Apple Inc. (NASDAQ:AAPL) has reportedly made a deal with Alphabet Inc (NASDAQ:GOOGL) under which Google’s cloud platform will power a certain portion of Apple’s iCloud infrastructure. The deal is said to have been signed last year.
According to a report from CRN on Wednesday, Apple will have to shell out $400 million to $600 million as charges for using Google’s cloud platform. However, the report did not state if the price range is a contract fee or annual fee.
According to another report from Morgan Stanley last month, Apple spends around $1 billion for using Amazon Web Services and may reduce dependency on third party cloud computing platforms by shifting computing to its own data centers.
If the reports are true, then Apple has signaled a partial shift from Amazon Web Services, either in furtherance of a plan to reduce dependene on third parties, or diversify the third parties it uses to improve reliability of its service. Whatever be the case, the deal can be considered a major achievement on Google’s part as it strives to become an enterprise cloud computing giant.
In November, Google brought VMware co-founder and ex-CEO Diane Green to head its cloud operations. Since then, it has been hunting deals for its cloud platform. The company claims that its cloud platform is 15% to 41% less expensive than that of AWS.
Apple is trying to curb its dependency on third party cloud computing platforms by building its own data centers in Ireland, Denmark and Arizona and has spent about $3.9 billion on the same. These data centers will add to its existing operations thereby improving service efficiency.
Valeant Pharmaceuticals Intl Inc
Valeant Pharmaceuticals Intl Inc (NYSE:VRX) found itself in troubled waters again with the release of dismal preliminary fourth-quarter results and a trimmed guidance for the first quarter and full-year 2016.
This led to a wide sell-off, making the stock tank over 50%, underlining battered investor sentiments.
Fourth-quarter results were impacted by weaker-than-expected sales of the gastrointestinal business. This was caused by sluggishness in the wholesale and retail channel in reaction to Valeant’s announcement of an agreement with Walgreens Boots Alliance (NASDAQ:WBA) in 2015.
We note that the company postponed its previously announced earnings call to discuss preliminary fourth-quarter results following the return of its Chief Executive Officer (CEO), J. Michael Pearson, who was on an extended leave because of health issues.
Concurrent with the preliminary results, the company slashed its guidance for the first quarter due to continued inventory destocking in the dermatology and gastrointestinal businesses, and revenue shortfalls in several businesses such as ophthalmology and women’s health, along with weak sales of drugs like Solta and Obagi. In addition, management transition issues and persistent organizational distractions are expected to impact business during the quarter. The company has trimmed its full-year outlook as well.
And finally, as the final nail in the coffin, management indicated a likely credit default in the event of a delay in the company’s regulatory filings (10-K). The company’s credit agreement and bond indenture contain financial reporting requirements that may be impacted by a delay in the filing of its 10-K.
We note that Valeant has been under the spotlight since Aug 2015 for all the wrong reasons like a price hike of specialty drugs, erroneous financial reporting, and termination of contracts with Philidor Rx Services.
The company, which had carved an impressive growth story from its strategic acquisitions, came under focus in Oct 2015 because of a massive price hike of two of its drugs — Isuprel and Nitropress — which were acquired from Marathon Pharmaceuticals. As a result, Valeant was accused of having followed the same business model as Martin Shkreli, whose company had spiked the price of Daraprim from $13.50 to $750.
At the same time, Valeant’s relationship with Philidor Rx Services, a specialty pharmaceutical company providing back-end services came under the scanner, after it was alleged that the latter was urging pharmacy benefit managers to opt for expensive drugs over their cheaper generics. Consequently, Valeant terminated its relationship with Philidor, whereby it lost 20% of prescriptions and $250 million in sales in the fourth quarter.
The ongoing review of its erroneous financial reporting is not helping matters either. In Feb 2016, the company reported the identification of approximately $58 million of net revenue, previously recognized in the second half of 2014, which were supposed to be recognized on the supply of products to patients rather than on their delivery to Philidor. This identification was based on the work of the Ad Hoc Committee of the board of directors, which was appointed to review the company’s relationship with Philidor Rx Services.
Hence, there appears hardly any ray of hope for investors at the moment.
Micro blogging site, Twitter Inc (NYSE:TWTR) announced that it will pull the plug on standalone TweetDeck Windows app from Apr 15, 2016.
In a blog post, Twitter said users will now be able to directly log in to TweetDeck through its sites like twiiter.com and analytics.twitter.com to offer a “seamless log-in experience”.
Product manager Amy Zima said the company continues to take up such infrastructure projects to achieve a “stable foundation to continue improving TweetDeck”. Twitter has added features like TweetDeck Teams, group direct messages and provided better search filters to find Periscope, Vines, GIFs and older content over the last several quarters.
Twitter has been working on improving its platform to boost the dwindling user base. In the last reported quarter, Twitter’s user growth was unchanged at 320 million sequentially. In fact, for the first time, excluding SMS followers, MAUs decreased 2 million to 305 million, sequentially. The company under second time CEO Jack Dorsey is trying newer means to boost its user base.
Dorsey has been trying to bring “big bold changes to the product”, something he promised as an interim CEO.These include introducing a new way to display tweets, the integration of its live video streaming app Periscope in its feed and expanding the tweet limit to 10K characters from its signature 140 character limit. It had earlier expanded the tweet limit on direct messages to 10K from 140 characters. Moreover, to attract users, Twitter said that tweets would now appear in Google search. Dorsey is trying to woo the 500 million users who don’t log in but keep a track of tweets. In December, Twitter launched ads for logged out users. Earlier, the launch of its news curation tool, Moments was also a step in that direction.
Moreover, Dorsey underscored on “hiring and investing in talent”. Recently, there were reports of Twitter paying cash and additional stock to retain talent in the company following some high profile departures. He himself had give away one-third of his stock worth $200 million to employees soon after he was elected the CEO.
So will Dorsey be able to pull it off? It remains a wait and see story.
Walt Disney Co
Ushering in good news for Indiana Jones fans, Walt Disney Co (NYSE:DIS) announced that the fifth movie in the series will hit the theatres in 2019. The last release was the Kingdom of the Crystal Skull in 2008.
Alan Horn, Disney Studios chairman, said: “Indiana Jones is one of the greatest heroes in cinematic history, and we can’t wait to bring him back to the screen in 2019. It’s rare to have such a perfect combination of director, producers, actor and role, and we couldn’t be more excited to embark on this adventure with Harrison and Steven.”
The Indiana Jones franchise’s previous movie, Kingdom of the Crystal Skull, was made within a budget of $185 million, and it earned $780 million globally. Thus, given its immense popularity, we believe that the upcoming Indiana Jones movie will drive the company’s top line even higher.
Disney tasted success at the box office and crossed the $5 billion mark in 2015. The company struck gold at the box office with almost every movie released over the last couple of years. In 2015, the company came up with major hits like Avengers: Age of Ultron, Marvel’s Ant-Man, Inside Out, Cinderella and Star Wars: The Force Awakens.
In December, the company released a much awaited flick – Star Wars: The Force Awakens. The movie flew high at the box office, with its worldwide collection crossing the $2 billion mark.
We believe that the studio’s success story will likely continue beyond Star Wars as it boasts an impressive line-up of big-budget movies. Disney also outlined release dates for its upcoming movies. Cars 3 is scheduled for release on Jun 16, 2017, whereas the release of Toy Story 4 has been delayed by a year and has now been set for Jun 15, 2018 instead of Jun 16, 2017. The Incredibles 2 is expected to release on Jun 21, 2019.
Most importantly, Disney has announced two more Star Wars movies and three spin-offs. Episode VIII and IX will likely release in 2017 and 2019, respectively, whereas the first spin-off, titled Rogue One, will release in 2016. The success of its movies will also mean great business for its Consumer Products division as demand for the merchandise associated with successful movies usually skyrockets, as seen in case of Frozen. Moreover, the addition of such popular themes to Parks and Resorts will likely increase footfall.