Work on Google Fiber is to continue in the cities where it has been launched or is under construction, wrote Craig Barratt, senior vice president at Alphabet and CEO of its Access unit, of which Google Fiber is a part. In the “potential Fiber cities” where Google Fiber was still at the stage of exploratory discussions, the project will pause operations.
“In this handful of cities that are still in an exploratory stage, and in certain related areas of our supporting operations, we’ll be reducing our employee base,” wrote Barratt, who under the new dispensation moves to the position of adviser to the venture. A new CEO has not been named.
Google Fiber set about five years ago laying fiber optic cabling to provide high-speed Internet access to a number of cities starting in Kansas City. The project claims its subscriber base and revenue are growing quickly, and it expects that growth to continue. But the company has also run into competition from other broadband players like AT&T and hassles of negotiating local bureaucracy.
In July, the Federal Communications Commission also adopted rules to open up 11GHz of high-frequency airwaves for 5G wireless broadband, throwing up opportunities for players like AT&T and Verizon to use wireless to deliver high-bandwidth data services using the spectrum.
Google Fiber had already seen opportunities for making the Internet available to consumers through wireless technologies. It said in June that it was acquiring Internet service provider Webpass to be able to increase its urban coverage quickly and offer customers a combination of fiber and wireless delivery of high-speed Internet. Most of the acquisition, except for a smaller affiliate Webpass Telecommunications, was completed this month.
In April, Google Fiber obtained approval to test Internet delivery on 3.5GHz spectrum in parts of Kansas City that could result in fast, short-range wireless connections to serve areas not reached by Google Fiber.
“Now, just as any competitive business must, we have to continue not only to grow, but also stay ahead of the curve — pushing the boundaries of technology, business, and policy — to remain a leader in delivering superfast Internet,” Barratt wrote.
Intel appears to have put the brakes on its 3DXPoint memory modules despite talking up the technology for a while.
For those who came in late 3DXPoint is a next-generation non-volatile memory technology and is supposed to be faster than NAND flash memory while much cheaper than DRAM.
Intel had previously said that these 3DXPoint memory modules would be supported on a “future Intel Xeon processor.” It had thought that Intel was referring to the Skylake-EP and this is expected in the first half of 2017.
However, on Intel’s most recent earnings call, CEO Brian Krzanich indicated that this wouldn’t be the case.
According to this, the “future Xeon processor” that will support 3DXPoint memory modules will not be the upcoming Skylake-EP but instead its successor, known as Cannonlake-EP.
If Intel’s upcoming 3DXPoint memory modules require Cannonlake-EP to work, then investors should realistically expect that Intel won’t be selling those modules until either late 2018.
The widespread job cuts could come before the company releases its third-quarter earnings on Thursday, according to Bloomberg, which cited people familiar with the matter. It cautioned that the precise number of jobs affected could change.
A Twitter spokeswoman said in an email that the company doesn’t comment on rumor or speculation.
Twitter announced in October last year that it was laying off 336 employees.
Unlike many of its peers, the company has failed to grow significantly the number of its users or adequately monetize through advertising the number of users it already has on the site.
For the second quarter of 2016, the company reported that average monthly active users (MAUs) of the service for the quarter were 313 million, up 3 percent year-over-year and compared to 310 million in the previous quarter. Revenue at $602 million was up 20 percent year-over-year, but the company posted a loss of over $100 million under generally accepted accounting principles.
The company has been trying to give users better ways to express themselves on Twitter, including through streaming video and by not counting @names in replies and media attachments in the 140-character limit for a tweet.
The company had hired bankers to explore a sale, but Salesforce.com, The Walt Disney Company and Alphabet, which had shown interest, later backed out from the process, according to reports. The company has seen a steep decline in its share price over the last one year.
AT&T announced the deal late on Saturday, stoking urgency in the telecoms and media sectors, where carriers facing a saturated wireless market are looking for content to attract mobile users and producers of shows and movies are seeking digital distribution.
T-Mobile took most of the wireless industry’s subscriber and revenue growth in the third quarter. Its strong balance sheet and fast-growing wireless business makes it an attractive target for a pay-TV or media company, analysts said.
T-Mobile shares jumped 9.5 percent on Monday after it announced third-quarter financial results. At least nine analysts raised their target price on the No. 3 wireless company, which said it added 851,000 postpaid subscribers in the quarter.
T-Mobile has taken market share from bigger rivals Verizon and AT&T, and that momentum is expected to continue, analysts said.
“The takeout target over the next twelve months has got to be T-Mobile,” New Street Research analyst Spencer Kurn said. Potential buyers include Comcast Corp, satellite-TV provider Dish Network Corp, and Mexican telecom company America Movil, analysts said.
Comcast and Dish declined to comment. America Movil could not be immediately reached for comment.
“Content of all kind is rapidly landing on the internet and the internet itself is rapidly transforming toward mobile,” T-mobile Chief Operating Officer Mike Sievert told Reuters.
T-Mobile is “very interested” in exploring strategic opportunities, he said.
Sprint Corp, which is aggressively working towards reviving its wireless business, is another takeout candidate, analysts said.
Sprint received more calls than usual from bankers over the weekend after the AT&T-Time Warner deal was announced, Chief Executive Marcelo Claure said on an earnings call on Tuesday.
“Our strategic value to many has significantly grown,” he added.
China’s Alipay has teamed up with U.S.-based Verifone to integrate its mobile app on Verifone payment terminals at merchants in Europe and North America, the latest such deal to reach Chinese consumers traveling abroad.
Alipay, which counts 450 million active users in China, is the top mobile payments player there. It is a unit of privately held ANT Financial, which is in turn an affiliate of publicly traded Chinese Internet giant Alibaba.com.
It has begun actively expanding outside Asia this year via partnerships with Western payment providers. Verifone terminals are used by most of the top 200 retailers in the United States, a spokesman said.
Instead of seeking to go head to head with major payments players outside its home market, Alipay targets the fast growing Chinese tourism market, which numbered 117 million travelers in 2014, according to the United Nations World Tourism Organization, and is forecast to double by 2020.
Through the Verifone deal announced on Monday, Alipay is targeting top-tier merchants across retail, luxury goods, health supplement and department stores.
Alipay and rival WeChat, a unit of Tencent,together make up 90 percent of the Chinese mobile payments market, with gross merchandise value estimated at more than $1 trillion last year, dwarfing other mobile payment systems around the world, according to iResearch China estimates.
Sabrina Peng, the president of Alipay International, said in a recent interview that her company’s ambition is to become a global payments provider over the next decade, with 60 percent of its transaction volume coming from outside China. “We are targeting 2 billion users in the next 10 years,” she said.
French payment terminal supplier Ingenico announced in August an expanded deal with Alipay to allow merchants across Europe to use Ingenico’s payment gateway to accept payments from Alipay users visiting the region.
The Alipay service is also being integrated into terminals from Concardis, a payments provider for merchants in German-speaking Europe.
Alipay has a similar deal with mobile payments start-up Zapper in Britain to allow Chinese tourists to use QR codes in more than 1,000 restaurants there.
A research analyst has forecast that the market in health related wearables will revolutionize the lives of people suffering from diabetes.
ABI Research said it estimates that by 2021, over nine million continuous glucose monitor (CGM) wearables will ship worldwide.
There are already half a billion people on the planet that suffer from diabetes, and wearable CGMs may really help people cope with the condition.
Ryan Harbison, a research analyst at ABI Research, said: “Wearable device manufacturers have integrated the new, non invasive CHMs and insulin pumps with cloud services, analytic tools, and predictive software to provide new types of pattern analysis in near real time.”
The diabetic testing market will be worth $17 billion in 2021, a rise from $12 billion this year. And Harbison predicts that CGM revenues will grow at a compound annual growth rate (CAGR) of 41 percent over the same period.
New players will challenge giants like Bayer and Johnson & Johnson, he added.
“Medtronic has a substantial advantage with its MiniMed CGM system, Abbott focuses on the European market, and Dexcom innovates on existing CGM devices to create all-in-one experiences through mobile integrations.Glucose meter manufacturers, such as Johnson & Johnson and Roche Diagnostics, can further disrupt this market by developing new form factors, such as contact lenses and skin patches, to create less invasive and more accurate monitoring devices.”
The company announced on Thursday that its quarterly revenue for the three-month period ending in September was flat overall at $20.5 billion. The company’s net profit was down 4 percent year-over-year from $4.9 billion to $4.7 billion.
Those results were driven by quarterly revenue from the company’s Intelligent Cloud segment, which includes Azure and Windows Server, and its Productivity and Business Processes segment, which includes Office 365 and Dynamics. Intelligent Cloud revenue grew 8 percent year-over-year to $6.4 billion, while Productivity and Business Processes segment revenue grew 6 percent to $6.7 billion.
It’s another positive sign for the cloud-focused strategy that the company adopted under the leadership of CEO Satya Nadella.
Azure revenue grew by 116 percent year over year, and Microsoft revealed for the first time that its profit margin from its cloud platform is 49 percent. The company continues to keep the exact revenue and profit numbers from its public cloud platform under wraps, however.
Office 365 commercial revenue grew 51 percent year-over-year. Microsoft reported it now has more than 85 million commercial monthly active users of its cloud-based productivity suite as a service offering.
Surface sales were another bright spot for Microsoft. The company’s line of tablets and laptops brought in $926 million over the past quarter, compared to $672 million during the same period in 2015. Phone revenue continued to drag the company down for another quarter, however — revenue from that division dropped by 72 percent year-over-year.
Microsoft’s non-GAAP results of $22.3 billion in revenue and earnings of $0.76 a share blew past analyst expectations for the quarter. The consensus of analysts polled by Thomson Reuters was an expected $21.7 billion in revenue and earnings of $0.68 a share. Investors rejoiced at the news, sending the company’s stock to an all-time high above $60 per share, beating a previous high set in 1999.
Tesla Motors Inc has plans to introduce a ride share services program and will announce details next year, the luxury electric vehicle maker said on its website, a service first outlined by Chief Executive Elon Musk in his master plan in July.
News of the Tesla Network was in a disclaimer about the self-driving functionality on new Model S vehicles. Musk said last week Tesla is building new vehicles with the necessary hardware to eventually enable full autonomy, although the software is not yet ready.
“Please note that using a self-driving Tesla for car sharing and ride hailing for friends and family is fine, but doing so for revenue purposes will only be permissible on the Tesla Network, details of which will be released next year,” read the disclaimer.
Tesla did not immediately respond to a request for more detail.
Car makers have rushed to invest in so-called mobility services, hoping to capture the potential trillions of dollars in revenue from selling both vehicles and such on-demand services, while carving out a stake in the industry dominated by Uber.
Barclays analyst Brian Johnson wrote in a note to investors on Thursday that although a Tesla Network could “excite the market” over its potential earnings stream, it was a costly proposition.
“While we think ride-sharing/hailing is the future of mass-market mobility, we have some financial concerns with the idea of an OEM-owned fleet,” Johnson wrote.
Venture capitalists and corporate investors had poured nearly $28 billion into the ride services sector in the past decade as of June, according to a Reuters analysis.
General Motors has made the biggest bet, investing $500 million in Lyft in January. GM’s upcoming electric Chevrolet Bolt was designed expressly with car sharing in mind, executives have told Reuters.
Money-losing Tesla lacks the deep pockets of GM, and ride services companies like Uber and Lyft burn billions of dollars in price wars to secure regional dominance, as occurred with Uber in China before it ceded to local rival Didi Chuxing.
In his “Master Plan, Part Deux” in July, Musk outlined a system in which a Tesla owner could add a car to a shared Tesla fleet using a phone app, allowing it to “generate income for you” and lower the cost of ownership.
Musk said that in cities where car ownership is lower, Tesla would operate its own fleet.
Troubled Japanese television manufacturer Sharp is expecting significant improvement in annual profit due to restructuring with its new owner Foxconn.
Shares in the outfit soared more than 10 percent after the Nikkei business daily reported that Sharp forecasts operating profit of about $385 million for the business year through March which was much better than expected.
Meeting the forecast would mark the first operating profit in three years for Sharp, which is rebuilding under Taiwan’s Foxconn which bought two-thirds of the telly maker in August.
Sharp slashed about 6,000 jobs in the last financial year through early retirement and an operations overhaul including withdrawal from its money-losing North American TV set business.
Sharp said it expected profit to improve but revenue to fall. Its shares subsequently jumped nearly 11 percent to their highest price in about six months, far outperforming the benchmark Nikkei average share price index.
However the prospects of Sharp’s mainstay display panel business are not that hot. The global panel market is on the cusp of improvement as a production cutback resolved a supply glut.
But Sharp still has to find ways to compete with Chinese peers rapidly expanding capacity, and with South Korean makers far ahead in next-generation technology.
Sharp said it would provide a full-year earnings forecast on 1 November when it announces its second-quarter results.
Now that Nintendo has finally teased the world with its Switch hardware reveal, everyone of course wants to know more and bigger questions about Nintendo’s strategy have become top of mind. Analysts have brought up a number of potential issues facing Nintendo as it moves forward. Most importantly, who is Nintendo really targeting with its new product and how is the company positioning the Switch against powerful consoles like next year’s Xbox Scorpio or this year’s PS4 Pro?
“Nintendo’s Switch reveal trailer unveiled a product positioning which aims to defend against the increasingly robust encroachment of the smartphone and tablet gaming opportunity yet still appeal to traditional console gamers that are looking for a big-screen gaming solution in the home. It has designed the Switch to deliver a flexible solution to cover multiple types of usage, but must avoid delivering a substandard experience by trying to be all things to all users,” said Piers Harding-Rolls, head of games research at IHS, which is now forecasting that Switch will sell 2.85 million units globally next March when it launches.
“Interestingly, the Switch reveal trailer was squarely targeted at young adults, which suggests that Nintendo is refocusing its early marketing on more traditional console gamers and those that also increasingly like gaming on the move. To build success with these buyers the offering must include third-party titles that are supported on other platforms,” Harding-Rolls continued. “Nintendo looks to have killed off its motion controllers with the Switch and opted for a more traditional form of gaming experience. This suggests the company is serious about getting third-party publishers to support the platform with multi-platform titles. Potentially, this will help Nintendo’s ambition to target young adult gamers.”
Third-party support does seem to be better already. Wii U had a list of just 21 publishers and developers at its launch while Switch has close to 50. Support, of course, is something that’s always in flux, but it’s crucial for Nintendo to get its messaging right with consumers if it wants to maintain that support from third parties. “They need a proper message. Right now I am concerned they are pitching it as just another tablet with controllers,” said DFC Intelligence’s David Cole.
“Nintendo’s ability to market a clear use case message to the audience [will be key]. Nintendo failed to do this with the Wii U and paid the price,” added Harding-Rolls.
SuperData’s Joost van Dreunen believes Nintendo needs to do a better job in defining its audience. “I have my reservations with regards to the breadth of the audience it targets. The Switch will likely be most popular among a younger audience: its functionality is uniquely geared toward pre-teens and teenagers. While the device seems much less like a toy than we’re used to from Nintendo, its features like backseat multi-player and the ability to have several people play using a single piece of the controller target Nintendo’s traditional audience. The reveal video makes a lot more sense to me if you swap out all the adults in it with kids,” he noted.
It’s clear that the widespread adoption of gaming on smartphones has had an impact on Nintendo, and indeed the company is pushing out its own mobile titles like Super Mario Run this holiday, but will that approach truly serve as a stepping stone to the Switch, or will it ultimately cannibalize Nintendo’s new hardware?
Dr. Serkan Toto, an analyst who specializes in the mobile market in Asia, remains skeptical. “Sorry, but is a portable/home console approach really that innovative in 2016? I am most concerned about the target group of the device: who else but die-hard Nintendo fans will buy the Switch? The Switch lacks a killer feature, and I think it will be very difficult for Nintendo to win back the casual gamers that are mostly on mobile now,” he commented. “In Japan, for example, the mobile gaming sector is already 2-3 times bigger than consoles. Even the PS4 struggles over here. It’s going to be a huge challenge to try to reverse that trend.”
So will Super Mario Run make a difference? “I find it very difficult to picture a scenario where a critical number of mobile, free-to-play users converts to console and buy hard- and software for several hundred dollars upfront. Different markets, very difficult to bridge,” Toto continued.
As ever, the biggest factor in the Switch launch and its chances for success could be its price. “Price pretty much depends on specs, and success depends on both price and specs. If the specs are close to PS4, I think they can price around the same ($249), and at most $299. If specs are weaker, price could be lower,” noted Wedbush Securities’ Michael Pachter.
“Assuming they are close to PS4, they are making porting of games easy for developers (and inexpensive), and I think they will get a lot of third party support. If the specs are weaker, porting will be costly and less likely to occur. So my ‘prediction’ is that if specs and pricing are similar to PS4, the Switch will get a lot of third party support and will be immensely successful. If specs are weaker or if pricing is too high, sales will suffer because of lack of third-party support or because of uncompetitive pricing.”
Analysts agreed that $299 really is the highest Nintendo could acceptably go. “They must find a way to release the Switch at US$299 to stand a chance, that’s the threshold,” said Toto. “It’s not impossible by offering the device in multiple versions, i.e. without the home dock. ‘Hardcore’ video game fans can, at US$299, already get fantastic devices from Sony and Microsoft. The portable gaming use case, at scale, has been taken over by smart devices.”
SuperData’s van Dreunen added that a high profile bundle, like Zelda, which we know is a launch title, could play an important role in incentivizing consumers. “I’m hoping they’ll keep it under $300, ideally bundled with a Zelda or Mario Kart. Anything over that will severely limit its market potential,” he said.
Harding-Rolls sees $300 as the max as well, commenting, “The reveal suggests it is competing more significantly with traditional home consoles, but with the edge of mobility. Pricing will need to be competitive in this context and anything over $300 may not be a convincing proposition.” He pointed to similarities with Nvidia’s Shield as evidence that Nintendo may very well end up in that price range.
“The new console shares a number of design, positioning and component similarities with Nvidia’s Shield tablet. As such it is likely that Switch will be capable of displaying 4K video content and judging by the pricing of the original Shield tablet is likely to sit in the $250-$300 range,” he said.
Excitement is currently sky high for the Switch. In fact, as noted by Bloomberg yesterday, right after Nintendo said it would unveil the console, its shares climbed almost 5% leading to a market value gain of $1 billion (the stock is up 3.34% as of this writing today). The company’s stock is up more than 50% in 2016 in large part because of its embrace of smartphone gaming, but how Nintendo balances its portfolio and its message on mobile and Switch will be fascinating to watch in the next 6-12 months and it will reveal a lot about the future of the firm.
Researchers claim that they have discovered a bug in Intel chips that could compromise system securities.
According to IOActive, which describes itself as an ethical hacking company, researchers there can bypass address space layout randomization (ASLR), which is often used as a defense against malware.
The ASLR function randomizes code locations which is intended to cause systems to crash rather than be completely compromised.
Alfredo Pironti, a senior security consultant at IOActive, said that the flaw means that hardware security is important in preventing hacks.
Pironti said: “This is an interesting case as it shows that software isn’t always the easiest point of entry, particularly for those hackers that have a deeper knowledge of hardware and its vulnerabilities. But this is not the first case of something like this happening, and hardware side-channel attacks are something we have been aware of for a while.”
He continued: “It is worth noting that these attacks are often more expensive and time consuming to conduct, compared to classical software attacks. Usually they also have stricter conditions, such as running a specific software on the victim’s machine and being able to collect CPU metrics. However, this doesn’t mean that we shouldn’t be vigilant. Cybercriminals are more sophisticated, well-funded and – worst of all – patient than ever before, and are always looking for new and surprising ways to infiltrate. This is why it is vital that companies have their chips pen tested during the development stage, as the cost and complexity of remediating an attack of this kind is enormous.”
Yahoo is asking the U.S. government to provide further clarity on requests for user data, following reports that said the internet company secretly scanned customer emails for terrorism-related information.
On Wednesday, Yahoo sent a letter to James Clapper, the director of National Intelligence, saying the company has been “unable to respond” to news articles earlier this month detailing the alleged government-mandated email scanning.
“Your office, however, is well positioned to clarify this matter of public interest,” the letter said.
The scanning allegedly involved searching through the email accounts of every Yahoo user and may have gone beyond other U.S. government requests for information, according to a report from Reuters.
However, Yahoo has called the Reuters report misleading. “The mail scanning described in the article does not exist on our systems,” the company said.
A separate report from The New York Times suggested the email scanning was done on behalf of the U.S. Department of Justice and was intended to look for signs of code belonging to a foreign terrorist group.
The recent news stories on the email scanning have “provoked broad speculation” about Yahoo and U.S. government activities, the internet company said in its letter. Although Yahoo respects the need for confidentiality, the company is urging more transparency over how the U.S. government goes about legally obtaining users’ private communications.
“Transparency underpins the ability of any company in the information and communications technology sector to earn and preserve the trust of its customers,” the letter said.
Yahoo has agreed to be sold to Verizon as part of a $4.8 billion deal. But the internet company’s value may have diminished on news of the secret email scanning and a massive data breach publicized in September.
The Office of the Director of National Intelligence didn’t immediately respond to a request for comment.
According to Piper Jaffray Companies, a recent survey of 10,000 U.S. teenagers showed that 52% used Facebook at least once a month this fall, compared to 60% who used it monthly in the spring.
“Factoring out shifts in the population surveyed, core Facebook usage likely declined by three basis points, which indicates Facebook is gradually becoming less relevant versus Instagram and Snapchat,” Piper Jaffray analyst Gene Munster wrote in a research note to investors.
The same survey, however, showed that teen use of Facebook-owned Instagram has gone from 70% to 74% in the same time frame — and rose from 75% to 80% for rival Snapchat.
When asked what their favorite social network was this fall, 35% said Snapchat; 24% said Instagram; and 13% said Twitter and Facebook (which tied for third place).
While older users – say anywhere from 35 to 65 years old – have shown to be loyal Facebook users, the site isn’t pulling in enough users 24 and younger to offset losses as older users die off.
“Well, think about it,” said Zeus Kerravala, an analyst with ZK Research. “If Facebook just lost 8% of all teens, that’s millions of users…. Over time, they need to keep the funnel of users coming in on the younger side. I think it creates a huge issue down the road. It’s not likely they can add users that are of older generations. They probably have all they will get from anyone 30 and older.”
Facebook certainly has been working to draw in younger users.
In August, Facebook unveiled its Lifestage stand-alone app. Designed for iOS devices, the app enables teen users to share videos with other people in their schools.
Lifestage was born as a rival to Snapchat and basically a video version of an early stage Facebook.
Also, in March, the company bought face-swapping app Masquerade or MSQRD. The app enables users to dress up their photos and selfies with an Iron Man helmet or a panda outfit.
Facebook hoped that by being able to add special effects to their pics, teens and young adults would be pulled onto Facebook — or at least one of the apps. But so far, at least, those efforts don’t appear to be panning out.
The X50 modem won’t ship until the first half of 2018, and 5G networks aren’t expected to go commercial until 2020. But Qualcomm will have a lot to say about the new technology at its 4G/5G Summit in Hong Kong. At the same event, it’s announcing plans around its gigabit-speed X16 LTE modem.
The X50 will offer download speeds as high as 5Gbps (bits per second), where networks support them, using millimeter-wave frequencies and futuristic techniques for beaming signals to devices, according to slides prepared for the 4G/5G Summit. Qualcomm shared the materials in advance.
The X50 initially will use the 28GHz band, which is also the focus of 5G development work at the Verizon 5G Technology Forum and Korea Telecom 5G Special Interest Group. It’s one of several millimeter-wave bands that are widely expected to be used for 5G.
Cellular networks up to now have stayed below 6GHz, because higher frequencies don’t naturally travel as far or go through objects as easily. But a lot more bandwidth is expected to become available in millimeter-wave bands in the coming years. Qualcomm says the X50 will be able to use a combined 800MHz of spectrum, compared with up to 80MHz for the X16.
The future modem will use several emerging techniques to make this work. Key tools are beam-forming and beam-tracking, in which a cell can focus its signal to reach a specific mobile device and then follow that device as it moves around. The X50 will even be able to bounce its signal off hard surfaces in order to get around objects between the cell and the user.
Qualcomm expects the X50 modem to ship to system makers in sample quantities starting in the second half of next year. Combined with a gigabit-speed LTE modem, the X50 will form the basis of dual-mode 4G/5G devices. LTE and 5G are expected to coexist for many years.
Meanwhile, the X16 LTE modem will be coming out in a consumer device in the next few months. The NetGear Mobile Router MR1100, a mobile hotspot that provides a Wi-Fi connection on the go, will be sold by Australian carrier Telstra, Qualcomm announced Tuesday.
Netflix Inc added over 50 percent more subscribers than expected in the third quarter as original shows such as “Stranger Things” attracted new international viewers and kept U.S. customers despite a price hike.
The company’s performance represented a turnaround from the previous quarter of disappointing subscription growth. Netflix, which has spent heavily to expand outside its home market, also said that it was on track to start harvesting “material global profits” next year, even as it raised spending on original programming.
Netflix added about 3.20 million subscribers internationally in the third quarter, higher than the 2.01 million average analyst estimate.
In the United States, Netflix added 370,000 subscriptions, compared with analysts’ estimate of 309,000, according to research firm FactSet StreetAccount.
“Investors appear laser focused on subscriber growth, and so long as Netflix delivers on that metric, investors will bid its shares up,” said Wedbush Securities analyst Michael Pachter. However, Pachter said he thought the continuing cost of developing new shows would undermine plans to deliver material profits in 2017.
Netflix has expanded into more than 130 markets worldwide, including most major countries, except China. It said on Monday it was dropping plans to launch a service in China in the near term, opting instead to license its shows for “modest” revenue.
The company said it still hopes to launch service in China “eventually.”
In the meantime, Netflix plans to keep pouring money into building its stable of original and licensed TV shows and movies. Content spending will rise to $6 billion next year, a $1 billion increase from 2016, the company said.”We will keep investing in growing the content spend, even domestically, for quite a long time,” Chief Executive Reed Hastings said on webcast.
Netflix has been facing a slowdown in subscription growth in the United States as the market matures and a planned U.S. price hike raised concerns it would not hit its targets. It also faces competition from the likes of Hulu and Amazon.com Inc.
But the company, whose other popular original shows include “Orange is the New Black” and “House of Cards”, said it expects to add 1.45 million subscribers in the United States in the current quarter.
Analysts on average were expecting 1.27 million additions, according to research firm FactSet StreetAccount.