Tag Archives: googl

Twitter Video Service Must Dodge Facebook ‘Torpedo’ In 2016

Twitter ( TWTR )’s  live video broadcast app Periscope will have to dodge a big “torpedo” from rival Facebook ( FB )’s live video service, Edison Research said Thursday. And Twitter must offer more than microblogging and instant messaging services if it ever wants to significantly expand its user base and see the kind of social network growth being enjoyed by Facebook, LinkedIn ( LNKD ) and Alphabet ( GOOGL )-owned Google, wrote Edison analyst Richard Windsor in a research report following up on Twitter’s Q4 earnings late Wednesday.  “ In the last three months, Twitter has underperformed its rivals — Facebook, LinkedIn and Google — all of whom have seen the size of their user base expand,” wrote Windsor, who said Twitter currently appeals mainly to a niche group of hardcore users, including marketing reps and journalists. Beyond its microblog, Windsor said Twitter should widen its use of Periscope, the live video broadcast app it purchased in January. “This is a priority for Twitter in 2016 and it clearly intends to develop this service into a go-to place for watching live broadcasts,” he said. “If it can do this successfully, then it will be able to emerge as a competitor in the media consumption space, which is where Facebook and Google are currently seeing strong revenue growth, but Periscope needs to dodge Facebook’s live video torpedo.” Facebook’s deep pockets will be a challenge to Twitter, Windsor said. “The problem is that Facebook is competing directly in this space and has far more resources upon which to rely to ensure that Periscope fails to really gain traction,” Windsor said. Twitter Core Problems: Usability, Accessibility While Periscope is a long way from its goal of being “a major force in video broadcast,” Windsor said, “If it can become a ‘go-to’ place for live video, then we suspect that the user base would once again start growing. This would have a big effect on both revenues and the valuation of the company.” Macquarie Capital analyst Ben Schachter also says that 2016 will be a critical year for Twitter, which saw its price targets cut by at least nine analysts Thursday and its stock fall  after the company said user growth slowed in Q4, for the fourth consecutive quarter, raising concerns that usage has peaked. “We think that it needs to fix its core usability/accessibility problems first,” Schachter wrote. “We broadly agree that these are the correct focus areas for Twitter, particularly the potential for video. Having said all that, obviously execution has been an issue and we want to see some real progress. “In some ways, this should be simple: Facebook has provided a compelling model for usability and monetization, but Twitter needs to execute.” In December, Facebook opened its live video streaming service to all users in a bid to take on Twitter-owned Periscope and Meerkat. Facebook said the service is being tested in U.S. with a “small percentage of people” on iPhones, after originally releasing a live streaming feature earlier this year for celebrities. Twitter stock hit a new all-time low on Thursday, at 13.91 and was down more than 4% in midday trading in the stock market today , near 14.40. Twitter has remained below its IPO price of 26 since mid-December, sparking buyout talk. Shares of Alphabet, Facebook and LinkedIn were all down roughly 1% midday Thursday, in another rough day for the stock market overall.

TV Auction View: AT&T, VZ Top Bidders; Comcast In; Google, AMZN Out

JPMorgan is bullish on the upcoming “Broadcast Incentive Auction,” which will free up prime, low-frequency airwaves owned by local TV broadcasters for wireless data services. Naysayers continue to contend that the Federal Communications Commission faces many challenges in pulling off a successful auction, which for now is scheduled to start late next month. One risk is that broadcasters might drop out of the auction if they determine that bidding prices are disappointing. The auction is key for T-Mobile US ( TMUS ), which needs spectrum.  AT&T ( T ) and Verizon Communications ( VZ ) own most of the available low-frequency spectrum, in which waves travel longer distances, among other advantages over higher-frequency spectrum. JPMorgan expects at least 70 MHz of airwaves, and possibly more, to be auctioned. The key is that broadcasters that own two local TV stations will sell off airwaves from one and keep spectrum from the other, says JPMorgan. “We estimate that 70-100 MHz will be auctioned, for $25 billion to $35 billion,” said JPMorgan in a research report. Twenty-First Century Fox ( FOXA ) and  CBS ( CBS ) are expected to sell airwaves in some markets. While Comcast ’s ( CMCSA ) cable company is a potential bidder , it also owns media firm NBCUniversal, a likely seller of airwaves. Smaller local TV station owners include  Sinclair Broadcast Group ( SBGI ) and  Gray Television ( GTNA ). “We view FOX and CBS as best positioned to monetize duopoly affiliates in large markets, followed by Comcast and Sinclair,” said JPMorgan. Walt Disney ( DIS ), which owns ABC, is not expected to sell airwaves. Private investment firms such as Columbia Capital are eyeing the auction, says a Washington Post report . JPMorgan predicts cable TV firms will show up, but it doubts that Internet giants will bid. “We expect that AT&T, Verizon, and T-Mobile will be the biggest bidders ($21 billion-$30 billion cumulative spend), that Sprint ( S )/ SoftBank ( SFTBY ) will not register, and Dish Network ( DISH ) will at most be an opportunistic buyer,” said the JPMorgan report. “We estimate Comcast, potentially in partnership with other cable companies, could spend $3 billion-$5 billion, and private equity funds in aggregate could spend $1 billion-$2 billion. “We do not expect digital economy players like Alphabet -Google ( GOOGL ) or Amazon.com ( AMZN ) to bid, though they can never be ruled out.”

Are We Near Peak Twitter? Usage Weakens Again Despite New Features

Twitter ( TWTR ) reported late Wednesday that user growth slowed for the fourth consecutive quarter in Q4 as it guided Q1 revenue below consensus estimates, raising concerns that usage may be peaking. The average monthly active user base rose 9% year over year in Q4 to 320 million. Wall Street had expected Twitter to report a 12% rise in users to 323 million. Growth has cooled from 18% in Q1, to 15% in Q2 and 11% in Q3. Excluding “SMS Fast Followers,” monthly active users rose 6% annually to 305 million but fell from 307 million in Q3. Adjusted earnings rose 33% to 16 cents a share. Analysts polled by Thomson Reuters had expected 12 cents. Revenue jumped 48% to $710.5 million, above the $709.9 million consensus expectation. Twitter sees Q1 revenue of $595 million-$610 million, below Wall Street views of $627.1 million. Shares declined 3% in late trading, after rising 4% in the regular session. User growth concerns have depressed Twitter stock, which sunk to an all-time low of 14.31 on Tuesday. Twitter’s report followed LinkedIn’s ( LNKD ) stock crash last Thursday after the professional networking firm gave guidance far below the Wall Street consensus estimate, while also reporting Q4 earnings that beat. The continued slowdown in Twitter usage came despite a series of new features it rolled out last year, including video tool Periscope and Moments. Earlier Wednesday, the social media network said it is testing a new feature that would make the microblog look a bit more like its No. 1 rival, social networking king Facebook ( FB ). ‘Few – If Any – Bright Spots’ Chilton Capital Management economist Samuel Rines told IBD via email that “the user metrics — the key to sustainable future growth — collapsed,” noting that active users fell in the U.S. and were flat internationally. “The decline in users was the truly disappointing part of the release,” he said. “And it is even more disheartening given that there is an election cycle, and (Republican presidential candidate) Donald Trump’s tweets should have been at least somewhat of a draw to the platform. There were few — if any — bright spots in the release.” Rines also directly attributed Twitter’s soft Q1 revenue guidance to its weak user growth. “It now becomes a conversation around whether we have seen peak Twitter usage,” he said. “And management will have a difficult—if not impossible job of proving otherwise without a sudden reacceleration in user growth. It’s tough to see how product usage accelerates—at least with the current product and rate of innovation.” On a call with analysts after the release, Twitter CEO Jack Dorsey said the company “saw some really promising growth with the test of the timeline (changes). We think there’s a lot of opportunity in our product to fix some broken windows and confusing aspects of our service that we know are inhibiting growth.” But user retention rates were positive in Q4, said Twitter CFO Anthony Noto on the call. “The retention rate of those users that we either resurrected or that we acquired new was strong. In fact, new monthly active users acquired through marketing efforts were performing better from a retention rate standpoint vs. new organic MAUs we acquired.” Limited Potential? “So, we will continue to integrate marketing into our strategy,” Noto added. “We are going to simplify the product, but we also have to clearly communicate its value. Marketing will play that role.” In an industry report on Wednesday before the release, Cowen and Co. analyst John Blackledge handed Twitter stock a price cut, to 17 from 26. Blackledge also he lowered revenue estimates for Twitter for 2016 through 2021. Advertising, which makes up 90% of Twitter’s total revenues, will “see continued deceleration over time,” RBC Capital Markets analyst Mark Mahaney wrote in a report last week. “Our concern for some time has been that Twitter’s lack of real-time commercial intent (a la Alphabet ( GOOGL )-owned Google) or detailed, authentic profiles (a la Facebook) will eventually limit Twitter’s growth potential.”