Apple Earnings Will Tell Us Whether to Expect Happy Holidays or a Long Winter

               

Apple will unwrap its outlook for the holiday shopping season on Tuesday, and analysts expect growth—just nothing on par with last year's bonanza.

The holiday quarter is projected to bring Apple sales of $77 billion and profit of $18.1 billion, or $3.22 a share, according to data compiled by Bloomberg. That would work out to sales growth of 3.4 percent, which is a far cry from the 30 percent Apple put up last holiday season.

During the critical October to December period, Apple generates more sales and profit than any other time of the year. The upcoming forecast will be closely watched because Apple is facing questions about whether the latest iPhones can match the record-setting pace of last year’s models, which included the long-overdue addition of bigger screens. Investors’ doubts about growth have sent the stock down 12 percent since the last earnings report.

The company calibrates its product-release schedule to take full advantage of the year-end holiday rush. This year’s refreshed lineup includes the new iPhone 6S and 6S Plus with 3D Touch screens, remodeled Apple TV set-top boxes that went on sale Monday for more than twice as much as their predecessor, and updated iMac computers with sharper displays.

But Apple’s business is increasingly tied to one product: the iPhone. Sales of the iPad have slowed, and newer products such as the Apple Watch haven’t become mainstream hits yet. Dialog Semiconductor, an Apple supplier, reported lackluster earnings and gave a disappointing fourth-quarter forecast on Monday, which RBC analyst Amit Daryanani said has a “negative implication” for iPhone sales. Apple’s stock fell 3.3 percent in New York. Gene Munster, an analyst with Piper Jaffray, wrote in a research note last week that iPhone sales for the holiday quarter are the “biggest investor concern” facing Apple.

The new handsets, released Sept. 25 in a dozen markets, led to opening-weekend salesof 13 million units, topping last year’s record of 10 million. Sales were boosted by availability in China, which wasn’t in last year’s debut. Apple Chief Executive Officer Tim Cook is banking on the world’s most populous country to help make up for slowing sales in other regions.

Visiting the country last week, Cook posed for pictures on the Great Wall and attended the opening of a new retail store in the port city of Dalian. Greater China, which also includes Hong Kong and Taiwan, accounted for 27 percent of Apple’s revenue in the quarter that ended in June, more than all of Europe. Cook has said the region will eventually be Apple’s biggest market.

For the fiscal fourth-quarter results coming on Tuesday, analysts on average expect Apple to report net income of $10.8 billion, or $1.88 per share, and sales of $51 billion, an estimated increase of 21 percent.

JP Morgan to launch a rival to Apple Pay called Chase Pay

Bank has already signed a deal with a group of major retailers including Wal-Mart, the largest US retailer, and Best Buy

JP Morgan Chase is to launch its own competitor to Apple Pay that will allow consumers to pay retailers using their smartphones in stores.

The largest US bank, which has already won the endorsement of a major group of merchants, is the latest company to try to profit from the prevalence of smartphones, which many financial executives believe will one day be consumers' preferred way to pay for everything from milk and eggs at the supermarket to a rental car at an airport.

The companies that figure out how to convince consumers to stop pulling credit cards out of their wallets and start paying with their phones stand to earn vast sums by taking a percentage of the trillions of dollars that consumers spend annually.

No clear front-runner has emerged in the business yet. JP Morgan believes its smartphone application, known as Chase Pay, has one key advantage: the caliber of retailers it has brought on board, Gordon Smith, chief executive of the bank's consumer business, said.

BP profits hit by lower oil and gas prices

                             

Oil giant BP has reported a fall in profits due to lower oil and gas prices.

Replacement cost profit between July and September was $1.23bn (£802m), compared with $2.38bn a year earlier. Total revenue was $55.9bn against $94.8bn a year ago.

The oil price dipped below $50 a barrel in the quarter, while it was above $100 for much of the same period last year.

Prices have dropped due to oversupply and weaker demand.

On an underlying basis, profit for the third quarter was $1.8bn, down from $3bn a year earlier but higher than analysts' estimates of $1.2bn. BP's share price rose 1.8% in early trading, reflecting these higher-than-expected earnings.

Replacement cost profit is a standard measure used in the oil industry that takes into account the price of oil.

Reflecting the tougher environment across the industry, the company's capital expenditure for the period fell to $4.3bn, down from $5.3bn. BP continued to rein in spending estimates for 2015, which it now expects to be about $19bn compared with the $24bn-$26bn forecast a year ago.

The company also announced that the total cost of the Deepwater Horizon oil spill in the Gulf of Mexico in 2010 would reach $55bn, higher than previous estimates.

Earlier this month, the company said it had agreed to pay $20bn to settle claims in the US.

To meet these costs, it is selling off assets, and expects to divest $10bn this year, with another $3bn-$5bn in 2016.

BP also said it was maintaining its dividend at 10 cents a share.

Apple sued for $5m over new Wi-Fi Assist on iOS 9

                            

Apple has been sued for $5m by a Californian couple who claim that the new WiFi-Assist feature has been eating up their 3G data without their knowledge.

The class action lawsuit accused Apple of "downplaying" the charges that you could accumulate as the result of a new default feature on the new iOS9 software.

The Wifi-Assist feature which was introduced in the iPhone software update iOS 9 last month, is designed to automatically switch your handset's connection from Wi-Fi to cellular data when in an area with poor connection.

According to the lawsuit, which was first discovered by Apple Insider, the couple William Scott Phillips and Suzanne Schmidt Phillips, had to pay excess data charges on both of their iPhone 5s phones after upgrading to iOS 9.

Although Apple did recently create a new support page on its website explaining the implications and details of the Wi-Fi Assist feature in response to complaints about data guzzling, the lawsuit claims that the explanation was too late in their case, and continued to underestimate the potential costs that could be incurred.

According to the complaint, Apple has been sued for unfair competition, false advertising and negligent misrepresentation under California law.

As the data allowance in some phone contracts can be as low as 500MB or 1GB, having the feature activated could technically result in higher bills for users if you use your iPhone to stream music and videos, download and run certain apps and Facetime often.

"With Wi-Fi Assist, you can stay connected to the Internet even if you have a poor Wi-Fi connection. For example, if you're using Safari with a poor Wi-Fi connection and a webpage doesn't load, Wi-Fi Assist will activate and automatically switch to cellular so that the webpage continues to load. You can use Wi-Fi Assist with most apps like Safari, Apple Music, Mail, Maps, and more," the new support page reads.

"Because you'll stay connected to the Internet over cellular when you have a poor Wi-Fi connection, you might use more cellular data. For most users, this should only be a small percentage higher than previous usage."

Bing adds $1 billion to Microsoft's revenue

                             

Microsoft Bing has emerged as the true underdog of search engines.

Chief Financial Officer Amy Hood said Thursday that Bing had finally achieved profitability in its firstfiscal quarter of 2016, and that the search engine contributed more than $1 billion to Microsoft's revenue for this quarter.

The last time Microsoft broke down the numbers on Bing, back in 2011, it was bleeding a billion dollars a quarter. And it has remained unprofitable over the last four years.

People were perplexed as to why Microsoft (MSFT, Tech30) kept pouring money into a seemingly dead investment. However, the tech giant now has results to show: Microsoft's search revenue, excluding traffic-acquisition costs, grew 29%.

Much of Bing's success can be attributed to its subtle presence. Not many people may actively log on to Bing, but it's everywhere.

Obviously, Microsoft products push Bing -- Internet Edge and Cortana, the virtual assistant on Windows phones, search through Bing. Plus, Windows 10 was more positively received than it's predecessors, which has helped boost Bing's success.

About 51% of Yahoo (YAHO) searches are powered by Bing. In the last couple of years, Apple(AAPL, Tech30) bid adieu to Google (GOOG) and now the tech giant uses Bing for Siri and the spotlight function on Macbooks as well.

Market share is key in search: With it, advertisers flock to you, and you can charge high rates for ads. But without it, search is a very expensive business.

Bing crossed the 20% market share threshold in search for the first time in March, and currently holds 20.7% of the desktop search engine market share, according to comScore's September 2015 data. Although it trails far behind Google at 63.9%, it trumps Yahoo, the third-best search engine, by 8.1%.

Microsoft posted revenue of $20.4 billion overall for the quarter, down 12% from the same quarter a year ago.

China's Xiaomi's is changing the U.S. too

                                       

Xiaomi is the most important phone manufacturer you've never heard of.

In the rich world, dominated by Apple and Samsung and where even fading brands such as Nokia and Blackberry remain familiar, Xiaomi (pronounced like the "show-" in shower, plus "me") is still largely unknown.

Yet this firm, only 5 years old, has already become a formidable supplier of smartphones in its home market of China (the world's largest), and has begun a remarkably successful campaign of international expansion.

As the firm gets ready to announce its newest model, the Mi5, next week, it is worth tuning in, because more than any company other than Apple, Xiaomi will show us where smartphones -- which is to say the mobile, networked computers we all have in our pockets -- are going worldwide.

China and the United States are the two most important economic powers in the world, and that goes double for technology.

For three decades, that relationship could be summed up as "invented here, produced there." (The iPhone box may say "Designed in California," but it is made in Shenzhen, China.) Xiaomi is one indicator among many that that relationship is over. Its phones are well-designed and cheap, and, more importantly, the firm has been engineered to rely on the Internet, allowing it to build one of the leanest manufacturing and sales operations the world has ever seen.

In a half decade, Xiaomi has gone from a startup focused on making a new mobile phone interface to beating Samsung as the No. 1 phone vendor in the largest market in the world last year.

Xiaomi's products are so popular in China that it has become the third largest ecommerce firm there, just selling its own products. As 2014 closed, the company was valued at $45 billion, an increase in value of something like 18,000% since its first round of fund-raising. It is, by several metrics, the most valuable startup ever.

Xiaomi is widely referred to as the "Chinese Apple," a phrase that carries both a sense of awe at its design prowess and derision at its habits as a design copycat. Both reactions are warranted -- some of their phones look like little else on the market (the Mi3), while others are almost-copies of iPhones (the Mi4).

The firm was founded in Beijing in 2010 by Lei Jun, a computer scientist and charismatic serial entrepreneur now in his mid-40s, who is predictably, often compared to Steve Jobs, both for his energy and brilliance, and for his Jobsian taste in clothes and product launches.

Apple's new billion-dollar business

As if Apple needed the money, Tim Cook is about to add yet another billion-dollar business to the company's war chest.

                                

Apple Music now has 15 million subscribers, Cook announced at a Wall Street Journal technology conference in Laguna Beach, California, on Monday evening. Of those 15 million, 6.5 million are paying customers (the other 8.5 million are still on Apple's free three-month trial). Subscribers pay Apple $10 a month for access to unlimited streaming music.

Do the math: 6.5 million times $10 a month times 12 months in a year = $780 million.

That's not quite a billion, but Apple only needs to convert 1.8 million more of the free-trial subscribers to reach that mark.

And Apple Music, which launched in June, would join the iPhone, iPad, Mac, iTunes and Apple TV as the company's billion dollar businesses. Apple Watch will likely reach that mark this year too.

That's not bad for a brand new streaming music service that is taking on a giant field of strong incumbents that includes Spotify, Pandora (P), Amazon (AMZN, Tech30), Google (GOOGL, Tech30)and a sea of other contenders. Apple Music's success is particularly impressive, considering themixed reviews that Apple Music has received, particularly when compared with Spotify.

"This is completely at odds with the feedback that the service has received where Spotify offers a better experience with a much richer feature set at the same price," noted Richard Windsor, analyst at Edison Investment Research.