Posts Tagged Market

Facebook puts mobile ads test on hold

Facebook said it is halting a test of placing ads in “apps” that synch to the leading social network, renewing questions on how it will boost revenues from members using smartphones or tablets.

“We are pausing our mobile ads test off of Facebook,” a company spokesman said in an email response to an AFP inquiry.

“While the results we have seen and the feedback from partners have been positive, our focus is on scaling ads in mobile news feed before ads off of Facebook.”

Facebook shares were down slightly on the news, slipping less than a percent to $27.60 in late afternoon trading on the Nasdaq exchange.

Facebook stock rallied in October after the company reported quarterly earnings that showed gains in tapping the mobile advertising market.

During an earnings call with analysts, founder and chief executive Mark Zuckerberg said the company was “just getting started with our mobile product development and monetization.

Facebook went public in May with a resounding flop, its $38 initial public offering price immediately plunging to eventually less than half that.

That angered many investors who had built hopes that the company’s huge popularity would result in huge gains in the share price.

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Motorola, Nokia try to win back market

In the smartphone market, Apple and Samsung have become the two giants. Is there room for a third?

Motorola Mobility and Nokia, two laggards in the mobile race, better hope so.

Both companies held events on Wednesday in New York to unveil their latest smartphones, just one week before Apple is scheduled to introduce its next iPhone. Much depends on the success of those phones, as Nokia and Motorola’s shares of the phone market continue to slide while sales of Apple and Samsung devices soar.

Combined, Samsung and Apple account for about 50 percent of the global smartphone market, with Samsung in the lead, according to estimates by Gartner, the research firm. Other phone-makers are so far behind that there is essentially no relevant third player. Research In Motion, a potential contender for that spot, has said its new line of BlackBerry devices will not be ready until next year.

Samsung and Apple are the only companies shipping lots of phones to retailers and making money, said Jan Dawson, a mobile analyst at Ovum, a research firm. “Nobody is really No. 3 because nobody else is shipping and profitable.”

At its event, Motorola unveiled three smartphones under its Razr brand that will be sold to Verizon customers. It said the focus of the phones was speed, because they connected to Verizon’s faster fourth-generation network. And they have larger screens than their primary rival, the iPhone.

These were the first new phones that Motorola has introduced since it was bought by Google, which announced the acquisition last year and closed the transaction in May. The companies remained mum about their plans until last month, when Motorola announced that it was laying off 4,000 employees, the start of a revamping under its new owner.

A Google executive, Dennis Woodside, is Motorola’s new leader. In an interview on Tuesday, Woodside said that the union of the two companies would spur mobile innovation. But Woodside, sharp and energetic, was careful not to overstate his goal for Motorola. He does not expect it to become a giant overnight.

“We want to be pushing the limits of what Android can do,” he said, referring to Google’s popular operating software for phones. He said that the plan for Motorola was to build excellent products that took advantage of its engineering heritage. “It doesn’t need to be the biggest player, but it can be one that’s truly leading in leaps and bounds in generations and generations of devices,” he said.

The new phones – the Droid Razr HD, Droid Razr M and Droid Razr Maxx HD – have a crucial component that reflects Motorola’s legacy as a radio company: the Motorola-made cellular modems inside them, which connect with newer, faster fourth-generation LTE networks.

And because Motorola helped develop this radio technology, the company knows how to design 4G LTE phones with long battery life, said Rick Osterloh, senior vice president for product management at Motorola, in an interview. The Droid Razr HD, for example, has a 4.7-inch screen with 16 hours of talk time, twice as long as many similar phones, according to Motorola.

The phones all use Android, raising questions about whether Motorola will become a legal target for Apple, which recently won a court victory against Samsung in one of many patent disputes related to smartphones. Apple accused Samsung of copying several aspects of the iPhone with its Android phones.

Woodside said he was confident that Motorola would not face similar problems. “We’ve always been pushing the envelope of technology,” he said. “It’s not a culture that copies things.”

Nokia has chosen a different and perhaps riskier route than the makers of Android phones, forming a close partnership with Microsoft and building that company’s Windows Phone software into its smartphones. The partners have not gotten much traction in the market lately, but they are hoping for another chance.

On Wednesday the two companies showed the Lumia 920, a smartphone that includes Nokia’s PureView camera technology and the ability to charge the phone by placing it on a special mat. Nokia also briefly introduced the Lumia 820, a midprice smartphone with exchangeable covers. The phones run Windows Phone 8, the latest version of the software.

“This is the most innovative smartphone in the world,” said Jo Harlow, Nokia’s executive vice president. She said the Lumia 920 took better pictures and video, especially in low light, than any other phone camera, and that it would offer access to Nokia’s mapping database, which provides maps for 200 countries.

Nokia, which is based in Finland, has been trying hard to gain a foothold in the smartphone market with its Windows-powered Lumia line. It sought to make a splash this year with the Lumia 900 on AT&T, aggressively priced at $100 and backed with an enormous promotional campaign, but sales were lackluster.

Investors seemed unhappy with the announcements. Nokia’s American shares dropped 16 percent. But some analysts were optimistic that the Lumia 920 would grab the attention of phone buyers.

Charles Golvin, an analyst at Forrester Research, said offering features like the ability to wirelessly charge the device would only help Nokia, as long as the phone is cleverly marketed and priced competitively enough. But Nokia did not say how much the phones would cost or when and where they would be available.

“The most pressing question is whether Nokia can get its magic back, whether it can be a viable third leg in the smartphone world and it remains to be seen,” Golvin said.

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Facebook mkt makers’ losses total at least $100 mn

Claims by four of Wall Street’s main market makers against Nasdaq over Facebook’s botched IPO are likely to exceed $100 million, as they and other traders continue to deal with thousands of problems with customer orders.

A technical glitch delayed the social networking company’s market debut by 30 minutes on Friday and many client orders were delayed, giving some investors and traders significant losses as the stock price dropped. The exchange operator is facing lawsuits from investors and threats of legal action from brokers.

Four of the top market makers in the Facebook IPO — Knight Capital, Citadel Securities, UBS AG and Citi’s Automated Trading Desk — collectively have probably lost more than $100 million from problems arising from the deal, said

a senior executive at one of the firms. Knight and Citadel are each claiming losses of $30 million to $35 million, potentially overwhelming a $13 million fund the exchange set up to deal with potential claims.

Nasdaq also has to contend with the outside prospect that it could lose the Facebook listing entirely after having just obtained it.

Facebook shares ended regular trading on Thursday up 3.2 per cent at $33.03, about $5 short of their offering price. Action on the stock, however, has essentially become secondary to the fallout from the IPO — its price, its size, its execution and questions about selective disclosure of its financial prospects.

Regulators including the US Securities and Exchange Commission, the Financial Industry Regulatory Authority and Massachusetts Secretary of the Commonwealth William Galvin are now looking into how the IPO was handled. The US Senate Banking Committee is also reviewing the matter.

BROKERS UP IN ARMS Advisers familiar with the situation said many investors are now finding out, nearly a week after the fact, that their orders were not executed at the prices they thought.

Fidelity, in a statement, said it was working with regulators and market makers on its clients’ issues “and we will continue to do so until we are confident that Nasdaq has done everything it can to mitigate the impact to our customers.”

Morgan Stanley is also still tending to trade orders placed by brokerage customers on Friday, two people familiar with the situation said. Nasdaq has said all orders were returned by 1:50 p.m. EDT last Friday, but a Morgan Stanley Smith Barney source said it did not get trade information in a “systemic, orderly way.”

Late Thursday, the company held a call with its brokers and told them adjustments would be made to thousands of trades so that no limit orders would be filled at more than $43 a share for stock from the IPO day, a person familiar with the call said.

While brokerages may have received confirmation of trades made on Friday, many were still handling customer disputes over what price they received on the trades, officials said.

The question is “who is going to eat the cost” of compensating those investors, said Alan Haft, a financial adviser with California-based Kings Point Capital LLC, which has $200 million in assets.

One prominent plaintiffs lawyer said what happened with Facebook was reminiscent of the dot-com bubble.

“This is just another spin on the same game of unfair treatment of individual investors,” said Stanley Bernstein of Bernstein Liebhard. He chaired the plaintiffs’ committee in an IPO class-action suit challenging the role of investment banks in more than 300 IPOs between 1998 and 2000. The litigation ended in a $586 million settlement in favor of the plaintiffs.

MARKET MAKERS LOOM The claims by market makers Knight and Citadel could end up dwarfing some of the brokerage issues, though.

“They are certainly facing the specter of some significant lawsuits if this pool is not enough,” a source familiar with Knight’s situation said of the Nasdaq claims pool.

Citadel has sent its losses to Nasdaq for potential compensation, a source familiar with the matter said. Citadel’s hedge fund was not affected.

The head of trading at Instinet said it still had no idea when Nasdaq would respond to requests for accommodation — essentially, compensation for the order problems — or if those requests would be honored.

“Were gonna be looking at a loss on our books” if Nasdaq does not honor the requests, Mark Turner said. “We basically made most of our clients whole because Nasdaq told us to go through the process and file for accommodation. If Nasdaq does not accommodate us we’re going to end up taking a loss.”

“I don’t know that I want to put a dollar amount on that but it’s not nearly as significant as Knight’s ($30-$35 million),” he said.

Citadel and Knight, as market makers to the Nasdaq, honor their clients’ buy, sell and cancellation orders. The orders are supposed to be processed by the exchange within milliseconds, but there was a nearly two-hour delay in processing Facebook orders at the Nasdaq.

During that time, market makers had no idea where their orders stood. And in reality, the price clients bought or sold at was sometimes different than the price they actually got.

For example, Facebook shares began trading with an opening cross price – the first price at which those not in on the IPO could buy or sell – of $42 per share. If an order to sell 10,000 shares at $42 went in at that time, but wasn’t filled until later in the day when shares were trading at around $39, a market maker like Citadel or Knight would make up the difference – in this case, at a cost of $30,000.

FEWER PROBLEMS ELSEWHERE Several analysts who cover exchanges said Nasdaq’s legal liability should be limited, though. According to the analysts, securities rules give Nasdaq wide discretion in determining what, if any, compensation it should pay to customers who claim that they suffered losses due to trading execution.

Under exchange rules, Nasdaq’s liability regarding client losses from certain trading issues is limited to $3 million a month. Market makers will be arguing that Nasdaq was so grossly negligent that its actions during the IPO opening override the limits, said a source with knowledge of Knight’s situation.

Other firms said they did not have similar problems to those of Knight, raising questions about the scope of the losses.

“The problems were where people were trying to cancel orders; we didn’t have that,” said Peter Boockvar, equity strategist at Miller Tabak & Co in New York. “Because we didn’t have a problem doesn’t mean there weren’t problems.”

E*Trade Financial Corp said its market making operations realized losses of “well under a million dollars.”

Charles Schwab Corp had a “small number” of the “tens of thousands of clients” who traded Facebook whose issues still have not been resolved, a spokesman said. “Each one requires some analysis to resolve, which can be time consuming.”

Shares of Nasdaq fell 1 cent to $21.80 on Thursday. As of Thursday’s close the stock was down 5.2 per cent from its last close before the Facebook debacle. Over the same period NYSE Euronext is down just 0.1 per cent.

The slide in the shares is adding to the pressure on Nasdaq Chief Executive

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