TECHNOLOGY Alibaba who? U.S. retail investors not that interested

(Reuters) - When Chinese e-commerce giant Alibaba Group Holding revealed plans earlier this year to go public on a U.S. stock exchange, financial advisers like Bob Mecca in Hoffman Estate, Illinois braced themselves for a wave of frantic calls from retail investors wanting to get in on the action.

Alibaba, which sells more than Amazon.com Inc and EBay Inc combined, could raise over $21 billion in its IPO. It is often described as technology's hottest initial public offering since Facebook Inc's 2012 debut, although initial pricing announced on Friday was less than many predicted.

Retail investors generally get only 10-20 percent of shares in big IPOs, and several advisers told Reuters they had expected a scramble from clients. But the phone has not been ringing off the hook.

"People are on Facebook, they know it, but no one has ever heard of Alibaba," said Mecca, who has $175 million in assets under management.

The number of client inquiries about the Alibaba IPO is around a quarter of what it was for Facebook at this stage of the process and about half of what it was for Twitter Inc, said Steve Quirk, senior vice president of the group serving active traders at discount broker TD Ameritrade Holding Corp.

Robert Christie, a spokesman for Alibaba, declined to comment, citing the company's pre-IPO quiet period.

Alibaba's decision to price its shares between $60 and $66 per American Depository Share is an indication that the company may not be too concerned about having a big U.S. retail investor base, since retail investors prefer stocks that cost much less per share. Alibaba could have raised the same amount of money by selling more shares at a lower price.

One consequence of retail investors sitting out the debut could be a muted first day of trade, rather than the "pop" many expect from a tech IPO.

"Because it is such a large deal and you aren't going to see a lot of retail investor interest, I do not think it's going to have a lot of momentum when it gets out of the gate," said Tom Taulli, an independent IPO expert.

Longer term, tepid U.S. retail interest could be a drawback for Alibaba. Individuals tend to hold stocks longer, providing stability to the share price, and they help diversify the shareholder base. Having too much concentration among a small number of institutional investors, for example, could make the company vulnerable to attacks by activists, IPO experts said.

"I think a strong retail base is much better for Alibaba," said Josef Schuster, founder of Chicago-based IPOX Schuster LLC, which helps create index funds for IPOs.

Still, retail interest could ramp up. Bargain hunters could take note of the lower-than-expected initial price and the company's pre-IPO roadshow, to promote the offering to fund managers, could spark wider interest.

The roadshow kicks off on Monday in New York and is expected to reach around the globe to London and Hong Kong. That will provide stronger evidence of institutional investor interest and indicate whether shares are likely to be priced in the initial range. Industry analysts had expected Alibaba to lock down a valuation of more than $200 billion, but the high end of the initial range would put it about $163 billion.

OTHER WAYS IN

Alibaba has some major, publicly traded investors, which give Alibaba fans other ways to get into the stock early. One UBS AG adviser said that some retail clients expecting to get shut out of the IPO have opted to buy shares of Japan's Softbank Corp, which has a 34.1 percent stake in Alibaba going into the IPO.

For the same reason, James Gambaccini, a Fairfax, Virginia-based independent financial adviser, said he has a few clients that have opted to invest in Yahoo Inc, which has a 22.4 percent stake in Alibaba. Softbank's and Yahoo's stakes will shrink from dilution in the IPO, and Yahoo will sell some shares, but both will remain major Alibaba shareholders.

But for the most part, Gambaccini said the demand for Alibaba shares has been lackluster, partially because many people have not heard of the company and some who know about it were wary of China, concerned by the potential for government interference, for example.

Alan Haft, a Newport, California-based adviser, has been trying to interest clients in Alibaba for months. But he said it has been an uphill battle.  

"It's clear to me that most people know very little about this company and just how enormous the IPO is likely going to be as well as how impactful this company is," Haft said.

(Reporting By Jessica Toonkel; Additional reporting by Olivia Oran, Lauren LaCapra and Liana Baker in New York; editing by Paritosh Bansal and Peter Henderson)

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TECHNOLOGY NEWS Showtime for Apple: Big phones, smart watches and high expectations

SAN FRANCISCO (Reuters) - It has been four years since Apple Inc introduced a completely new gadget and the pressure is on for the world's largest tech company to wow at its "special event" in Cupertino, California, on Tuesday.

Apple has fed the high expectations, with promises by executives that the company's best product pipeline in 25 years is being readied inside its secretive facilities. That's a high bar for a company whose hits include the modern, graphic-based personal computer, the smartphone, the iPod and the tablet PC.

Those now ubiquitous gadgets were created under the innovative and famously meticulous eye of Apple co-founder Steve Jobs, who died in 2011. When Chief Executive Officer Tim Cook takes the stage on Tuesday, technology aficionados, investors and rivals will be watching closely to see whether Jobs' handpicked successor inherited the magic touch or whether Apple's winning streak is coming to an end.

"We think Apple's pipeline is finally going to satisfy those who have wondered if the company has any new products. The stock price has been rallying as investors are beginning to believe that Tim Cook all along was telling the truth that there is an incredible pipeline of products," said Michael Yoshikami, CEO of Destination Wealth Management.

In the last five years, the period beginning July 1 has been the most fruitful for holders of Apple shares, with an average price gain of about 22.5 percent, compared with 11 percent gains seen in the first half of the last five years.

Below are some of the key products and features to look out for at Apple's big event on Tuesday:

iWatch?: Rumors of an Apple smartwatch go back several years, but Tuesday may finally be showtime. The watch, which will reportedly have a flexible screen and come in two sizes, will track its wearer's health and fitness, double as an electronic wallet and of course, display messages.

The watch is not likely to go on sale until sometime in 2015 and Apple may not even reveal its price on Tuesday. But with rivals such as Google Inc and Samsung Electronics Co already entering the smartwatch market, tech-watchers are anxious for Apple to show its cards.

"The market has been waiting for Apple's product as the real category-defining product," said FBN Securities analyst Shebly Seyfari.

iPhone 6: Smartphones are Apple's bread-and-butter, representing more than half of its revenue, and the company is expected to introduce a pair of new models with bigger screens, a sleeker design and wireless payment capabilities. The iPhone 6 will be available with 5.5-inch or 4.7-inch screens, a step up from the current models' 4-inch screens. There is also speculation that some phones will boast extra-tough screens made from scratch-resistant sapphire material.

Mobile Wallet: Apple has reportedly struck deals with major credit card providers Visa Inc, MasterCard Inc and American Express Co. The partnerships, as well as a special communication chip within the new iPhone and smartwatch, would allow consumers to use their gadgets at stores to buy everything from coffee to blue jeans - changing the shopping experience and extending Apple's reach from the Web to real-world commerce.

Health: Apple's launch of the "HealthKit" data service earlier this year made it clear that it sees its products helping consumers manage personal health information. By incorporating the HealthKit service into the iPhone 6, and by packing its smartwatch with sensors capable of monitoring physical movements and heart rates, Apple could lay the groundwork for a broader push into mobile healthcare.

One More Thing? Apple's Jobs was famous for surprising fans with unexpected products at the end of his presentations. Could Cook preserve the tradition with a peek at a long-awaited Apple television, a rumored bigger iPad or a completely unexpected product?

(Reporting by Christina Farr, Alexei Oreskovic and Noel Randewich; Editing by Bernard Orr)

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TECHNOLOGY WeChat helps Apple rack up bonus points in China

BEIJING (Reuters) - Apple Inc has a lot for which to thank people like Deng.

A Beijing-based quality analyst, she gave only her surname as she's embarrassed by how much money she spends playing mobile games on WeChat, a hugely popular messaging app developed by Chinese internet giant Tencent Holdings Ltd.

"The most expensive time was when I spent 68 yuan ($11.08) on a leopard on Tiantiankupao," said Deng, an avid iPhone user, referring to Tencent's hit game - called Timi Run Everyday in English - where characters run through obstacle courses. Having a leopard as a pet gives the characters extra power, helping players beat their friends.

Deng and tens of millions like her have made China Apple's third-largest market for software sales, and a huge chunk of that comes through WeChat. Known locally as Weixin, WeChat had 438 million monthly active users globally, mostly in China, at the end of June, and has rapidly evolved from a messaging tool into a digital Swiss Army knife, allowing users to send messages, play games, book taxis and shop online.

The app has proved a winning formula in getting people in China, a market notorious for not paying for software, to connect their bank accounts with their phones and pay for virtual goods like extra lives and power-ups in mobile games.

Apple takes a 30 percent cut on all sales.

"We're seeing some substantial strength there," Apple CEO Tim Cook said of China in a July earnings call. "The thing that's actually growing the most is the iTunes, Software and Services category, which has the App Store in it. That area is almost doubling year over year."

Apple's Greater China revenues, which include Hong Kong and Taiwan, soared 28 percent in April-June from a year earlier to $5.9 billion, and globally, iTunes, Software and Services sales were the company's second-fastest growing product category, up 12 percent year-on-year to $4.5 billion.

Tencent was the top game publisher for Apple's iOS operating system in China by revenue for both June and July, according to App Annie, a company that measures app usage. Apple is this week expected to launch its new iPhone - with a gamer-friendly larger screen.

"A VERY VIRTUOUS CYCLE"

Apple makes all software sales on the iPhone go through its App Store. Typically, the Cupertino, California-based company will take its 30 percent of the sales, while the rest goes to an app's developer or publisher.

WeChat, which itself hosts apps and games made by other developers, is no different. The cash from any products sold on the app are split between Apple, Tencent and the developer.

"By far the biggest factor driving App Store revenue in China is WeChat," said Ben Thompson, who writes about technology at stratechery.com. "WeChat has driven app download and usage, which drives people to want to buy stuff, which drives them to connect their payment information. It's been a very virtuous cycle."

Growth has also been helped by increased smartphone sales since China Mobile, the country's largest carrier, began offering the iPhone in January.

A big part of WeChat's success has been with casual games - highly addictive hits like Candy Crush Saga and Temple Run that are often free to download but let users pay for in-game upgrades. WeChat has its own stable of games, and also publishes Candy Crush in China.

Games integrated with WeChat and Tencent's other mobile social network, Mobile QQ, generated revenues of 3 billion yuan ($489 million) for Tencent in April-June, up from around 1.8 billion yuan in January-March.

"If you look at who's playing Temple Run and Candy Crush, a lot of these were non-gamers five years ago," said Junde Yu, App Annie's vice president of Asia Pacific. "With the advent of smartphones, the ease of use, they started to download apps, and because they're very casual and fun they start playing games. It hooks them and encourages them to start making payments."

   

REPEAT PURCHASES

China is unique in another way that helps push up spending on smartphones.

Both Apple and Tencent have tried to drive the adoption of mobile payments on their platforms, but China's banking payment system is complex at best, and makes it difficult to carry out any kind of online payment with ease.

Apple uses a top-up system for its App Store in China, with a 50 yuan ($8.15) minimum value, said Yu - for those using China's national bank card payment network rather than international credit cards. "This leads to a lot of repeat purchases as people aren't likely to spend 50 yuan on one purchase," Yu said. "After the first time, they won't stop but will keep purchasing and playing games."

iPhone users themselves are a big draw for app developers, and some value them more highly than people using smartphones operating on Google Inc's Android system.

"I'd pay six times the price for an iOS user compared to Android," said Peng Tao, chief executive of breadtrip, a Beijing-based travel app. Part of the reason, in China at least, is that Android's Google Play app store isn't accessible, so dozens of smaller, less curated app stores have sprung up.

"On the iOS App Store front page apps are chosen by merit, whereas in China for Android they're chosen by who pays," said Peng. "Android users just like to download things, no matter the need. They see it's free and download it, so they shift apps quickly - download and delete, download and delete."

UNEASY ALLIES?

For Apple, though, WeChat may turn out to be a Trojan horse.

While the U.S. company is earning good money through WeChat's success, there is some concern that Tencent may want Apple to see less of that.

"WeChat made the market, Apple didn't, and it's becoming so powerful on mobile in China that, broadly speaking, it's a threat to Apple," said stratechery.com's Thompson. "If Tencent want to flex their muscles and keep more of that revenue, I could certainly see them leaning on the government to help them and keep a bigger percentage of the sales they're driving."

China's ruling Communist Party is no stranger to heavy-handed regulation. Last week, a U.S. business lobby said foreign companies are increasingly concerned they are being targeted by Chinese regulators, charges the regulators deny. [ID:nL1N0R40O5]

Apple itself has repeatedly come under fire from Chinese state media - more frequently since former U.S. National Security Agency contractor Edward Snowden's revelations about U.S. government cyber-espionage conducted through private companies including Apple, Google and Microsoft Corp.

In July, China's state broadcaster branded the iPhone a national security threat because of its ability to track and time-stamp user locations, and government mouthpieces have called for 'severe punishment', accusing Apple of providing user data to U.S. intelligence agencies.

Some of WeChat's rivals in messaging apps have also fallen by the wayside in China because of the government.

Chinese authorities said in August they blocked South Korean firm Kakao Corp's KakaoTalk and Naver Corp's Line as part of efforts to fight terrorism, according to the Korean government, explaining service disruptions in China that had begun a month earlier.

"The biggest danger for Apple in China is always the uncertain regulatory environment," said stratechery.com's Thompson. "It's very plausible to see the government moving against Apple's App Store policy."

(Editing by Ian Geoghegan)

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TECHNOLOGY NEWS: Bharti Airtel to sell over 3,500 African mobile phone masts to Eaton Towers

MUMBAI (Reuters) - India's Bharti Airtel Ltd (BRTI.NS) has agreed to sell more than 3,500 of its mobile phone masts in six African countries to telecommunications tower company Eaton Towers in a bid to cut costs, the companies said on Monday.



Bharti Airtel will lease back the towers from Eaton under a 10-year contract, the companies said in a statement. They did not disclose financial details of the deal.



In July, Bharti Airtel agreed to sell about 3,100 masts in four African countries to Helios Towers Africa. The sales are part of the Indian group's plan to divest most of its more than 15,000 towers in Africa in a process that sources have said could raise up to $2 billion.



(Reporting by Devidutta Tripathy; Editing by Subhranshu Sahu)





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TECHNOLOGY Google hosts meetings across Europe on privacy rights

PARIS (Reuters) - A panel appointed by search engine Google (GOOG.O) will hold the first of a series of meetings on Tuesday to debate the balance between privacy and the free flow of information after a May court ruling reinforced Europeans' "right to be forgotten".

The event in Madrid will be the first of seven meetings in European capitals, as the Internet giant struggles with thousands of requests a month to remove from its search results everything from serious criminal records, embarrassing photos, instances of online bullying and negative press stories.

By mid-July, Google, which holds more than 80 percent of Europe's search market, said it had received more than 90,000 requests and accepted more than half since the European Union's top court ruled they must remove results if the information was "inadequate, irrelevant or no longer relevant".

Meanwhile data protection regulators from European countries, which are next set to meet on Sept. 15, are working on guidelines for the search engines, which also include Microsoft (MSFT.O) and Yahoo! (YHOO.O), to ensure that requests are handled consistently.

Isabelle Falque-Pierrotin, who heads France's privacy watchdog and the WP29 group of EU national data protection authorities, said on Friday she was sceptical about the Google initiative, which she described as part of a "PR war" on an issue that was important to the company's business strategy.

"Google is trying to set the terms of the debate," she said. "They want to be seen as being open and virtuous, but they handpicked the members of the council, will control who is in the audience, and what comes out of the meetings."

If a search engine declines a person's request, he or she has the right to appeal to the national data protection regulator. Some 90 such appeals have been filed in Britain, 70 in Spain, 20 in France and 13 in Ireland.

Some examples of link removals have become public because Google notified media outlets such as the BBC and Guardian when their stories were removed from search results. That prompted critics to charge that Europe's Internet was being scrubbed and the press censored.

SPIRIT OF THE RULING

The Wikimedia Foundation, which operates online encyclopaedia Wikipedia, set up a web page to post all the link removal notices it has received, as a form of protest that attracts attention to the very information someone wanted removed.

Regulators have said that such notifications undermine the spirit of the court ruling on online privacy, and are considering whether they should try and curb them.

The issue of notifications is one of the many that Google asked the advisory panel to consider, said Sylvie Kauffmann, one of its members and the editorial director of France's Le Monde newspaper.

"There are a seemingly infinite variety of cases coming in, so Google is struggling to apply the court decision," said Kauffmann in an interview.

"Google has asked us to formulate ideas to help them, and there is of course a public relations dimension to the exercise as well."

Kauffman added that Google would not pay panel members, beyond covering their travel expenses, and that the company had assured them they would have total independence.

Google asked French regulator Falque-Pierrotin via letter whether she or other regulators would take part in the meetings, but she declined, saying it would be inappropriate for a regulator with enforcement powers. She said some national regulators could send staff members to observe the proceedings.

A spokesperson for the Spanish regulator said it had no plans to attend the Madrid meeting.

The advisory council includes eight representatives from outside Google, including a former German justice minister and two academics, as well as Google's general counsel David Drummond and chairman Eric Schmidt.

Other members include Jimmy Wales, the Wikipedia founder and vocal critic of the "right to be forgotten", United Nations human rights official Frank La Rue, and Jose-Luis Pinar, who headed Spain's data protection regulator from 2002 to 2007.

After Madrid the council will meet in Rome on Wednesday, Paris on Sept. 25, Warsaw on Sept. 30, Berlin on Oct. 14, and London on Oct. 16, before concluding in Brussels on Nov. 4.

Google said it would stream the sessions online.

(Additional reporting by Julia Fioretti, Robert Hetz, and Conor Humphries; Editing by Will Waterman)

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TECHNOLOGY GM to offer connected car, automated driving technology in 2016

DETROIT (Reuters) - General Motors Co (GM.N) will introduce in two years its first car that can communicate with other vehicles to help avoid accidents and ease traffic congestion, Chief Executive Mary Barra said on Sunday.

In the same time frame, GM also will introduce more advanced technology allowing hands-free driving in some cases, she said.

"I'm convinced customers will embrace (vehicle-to-vehicle) and automated driving technologies for one simple reason: they are the answer to everyday problems that people want solved," she said in a text of a speech delivered at a conference here.

Auto companies, academics and government agencies globally are working to develop cameras, sensors, radar and other technologies that allow vehicles and surrounding infrastructure like stoplights to alert each other about nearby driving conditions.

The industry is rolling out such features as adaptive cruise control, crash-imminent braking and semi-automated, hands-free driving like GM's 'Super Cruise' feature to make roads safer.

However, GM and other automakers have emphasized that even with hands-free driving, drivers will be responsible and need to maintain attention on the road. Meanwhile, Internet search company Google Inc (GOOGL.O) is working to develop fully autonomous vehicles.

The U.S. Department of Transportation has made developing connected car technologies a high priority, a view shared in Japan and Europe. And when cars can also talk to surrounding infrastructure, the gains will be exponential, Barra said.

However, she said commercializing a fully automated vehicle may take until the next decade.

Congestion causes urban Americans to travel 5.5 billion more hours and purchase an extra 2.9 billion gallons of fuel each year, she said, citing outside data.

In 2016, GM will sell a 2017 model Cadillac CTS sedan standardly equipped with vehicle-to-vehicle technology. However, the car can only communicate with similarly equipped vehicles and it will take time for the industry to introduce the technology broadly, GM officials said before Barra's speech.

They added that U.S. regulators still need to finalize requirements for these technologies and cyber security protections need to be developed.

Also in 2016, GM will roll out Super Cruise as an option allowing hands-free highway driving at both highway and stop-and-go speeds, as well as lane following, speed control and braking in a new, unidentified 2017 Cadillac model in a segment where the company does not currently compete.

GM did not disclose either feature's cost, or timing on offering them on the No. 1 U.S. automaker's other brands.

GM will introduce the connected CTS sedan and the unnamed Cadillac with the Super Cruise feature in the United States.

In 1956, GM showed the Pontiac Firebird II concept that included a system to work with an electrical wire embedded in the highway to guide the car. Three years later, the rocket-like Cadillac Cyclone concept boasted an autopilot system that steered the car, and radar in front nose cones that warned of a collision and automatically applied the brakes.

Barra said the U.S. Congress can help develop vehicle-to-infrastructure communication with funding in the next federal transportation bill.

She also said GM is joining the University of Michigan and the state of Michigan to develop vehicle-to-infrastructure driving corridors on 120 miles (193 km) of metro Detroit roadways. State officials said Ford Motor Co (F.N) is also part of the effort.

(Reporting by Ben Klayman in Detroit; Editing by Paul Simao)

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TOP NEWS Artillery fire heard, blaze seen near port in east Ukraine: Reuters witness

MARIUPOL Ukraine (Reuters) - Prolonged artillery fire was heard late on Saturday to the east of the port of Mariupol in eastern Ukraine, a Reuters reporter said, in what may be the first significant violation of a ceasefire declared little more than 24 hours earlier.



The reporter saw an industrial facility, a truck and a gas station ablaze in an area within the limits of Mariupol, a city of 500,000 people on the Sea of Azov near the Russian border.



The area had seen fierce fighting between Ukrainian government forces and pro-Russian separatists before the ceasefire took effect on Friday evening. It had been quiet since then until the artillery fire began late on Saturday.



"There has been an artillery attack. We received a number of impacts, we have no information about casualties," a Ukrainian officer told Reuters at the scene.



(Reporting by Aleksandar Vasovic, writing by Gareth Jones)





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