and tablets are easily spotted in the wilds of flea markets and coffee shops. They are easy to use, and the 2.75 percent they charge per swipe is relatively appealing for small transactions. Last year the company racked up more than $500 million in revenue.

Yet it’s a difficult business to make a buck in - and getting harder. Square lost about $100 million last year, according to the Wall Street Journal. That’s because it must pay a majority of the transaction fees to banks and payment networks like Visa and MasterCard. That leaves little to cover overheads and investment needed for growth.

Increasing volume might solve this problem, but finding new users is getting more difficult as competition is increasing. PayPal charges less per transaction for its card reader. So does Amazon, which entered the fray earlier this month.

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:

SoftBank’s U.S. mobile retreat is least bad option

By Peter Thal Larsen 

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

Masayoshi Son has been forced to scale back his mobile phone ambitions in the United States. The chief executive of Japan’s SoftBank has belatedly bowed to hostile regulators and abandoned plans for his Sprint unit’s $32 billion takeover of T-Mobile US. He has chosen the least bad option.

from Breakingviews:

Microsoft’s China dream sorely strains credibility

By Ethan Bilby

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

Xbox gamers fear the “red ring of death”, a flashing light that can herald system failure. Microsoft, which makes the consoles, must be awaiting a similar sign in China. After 22 years, the tech giant has achieved little in the country, which looks to account for around 2 percent of revenue. Cloud services may multiply that over time, but political headwinds are raising the cost of business - possibly too high.

from Breakingviews:

French T-Mo bid looks like peak TMT Entrepreneur

Quentin Webb

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

TMT-men are the superheroes of finance today. A market boom has let telecoms, media and technology dealmakers such as John Malone of Liberty Global and Masayoshi Son of SoftBank finance ever-bigger dreams. Xavier Niel, the billionaire behind French telecoms group Iliad, is now bidding $15 billion in cash for 56.6 percent of T-Mobile US, listed but two-thirds owned by Deutsche Telekom. Maybe this idea should have stayed in the lab.

from Breakingviews:

Yahoo’s Mayer nears post-Alibaba reckoning

By Richard Beales

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

Yahoo is a big company with a much smaller one struggling to get out. A 22.5 percent stake in Alibaba accounts for well over half the U.S. internet group’s roughly $36 billion market capitalization, according to a new Breakingviews calculator. With the Chinese e-commerce giant likely to go public next month, Yahoo Chief Executive Marissa Mayer will find out how investors value the businesses she actually runs.

from Edward Hadas:

Growth in a rich and crowded world

Perky, productive robots, or nothing more than a few new smartphone apps? Cascading innovation, or just a few tweaks? Economists and technologists are debating what the future holds.

Pessimists like Robert Gordon of Northwestern University see decades of slow growth ahead, with little scope for big leaps forward. The optimists, among them Erik Brynjolfsson and Andrew McAfee of the Massachusetts Institute of Technology, expect new technological glories. Both sides are more wrong than right.

from Breakingviews:

The perks and pitfalls of depending on Jack Ma

By John Foley 

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

Buy a share in Alibaba and you place your trust in Jack Ma. The Chinese e-commerce giant’s founder, executive chairman and spiritual sultan will remain a controlling force even after the company completes its massive initial public offering later this year. The $100 billion-plus question for prospective shareholders is whether they can depend on him to always act in their best interests.

from Breakingviews:

China’s “De-IOE” campaign takes a bite out of tech

By Rob Cyran 

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

China’s “De-IOE” campaign is taking a bite out of some Silicon Valley stalwarts. For those unfamiliar with the term, it’s being used by tech executives to describe Beijing’s nudging of state enterprises to wean themselves off U.S. software and service firms, chiefly IBM, Oracle and EMC. The drive, which has been going on for at least a year, but accelerated after Washington indicted Chinese army officials, has dimmed the brightest star in Big Tech’s otherwise dull constellation.

from Breakingviews:

Supercharged IPO tax spoils need splitting

By Robert Cyran

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

Initial public offerings that generate extra tax spoils are in the spotlight. KKR and Silver Lake are listing web hosting company GoDaddy, three years after buying it for $2.25 billion. The use of what’s called an “Up-C” structure means the company will float with big potential tax deductions on its books. In GoDaddy’s case, investors and sponsors will both benefit. But other IPOs with Up-Cs have seen more dubious arrangements.

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