B4| Thursday, October 31, 2019 *** THE WALL STREET JOURNAL.**
TECHNOLOGY WSJ.com/Tech
The Twitter CEO, a CoinList investor, has been bullish on bitcoin.COLE BURSTON/BLOOMBERG NEWSApple has responded to the
challenge of a maturing smart-
phone market by accelerating
sales of software, services and
accessories across the 900 mil-
lion iPhones in use world-wide.
The company said sales of its
services business rose 18% in
the latest quarter, while sales in
its wearables business soared
54% on the popularity of its Air-
Pods wireless earbuds.
The company is expanding
on its entertainment push with
the launch Friday of its new Ap-
ple TV+ streaming service.
Still, services and wearables
together brought in $19 billion
in quarterly revenue, less than
60% of the iPhone.
Apple reassured investors
that its new iPhone 11 models
are being well received, offer-
ing guidance for the current pe-
riod that largely exceeded Wall
Street’s projections.
It expects sales between
$85.5 billion and $89.5 billion
for the period, an improvement
on the $84.31 billion it posted
for a year earlier.
Continued from page B1
Lyft Inc. raised its outlook
for the year and built on recent
Wall Street momentum with re-
sults that showed a 63% in-
crease in revenue and more
earnings per rider using its
ride-hailing app.
The results prompted Lyft to
improve its full-year guidance
for the second quarter in a row.
The company said it expects
annual revenue of $3.57 billion
to $3.58 billion, up from $3.47
billion to $3.50 billion. It
trimmed its estimate for ad-
justed annual losses of $708
million to $718 million, com-
pared with previous guidance
of $850 million to $875 million.
Lyft said revenue climbed
63% in the three months ended
Sept. 30 to $955.6 million. Ana-
lysts surveyed by FactSet had
projected revenue of $915 mil-
lion for the quarter.
“Just across the board, the
third quarter exceeded our ex-
pectations,” Brian Roberts,
Lyft’s chief financial officer,
said in an interview.
The results mark the San
Francisco-based company’s
third earnings report to Wall
Street since going public, and
provide one of the strongest in-
dications that Lyft could
achieve profitability and be-
come a self-sustaining company
despite investor skepticism
over its losses and regulatory
challenges.
Investors have pushed the
company’s stock up about 9% in
the past week, after Lyft’s
founders said at a Wall Street
Journal conference that the
company would be profitable
on an adjusted earnings basis,
before interest, taxes, deprecia-
tion and amortization, by the
end of 2021. That is a year
ahead of analysts’ expectations.
The company’s loss widened
to $463.5 million in the period,
compared with a loss of $249.2
million in the year-earlier quar-ter. Lyft attributed that to
$246.1 million in stock-based
compensation and related taxes,
tied to the company’s March
initial public offering.
Excluding interest, taxes, de-
preciation and amortization, the
loss narrowed to $128.1 million
from $263.2 million on an ad-
justed basis, compared with a
consensus analyst estimate of
$206 million.
Analysts with Wedbush Se-curities wrote in a note Friday
that they were expecting strong
results and viewed the quarter
as “another step forward to-
wards regaining investor credi-
bility for Lyft.” Wedbush ex-
pects Lyft stock to surpass its
IPO price of $72 in the next 12
months. But the company has a
long way to go to achieve that
milestone: On Wednesday, Lyft
shares closed at $44.11 and
rose 2.2% in aftermarket trad-ing.
Key to Lyft’s future profit-
ability is eliminating discounts
and subsidies and making more
money per ride. Lyft said it had
more than 22 million active rid-
ers in the third quarter, a 28%
increase over the year-earlier
quarter. The company earned
an average of $42.82 per active
rider, up 27% from the $33.63 it
brought in per rider last year.
Mr. Roberts attributed the
increase in part to Lyft attract-
ing more passengers willing to
pay a higher price—mostly
business travelers who can ex-
pense their trips to their com-
pany. Also, neither Lyft nor ri-
val Uber Technologies Inc. are
offering as many promotions
and subsidies as they were a
year ago.
“The market is increasingly
rational. There is significantly
less discounting from a year
ago, and we expect these mar-
ket conditions to continue,” Mr.
Roberts said.
Lyft executives cautioned on
an investor call that the fourth
quarter is often slower, as the
holidays mean fewer business
trips, and its scooter- and bike-
rental business will also hit a
lull in cold-weather markets.
The company still faces a
regulatory crackdown by states
and courts. One of the biggest
threats to Lyft is California’s
passage of Assembly Bill 5 in-
tended to make companies clas-
sify workers such as ride-hail-
ing drivers as employees
eligible for legal protections.BYHEATHERSOMERVILLE
Lyft Increases Its Revenue Outlook
The results prompted the company to improve its full-year outlook for the second quarter in a row.BRENDAN MCDERMID/REUTERSBYSTEVENRUSSOLILLODorsey Backs Crypto Startup
In an interview, Chief Finan-
cial Officer Luca Maestri said
Apple is on track for a strong
Christmas sales season thanks
to customer interest in the
newest iPhones and the addi-
tion of new wearables, includ-
ing a pricier version of AirPods
that went on sale this week.
He added that the company’s
China business has improved
considerably and said Chinese
customers’ response to the new
iPhones has been good.
Some investors have feared
new iPhone models introduced
in September would fail to
catch on with consumers and
weigh on sales in the coming
year because they offer limited
new features.
The iPhone accounts for
over half of Apple’s revenue.
“The new phones are prov-
ing to be enough,” said Stephen
Lee, principal at Logan Capital
Management, an investment
adviser that counts Apple
among its largest holdings. “It’s
been a year where smartphones
are transitioning and manage-
ment has done the things nec-
essary to be relevant when 5G
is ready.”
Apple per-share earnings in
the latest quarter were $3.03.
Analysts expected earnings of
$2.83 a share.
Dow Jones & Co., publisher of
The Wall Street Journal, has a
commercial agreement to supply
news through Apple services.Apple’s
Sales Rise,
Profit Falls
SEOUL— Samsung Electron-
ics Co.’s third-quarter net
profit fell sharply, pressured by
a downturn in the memory-chip
market, despite growth at its
mobile and display businesses.
The South Korean company
reported a net profit of 6.29
trillion won ($5.4 billion), a
52% drop from a year earlier,
when the company reported its
highest-ever net profit. The
company reported revenue of
62 trillion won, down 5.3%.
Samsung, the world’s largest
producer of memory chips,
posted record quarterly profit
for much of 2017 and 2018 as
global demand for chips
soared.
More than 75% of Samsung’s
earnings came from chips last
year, but a semiconductor glut
has dragged down prices, end-
ing the hot streak.
The slump hasn’t affected
the company’s share price,
which has rallied more than
30% this year as of Wednesday.
Some analysts say the stock
has risen in anticipation of a
rebound in chip demand next
year from smartphone makers.
Early Thursday in Seoul,
Samsung shares were up about
2%.BYEUN-YOUNGJEONGSamsung
Profit Hit
By Slump
In Chips
frustrated with us,” Mr. Zuck-
erberg said. “I could be wrong,
but my experience running
this company so far has been
that if we do what we believe
is right, even when it’s unpop-
ular for years at a time, then
eventually, it has worked out
best for our community and
for our business, too.”
Facebook’s earnings re-
flected strong user growth.
The Menlo Park, Calif., com-
pany said it has 1.62 billion
daily active users of its plat-
form, up 9% from just under
1.5 billion a year ago, with
most of the new users outside
the U.S., Canada and Europe.
Average revenue per user rose
to $7.26, up 19% from $6.09 a
year earlier.
The company reported an
operating margin of 41%, downslightly from last year but well
above the mid-30s level Face-
book predicted last year when
it pledged to invest more in
user safety and security.
Facebook’s solid earnings
come amid mixed third-quar-
ter results for tech companies.
Twitter stock fell sharply last
week after reporting lower
revenue and earnings than ex-
pected, and Alphabet Inc.’s
profits fell short of forecasts
amid higher costs. Snap Inc.,
meanwhile, reported narrow-
ing losses and faster growth
than analysts had predicted.
The company’s strong earn-
ings contrast with its strug-
gles in Washington. Facebook
faces antitrust investigations
from the Federal Trade Com-
mission, the Justice Depart-
ment and more than 40 stateattorneys general. Democratic
presidential candidates and a
bipartisan collection of con-
gressional lawmakers have
faulted the company for al-
leged bias, inadequately ad-
dressing misinformation on its
platform or both.
Pressure from the White
House and Capitol Hill con-
tributed to the key financial-
industry partners dropping
out of Facebook’s Libra digital
currency project, and the Jus-
tice Department has asked the
company to shelve its plans to
introduce encryption across
its messaging services unless
it can address alleged public
safety risks.
News Corp, owner of The
Wall Street Journal, has a
commercial agreement to sup-
ply news through Facebook.plans to follow suit.
Mr. Zuckerberg rejected al-
legations that the company’s
refusal to fact-check candi-
dates’ advertising was de-
signed to appeal to conserva-
tives. Ads directly from
political candidates account
for only 0.5% of the company’s
revenue, he said, adding that
Facebook expects to win few
friends in either party.
“I’m pretty sure everyone isContinued from page B1Earnings
Surge
Twitter Inc. Chief Execu-
tive Jack Dorsey, a longtime
bitcoin advocate, is making a
fresh bet on cryptocurrency.
Mr. Dorsey is one of several
investors backing CoinList
Inc., a two-year-old venture
that helps startups raise
money through token sales.
CoinList has raised $10 million
in a new round of funding,
with Mr. Dorsey investing in
the company for the first
time, CoinList said.
Mr. Dorsey, who also serves
as chief executive of payments
company Square Inc., is a bit-
coin holder and has spoken
optimistically about the
world’s biggest digital cur-
rency for years. Earlier this
year, Square announced a new
initiative, Square Crypto.
San Francisco-based Coin-
List gained prominence in
2017 during the boom in ini-
tial coin offerings, a contro-
versial fundraising method in
which startups raised money
in exchange for digital tokens.
The market for ICOs surged
and then tanked in sync with
bitcoin’s rapid rally and subse-
quent decline.
Since then, token sales
have continued, albeit on asmaller scale and in various
forms.
Bitcoin has more than dou-
bled this year but on Wednes-
day was trading around
$9,100, below its all-time high
near $20,000 in late 2017.
CoinList says it connectsthoroughly vetted blockchain-
related companies with inves-
tors in compliance with
emerging cryptocurrency reg-
ulations. It has supported
more than $800 million of to-
ken offerings since August
2017.berg. The debacle prompted
hearings in the U.S. and Europe
as well as calls for stricter rules
on the data-sharing practices of
tech companies.
The U.K.’s Information Com-
missioner’s Office, in announc-
ing the agreement Wednesday,
said Facebook had “made no
admission of liability.”
The settlement, a first in the
Cambridge Analytica scandal,
highlights Facebook’s legal te-
nacity in fighting privacy cases
even as its public posture on
the issue has softened.
During the fight, Facebook
demanded to see documents
the privacy regulator seizedfrom Cambridge Analytica,
which has since closed down. It
also disputed how the ICO con-
ducted its investigation.
The regulator has said its in-
vestigation confirmed that
Cambridge Analytica got access
to data on tens of millions of
Facebook users from the devel-
oper of a third-party app that
plugged into the social net-
work. That included data on
roughly a million U.K. residents,
it said.
While Facebook has settled
the U.K. probe, it faces broader
antitrust inquiries in the U.S.
and 11 more privacy investiga-
tions in Ireland, which couldlead to major fines. Ireland’s
Data Protection Commission is
Facebook’s lead privacy regula-
tor under the European Union’s
new privacy law because the
company’s regional headquar-
ters are in Dublin.
The most advanced case in
Ireland involves whether Face-
book’s WhatsApp chat service
gives adequate notice to users
on how it shares their data,
while other regulators are ex-
amining such matters as
whether Facebook gets suffi-
cient consent for its use of per-
sonal data for advertising.
—Sam Schechner
contributed to this article.LONDON— Facebook Inc.
reached a settlement with the
U.K.’s privacy regulator to pay a
£500,000 ($643,000) fine for
allowing political-data firm
Cambridge Analytica to im-
properly access users’ data, but
stopped short of admitting
wrongdoing.
The contested fine, issued a
year ago, is small for a com-
pany the size of Facebook. but
it marks the first regulatory
penalty against the social net-
work in a scandal that became
a reputational nightmare for
Chief Executive Mark Zucker-BYPARMYOLSONCambridge Analytica Case Results in Fine
nections 100 times faster than
current 4G networks.
Its speed and capacity could
enable innovations such as
driverless cars, robot-run facto-
ries and internet-connected
pacemakers.
China already has more than
80,000 macro base stations,
typically cellular towers with
antennas and other hardware
that beam wireless signals over
wide areas.
Bernstein Research esti-
mates China will end the year
with about 150,000, while
South Korea will be in second
place with 75,000, followed by
the U.S. with 10,000.
Before Thursday, China’s
three major wireless carriers
had said they had more than 10
million preregistrations for 5G
subscriptions.
Bernstein analyst Chris Lane
estimated there would be 120
million 5G subscribers in China
by the end of 2020 and 465
million by the end of 2021.
— Raffaele Huang
contributed to this article.Continued from page B1China
Activates
5G Network