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Zynga Founder Mark Pincus Steps Down From Chief Product Officer Role

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Along with the company’s earnings release, Zynga announced that founder Mark Pincus would be stepping down from any operational duties and ceding his chief product officer title today. The company said that Pincus, who started the social gaming company in 2007, will remain chairman of the board.

The announcement comes about nine months after the company announced Pincus would step away from the CEO role and hand it over to longtime Microsoft executive Don Mattrick. Since then, the company has lost several executives and gone through a round of layoffs that cut its worforce by 15 percent, as Mattrick has tried to right the ship.

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Facebook Passes 1B Mobile Users, 200M Messenger Users In Q1

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Another mobile milestone for Facebook: the company reported in its Q1 earnings that it has now passed the 1 billion mark for monthly active users on phones and tablets. 1.01 billion to be exact. That is a sign of how mobile is approaching near-parity with desktop for Facebook: overall MAUs across both desktop and mobile totalled 1.28 billion.

That’s without Instagram users or those on Facebook Messenger, which in themselves are each now at over 200 million monthly users (Instagram was announced a month ago), the company pointed out during its earnings call.

Nor does it include WhatsApp users, nor what CEO Mark Zuckerberg referred to on the earnings call as “the third step” in its mobile strategy — a reference to its Creative Labs effort and apps like Paper “and other things that we might announce at some point,” he said. “It might take a few years” for usage of these to reach meaningful proportions compared to Facebook and the other, more established apps.”

Facebook’s daily active users on mobile are at 609 million for the quarter. Facebook defines a DAU as “a registered Facebook user who logged in and visited Facebook through our website or a mobile device, used our Messenger app, or took an action to share content or activity with his or her Facebook friends or connections via a third-party website or application that is integrated with Facebook, on a given day.”

(And a MAU is defined as “a registered Facebook user who logged in and visited Facebook through our website or a mobile device, used our Messenger app, or took an action to share content or activity with his or her Facebook friends or connections via a third-party website or application that is integrated with Facebook, in the last 30 days as of the date of measurement.” Hence the higher number as the metric catches more people.)

Interestingly, mobile-only users nearly doubled over a year ago and now stand at 341 million. Were Facebook to consolidate WhatsApp usage, and that of Instagram, with its wider mobile numbers, that figure would presumably shoot up to over 800 million, with WhatsApp making a timely announcement, just a day before its new owner’s quarterly earnings, that it has reached a milestone of 500,000 “regular, active users of WhatsApp.”

“We’ve grown fastest in countries like Brazil, India, Mexico, and Russia, and our users are also sharing more than 700 million photos and 100 million videos every single day,” WhatsApp noted in the blog post announcing the news.

The news that Facebook has passed 1 billion users, rising 34% in a year, is on one hand a mark of a relentless trend for the company — more and more people are accessing the social network on phones and tablets than on desktop computers, a trend that is only growing as Facebook pushes into more developing markets where handsets are often a user’s primary link to the Internet.

On the other hand, hitting 1 billion is a vindication of sorts: Facebook in the last quarter announced that it would fork out $19 billion on mobile messaging service WhatsApp to help it push deeper into connecting with and growing its mobile user base, and specifically into the kinds of markets where WhatsApp does well, emerging and fast-growing economies. Facebook is, in some regards, betting the house on mobile.

Monetizing mobile users

While we have yet to see how Facebook eventually decides to monetise its WhatsApp userbase, one area where it is already reaping some big rewards is in advertising on its existing products, specifically its Facebook itself.

Mobile ads continue to be a powerhouse for the company. They are now at 59% of all ad sales, equivalent to $1.4 billion. A year ago they made up 30% of all ad revenues. Facebook is expected to be announcing a mobile ad network at its F8 developer conference at the end of this month, and in the earnings call today COO Sheryl Sandberg confirmed “early testing” of such a network. (Note: it’s not the first time we’ve heard that one but apparently this may really, really be coming out now.)

Interestingly, it sounds like whatever future plans Facebook has for driving more mobile ads, it will not necessarily factor Instagram into the equation in a massive way, at least for now. “Instagram is a great advertising product because there are tons of demand and pictures are visually appealing. We have seen some great results,” Sandberg noted during the call, using a campaign from Levi’s with pictures of denim in outdoor space, as a sign of things to come. But that’s not at the expense of continuing to scale up the user base. “We don’t see the need or urge to ramp this,” she said in reference to adds. “We want to grow it slowly and deliberately.”

An app-tastic future

One thing that stood out during the earnings call, in terms of Facebook’s mobile future, is that whatever those levers will be for growth, it sounds like they will continue to remain native experiences. “There’s nothing wrong with HTML5… but both Apple and Google have made it easier to provide good experiences on their own platform,” Zuckerberg. “A large number of people access people from the mobile web so we are continuing to develop that but for the foreseeable future we will continue… to work on the native app experiences we have now.”

And the more established native app experiences are continuing to develop. Despite the WhatsApp acquisition, we may see more from Facebook’s pre-existing, in-house efforts, for example. “We have a lot more coming to Messenger in the first half of this year,” Zuckerberg noted a quarter ago — before the WhatsApp tsunami. No surprise, considering Messenger’s growth. It’s added about 150 million users in the last 15 months.

Indeed, Facebook’s been pushing Messenger much more aggressively of late. In November 2013 Facebook began shortcutting users from its main apps into Messenger if they had the standalone chat app installed, and if you chatted with someone who wasn’t using Messenger, you were given a link to invite that person to do so. Eventually, the plan appears to be to strip out chat from the main app to drive much more downloads of Messenger.

Additional reporting Josh Constine

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Apple Beats In Q2 2014 With $45.6B Revenue, $10.2B Profit And $11.62 EPS

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Apple has just released its fiscal Q2 2014 earnings, reporting $45.6 billion in revenue, $10.2 billion in net profit representing $11.62 per share. Compared to the year-ago quarter, it corresponds to a growth of 4.6 percent in revenue, and 15.2 percent in EPS.

According to Fortune, the consensus among analysts was for Apple to report earnings of $10.22 per share on $43.45 billion in revenue, with revenue very slightly declining and EPS very slightly growing year-over-year.

Guidance from its last earnings release forecasted between $42 billion and $44 billion in revenue, with gross margin between 37 percent and 38 percent. Over the past year, Apple’s own guidance has been much more accurate, with the upper end of the forecast very close to what it actually reported.

In other words, analysts and Apple itself all anticipated a flat quarter — flat revenue, flat gross margin, flat net profit, flat everything. This was mostly due to a slight decline in iPad sales and a slight increase in iPhone sales.

But this quarter is an exception. Apple performed better than anticipated. In particular, the iPhone was a big seller this quarter. It could come from better international performance, and especially in China.

Hardware

Apple sold 43.7 million iPhones, 16.4 million iPads and 4.1 million Macs in the quarter. Compared to Q2 2013, iPhone sales grew by 16.8 percent while iPad sales declined by 15.9 percent. Read all the details about hardware sales in our separate post.

“We’re very proud of our quarterly results, especially our strong iPhone sales and record revenue from services,” Apple CEO Tim Cook wrote in the release. “We’re eagerly looking forward to introducing more new products and services that only Apple could bring to market.”

International Revenue

China is one of the main reasons behind today’s performance. Apple has a hard time selling more devices in countries where it is already well established — it has to look elsewhere. Moreover, China Mobile recently added support for the iPhone. While Q1 is usually a very strong quarter for Apple, the company actually performed better in Q2 2014 compared to Q1 in China. Read more about this in our separate post.

Apple’s Financial Strategy

The company also made a few announcements regarding its financial strategy. First, it’s going to make a 7 for 1 stock split on June 1. It just added $30 billion to its share buyback program. And finally, the dividend was increased by 8 percent. It’s an impressive buyback program.

Apple has been pursuing an aggressive share buyback strategy. In February, the company repurchased $14 billion of Apple shares. Buying back your own shares is an alternative to issuing dividends and proves that you think that your stock is currently underpriced. So far, it doesn’t seem to have a significant impact on the stock price.

But today’s update just changed that. Shares jumped more than 7 percent following the announcement. Read about Apple’s financial strategy in our dedicated post.

Guidance

Apple’s own guidance for Q3 2014 predicts between $36 billion and $38 billion in revenue with a flat gross margin between 37 and 38 percent. The company reported $35.3 billion in revenue last year, so Apple is still a growing company.

Image credit: Bryce Durbin

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Apple Sold 44M iPhones, 16M iPads And 4M Macs In Q2 2014

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Apple shared its quarterly earnings results today, and for fiscal Q2 2014, the company moved 43.7 million iPhones, 16.3 million iPads and 4.1 million Macs. That compares to 51 million iPhones sold during the first fiscal quarter, along with 26 million iPads and 4.8 million Macs, but that was a holiday quarter, so a dip is to be expected. Last year during the same quarter, Apple sold 37.4 million iPhones, 19.5 million iPads and 3.95 million Macs.

Estimates for the quarter from Wall St. had pegged iPhone sales at 38.77 million units on average, with predictions of 19.36 iPads sold and 4.07 million Macs. iPod sales decreased from 5.63 million a year ago, too, and now sit at just 2.7 million for Q2 2014, but that’s not surprising given that they’ve been trending downwards a long time, and that Apple didn’t even update iPod touch hardware last year.

Apple’s year-over-year performance includes iPhone unit sales growth of 16.8 percent, while iPad sales slumped by about the same amount, with negative 16.4 percent growth. That iPad number represents a considerable miss, and will likely be cited by analysts as yet another sign that the tablet market might be nearing saturation. As for the Mac number, it’s just about flat from last year. The iPod tumbled even more than expected, but again, Apple doesn’t seem to be too concerned with that product category as it looks to other opportunities that are replacing it in terms of consumer interest, like the iPhone. Apple CEO Tim Cook cites the iPad mini being late last year as the reason for the big discrepancy (sales surged unnaturally during Q2 2013 as a result).

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Apple Announces 7 For 1 Stock Split, Boosts Its Dividend 8%, Adds $30B To Its Buyback Program

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As part of its earnings cycle today, Apple announced that it will increase its dividend 8 percent, add $30 billion to its share buyback program current to a total of $90 billion, and split its stock 7 for 1 in June.

The company’s dividend will also now rise yearly.

Apple is incredibly cash-rich, and has been under pressure to utilize its vast financial resources to reward its investors. Apple’s shares fell more than 1 percent in regular trading, and are up a minute fraction in after-hours trading.

The news matters, as Apple is helping set the tone for other wealthy tech companies. Apple is relatively new to having a dividend at all, so to see it push here could force other firms  to make similar actions. Microsoft has also been pressed to better shareholder returns.

Apple will now pay out around $11 billion in yearly dividend payments.

Given that much of its cash is sitting in foreign accounts that it doesn’t wish to repatriate to avoid massive tax fees, Apple will hit up the debt markets for more dollars, it being cheaper to use other’s domestic cash than its foreign reserves:

To assist in funding the program, the Company expects to access the public debt markets during 2014, both domestically and internationally, for an amount of term debt similar to what the Company raised during 2013. The management team and the Board of Directors will continue to review each element of the capital return program regularly.

Apple’s CEO Tim Cook called the changes a “significant increase” in Apple’s “capital return program.” Correct. And if investors were getting grumpy about his tenure, I doubt there will be much whining after all this.

Apple closed today at $524.75 a share.

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Parchment Launches College Recommendation Engine So Applicants Can Hedge Their Bets

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Hello, high school juniors. Stressed about graduation next year? Nervous about getting into college? Well Matthew Pittinsky, co-founder of the online education giant Blackboard and current chief executive at Parchment, has some advice for you: Treat your college applications like you would a stock portfolio and hedge your bets. And you can even use a new tool from Parchment to do so.

Today the company launched its college recommendation engine, a tool that takes all of the existing user information Parchment has about you — your GPA, your SAT and ACT scores, your extracurriculars and the list of schools you just have to attend — and crunches numbers to show you just how likely you are to get into those top-choice schools.

The new service also recommends schools that are similar to the ones already on your list. The idea is to diversify your portfolio of would-be colleges to ensure that you get into at least one or two of the schools that’d be a good fit — all while reducing the total number of applications you have to fill out. Because, let’s face it, filling out college applications sucks. It sucked in 1994 when I had to do it and it sucks now. (At least I assume it sucks. Thankfully I haven’t applied to anything other than a job since 1998.)

“We see more and more students applying to more and more colleges,” Pittinsky says. “But, while students apply to more colleges, the colleges are accepting the same number of kids.”

Statistically, the service isn’t perfect. It’s based on the total number of users that are on Parchment. So, in some cases that sample size can be limiting. So far, the company has 1,000 college listings for potential applicants. In cases where the data isn’t there to give would-be applicants a sense of their success or failure in an application, the company’s web site will make that clear, Pittinsky says.

The point is that students won’t have to apply to 10 or 12 schools if they use Parchment’s service, Pittinsky says. Instead, students can target their applications to the schools that are most likely to accept them — based on Parchment’s calculations of students with similar profiles who have been accepted or rejected by the schools on the list.

Fair warning: Some schools, particularly smaller liberal arts schools that put more weight on written essays or personal interviews, don’t align neatly with the company’s predictive analytics.

The company is still going gangbusters with its core business of providing certifications, credentials, transcripts and diplomas to the folks that need them, Pittinsky says.

That was why the company had no trouble raising an additional $10 million tranche for its latest round.

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