May 21, 2023: NASDAQ Outperforms More Data Confirms Slipping Private Valuations

Last week, Dow Jones was up 0.4%, S&P 500 was up 1.65%, Nasdaq rose 3%. More data confirmed last week’s data of falling private valuations: For the first time in more than a decade, returns for venture funds were negative for three consecutive quarters last year, according to research firm PitchBook Data, as investors finally began to mark down startups that had ballooned in value. Initial data for the fourth quarter also show a negative quarterly return. Tiger Global is looking to offload some of its startup stakes. Snowflake is reportedly nearing the acquisition of search startup Neeva. Software company New Relic is in talks to be sold to private equity. EU approved Microsoft’s US$69 billion acquisition of Activision. Buffett exited TSMC while hedge funds Coatue, Tiger Global bought. Billionaire Stanley Druckenmiller’s family office pumped a combined US$430 million into Nvidia and Microsoft stocks in big, bold AI bets. The manufacturing cost of Apple’s mixed reality headset exceeds US$1,500 per unit. But internal projections give it the potential to eventually be as big as the iPad or the Apple Watch, as the company adds features and reduces the price with subsequent versions. Almost 5 million people are using Netflix’s ad tier. YouTube says revenue rose to US$40 billion, boosted by subscriptions. Disney is reportedly preparing a standalone ESPN streaming service. Instagram is reportedly testing a Twitter competitor — and the first leaked images indicate a summer release. In Canada, Sophic Client OneSoft reported Q1 revenue growth of 72%, and expects approximately 50% revenue growth in 2023and to achieve near cash-neutral monthly operations late in 2023. Sophic Client Kraken received $1.1 million of synthetic aperture sonar orders. Sophic Client Clear Blue Technologies received a $300,000 roadway expansion project in Oregon. Year to date, Clear Blue’s bookings are $4.6 million, of which $4 million is expected to be recognized in 2023. Canadian venture capital continues to fall back to pre-pandemic levels, according to CVCA. Despite seeing a decline in venture funding both quarter-over-quarter and year-over-year, Québec attracted more investment than any other Canadian region in the first quarter of 2023.

Sophic Client OneSoft Solutions Inc. (OSS-TSXV, OSSIF-OTC) reports results for first quarter ended March 31, 2023 and provides a business update.

Revenue in Q1 2023 was $2.2 million, an increase of 72% or $0.9 million over Q1 2022 revenue of $1.3 million. Gross profit increased 73% to $1.6 million in Q1 2023 from $0.9 million in Q1 2022. Gross profit as a percentage of sales was 70.5% in Q1 2023 versus 70.1% in Q1 2022.The net loss was $0.7 million in Q1 2023, an $0.4 million improvement over Q1 2022’s loss of $1.1 million, driven by the increase in gross profit. Sales efforts are currently underway with prospective customers in North and South America, Europe, Middle East and Australia, and several U.S. based customers have initiated efforts to expand their use of solutions to their international operating divisions. Management believes that OneSoft is poised for approximately 50% revenue growth in Fiscal 2023 over Fiscal 2022 and to achieve near cash-neutral monthly operations late in Fiscal 2023. With a strong balance sheet, sufficient cash on hand and a strong base of hallmark customers who generate recurring revenues, management believes there will be no requirement to raise additional capital to execute current business and operational plans. https://bit.ly/3MAb9pM

Sophic Client Kraken Robotics (PNG-TSXV, KRKNF-OTC) receives $1.1 million of synthetic aperture sonar orders.

These systems will be integrated to Autonomous Underwater Vehicles (AUVs) for use in minehunting and security applications. Customer names cannot be disclosed. Delivery is expected in 2023. Kraken’s AquaPix is an off the shelf, configurable SAS that replaces high end sidescan systems at an affordable price, while delivering higher resolution, range, and area coverage rates (ACR). The increased range, resolution, and therefore higher useable ACR of SAS over traditional Side Scan Sonar systems significantly expand the capabilities of naval, scientific, and commercial applications. https://bit.ly/3Ip19Nz

Sophic Client Clear Blue Technologies (CBLU-TSXV, CBUTF-OTC, 0YA-FRA) Illumient lighting selected for $300,000 roadway expansion project in Oregon.

The project is a follow-on order with a previous Illumient customer. The total lifetime contract value of the project is $425,000 and is expected to ship in Q3 2023. Year to date, Clear Blue’s bookings are $4,600,000, of which $4,000,000 is expected to be recognized in 2023. Recall, in Q1 2023, Clear Blue’s order intake was $3,500,000 (up 74% from 2022), of which $3,200,000 was expected to be recognized as revenue in 2023. The customer previously purchased and successfully installed 63 Illumient Smart Off-Grid lighting systems with Clear Blue in 2019, and has been satisfied with the operation of the systems as well as Clear Blue’s ongoing service. The Illumient lighting systems will include 3 years of Clear Blue’s Energy-as-a-Service offering, whereby Clear Blue remotely monitors and manages every Illumient lighting system to ensure optimal system performance. The recurring revenue component of this contract will contribute an additional $125K in revenue beyond the initial value of $300,000. https://bit.ly/3Mivaj9

Energy management startup Peak Power raises $47 million to expand across US.

Toronto cleantech startup Peak Power has raised $47.2 million as it looks to capitalize on increasing adoption of energy storage solutions in the United States (US). Peak Power raised the round from a slate of investors in sustainable technology. The funding was led by a fund affiliated with Greenbacker Capital Management, with participation from existing investors such as Hatch, The Atmospheric Fund, BDC Capital, Sensata Technologies, and Osmington Inc. Peak Power also plans to hire for “critical roles,” and continue to develop its software. Founded in 2015, Peak Power provides energy management solutions for commercial real estate and industrial companies. Peak Power claims its flagship software, Peak Synergy, can help users minimize operational costs, reduce emissions, and sell energy back to the grid. According to Peak Power, its platform can optimize energy use for three assets: battery energy storage systems, electric vehicles, as well as “grid-interactive buildings,” which are infrastructures that can effectively change their energy consumption to lower demand on the energy grid. https://bit.ly/45jJKzD

Stathera closes $20 million Series A to commercialize semiconductor timing tech.

Montréal-based fabless semiconductor startup Stathera has secured $20 million in Series A financing to bring its first-generation microchip clock to market. Stathera’s all-equity, all-primary Series A round was co-led by BDC Capital’s Deep Tech Venture Fund and San Francisco-based, deep tech-focused venture firm Celesta Capital. The financing, which closed in mid-April, was supported by strategic investors from the semiconductor and electronics spaces, including Taiwan’s MediaTek and TXC, and Japan-based Seiko Epson. Stathera specializes in micro-electromechanical systems (MEMS) and develops MEMS-based timing solutions for semiconductors. https://bit.ly/43bmMZR

ChrysaLabs raises $15 million to help farmers unearth soil data using AI.

Montréal-based agtech startup ChrysaLabs, which provides soil-testing technologies, has raised a $15 million funding round. Leaps by Bayer, TELUS Ventures, and BDC Capital are among the new investors that participated in this round. It also saw the participation of existing investors Ecofuel, Emmertech, Anges Québec, AQC and Koan Capital. Founded in 2017, ChrysaLabs offers a sampling probe that can help farmers unearth deeper insights into their soil. Per Crunchbase data, ChrysaLabs has raised over $21 million in total funding to date. This includes a $1.3 million seed round and $1.6 million financial contribution from Sustainable Development Technology Canada in 2021. https://bit.ly/42OG0EO

Bloom raises $7 million to make applying for reverse mortgages easier.

Toronto-based Bloom has raised $7 million in Series A funding to make applying for reverse mortgages easier. SixThirtyVentures led the round. Bloom did not name other investors that participated. Bloom said its platform has been actively expanding since it launched in 2021. It claims to have extended nearly $100 million to homeowners in Ontario and British Columbia to date. https://bit.ly/3MiVABr

Québec attracted more venture funding than any other Canadian region in Q1 2023.

Despite seeing a decline in venture funding both quarter-over-quarter and year-over-year, Québec attracted more investment than any other Canadian region in the first quarter of 2023. Québec startups raised a cumulative $317.3 million through 12 deals in Q1 2023, which represents a 37 percent decrease in investment quarter-over-quarter and a 78 percent decline year-over-year. Of the ten largest deals closed during Q1, half either received contributions from or were led by Investissement Québec. The government-backed investments come at a time when the province has sought to deepen its commitment to its innovation sector. In its most recent budget, the province allocated $900 million to initiatives aimed at stimulating economic productivity and innovation, and committed to making investments in cleantech, AI, FinTech, and two “innovation zones” focused on quantum sciences and digital technologies. There are other signs the Québec tech sector could see more investment in the next few quarters, including the province’s plans to launch a $100-million entrepreneurship hub in downtown Montréal and the relaunch of the FounderFuel accelerator program in February. On the investor side, a number of firms appear ready to deploy new capital, including Diagram Ventures, which recently closed $100 million, Innovobot, which has already raised $14 million for its new seed-stage fund; and Brightspark Ventures, which recently closed half of its targeted $120-million early-stage-focused fund. https://bit.ly/45dv2dv

CVCA: Canadian venture capital continues to fall back to pre-pandemic levels.

Canadian venture capital investment continued its significant decline in Q1 2023 compared to the boom in recent years. However, while it fell quarter-over-quarter and year-over-year, the amount invested is a return to pre-pandemic levels and sets the time period of 2021 to early 2022 as a potential outlier for Canadian venture capital. The CVCA tracked a total of $1.17 billion invested into 153 deals overall in Q1 2023. In terms of private equity, the CVCA found that deal count and amount invested remained steady in Q1 2023 compared to the past year. While deal count was down 30 percent compared to the same quarter in 2022, deal value was comparable with $2 billion in private equity invested across 155 deals. Seed-stage companies saw the most deals done in Q1 2023, with 60 investments that amounted to $152 million. Early-stage companies saw the highest number of dollars invested, with $730 million across 50 deals. Later-stage deals amounted to $241 million in nine companies, while the CVCA recorded no growth-stage deals in the quarter. Comparatively, 2022 saw a high amount of venture debt dollars invested with Q2 through Q4 having around $200 million invested each quarter. Private equity had different trends than venture capital, but was also a mixed bag. While the amount invested remained steady compared to 2022, deal count in Q1 2023 was down 30 percent. A total of $2 billion was invested across 155 deals. https://bit.ly/45glvT2

A Toronto esports team just had their fingers insured for $1 million.

Media and telecom giant Bell announced on Tuesday that, in partnership with esports team Toronto Ultra, it had insured each individual finger of team members for up to $1 million combined, marking a first for a professional esports team in Canada. https://bit.ly/3IvxhiD

Venture-fund returns show worst slump in more than a decade.

For the first time in more than a decade, returns for venture funds were negative for three consecutive quarters last year, according to research firm PitchBook Data, as investors finally began to mark down startups that had ballooned in value. Initial data for the fourth quarter also show a negative quarterly return. The data also show that the yearly internal rate of return hit minus 7% in the third quarter—the latest data available for that measure—the lowest value for those three months since 2009. The internal rate of return is used to measure the profitability of venture funds on an annual basis and is a key performance metric used by the industry. The decline marked the fifth consecutive quarter of deteriorating yearly rates of return—the first time this has happened in a decade—and was also the only negative rate of return among seven investment categories tracked by PitchBook, including private equity and real estate. https://archive.is/Lhp5g

Tiger Global looks to offload startup stakes.

Tiger Global Management, the New York-based hedge fund turned venture investor, has hired an advisor to help it sell off some of its startup stakes, a process known as a seconary sale, the Financial Times reported. Selling positions in portfolio companies like ByteDance and OpenAI could help the firm return capital to its backers. Tiger has been on the hunt for secondary market opportunities for months now. Earlier this year, the firm tried to sell stakes in venture capital funds it backed in 2022, The Information reported last month. It’s been a challenging year for Tiger. Write-downs of its portfolio companies like OpenSea and FTX have damaged returns for its biggest venture fund, a US$12.7 billion vehicle launched in 2022. That fund had a paper loss of 20%, net of management fees, as of December, according to documents viewed by The Information. https://bit.ly/41QLBZT

Fashion giant Shein raises US$2 billion but lowers valuation by a third.

Shein, the online fashion company that won over millions of American shoppers during the pandemic, raised US$2 billion in its latest fundraising round that values the company at US$66 billion, about a third less than a year earlier, according to people close to the company. The online-only retailer, which was founded in China and is now based in Singapore, cut its valuation after tech-company share prices have come down. The company also faces intensifying pressure from U.S. lawmakers on its labor and environmental practices. Shein generated US$23 billion in revenue last year, the people said, closing in on European rivals H&M Hennes & Mauritz and Zara owner Inditex, and its net profit was US$800 million. Shein has set a target to grow its revenue by 40% this year, the people said. Before the latest fundraising which closed last week, Shein was last valued at US$100 billion a year ago, catapulting its worth to be more than the combined market capitalization of H&M and Inditex. At the time, tech companies were flush with cash and investors have been betting on cashing in eventually when Shein goes public. https://on.wsj.com/3MqkS0q

Alibaba aims to spin off cloud business within 12 months.

Chinese e-commerce giant Alibaba Group said Thursday that its board has approved a full spin-off of its cloud computing business segment, and it aims to complete it in the next 12 months. The cloud unit intends to become an independent publicly listed company after the completion of its spin-off, Alibaba said. The move comes after Alibaba, whose stock fell sharply in the past few years due to Beijing’s regulatory crackdown on internet firms and China’s economic slowdown, said in March that it would split into six business units in the biggest change in the company’s corporate structure in its 24-year history. Each of the six units, Alibaba said, would have the flexibility to raise outside capital and seek its own initial public offering. On Thursday, Alibaba said that its Cainiao logistics business would aim to complete its own IPO in the next 12 to 18 months, while its Freshippo supermarket business would aim to go public in the next six to 12 months. During a conference call with analysts, executives reiterated that the restructuring would help increase Alibaba’s overall value for its shareholders. Separately, Alibaba also reported its financial results for the quarter through March. Its revenue grew only 2% in the quarter, as online transactions of physical goods on the company’s main domestic shopping sites declined amid weak consumer demand. But the company said China’s consumption gradually improved toward the end of the quarter. https://bit.ly/3Wok4ha

China’s Tencent reports solid first-quarter revenue after tough 2022.

Chinese internet giant Tencent said its revenue grew 11% in the first quarter, thanks to a recovery in its online advertising and videogame businesses. The quarterly revenue was better than analysts’ expectations. The results show how Tencent, China’s largest publisher of online games and the operator of the WeChat messaging app, is starting to recover from a tough 2022. Last year, Tencent, like most other major Chinese tech giants, struggled to cope with China’s economic slowdown amid severe Covid-19 lockdowns as well as the negative impact from Beijing’s earlier regulatory crackdown on the videogame industry. Tencent said its online ad revenue grew 17% in the first quarter. Revenue from domestic videogame business rose 6%, while revenue from its overseas videogame business grew 25%. The volume of Tencent’s digital payment transactions increased thanks to a recovery in domestic consumption, the company said. https://bit.ly/3WoeCLB

Snowflake nears acquisition of search startup Neeva.

Snowflake signed a letter of intent to acquire search startup Neeva, according to a person briefed on the deal. The Information reported Wednesday that Snowflake, a major cloud database provider, was in advanced talks to acquire the startup in order to help develop services for customers that want to use artificial intelligence software. Neeva, valued on paper at US$250 million two years ago, was co-founded four years ago by former senior Google advertising tech executives. Neeva earlier this year launched software that marries web search with large-language models, which are trained on massive volumes of text to understand the nuances of writing and underpin ChatGPT and other chatbots. Terms of the deal couldn’t be learned, and spokespeople for the companies did not have a comment. https://bit.ly/45lKvZk

Software company New Relic in talks to be sold.

Private-equity firms Francisco Partners and TPG are working together on a US$5 billion-plus bid to acquire software company New Relic, according to people familiar with the matter. Should there be a deal, it could be reached in the next few weeks, according to the people. It is possible the talks could fall apart and other suitors could still emerge. Shares of New Relic closed at US$83.84 Wednesday, up 11%, after The Wall Street Journal reported the potential deal, giving the company a market value of roughly US$5.8 billion. New Relic, based in San Francisco, provides observability software, which allows app owners and websites to track the performance of their services. Mergers and acquisitions, especially for private-equity firms, have been muted of late as a result of market volatility and economic uncertainty. As of May 12, private-equity firms had struck US$73.2 billion worth of leveraged buyouts versus US$111.1 billion in the same period last year, according to Dealogic. https://on.wsj.com/3MiIJPT

EU approves Microsoft’s US$69 billion acquisition of Activision.

The European Union’s executive arm on Monday approved Microsoft’s $69 billion purchase of Activision Blizzard, a major win for Microsoft in its effort to complete the deal. The European Commission, which has been investigating the acquisition since November, said in a statement that Microsoft showed the deal would not harm competition by agreeing to certain concessions. A central remedy that Microsoft offered would ensure Activision’s popular games such as Call of Duty remain available on competing consoles sold by rivals like Sony and Nintendo. The decision comes as the deal is facing other regulatory setbacks in the UK and the US. The British Competition and Markets Authority moved to block the deal last month, arguing that the acquisition would give Microsoft an insurmountable advantage over rivals in the nascent cloud gaming market, a decision that Microsoft plans to appeal. Meanwhile, in the US, the FTC has sued to block the deal. https://bit.ly/3MpOStH

Vice Media files for Chapter 11 bankruptcy, the latest in a string of digital media setbacks.

Vice Media on Monday filed for Chapter 11 bankruptcy protection, the most recent digital media company to falter after a meteoric rise. A consortium of lenders — Fortress Investment Group, Soros Fund Management and Monroe Capital — is buying Vice for about US$225 million, in addition to taking on a significant amount of the company’s debt. Other parties will be able to submit bids as well. Vice said it expects the sale to be wrapped up in the next two to three months. It said that during the process its media brands will continue to produce content and the company will keep paying its employees and vendors. The bankruptcy filing arrives just weeks after the company announced it would cancel its flagship “Vice News Tonight” program amid a wave of layoffs expected to impact more than 100 of the company’s 1,500-person workforce, the Wall Street Journal reported. The company also said it would end its Vice World News brand. There has been a wider surge of media layoffs and closures, including job cuts at Gannett, NPR, the Washington Post and other organizations. In April, BuzzFeed Inc. announced that its Pulitzer Prize winning digital media outlet BuzzFeed News was being shut down as part of a cost-cutting drive by its corporate parent. https://bit.ly/3og6lwz

Australia’s Aristocrat Leisure to buy Israel’s NeoGames for US$1 billion.

Australia’s Aristocrat Leisure on Monday said it will acquire Israel-based online gaming solutions provider NeoGames SA for about US$1 billion in a bid to improve its foothold in the real-money gaming (RMG) space. Aristocrat will pay US$29.50 per share to shareholders of the Nasdaq-listed firm for 100% of its shares, representing a premium of about 130% to NeoGames’ last close of US$12.84. The takeover will give Sydney-based Aristocrat entry into the attractive but highly regulated iLottery market, and facilitate further penetration across other online RMG verticals, it said. Aristocrat expects the acquisition to add to its profit in financial year 2025. Separately, it also announced an increase of A$500 million (US$339.2 million) to its existing share buyback program. https://bit.ly/3Io1obN

Fanatics buys PointsBet’s U.S. business for US$150 million.

Fanatics, the sports merchandise giant valued at over US$30 billion, has reached a deal to acquire the U.S. assets of PointsBet, an online sportsbook operator based in Australia. The deal brings Fanatics further into the world of online sports betting as it gears up for a potential IPO. Fanatics hired former Meta executive Deborah Crawford as its first head of investor relations last month. The company has alluded to a possible IPO in the next few years. The deal values PointsBet’s U.S. assets at US$150 million. It will give Fanatics access to sports gambling in the 15 U.S. states where PointsBet is currently licensed to operate. PointsBet has been trying to expand its U.S. presence since launching in New Jersey in 2019. PointsBet in 2020 inked a five-year deal with NBC Sports — worth nearly $500 million. That gave NBCU an equity stake in PointsBet and made PointsBet the exclusive sports betting partner of NBC Sports. https://bit.ly/45bg4Vs

Buffett exits TSMC while hedge funds Coatue, Tiger Global buy.

Buffett offloaded last of TSMC stake to conclude abrupt exit TSMC is biggest new buy for Coatue, Tiger Global last quarter. Taiwan Semiconductor Manufacturing Co. drew a mixed verdict from top investors in the first quarter, as Warren Buffett closed out his position while hedge funds Tiger Global Management and Coatue Management added new bets. Buffett’s Berkshire Hathaway Inc. exited the stock in the first quarter, according to a filing, after the firm slashed its holding by 86% late last year. That move — which sent TSMC shares tumbling and investors spiraling — was motivated by concerns over geopolitical tensions between China and Taiwan, Buffett told investors at its annual meeting earlier this month. https://bit.ly/3pR0VbQ

Billionaire Stanley Druckenmiller’s family office pumps a combined US$430 million into Nvidia and Microsoft stocks in big, bold AI bets.

Billionaire investor Stanley Druckenmiller’s family office loaded up on Nvidia shares and made a new Microsoft investment last quarter, signaling a big push into artificial intelligence-related stocks. Druckenmiller’s Duquesne Family Office bought 791,475 shares of Nvidia worth about US$220 million, boosting its holding in the chipmaker from 582,915 shares worth US$85.1 million as of end-2022, according to a 13F filing on Monday. Duquesne’s new investment in Microsoft saw the company buy 729,040 shares worth $210 million in the first quarter. Both Nvidia and Microsoft have dominated the AI scene this year, with the chipmaker earning a title as the “leading silicon AI enabler,” while the latter fueled the hype around artificial intelligence with a US$10 billion investment in OpenAI – the firm behind the viral large language tool, ChatGPT. The two tech giants’ ‘ shares have surged this year thanks to the AI boom, with Nvidia shares soaring 98% so far this year, while Microsoft stock rose about 30%. Druckenmiller himself recently spoke on artificial intelligence – highlighting it as a game-changing technology – during the 2023 Sohn Investment Conference. https://bit.ly/3MHMJuw

OpenAI readies new open-source AI model.

OpenAI is preparing to release a new open-source language model to the public, according to a person who has knowledge of the plan. The move comes as open-source alternatives to ChatGPT multiply. Meta released models in February that gave some researchers access to sophisticated models that they quickly turned into software that can rival proprietary technology from Google and OpenAI. Open-source engineers can also choose from technology from Laion, a German nonprofit, as well as Databricks and Stability AI. OpenAI hasn’t open-sourced its language models since 2019. But the sophistication of Meta’s models could put pressure on OpenAI and Google, which previously open-sourced some less-capable models, to make even better software available to open-source engineers. OpenAI is unlikely to release a model that is competitive with the proprietary model it’s selling, GPT. Unlike Meta, which doesn’t sell access to its AI, OpenAI’s US$27 billion private valuation depends on a future in which the most sophisticated AI for commercial purposes isn’t open source. https://bit.ly/3Mq32Lh

Apple restricts employees from using ChatGPT over fear of data leaks.

Apple has restricted employees from using AI tools like OpenAI’s ChatGPT over fears confidential information entered into these systems will be leaked or collected. Apple employees have also been warned against using GitHub’s AI programming assistant Copilot. Bloomberg reporter Mark Gurman tweeted that ChatGPT had been on Apple’s list of restricted software “for months.” Apple has good reason to be wary. By default, OpenAI stores all interactions between users and ChatGPT. These conversations are collected to train OpenAI’s systems and can be inspected by moderators for breaking the company’s terms and services. In April, OpenAI launched a feature that lets users turn off chat history (coincidentally, not long after various EU nations began investigating the tool for potential privacy violations), but even with this setting enabled, OpenAI still retains conversations for 30 days with the option to review them “for abuse” before deleting them permanently. https://bit.ly/3MHuyoP

Apple Reality Pro availability dependant on exclusive suppliers for most parts.

A report on Friday suggested that initial Apple Reality Pro availability is likely to be very limited, as the Cupertino company is “anticipating some production issues” with its upcoming AR/VR headset. Apple’s combined augmented reality/virtual reality headset is expected to be announced at WWDC next month. It’s believed to be branded Reality Pro. However, while the upcoming headset will be unveiled and demonstrated in June, mass production isn’t expected to begin until December. A fresh report suggests one reason for concern: for almost all of the key components, Apple is dependant on a single supplier for each. Apart from the assembly (exclusive to Luxshare-ICT), micro-OLED display (exclusive to Sony), dual processors (exclusive to TSMC), casing (Everwin Precision as the main supplier), 12 camera modules (exclusive to Cowell), and external power supply (exclusive to Goretek) are the top 5 most expensive material costs for this new device. https://bit.ly/42OFPJE

Manufacturing cost of Apple’s mixed reality headset exceeds US$1,500 per unit. Apple is rumored to finally unveil its first mixed reality headset next month at WWDC 2023. And according to the latest rumors, the device will cost around US$3,000 due to its advanced technologies and complex manufacturing process. But how much will Apple spend to manufacture each unit? Chinese analysts believe that the headset will cost Apple US$1,500 per unit. Apple’s headset manufacturing cost is higher than competitors. A report from Wellsenn XR details the Bill of Materials (BoM) for Apple’s upcoming mixed reality headset. If the report is correct, the components cost Apple around US$1,400. When shipping costs are added, the price for each unit comes to US$1,600. The headset is expected to be equipped with Apple’s M2 chip, 12GB of RAM, 512GB of SSD storage, Wi-Fi 6, and Bluetooth 5.3 for fast wireless connection. Apple, is known for not giving up its profit margin. A Bloomberg report said that the company considered selling the device at a loss to make it as competitive as possible, but the idea was then scrapped. https://bit.ly/42JhdSx

Apple’s new headset meets reality.

The device Cook will present, say people familiar with a development process that spread over seven years, has deviated far from his initial vision. Initially imagined as a pair of unobtrusive eyeglasses that could be worn all day, Apple’s device has morphed into a headset that resembles a pair of ski goggles and requires a separate battery pack. The stakes are high. For Cook, it’s the release of a long-awaited product that could be one of his last big swings as Apple CEO and will affect his legacy, either by giving him another major achievement or underscoring the narrative that the company’s biggest victories were initiated under his predecessor, Apple co-founder Steve Jobs. For Apple, it’s the culmination of a multibillion-dollar development process, and some people within the company have described it as the potential foundation of a post-iPhone era. For others pursuing mixed reality and the metaverse, Apple’s headset could finally prove that the technology can live up to its long-promised, never-quite-realized potential. The company doesn’t see the headset being as immediately transformative as the iPhone. But internal projections give it the potential to eventually be as big as the iPad or the Apple Watch, as the company adds features and reduces the price with subsequent versions. That could mean a contribution of more than US$25 billion annually to the company’s revenue. Apple knows this will take time. It initially hoped it could sell about 3 million units a year out of the gate, but it’s pared back those estimates to about 1 million, then to 900,000 units. By comparison, the company sells more than 200 million iPhones a year. https://archive.is/IMDY0

Blue Origin wins US$3.4 billion NASA Moon mission contract.

Jeff Bezos’s rocket company Blue Origin won a US$3.4 billion NASA contract to design a human-landing system to put astronauts on the moon for NASA’s Artemis V mission scheduled for 2029, the US space agency announced on Friday. NASA previously contracted Elon Musk’s rocket company SpaceX to build a human-landing system for its Artemis III and IV missions to the moon. Those missions will use SpaceX’s superheavy rocket Starship, which is still under development. In its announcement, NASA emphasized the importance of supporting multiple private space companies. “Having two distinct lunar lander designs, with different approaches to how they meet NASA’s mission needs, provides more robustness and ensures a regular cadence of Moon landings,” Lisa Watson-Morgan, NASA’s manager of human landing systems, said in a statement. https://bit.ly/3IoEjWf

Cord-Cutting hits all-time high in Q1, as U.S. pay-TV subscriptions fall to lowest levels since 1991.

As streaming video continues its ascendancy, cable, satellite and internet TV providers in the U.S. turned in their worst subscriber losses to date in the first quarter of 2023 — collectively shedding 2.3 million customers in the period, according to analyst estimates. With the Q1 decline, total pay-TV penetration of occupied U.S. households (including for internet services like YouTube TV and Hulu) dropped to 58.5% — its lowest point since 1992, two years before DirecTV launched as a new rival to cable TV. As of the end of Q1, U.S. pay-TV services had 75.5 million customers, down nearly 7% on an annual basis. Cable TV operators’ rate of decline in Q1 reached -9.9% year over year, while satellite providers DirecTV and Dish Network fell -13.4%. In addition, so-called “virtual MVPDs” (multichannel video programming distributors) lost 264,000 customers in Q1, among the worst quarters to date for the segment. Comcast, the largest pay-TV provider in the country, dropped 614,000 video customers in Q1 — the most of any single company — to stand at 15.53 million at the end of the period. Google’s YouTube TV was the only provider that picked up subs in Q1, adding an estimated 300,000 subscribers in the period (to reach about 6.3 million) and netting 1.4 million subscribers over the past year. Hulu, meanwhile, has barely grown over the past three years (and loss about 100,000 live TV subs in Q1), Moffett noted, while FuboTV lost 160,000 subscribers in North America in the first quarter to mark its worst quarterly loss on record. https://bit.ly/3OnMJ49

Almost 5 million people are using Netflix’s ad tier.

Netflix revealed that the platform’s ad-supported tier has attracted almost 5 million global monthly active users six months after it first launched. The streaming giant disclosed the figures during its 2023 Upfront presentation on Wednesday, adding that the number of ad tier subscribers has “more than doubled” since early this year, with the median age of users being 34. Netflix co-CEO Greg Peters said during the presentation that over 25 percent of new signups select the ad-supported tier in countries where it’s available. Peters also claimed that viewer engagement on ad-supported tiers mirrors engagement levels seen across ad-free Netflix accounts. Warner Bros. Discovery made similar claims about its Max streaming service during the company’s own Upfront event on Wednesday. “Max Ad-Lite subscribers get all the same content as ad-free subscribers,” said Warner Bros. Discovery CEO David Zaslav. “See only three or four minutes of ads per hour and pay just US$9.99 a month.” https://bit.ly/3pYs2li

YouTube says revenue rose to US$40 billion, boosted by subscriptions.

YouTube generated US$40 billion in revenue across all its products in the last 12 months ending March 31, including subscriptions from YouTube Premium and TV, which it previously had not included when reporting revenue, CEO Neal Mohan said Thursday at a conference hosted by research firm MoffettNathanson that was livestreamed. Previously, the Alphabet unit had reported it made US$29.2 billion in advertising revenue but did not disclose sales from paid subscriptions. Most of YouTube’s revenue continues to come from advertisements played before and during YouTube videos. But Mohan said more is also coming from ads on its short-form YouTube Shorts as well as its paid subscribers. Some 80 million of its users subscribe to YouTube Premium, which sells access to ad-free music and videos, while YouTube TV, its television streaming service, has more than 5 million paid subscribers, Mohan said. YouTube accounts for more TV viewing than any other single network or streaming service, The Information reported this month. YouTube’s ad revenue has been declining over the last several quarters, down 2.6% to US$6.7 billion during the first quarter of 2023 compared with the same period a year ago. https://bit.ly/3BKNltg

Disney is reportedly preparing a standalone ESPN streaming service.

Disney is actively preparing to launch a standalone ESPN streaming service, according to a new report from The Wall Street Journal. The report indicates that ESPN is planning to sell its channel directly to cable cord-cutters as a subscription-streaming service in the coming years. It’s unknown when Disney plans to launch the service. The report comes as Disney and ESPN have previously said that the channel would eventually be available as a standalone streaming service. The companies are now reportedly setting this plan into motion with a new project internally codenamed “Flagship.” ESPN has started to secure flexibility in its deals with cable providers and is having similar discussions with pro sports leagues. Disney will reportedly continue to offer EPSN as a TV channel even after breaking it out into its own streaming service. Still, the shift will have significant implications for cable TV providers, given that live sports on ESPN are one of biggest draws of traditional cable. The providers, who pay to carry the ESPN channel, would end up having to compete with the new streaming service. Disney’s upcoming plans come as companies like Apple, Amazon and Google are scooping up sports media rights. Most notably, Google-owned YouTube secured the NFL Sunday Ticket in a landmark streaming deal last December. Apple has gained the rights to Major League Baseball and Major League Soccer games, and Amazon made a deal in 2021 for the rights to Thursday night NFL games. https://tcrn.ch/3objSWh

Instagram is reportedly testing a Twitter competitor — and the first leaked images indicate a summer release.

Meta is reportedly pitching celebrities and influencers to join its “Instagram for your thoughts.” A new report from the Substack of Lia Haberman cites conversations with a creator who met with Meta about the app. Initial images of the app in marketing materials make it look like a mix of Twitter and Instagram. https://bit.ly/3pWdu5y

Montana bans Telegram, WeChat, and Temu from government devices.

On Wednesday, Montana governor Greg Gianforte didn’t only ban TikTok state-wide. He also accused Telegram, WeChat, and the shopping app Temu of being “tied to foreign adversaries” and directed that they and similar apps be banned from government devices and all state business. Gianforte also cited TikTok owner ByteDance’s CapCut video editor and Lemon8 as examples of offending apps. With this ban, Gianforte largely seems to be targeting apps with ties to China, given that ByteDance, Temu owner Pinduoduo, and WeChat owner Tencent are all based in the country. Telegram is the exception: it was founded in Russia but is currently headquartered in Dubai. Gianforte’s letter claims that the Russian government uses the app to “monitor users and obtain personal, sensitive, confidential information,” perhaps referencing Wired’s February report. Montana’s new policy will be in effect on June 1st. https://bit.ly/3MHR9By

Australian stock exchange says software overhaul won’t involve blockchain.

Australia’s stock market operator said it will no longer attempt to rebuild its software platform with blockchain-based technology, one of the highest-profile repudiations of the once-feted concept best known for powering cryptocurrency. The company has since said it is considering options for another attempt at the rebuild of the 30-year-old software, but at a meeting with participants this week it said it would not involve blockchain or related “distributed ledger technology” (DLT). Asked if the next attempt would “go down the more conventional route, that is without the focus on DLT (or) blockchain”, exchange project director Tim Whiteley told the meeting that “while we continue to explore all the options, certainly we will need to use a more conventional technology than in the original solution in order to achieve the business outcomes”. https://reut.rs/3OvsilR

Global chipmakers to expand in Japan as tech decoupling accelerates.

Seven of the world’s largest semiconductor makers have set out plans to increase manufacturing and deepen tech partnerships in Japan as western allies step up efforts to reshape the global chip supply chain amid rising tensions with China. At an unprecedented meeting in Tokyo with Japanese prime minister Fumio Kishida, the heads of chipmakers including Taiwan Semiconductor Manufacturing, South Korea’s Samsung Electronics and Intel and Micron of the US described plans that could transform Japan’s prospects of re-emerging as a semiconductor powerhouse. Micron said it expected to invest up to ¥500bn (US$3.7bn), including Japanese state subsidies, to build a plant to produce cutting-edge extreme ultraviolet lithography technology in Hiroshima. Samsung is also discussing setting up a ¥30bn research and development centre in Yokohama with pilot lines for semiconductor devices. Japanese government officials said the move followed a thaw in relations between Tokyo and Seoul. Samsung was not available for comment. https://on.ft.com/41OcEoI