November 27, 2020

Ad Revenue From Mobile for Pandora Increases

Pandora said it had $157.4 million in revenue for the quarter ending in July, up 55 percent from the same period a year ago.

The ad revenue Pandora collects from mobile devices, where the majority of its 71.2 million active users do their listening, has also shot up quickly. It made $116 million from these ads in the quarter, up 92 percent from a year ago. At that time the company was charging $22.17 for every 1,000 listening hours served to mobile devices, but last quarter that rose to a high of $33.90.

“Ninety-two percent growth on mobile growth to $116 million is pretty much crushing it,” Joseph J. Kennedy, the company’s chief, said in an interview after Pandora announced its earnings.

Pandora also reported a success in another closely watched figure: its “content acquisition” costs, which include royalties to music companies. For the quarter, it paid $81.9 million, or 52 percent of its revenue, on these costs, its lowest ratio in almost two years.

Since bottoming out in November, the company’s stock price has increased more than 200 percent, and some analysts have recently given Pandora optimistic reviews. But the imminent arrival of Apple’s own radio feature and Pandora’s growing expenses continue to worry investors.

Pandora’s stock closed at $21.71 on Thursday, up 1 percent for the day, but it fell more than 6 percent in after-hours trading.

In a conference call with journalists and investors, Pandora announced that it had recently spent $8 million on “a broad patent portfolio” from Yahoo.

Pandora also announced a policy change that may encourage more use of the service. On Sept. 1, it will drop the 40-hour monthly limit for free listening on mobile devices, which it instituted in March as part of an effort to reduce royalty expenses.

This article has been revised to reflect the following correction:

Correction: August 22, 2013

An earlier version of this article misstated the unit for which Pandora charged $22.17. It is every 1,000 listening hours, not every 1,000 ads.

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Google Acquisition of Motorola Delayed in Europe

BRUSSELS — European antitrust regulators have suspended their investigation into Google’s acquisition of Motorola Mobility, a maker of smartphones, until Google provides additional evidence in the case, the European Commission said Monday.

Google needed to supply “certain documents that are essential for the evaluation of the transaction,” Amelia Torres, a spokeswoman for the commission, said. “Once we have all the documents, we’ll restart the clock.”

Ms. Torres declined to give any details about the nature of the documents at the center of the latest tussle between Google and European regulators.

Google already is trying to fend off a separate investigation by the commission into whether the company has abused its dominant position in online search and advertising.

Google filed late last month for European clearance to complete the deal with Motorola, worth $12.5 billion.

With its purchase, Google would obtain a portfolio of patents that could give it an impressive defense against infringement lawsuits.

But the acquisition could also aggravate antitrust concerns by further bolstering Google’s strength in the markets for mobile search and advertising.

“We’re confident the commission will conclude that this acquisition is good for competition and we’ll be working closely and cooperatively with them as they continue their review,” Al Verney, a spokesman for Google, said.

Such requests were “routine,” he said.

Joaquín Almunia, the E.U. competition commissioner, had been scheduled to decide whether to clear the transaction, or to take a few more months to review the deal for antitrust concerns, by Jan. 10.

The U.S. Justice Department has already sent Google and Motorola Mobility a request for additional information, lengthening the U.S. review process.


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DealBook: Rio Tinto and Mitsubishi Raise Bid for Coal & Allied

Rio Tinto and the Mitsubishi Corporation upped their offer to acquire all of Coal Allied to roughly $131 a share, from $128, in a deal that values Coal Allied, an Australian mining company, at around $11.6 billion.

The improved price, which comes a few weeks after the first proposal, represents a 39 percent premium to Coal Allied’s closing price before the suitors initially approached the company about an acquisition. The directors of Coal Allied have recommended the deal.

Rio Tinto and Mitsubishi own 75.7 percent and 10.2 percent of Coal Allied, respectively. After the deal closes, they would own 80 percent and 20 percent, respectively.

The Coal Allied deal is the latest in a flurry of activity around Australian miners.

Earlier this week, Glencore, the commodities giant, moved to acquire the remaining shares of Minara Resources, a nickel producer. Peabody Energy and ArcelorMittal made a hostile bid for Macarthur Coal.

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DealBook: Google to Buy Motorola Mobility for $12.5 Billion

Jin Lee/Bloomberg NewsThe Motorola Droid X.

9:16 a.m. | Updated

In a bid to strengthen its mobile business, Google announced on Monday that it would acquire Motorola Mobility Holdings, the cellphone business that was split from Motorola, for $40 a share in cash, or $12.5 billion.

The offer — by far Google’s largest ever for an acquisition — is 63 percent above the closing price of Motorola Mobility shares on Friday. Motorola manufactures phones that run on Google’s Android software.

Android has become an increasingly important platform for Google, as global smartphone adoption accelerates. The platform, launched in 2007, is now used in more than 150 million devices, with 39 manufacturers.

The acquisition would turn Google, which makes the Android mobile operating system, into a full-fledged cellphone manufacturer, in direct competition with Apple.

“This is an emphatic exclamation point that Google is a mobile company,” said Ben Schachter, an analyst with Macquarie Capital. “This is clearly a defensive deal, they were backed in a corner and they had to protect the Android platform.”

The deal answers a big question about Google’s next strategic step in wireless. Google has been battling with Apple and Microsoft over patents.

Last month, Apple and Microsoft led a consortium of technology companies in a $4.5 billion purchase of roughly 6,000 patents from Nortel Networks, the Canadian telecommunications maker that filed for bankruptcy in 2008. Google, which lost out in the bidding, criticized the deal as an anticompetitive strategy. Several weeks later, Google acquired more than 1,000 patents from I.B.M.

Motorola holds more than 17,000 patents.

While the acquisition will move Google directly into the telecommunications hardware business, Larry Page, Google’s chief executive, said in a blog post that “this acquisition will not change our commitment to run Android as an open platform. Motorola will remain a licensee of Android and Android will remain open. We will run Motorola as a separate business.”

Still, the deal is certain to attract significant antitrust scrutiny. The Federal Trade Commission is already investigating Google’s dominance in several areas of its business. The company has agreed to pay a $2.5 billion reverse termination fee, if it walks away, and Motorola will pay a $375 million break-up fee if it takes another offer, according to a person close to the transaction, who was not authorized to speak.

In a conference call on Monday morning, Google said it was confident that it will be able to win regulatory approval, since the deal will ultimately improve competition in the smart phone market.

“We think this is a competitive transaction,” David Drummond, the company’s chief legal officer said. “This is not a horizontal transaction, Google has not materially been in the handset business.”

The acquisition of a major handset maker may still pose a significant challenge to the search giant, which has not specialized in manufacturing or marketing of smartphones. Last year, it closed down the online store for its first Google-branded phone, the Nexus One, citing the store’s underwhelming performance. A Motorola tie-up may also irk other phone manufacturers, like Samsung and HTC, which will now be competing directly with Google.

“Can they convince their competitors that Motorola will truly operate as a standalone business?” Mr. Schachter said.

And while Google has made dozens of acquisitions in recent years, most of them have been for less than $1 billion — despite a current war chest of some $40 billion in cash. On the company’s official blog, Mr. Page said Google was purchasing the handset maker to bolster its Android mobile operating system and increase the number of patents it owned.

Android accounted for 43.4 percent of smartphone sales in the second quarter, according to Gartner Research, a major increase from the year ago period, when it made up about 17 percent of sales.

“Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anticompetitive threats from Microsoft, Apple and other companies,” Mr. Page said.

Carl C. Icahn, Motorola Mobility’s second-largest shareholder, had urged the company last month to “explore alternatives regarding its patent portfolio to enhance shareholder value.” Mr. Icahn owns 9.03 percent of Motorola Mobility.

On Monday, he applauded the transaction, calling it “a great outcome for all shareholders of Motorola Mobility, especially in light of today’s markets.”

Lazard and the law firm of Cleary Gottlieb Steen Hamilton advised Google. Frank Quattrone’s investment bank, Qatalyst Partners, Centerview Partners and the law firm Wachtell, Lipton, Rosen Katz advised Motorola Mobility.

The acquisition has been approved by both boards.

Michael J. de la Merced contributed reporting.

This post has been revised to reflect the following correction:

Correction: August 15, 2011

Because of an editing error, an earlier version of this article referred incorrectly to Google’s acquisition of patents from I.B.M. The purchase price was not disclosed.

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HSBC to Announce 10,000 Job Cuts

LONDON — HSBC, Europe’s biggest bank, plans to announce thousands of job cuts on Monday as part of a wide-ranging cost-reduction program that started in May, a person with direct knowledge of the decision said Sunday.

HSBC plans to cut about 10,000 jobs, or 3 percent of its global work force, said the person, who declined to be identified before the figures are made public. The bank, which employed 307,000 people at the end of last year, is expected to announce the job cuts when it reports earnings for the first half of this year on Monday. HSBC declined to comment on the job cuts, which were first reported by Sky News.

Meanwhile, on Sunday, the bank announced that it would sell 195 of its branches in upstate New York to the First Niagara Financial Group for about $1 billion. The branches being sold hold about $15 billion in deposits.

Stuart T. Gulliver, who took over as HSBC’s chief executive in January, said in May that he was seeking to lower costs by at least $2.5 billion in the next two to three years mainly by scaling back the bank’s retail operations outside Britain. HSBC said in May that it might also sell its bank card business in the United States. It has already withdrawn from the Russian retail banking market.

Mr. Gulliver has said that he plans to radically change HSBC’s business in the United States, which has been a drag on group earnings mainly because of the bank’s ill-advised acquisition of the subprime lender Household International in 2003. Mr. Gulliver has indicated that he hopes to strengthen the business by winning market share with its commercial banking unit.

To compensate for sluggish growth in Europe and its British home market, Mr. Gulliver also plans to win market share in faster-growing economies like those in Latin America and Asia, where HSBC has a historically strong presence. HSBC was helped through the subprime mortgage crisis by its growing business in Asia, where it continues to generate more than half its annual pretax profit.

HSBC would be the latest bank to announce job cuts. Credit Suisse said last week that it planned to eliminate 2,000 positions, or 4 percent of its global jobs. Goldman Sachs and Morgan Stanley are also reducing their head counts. The cuts are expected to help the banks improve returns despite slower economic growth and a stricter regulatory environment.

First Niagara’s deal to purchase the HSBC branches in upstate New York would more than double its branch network in the region. As of the end of June, the firm, based in Buffalo, had 117 branches in upstate New York and 346 total.

First Niagara reportedly beat out several bigger competitors for the HSBC branches, including MT Bank, whose market value is more than three times larger.

HSBC also plans to consolidate 13 of its branches in Connecticut and New Jersey into nearby existing locations.

HSBC’s pretax profit for the six months to the end of June is expected to fall to $10.9 billion from $11.1 billion a year earlier, according to the average of analyst forecasts polled by Reuters.

HSBC’s shares fell 8.7 percent this year, less than its British rival Barclays, which is set to report earnings on Tuesday.

Julia Werdigier reported from London and Michael J. de la Merced from New York.

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Caterpillar Profit Rises 44% but Misses Wall St. Estimates

Continued robust demand for Caterpillar’s heavy equipment raised the company’s second-quarter profit 44 percent, the company said Friday, but higher costs and cautious comments about China’s economy set off a 5.8 percent decline in its share price.

The company raised its sales outlook for the year, but cost increases, mostly related to its recent acquisition of the mining equipment maker Bucyrus, will prevent rising sales from helping profit more than previously expected.

Caterpillar’s quarterly profit fell short of Wall Street estimates for the first time since the recession ended.

Many investors that were very optimistic about Caterpillar appeared to pause and reassess the prospects for months ahead, said Jeff Windau, an analyst at Edward Jones, who thinks Caterpillar still has strong long-term growth potential.

“There’s a lot to digest in this quarter,” Mr. Windau said.

The company said it earned $1.02 billion, or $1.52 a share, up from $707 million, or $1.09 a share, a year earlier.

Excluding costs associated with the Bucyrus acquisition, profit per share would have been $1.72.

Revenue rose 37 percent to $14.2 billion, easily topping Wall Street estimates.

Caterpillar predicts 2011 sales of $56 billion to $58 billion with Bucyrus. Previously, it predicted sales of $52 billion to $54 billion.

Stock in Caterpillar, which is based in Peoria, Ill., fell $6.45 to close at $105.15 a share.

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DealBook: Lenovo to Buy German Electronics Firm Medion

Lenovo, the Chinese computer maker that bought IBM’s PC division six years ago, said on Wednesday that it planned to take control of the German consumer electronics manufacturer Medion in a deal valuing the company at $909 million.

Lenovo said the acquisition would double its share of the German PC market, where it would become the third-largest player, after Acer and Hewlett-Packard. The deal, expected to close in the third quarter, would be the first time a Chinese company has bought a well-known German brand like Medion, which supplies computers and other devices to the popular discount chain Aldi.

Yang Yuanqing, head of Lenovo, said the company planned to combine “this ‘front end’ with Lenovo’s ‘back end’ manufacturing capability and supply chain” in a push further into Europe.

The move will give Lenovo 14 percent of the German PC market and about half that share for the PC market in Western Europe, the company said. It bears echoes of Lenovo’s landmark 2005 deal in America, when it bought the ThinkPad PC division of IBM for $1.75 billion.

Gerd Brachmann, chairman of Medion, has agreed to sell two-thirds of his 60 percent stake in the company. He will be paid in cash for 80 percent of the shares he is selling, and receive 20 percent in Lenovo shares, terms that are set to give him about 1 percent of Lenovo, the world’s fourth-largest PC maker after H.P., Dell and Acer.

Both the Lenovo and Medion boards have approved the deal, and Lenovo said the acquisition was contingent on an additional 15 percent of Medion shares being tendered by investors other than Mr. Brachmann. The transaction, subject to regulatory approval, will be financed with Lenovo’s cash reserves.

After the announcement, shares of Medion, which closed on Tuesday at 11.05 euros, jumped 2.04 euros, or 18.5 percent, to 13.09 euros in early trading on Wednesday in Frankfurt. At 13 euros a share, the Lenovo offer is 29 percent above the average closing price for Medion shares over the last 30 days.

The largest shareholder in Lenovo’s parent company, Legend Holdings, is the Chinese Academy of Sciences, a government research institute. An employee group and the conglomerate China Oceanwide also hold major stakes.

Founded in 1983 by Mr. Brachmann, Medion is based in Essen and employs about 990 people. It reported net income of 4 million euros for the first quarter, up from 3 million euros for the same period a year before, but sales declined to 371 million euros in the first quarter this year from 411 million euros in the period a year earlier.

Lenovo hired Barclays Capital as its financial adviser. The company said last week that it had generated record sales of $21.6 billion for the year ended March 31.

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Bits: YouTube Founders Acquire Web Analytics Firm

Chad Hurley and Steve Chen, the co-founders of YouTube, are on a shopping spree.

In late April, the pair announced plans to purchase Delicious, the online social bookmarking service, from Yahoo, saving it from  closure.

Now, they’re adding another company to the mix. On Monday, they announced plans to purchase Tap11, an analytics firm that tracks social media.

Mr. Hurley said in a statement that the acquisition was another move toward the pair’s ultimate plan to “create the world’s best platform for users to save, share, and discover new content.”

Tap11 helps businesses understand what is being said about their companies on social media Web sites like as Twitter and Facebook. The purchase of Tap11 will allow the company to provide “powerful tools to publish and analyze their links’ impact in real-time.”

The price of the sale and other financial terms were not disclosed. Both companies will roll into Mr. Hurley and Mr. Chen’s newest venture, AVOS.

The news of Mr. Hurley and Mr. Chen’s purchasing plans has prompted tremendous interest in the tech world. The two men, who started YouTube in 2005, and sold it to Google a year later for a staggering $1.76 billion, have said they plan to keep Delicious, which allows people to make lists of interesting Web sites and share them with friends, intact.

However, the Tap11 news suggests they have a bigger plan in mind to change the way people share content on the Web.

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