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Data Sheet—Friday, April 22, 2016

Andrew Nusca is a senior editor at Fortune.

Good news, Data Sheet readers: Small business is alive and well in Seattle.

On account of a spell of unseasonably good weather in the city—68 degrees with nary a rain cloud in sight, to the amazement of every local—I stopped by historic Pike Place Market yesterday. Tourists, fishmongers, trinket-sellers—the century-old farmers market was as bustling as always. Even the employees at the original Starbucks store at 1912 Pike seemed energized. (Though it may have been the brew.)

Unfortunately, yesterday’s sunny conditions didn’t extend to Seattle’s biggest companies, some of which reported their earnings yesterday. Starbucks was one, taking a 4% hit (to $58) to its stock price in after-hours trading after revealing slowing sales growth amid an otherwise strong quarter. And shares of Microsoft, headquartered across the water in Redmond, bore an even bigger blow of 5% (to less than $53) after strong growth in several businesses was overshadowed by the continued slump of the PC market.

Yikes.

There’s plenty to be said about both, and you can read more here and here. But allow me to briefly draw your attention to what I think is the most interesting item in Microsoft’s earnings report: the recurring phrase “lower phone sales.”

Two and a half years after Microsoft gobbled up Nokia’s devices business, it’s still feeling the heartburn. The company sold 2.3 million Lumia phones in three months’ time, just one-quarter of the amount it sold in the same span the year before.

The good news is that selling phones is still a profitable business for Microsoft. The bad news is that its revenue from doing so is plummeting, down 47% year over year.

None of this is a surprise, of course. A year ago, Microsoft’s management team waved a white flag of sorts and promised to dramatically restructure the business to the tune of 7,800 jobs cut. Still, it is remarkable just how much of a drag Microsoft’s phone business continues to be on growth areas like cloud computing or gaming.

Sunny with a good chance of rain? You know, I think the locals have a term for that: “liquid sunshine.”

Best wishes for a productive day.

Andrew Nusca
@editorialiste
andrew.nusca@fortune.com

Share this essay: http://for.tn/26iWoes. Find past editions.

BITS AND BYTES

Uber drivers settle for $100 million. The proposed deal will compensate drivers in California and Massachusetts for certain fees and expenses, but it maintains their status as independent contractors rather than employees of the ride-sharing company. In addition, Uber agreed to create a “Drivers Association” that will represent their interests but that won’t have collective bargaining rights like a union. The proposal is a big deal, since it would cover 385,000 drivers, but it is subject to a fairness hearing. Plus Uber still faces many other legal challenges. (Fortune, Wired)

Google attacks Facebook’s mobile ad stronghold. Google’s parent Alphabet reported lower-than-expected profits for its first quarter. The troubles with its Nest division are just one part of the problem, but Alphabet CFO Ruth Porat had few specific explanations during the company’s financial update Thursday night.  On the bright side: Google’s advertising revenue grew more than 16% to $18 billion. It needs that money for the huge investment it plans in cloud services(Fortune, Fortune )

SoftBank investors want investigation of No. 2 exec Nikesh Arora. Lawyers representing unnamed SoftBank stockholders sent a letter to the company’s board in January questioning certain transactions and investment decisions made by the former Google executive, reports Bloomberg. Arora is the likely successor to founder Masayoshi Son. (Bloomberg)

Setback for Microsoft’s cloud transition? The software giant’s “intelligent cloud” reporting unit, which includes its Azure public cloud services as well as products that run on-premises like the Windows Server operating system and SQL Server database, reported a 3.3% sales increase to $6.1 billion. But profit fell 14% to $2.19 billion. (Fortune)

SecureWorks sets IPO price lower than expected. The Dell-owned cybersecurity company sold 8 million shares at $14 on Thursday, raising about $112 million in the first tech IPO of 2016. The company had planned to sell 9 million shares at a price of between $15.50 and $17.50. (Fortune)

An AMD resurgence? Let’s be clear. Advanced Micro Devices is still shrinking, and it’s still losing money. But the chipmaker surprised investors with better-than-anticipated results for the first quarter, which buoyed its stock more than 24% in after-hours trading. A new joint venture with China’s Tianjin Haiguang Advanced Technology for server chips also helped. (Fortune, Bloomberg)

Verizon: Strike may or may not hurt results this quarter. The walkout by 40,000 workers, who predominantly represent its Internet and wireless businesses, is delaying new installations. But there’s been no real financial impact yet, says CFO Fran Shammo, who fielded questions on the teleco’s earnings call. (Fortune)

THE DOWNLOAD

Here’s what still bugs people about the Dell-EMC deal. Barring a massive unforeseen event, Dell will complete its $67 billion acquisition of business technology giant EMC sometime before October. An EMC shareholder vote is slated for next month and regulatory approvals in some countries are still pending, but no one seems to think anything will derail the deal at this point.

If all goes smoothly, the proposed convergence of Dell, EMC, and VMware would combine Dell’s PC, laptop, server, and software expertise with EMC’s enterprise storage products, and VMware’s virtualization software, which is run by an estimated 80% of corporate data centers.

But serious doubts remain about whether this expensive—and debt-laden—acquisition will create a profitable entity. The combined entity will need to generate much more revenue than it does, reports Fortune senior writer Barb Darrow. Given prospects for technology spending (ask Intel about that) and the poor track record of previous mergers (think Oracle buying Sun Microsystems), the odds are not in EMC-Dell’s favor. (Fortune)

 

 

IN CASE YOU MISSED IT

Prince was an early fan of the web but grew to hate what it did to artists by Mathew Ingram

Nordstrom turns to Snapchat to win over millennials by Phil Wahba

Flight canceled? This app could book you a new one quickly
by Donna Fuscaldo

Google Search will soon include live TV listings by Tom Huddleston, Jr.

Amazon shuts down flash sales site by Leena Rao

The FBI paid $1.3 million to crack the San Bernardino iPhone
by Don Reisinger

Exclusive: Eventbrite has a new CEO by Michal Lev-Ram

Barclays analyst doesn’t believe iPhone 7 will be a ‘must have’
by Don Reisinger

Woz thinks Apple should pay more taxes by David Meyer

Sony sees eSports potential for PlayStation VR by John Gaudiosi

ONE MORE THING

Is Ultimate Software’s CEO worth his paycheck? Scott Scherr’s compensation tripled last year to more than $38 million. That’s more than Microsoft CEO Satya Nadella makes. Bloomberg reports that some investors think it’s far too much, even though the company’s stock has increased more than 1,000 times since 2008 to almost $197 per share. (Bloomberg)

MARK YOUR CALENDAR

Qlik Qonnections: Business intelligence trends. (May 1-4; Orlando)

EMC World: What’s next for digital business. (May 2-5; Las Vegas)

The Marketing Nation Summit: Marketo’s annual conference. (May 9-12; Las Vegas)

Digital Transformation: Forrester’s new forum for digital business leaders. (May 10-11; Orlando)

Salesforce Connections: Cloud marketing trends. (May 10-12; Atlanta)

Coupa Inspire: Rethink the possible. (May 10-12; San Francisco)

Hub16: Smarter planning apps for numbers-driven companies. (May 10-12; San Francisco)

Relate Live by Zendesk: Customer engagement strategies. (May 11-12; San Francisco)

Knowledge16: ServiceNow’s service management conference. (May 15-20; Las Vegas)

SuiteWorld: NetSuite annual customer gathering. (May 16-20; San Jose, Calif.)

Fortune Brainstorm E: The intersection of technology, energy, and sustainable business. (May 16-17; Carlsbad, Calif.)

SAPPHIRE Now: SAP’s annual conference. (May 17-19; Orlando)

Gartner Digital Marketing: How to move from vision to execution. (May 17-19; San Diego)

Gartner Supply Chain Executive: Creating a value chain. (May 17-19; Phoenix)

Google I/O: For creative software coders. (May 18-20; Mountain View, Calif.)

MuleSoft Connect: Enable your digital transformation. (May 21-25; San Francisco)

Twilio Signal: The developer conference for communications. (May 24-25; San Francisco)

Apple Worldwide Developer Conference: The Apple developer ecosystem. (June 13-17; San Francisco)

Red Hat Summit: The premier open source technology event. (June 27-30; San Francisco)

MongoDB World: For giant ideas. (June 28-29; New York)

Inforum: Infor’s annual user conference. (July 10-13; New York)

Fortune Brainstorm Tech: The world’s top tech and media thinkers, operators, entrepreneurs, innovators, and influencers. (July 11-13; Aspen, Colo.)

Sage Summit: For fast-growth businesses. (July 25-28; Chicago)

Workday Rising: Talent management in the cloud. (Sept. 26-29; Chicago)

Microsoft Ignite: Product road maps and innovation. (Sept. 26-30; Atlanta)

Oracle OpenWorld: The future of the cloud is now. (Sept. 18-22; San Francisco)

Gigaom Change: 7 transformational technologies. (Sept. 21-23; Austin)

Dreamforce: The Salesforce ecosystem gathers. (Oct. 4-7; San Francisco)

Grace Hopper Celebration of Women in Computing: The world’s largest gathering of women technologists. (Oct. 19-21; Houston)

Drone World Expo: Commercial apps for unmanned aircraft. (Nov. 15-16; San Jose, Calif.)

This edition of Data Sheet was curated by Heather Clancy.
@greenTechlady
heather@heatherclancy.com