China’s Tencent To Rest...

China’s Internet juggernaut Tencent  announced today that it would undergo a restructuring of its business units into six groups. Ren Yuxin was also named as the new chief operating officer and will head  up the media and social-networking groups. The six groups include: TEG – Technology & Engineering Group, comprised of Tencent Research and operating divisions. SNG – Social Networking Group, comprised of its Internet business lines and some divisions from Tencent Research. CBG – Creative Business Group, formed by Tencent Guangdong R&D Center and its corporate development arm. IEG – Interactive Entertainment Group, original Interactive Entertainment service. MIG – Mobile Internet Group, made up of wireless services and some divisions from Tencent Research. OMG – Online Media Group, namely its portal business. The most profitable Chinese Internet company and its red scarf clad penguin mascot, has been growing into quite the force by competing with other Chinese Internet companies on many fronts like portal business (rivals with Sina, Sohu and NetEase), online games (Sohu, NetEase and Shanda), social networking service (Sina, Renren), software and anti-virus services (Qihoo 360), online video (Qiyi, Sohu Video), eCommerce (Taobao), travel booking (Ctrip), online payment (Alipay) and search (Baidu and Sogou). Just to name a few. In the firm’s freshly released Q1 2012 financial results, the company turned a profit of US $470.6 million on revenue of 1.53 billion, a 2.8% increase from this time last year. All of its major offerings are still seeing big growth, for example, its instant messaging system QQ now boasts 751.9 million accounts, up 11.5% YOY. Both QZone and Pengyou.com, Tencent’s approach to social networking to date claims 576.7 million and 214.5 million users respectively, up 9.7% since last quarter and a stunning 30.2% YOY. And the Shenzhen-based company’s profit-making businesses including QQ Game Open Platform, Internet value-added service, wireless Internet value-added service as well as online advertising business all pulled off decent growth in the past quarter. However, there’s always more than meets the eye. For starters, Tencent’s investment spree last year hasn’t brought on too much revenue, for example, it still lags behind Alibaba/Taobao on the eCommerce front in spite of all its recent acquisitions. Starting last year, Tencent invested in a handful of eCommerce services, like Gaopeng (think Groupon), China’s Zappos OKBuy.com, the Chinese OTA elong.com, diamond dealer kela.cn, 3C etailer 51buy.com and so forth, with elong.com being the only one turning a profit. Furthermore, Sina Weibo, which is like a Chinese mix of Facebook and Twitter, is posing a real threat to Tencent’s dominance in social networking. Just like Tencent built its empire on QQ, Sina has been working relentlessly on Weibo to reinvent itself from the traditional online media company to the leading social media outlet by adding a swath of innovations to the platform like Weibo Open Platform, Enterprise Weibo, Weibo gaming center and so on. At the same time, Tencent’s search effort Soso has been long-rumored to be facing serious downsizing, which shows that a company that seems as strong as Tencent can still have weaknesses. Soso hasn’t had any major breakthroughs since its inception six years ago. It currently accounts for 1.5% of China’s search market in the first quarter of this year, according to a report by Beijing-based market researcher iResearch. Tencent should be wary of the rise of its peers and an organizational restructure might help it be more responsive to market change and be nimble in execution.

Salesforce.com: Q1 Net ...

The ongoing interest and use of cloud-based services has brought a generally good set of results to one of the leaders in the enterprise software-as-a-service business.  Salesforce.com released Q1 earnings just now and in a quarter that is traditionally slower for the company, it swung to a net loss of $19.5 million, compared to a net profit of $530 million a year ago. Nevertheless, total revenues for the quarter were $695 million and earnings per share of $0.37 — beating estimates from analysts as polled by First Call, who expected adjusted EPS of $0.34 and $678.21 million for revenue. The figures were also better than Saleforce’s own guidance of $0.33-$0.34 for the EPS and revenue of $673 million – $678 million. The sales were an increase of 38 percent on revenues for the same period a year ago, and Marc Benioff, chairman and CEO, salesforce.com, says that the company is on track for its first $3 billion year; last year the company broke new ground with $2 billion in sales. Within salesforce’s revenues of $695 million, the company is making the vast majority of its money on its core, cloud-based CRM software, for which subscription and support revenues were $655 million. Professional services accounted for a much smaller portion of sales at just $40 million. Subscriptions are growing more: they were up by 38 percent compared to 30% for professional services. Deferred revenues — that is, revenues that Salesforce has yet to collect from its customers — is up by quite a lot. Salesforce notes that overall deferred revenue on the balance sheet was $1.33 billion, a rise of 46 percent on last year. Meanwhile unbilled deferred revenue — business that is contracted but unbilled and off the balance sheet — was up to $2.7 billion from $2.2 billion a year ago. Rises in both might be a reflection of Salesforce’s own growth, but could also be a sign of customers delaying their payments, which Salesforce cites as a risk factor in its business. Salesforce says that it generated cash of $213 million in Q1, up 53 percent over last year. Total cash, cash equivalents and marketable securities are at $1.7 billion. In addition to the bullish projections on $3 billion in revenues for the full year, Salesforce.com says that it expects revenues for the next quarter to be up on this quarter and in the range of $724 million and $728 million, up 33 percent on last year’s Q2. Looks like tomorrow might be a good trading day for Salesforce.com.  In a research note, Canaccord Genuity analyst Richard Davis noted that the thinks that shares of Salesforce.com  might rise by as much as three-eight percent on Friday, due to “at least temporary exhaustion of risk-off selling of high valuation growth stocks,” and “a positive halo effect from a successful Facebook IPO.”

Pearson Buys Certiport ...

Pearson , the educational publisher, today made a move to beef up its international professional IT testing business: it announced that it is buying Certiport , a developer, marketer and distributor of certification exams and practice tests for IT and digital literacy skills, for $140 million in cash from the private equity firm Spire Capital Partners. The deal will give Pearson’s VUE unit, where Certiport will sit, much further reach into the retail distribution of testing services in markets outside of the U.S. and UK: Certiport currently sells its certifications and assessments through a network of 12,000 testing centers operated by 70 partners in 150 countries, serving the range of skills in the world of IT. In all, it delivers 225,000 exams in 27 languages every month, and generated revenues of $48 million in 2011. Certiport, which was founded in 1997 in Utah, creates certification programs for software from companies like Microsoft, Adobe, HP and Intuit. With Certiport having 60 percent of its business currently outside of the U.S., the deal will mean not only a stronger profile in IT educational services for Pearson, but a window on to a wider geographic footprint, especially in Asia and the Middle East. The existing testing network will also become a channel that Pearson can use to distribute testing and certification content already in its portfolio. “Certiport is a high-quality company serving the significant demand for foundation IT skills. That need is growing fast and is truly international,” said Rona Fairhead, chief executive of Pearson’s professional education businesses, in a statement.”The combination of Pearson VUE and Certiport will strengthen both businesses and will give us a unique portfolio of technology assessments and certification, serving everyone from a basic word-processing users to technology experts.” Pearson notes that Certiport’s revenues have been growing at a compound annual rate of 20 percent in the last three years, with the integration costs for Certiport expensed in 2012 and the acquisition showing up in Pearson’s earnings from 2013.

Workplace Social Networ...

When it comes to business social networking products, Convo , created by Scrybe Labs, probably doesn’t have the name recognition (or the funding ) of Yammer. But judging from the demonstration I saw recently, it has a compelling product, and it’s announcing some nice additions today. CEO Faizan Buzdar came by the TechCrunch office last week to demonstrate Convo and its new features. It was the first time I’d seen the product, and even though the TechCrunch team pretty much lives in Yammer, I was impressed. When you first open the website or the desktop app, it looks pretty similar to other enterprise social networks — a stream of conversations and shared content from your coworkers. What’s really compelling, however, is the quality of the integration between the conversation and the documents (or other content). You can highlight items in a presentations, for example, and thumbnail of what you’ve highlighted will show up in the conversation stream. When someone clicks on that image, they’ll be taken to that exact point in the presentation. You can do the same thing for live websites, which is useful, for example, for tech blogging customers like The Next Web . This isn’t Convo’s only feature, but it’s the one that makes the best case that the service isn’t just “a stream of chitchat,” as Buzdar puts it. As for the new features, Convo is launching an Android app today. The company already has an iPhone app, and Buzdar says the Android functionality is pretty similar. Both mobile apps are designed around letting people keep up with the conversations in Convo, rather than porting all of the desktop version’s features onto the phone. The next step in the company’s mobile plans is an iPad app, which should come much closer to the desktop experience, except with a touch interface. Buzdar also plans to launch a group chat feature later this month, where users can start a conversation with select coworkers in a private room. What’s appealing, especially for anyone who’s ever had a “Wait, who said what where?” moment of being overwhelmed by all of a company’s different conversation channels, is the fact that these group conversations can eventually be shared (perhaps with some light editing, if some of the conversation isn’t always polite about your coworkers) with everyone else in the workplace, and they can be marked up like any other piece of content. We last wrote about Convo about a year ago, when it was known as Convofy .

iZettle, The ‘Square Of...

With Square yet to reveal when or where it might offer its mobile payment service in Europe, and PayPal apparently still only talking with would-be partners, the door is wide open for more local players to jump in and pick up some market share. Sweden’s  iZettle , which often gets compared to Square , is now doing just that: today it is launching its iOS, dongle-based mobile payment service to the UK, four months after its pan-nordic live launch, and as it is preparing to launch an Android version of its product later this year. iZettle kicking off its service by giving away 3,000 card readers to small businesses and sole traders in the country as part of its invitation-only beta, which it is running in cooperation with MasterCard, American Express and Diners Club. In its still brief life, it has seen some decent traction in Sweden, Norway, Denmark and Finland, where it now has 50,000 active merchants on its network. iZettle is filling a practical need in the current market. The initial aim of the service, according to Jacob de Geer, the founder and CEO, is to target not those merchants that already take card payments, but those who have never signed on to using anything other than checks, cash and invoices to accept payments. There are roughly 20 million small businesses in Europe that fall into this category, he says, with the “uncarded” ranging from sole traders like carpenters to small independent cafes. “We’re not trying to go after those with existing infrastructure because switching costs are too high,” he says. De Geer will not yet reveal the total number or value of transactions or how many consumers that have used the service to date, except to say that the company is building out its infrastructure to keep up with the demand and has grown by 10 percent in recent months. What’s interesting is that, for now at least, the service seems to be attracting high-value transactions: De Geer says the average value of a transaction is €60 ($76), compared to between €10 and €15 for the average NFC transaction in the Nordic region. (In comparison, he notes that Square transacts between $8-10 per day on any given reader, but that’s an average number and it has picked up a huge number of merchants now.) The iZettle service works similar to PayPal’s Here and Square, in that a merchant plugs a card-reading dongle into an iOS device to process a card payment using an app downloaded to the device. Instead of reading the magnetic strip on the back of the card, iZettle reads the chip — these are now near-ubiquitous in Europe and tend to be more secure. Like other card payment services, you sign on the device screen to complete a payment, and the funds are deposited in a merchant account the next day. Similar to other payment services iZettle works on a commission basis — in its case a percentage on each transaction, with that percentage varying by country. It actually dropped a transaction fee it used to take only days ago — perhaps a sign of how the area is heating up and so offering more competitive offerings is essential. For now, the service is only on iOS but De Geer says that Android is coming soon, “this year for sure.” He says that the delay was due to (surprise!) fragmentation across too many versions of the platform, and too many devices. But the evolution to Ice Cream Sandwich — the latest OS — is definitely making things more standardized, he notes. One expansion that is not coming soon is to the U.S. Not only do companies like Square and Here have a lot of early business sewn up, but he also notes that “The U.S. is not too interesting for us given that they use the mag stripe and we focus on chip-and-PIN services.” More interesting, he says, are markets like Asia and Latin America, where there is good chip-card penetration but card payment facilities are still relatively low among smaller businesses. Still, the next launches are likely to be in Europe, with Germany, France, Italy and Spain all on De Geer’s roadmap, with “one or two of those” expected to come online this summer. To date, iZettle has received venture funding of $16.4 million from Index, Creandum and others to fund that expansion. Interested companies can either register a request through iZettle’s web site , or via its iTunes app, and the first 3,000 will get a free card reader to get started.