Posts by Aaron Pressman

  • Alarm.com IPO shows possibilities for profit in smart home services

    Aaron Pressman at Yahoo Finance 2 hrs ago

    Alarm.com's initial public offering filing has lifted a veil on the fast-growing niche of smartphone-controlled home security and automation services. And while there's plenty of competition, Alarm.com's results show at least the potential for heady profits beyond just the sale of remote-controlled thermostats and Internet-connected nanny cams. Although Alarm.com sells its own line of hardware, its main business is selling monthly monitoring and security service that lets homeowners remotely control their lights, thermostats and appliances. But unlike traditional home security systems that rely on an expensive network of monitoring gear and communications equipment, Alarm.com and competitors like Icontrol Networks use an Internet-based cloud setup to reduce costs. And therein lie the potential profits. Following the popular "software as a service" cloud business model, Alarm.com reported a gross profit margin of 60% last year. Excluding the lower margin hardware sales, the gross margin on services alone was close to 80%. The company doesn't sell directly to consumers, relying instead on a network of thousands of dealers and security companies to close the deal. The strategy of offering a cloud service via third-party resellers is quite different from the path being pursued so far by the biggest tech companies. Apple (AAPL) is trying to establish a software standard, dubbed HomeKit, allowing iPhone owners to control all manner of home automation gear from different vendors. Via its Nest Labs unit, Google (GOOGL) is selling some hardware of its own but is also seeking to popularize a software interoperability standard. And Microsoft (MSFT) partnered with one hardware vendor, Insteon, to offer a Windows-compatible line of home automation gear. Alarm.com's filing said the company planned to raise $75 million, though such amounts often change from the initial filing.  Analyzed in isolation, there's plenty for investors to like about the Alarm.com strategy. The company increased revenue by 28% to $167 million last year while its subscriber base grew by 21% to 2.3 million. The more profitable services segment grew 35% to $112 million while sales of gear like remote-controllable video cameras increased 17% to $56 million. Net income last year nearly tripled to $13.5 million and, unlike many tech companies that recently went public, the company has had positive cash flow from operations for each of the past three years.

  • Amazon drops popular tax avoidance strategy

    Aaron Pressman at Yahoo Finance 22 hrs ago

    Amazon.com (AMZN) is surrendering in yet another of its long-running tax battles, this one in Europe, but don't expect its many co-tax avoiders to join the party yet. Amazon said yesterday that it would stop funneling its sales from across Europe through a Luxembourg-based entity to minimize its tax bill. Instead, the e-commerce giant will begin accounting for sales, and paying taxes, in individual European countries.

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  • Who even needs ads anymore? More companies go direct

    Aaron Pressman at Yahoo Finance 5 days ago

    Coca Cola (KO) ended up with a surprise starring role in the final moments of the AMC Networks' (AMC) critically-acclaimed series "Mad Men," as the last scene was the soda company's iconic 1970 "Hilltop" ad playing for millions of viewers. Viewers got curious about the real origins of the commercial, and searched the web for more information. Whether they used a search engine or clicked from a link in stories at the New York Times, BuzzFeed or Entertainment Weekly, many ended up learning what really happened from an article Coke itself commissioned a few years back. No, the fictional Don Draper didn't return from a California yoga retreat and write the spot. It was real life adman Bill Backer who concocted the idea while his plane was fogged in in Ireland. The 2012 article, written by a Coke company archivist, recounts the making of the now-famous "I'd Like to Buy the World a Coke" jingle and the shooting of the commerical itself.  It's just one piece produced as part of Coke's Journey web site, a direct effort by the brand to take control of its own narrative instead of leaving the storytelling to reporters, editors and analysts in the media. Coke, of course, is hardly alone among brands large and small that are creating the kind of original content that used to be mainly the function of the news business. And now they're increasingly creating their own web sites, like Journey, to attract more readers.

  • Yahoo shares bounce back as spinoff tax fears recede

    Aaron Pressman at Yahoo Finance 7 days ago

    Shares of Yahoo (YHOO) bounced back after a steep late day sell-off on Tuesday, as investors debated whether tax concerns might delay a planned spin-off of the company's stake in Chinese e-commerce giant Alibaba (BABA). Reports that the Internal Revenue Service was halting approvals for future tax-free spin-offs amid a review of its rules sent Yahoo shares into a rapid tumble on Tuesday. The stock dropped as low as $39.12 before closing at $40.98, down 8% on the day. The shares made up some of the loss on Wednesday, gaining 3% to $42.25 in morning trading. Yahoo is the parent company of Yahoo Finance. The stock plunge came on reports from Washington, D.C., of remarks by Isaac Zimbalist, senior technician reviewer at the IRS Office of Associate Chief Counsel. The IRS lawyer said the agency was concerned that some companies might be abusing the rules for tax-free spin-offs to avoid paying capital gains taxes. While the IRS reviews the rules, new requests for private letter rulings to approve tax-free spin-offs would be delayed, he said, but requests already filed would move forward, at least for now. Yahoo, which paid more than 40% in capital gains taxes when it sold shares of Alibaba in the past, has made plans to avoid the tax hit for its remaining 15% stake in the Chinese company. Instead, CEO Marissa Mayer said in January that Yahoo would spin off its remaining stake in Alibaba, valued at almost $34 billion, along with its small business unit in a tax-free distribution to shareholders. The deal would be completed in the fourth quarter, Yahoo said. [Get the Latest Market Data and News with the Yahoo Finance App] “The issue comes down to whether we’ve dropped a hot-dog stand or a lemonade stand into a business that is primarily publicly traded stocks, cash and other wonderful things that I call appreciated property,” Zimbalist said, according to a Bloomberg news report of his talk. After Zimbalist spoke, Yahoo said it had already filed its request for a private letter ruling from the IRS and didn't expect the agency to delay its plans. "Yahoo understands that the IRS’s statement is not specific to Yahoo’s planned Q4 2015 spin-off of its remaining stake in Alibaba Group and Yahoo Small Business, reflects no change in applicable law, and does not affect previously filed ruling requests," the company said in a blog post. "Yahoo continues to work toward completing the planned spin-off in Q4 2015." Before Zimbalist made his comments, Mayer spoke about the Alibaba spin-off at a JP Morgan investor conference in Boston Tuesday morning, assuring investors that it was on track for the fourth quarter. "The decision has been made, but there's a lot of work to do to make sure that that entity is ready and to really make sure that we achieve the tax efficiencies that we want. So things are on track, but there are a lot of people at Yahoo who are working very hard," Mayer said. Yahoo's take fit the narrative of Wall Street analysts who are bullish on the Internet company.

  • Samsung gains ground in patent wars, but Apple still ahead

    Aaron Pressman at Yahoo Finance 7 days ago

    It was the most memorable moment in an otherwise pretty dull patent fight -- a judge held up an Apple (AAPL) iPad and a Samsung (005930.KS) Tab and asked one of Samsung's lawyers if she could tell the difference from 10 feet away. "Not at this distance, your honor," she replied. But on Monday, an appeals court said the courtroom theatrics were irrelevant. The U.S. Court of Appeals for the Federal Circuit found no protection in U.S. patent law for the overall appearance of a tablet or smartphone as long as the shape and look improved the device's functionality, by making it easier to grip, for example. Apple also lost a similar claim for the shape and arrangement of icons on the iPhone's screen. That move overturned Apple's so-called trade dress patents win, a big piece of its 2012 $1 billion jury verdict victory over Samsung (later knocked down to $930 million). At the same time, the appeals court upheld other parts of Apple's victory, including patents covering more specific features, such as the color and arrangement of the elements on the front face of the iPhone and its bezel. Now, barring a settlement, the case goes back to the lower court to re-decide the damages. Samsung says the trade dress patents accounted for $382 million, so damages should fall to $548 million. Apple argues the full amount should still stand. The case is separate from another Apple patent win in court last year that resulted in a $120 million damage ruling against Samsung. Who's winning the patent war? So who ultimately won the patent wars initiated by Apple's late CEO Steve Jobs five years ago against his iPhone competitors?

  • Wall Street momentum adds to year of bitcoin legitimacy

    Aaron Pressman at Yahoo Finance 7 days ago

    A top secret bitcoin startup called 21 Inc. finally disclosed its business plan this week and the strategy points to the many uses of the virtual digital currency beyond the obvious. With $116 million of backing from top tier venture capital firms and former Treasury Secretary Lawrence Summers signed on as a strategic advisor, 21's emergence is also further proof that bitcoin has rapidly moved from fodder for weirdo science fiction to the realm of real business tools. The New York Stock Exchange's announcement on Tuesday of its own bitcoin price index, one that could be used as the basis for all manner of derivative contracts, is yet another signal of bitcoin's usefulness to mainstream businesses. The well-funded startup says it has created a dedicated computer chip that can be added to smartphones, tablets or almost any other type of computing device to allow for the processing of bitcoin transactions and the creation of new bitcoins. The feature could also be incorporated into chips made by other companies to add the same functionality. Currently, that's the realm of high-powered (and high-priced) computer rigs known as bitcoin miners. Every time a bitcoin is traded from one person to another, the transaction is recorded in a digital logbook known as the blockchain. Mining computers crunch the encryption equations needed to verify each transaction and verify the listings in the blockchain. New bitcoins, each really just a unique string of digits, are generated via the same process, providing an economic incentive for the miners to verify all of the transactions. Adding the bitcoin mining capability to any consumer's portable computing device opens an intriguing array of new functionality. Because bitcoin mining generates new bitcoins, 21's chips create a small, new revenue stream for any device. That revenue could go toward subsidizing Internet access or paying for online services. It could also go to a phone manufacturer or mobile carrier. And if the idea catches on, more than a billion smartphone owners could be crunching bitcoin transaction data on the phones in their pockets as they go about their day.

  • IBM's hacking database takes off with banks, retailers

    Aaron Pressman at Yahoo Finance 12 days ago

    IBM's (IBM) new cyberthreat data sharing project has attracted more than 1,000 companies in its first month, but the private sector effort doesn't reduce the need for new laws to encourage further sharing, IBM officials said.

    IBM's X-Force Exchange lets participants anonymously share information about hacking attempts and access IBM's 20 years of accumulated data. Participants include 5 of the 10 largest global banks and six of the 10 largest retailers, IBM said. Both industries have been hard hit by hackers -- last year crooks stole data on 83 million accounts from JPMorgan Chase (JPM) and 56 million credit card accounts from Home Depot (HD). Security experts have long advised companies to share data about hacking attacks so countermeasures can be developed more quickly. But antitrust, liability and privacy concerns have hampered those efforts even as Congress is considering legislation to create a safe harbor for some data sharing.

  • Parents can spy on teens' smartphones, but should they?

    Aaron Pressman at Yahoo Finance 13 days ago

    Kids today face a host of dangers that didn't exist as prior generations came of age. Whether it's sexting, cyberbullying or overly accessible and highly inappropriate content (aka porn), kids are faced with a whole new array of potentially risky behaviors, many just a click or text away on the ubiquitous smartphone. What's a modern parent to do? Ameeta Jain, the LA mom of teenagers and co-founder of Teensafe, thinks the answer lies in technology. Competing against a host of similar apps and services, the $15-per-month Teensafe program lets parents keep tabs on their kids' smartphone activities in detail.

  • Verizon focused on future growth with AOL bid

    Aaron Pressman at Yahoo Finance 15 days ago

    Verizon (VZ) and AT&T (T) both emerged from the fading telephone business in perfect position to dominate wireless. And with growth in mobile finally slowing, both surely want to avoid their old time roles as highly regulated utilities, the "dumb pipes" of the 20th Century. But the two giants are moving in almost opposite directions as they look for the next big thing. Verizon's plan to buy AOL for $4.4 billion marks another step away from the traditional communications business and towards the kind of markets being pursued by the likes of Amazon (AMZN), Microsoft (MSFT) and Google (GOOGL). Meanwhile, AT&T is acquiring DirecTV (DTV), a satellite television service that hasn't changed much in decades.

  • Nasdaq's bitcoin plan will provide a real test of bitcoin hype

    Aaron Pressman at Yahoo Finance 15 days ago

    Bitcoin, the virtual digital currency, has been called the future of banking, a dangerous fad and almost everything in between, but we're finally about to get some solid data to help settle the debate. On Monday, the Nasdaq (NDAQ) stock exchange said it would try using bitcoin's globally distributed network for verifying virtual currency transactions as a logbook for tracking private company stock deals. Nasdaq is best known for running the $9.5 trillion exchange listing public companies like Apple (AAPL) and Google (GOOGL). But two years ago it started a market for trading in shares and options of private companies, such as music app Shazam and messaging service Tango. Keeping records of private stock transactions has sometimes been a haphazard affair and Nasdaq wants to bring more certainty, security and speed to the trades using bitcoin's network. Until now, bitcoin's popularity has been all too dependent on the currency's often-volatile price. It was all over the news when the price of a single bitcoin topped $1,000 back in November, 2013. And there was plenty of coverage of the subsequent crash, as the price dropped more than 75% last year. Currently, each bitcoin trades for about $245. The extreme ups and downs left many people puzzled about how bitcoin could ever be used as a reliable currency.