It’s a day of financial reckoning in the technology industry. From multiple perspectives, investors are checking their exuberance on tech. These are tweaks more than corrections, and very likely a good sign. Elsewhere the world is a crazy place; who would have guessed the tech world would provide a dose of sanity?
* The Wall Street Journal was the first to report that Snap, the “camera” company parent of messaging service Snapchat, will price its initial public offering at the low end of its expected range. Snap confirmed it will seek a valuation of merely $19.5 billion to $22.2 billion, compared to the high of up to $25 billion it had originally indicated. My “merely” was intended to be humorous. Snap has Twitter-like user growth—not a good thing—and faces fierce competition from Facebook. More, prospective investors in Snap’s IPO have done a remarkable job of talking down its valuation prior to the offering. Whatever happens, Snap is an extraordinary company. Soon we’ll find out what it’s worth.
* Multiple news outlets report that Yahoo will shave approximately $300 million from the $4.8 billion it agreed to accept from Verizon for its core business. Getting this deal done is a high priority for Yahoo, whose data leaks have become more embarrassing with passing time. That Verizon wants to complete the deal is a testament to Yahoo’s business. It’s like a homebuyer who discovers mold in a fixer-upper and still wants to take ownership anyway—just not at the agreed-upon price.
* Finally, as Jen Wieczner writes on Fortune.com, three activist hedge funds have accumulated a small position in San Francisco software company Salesforce.com. These firms specialize in buying shares of companies whose stock prices are down on the hopes their influence or sometimes merely their presence will encourage companies to shake things up. (One of the funds, Jana Partners, took a stake in Time Inc., parent of Fortune.) Wall Street has been kind to Salesforce in the past, but its patience isn’t unlimited. Salesforce hasn’t earned a full-year profit since 2011. That, obviously, can’t stand.
BITS AND BYTES
Cisco posts its fifth straight down quarter, but few seem to mind. Revenue for the company’s core routing and switching businesses declined 5% and 10%, respectively, during the second quarter. But Wall Street responded favorably to CEO Chuck Robbins’ optimistic comments about the potential for recurring software subscriptions—which will get a big boost from its $3.7 billion acquisition of software monitoring firm AppDynamics. (Fortune)
Lenovo is having a tough time making money. The company chairman is hoping for profits in the smartphone business this year, but losses for the data center technologies it inherited from IBM will continue much longer. You can expect a restructuring of the latter effort. (Wall Street Journal)
Samsung’s vice chairman Jay Y. Lee is back in court again. A South Korean judge is considering another arrest request by prosecutors who believe the prominent executive and at least one of his colleagues are linked to the bribery and corruption scandal surrounding the country’s impeached president. Their first attempt to have Lee arrested last month failed. (Reuters)
Google hires experienced wireless CEO for home Internet initiative. The company brought on Gregory McCray to lead the six-year-old Fiber effort, which is being retooled as parent company Alphabet tightens its financial controls. Plus, you can expect more job cuts. (Fortune)
Watch out, LinkedIn. Facebook is rolling out a service that lets companies recruit job applicants from their profile pages on the social network. Technically, you could already do this, but the service is now tightly integrated with Messenger so it’s easier for applicants to send in their resumes. (Fortune)
Microsoft’s cloud service is gaining even more traction. Adoption of Azure jumped appreciably in a survey of IT professionals released on Wednesday—it was used by about one-third of them, compared with 20% last year. Google’s cloud offering is also picking up momentum, the data suggests. (Fortune)
3D printing company MakerBot is laying off more employees. The cuts, which will affect about one-third of its workforce, underscore slow growth in the consumer segment of this market. (Fortune)
Secretive startup Magic Leap is facing a gender discrimination lawsuit. The papers filed this week by the augmented reality software company’s former vice president of strategic marketing, Tannen Campbell, describe a “macho bullying atmosphere” that is hostile to female employees. (Fortune)
Why Apple may still need a big media deal. Apple executives last month pledged to double the size of the company’s $24 billion-a-year services business in four years. That has puzzled some analysts because growth in services revenue—which includes Apple’s cut on everything from songs and movies bought at the iTunes Store to apps and Apple Music subscriptions—has actually slowed.
Since revealing the target, Apple CEO Tim Cook and other top executives have been all over the map in discussing their strategy. The company never reveals future products, and it would be foolish to name M&A targets before negotiating a deal. But even with those limits, the message has been a bit messy.
It could be that Apple had mapped out multiple paths, with acquisitions needed only if optimistic hopes for in-house growth fall short. That sounded like the takeaway from CFO Luca Maestri, as he offered some new hints on Tuesday speaking at a Goldman Sachs conference in San Francisco. Fortune‘s Aaron Pressman weighs in.
IN CASE YOU MISSED IT
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Why H1-B Visas Aren’t So Great for Silicon Valley Workers, by Jeff Bukhari
Etsy Wants to Be Your One-Stop Shop for Everything DIY, by Rachel King
How Apple Stores Were Almost Apple Cafes, by Don Reisinger
Amazon Alexa Can Now Add Events to Your Outlook Calendar, by Barb Darrow
Twitter Is Having an ‘Arab Spring’ Moment, by Jeff John Roberts