U.S. District Judge Jon Tigar in Oakland scheduled a June 28 case management virtual conference on the complaint by Finnish inventor Lauri Valjakka alleging the Netflix Open Connect program infringes his July 2013 U.S. patent (8,495,167) on data communications networks (see 2203180053). Tigar is the third judge assigned the case (in docket 4:22-cv-1490) since it was transferred March 9 to Northern California from Waco, Texas. U.S. Magistrate Judge Virginia DeMarchi in San Jose immediately recused herself, and a second magistrate judge, Sallie Kim in San Francisco, was removed from the case after Netflix declined Wednesday to have it tried before anyone but a U.S. district judge.
Consumer tech products barely figure at all on the list of 352 exclusions from Section 301 tariffs on China that were reinstated Wednesday by the Office of the U.S. Trade Representative. Of the newly granted 352 exclusions -- about 64% of those that were "eligible" for reinstatement because they previously had been extended -- most had expired at the end of 2020, but some had lapsed by midyear 2021.
With its cessation of all new sales in Russia and Belarus due to the hostilities in Ukraine, Adobe reduced the annual recurring revenue balance in its digital media business by $75 million, “which represents all ARR for existing business in these two countries,” said Chief Financial Officer Dan Durn on an earnings call Tuesday for fiscal Q1 ended March 4. “While we will extend subscriptions automatically in Ukraine during this period and continue to provide digital media services, we reduced ARR by an additional $12 million, which represents our entire Ukraine business,” he said. That will result in a total ARR reduction of $87 million and an expected revenue hit of $75 million for fiscal 2022 ending early December, he said. For the war in Ukraine, “we de-risked the profile around the situation,” said Durn. Adobe finished Q1 with 9% year-over-year revenue growth to $4.26 billion, a quarterly record. Despite the volatile “macroeconomic” situation, “we actually continue to see strength” in the business, and “we were pleased with the strong Q1,” said CEO Shantanu Narayen. “The last few weeks of the quarter, you saw some impact in Europe, specifically as it related to what happened in terms of the terrible situation in Ukraine,” he said.
Xiaomi’s global smartphone shipments exceeded 190 million in 2021, enough to place it No. 3 in the world, said President Wang Xiang on a Q4 earnings call Tuesday. Xiaomi finished 2021 ranked No. 1 in 14 markets and in the top five in 62 markets, he said. “We ranked No. 2 in Europe with a market share of 23% and retained our No. 1 position in Spain for two consecutive years and the No. 1 position in India for 17 consecutive quarters,” he said. “We continue to strengthen our position in the premium smartphone market,” having shipped more than 24 million premium handsets globally in 2021, compared with 10 million the year before, said Wang. “Premium smartphones accounted for around 13% of our total smartphone shipments in 2021 compared with around 7% the year before.” Xiaomi estimates its global smartphone share rose to 14.1% in 2021 from 9.2% in 2019, said Chief Financial Officer Alain Lam.
The past two years have shown that global supply chains “are very vulnerable,” and especially vulnerable to “external shocks” like pandemics and war, Young Tae Kim, secretary-general of the International Transport Forum, told the World Trade Organization’s Global Supply Chains Forum Monday. “Some vulnerabilities are the result of internal factors as well,” he said.
The Office of the U.S. Trade Representative is wading into “unchartered waters” if it tries extending the Lists 1 and 2 Section 301 tariffs on China past their four-year expiration deadlines under the 1974 Trade Act (see 2203120001), emailed David Olave, a Sandler Travis associate and trade policy adviser. List 1 is due to expire July 6, List 2 on Aug. 23. The Trade Act binds USTR to hold a notice-and-comment review period in the last 60 days before each tranche expires if the agency gets written requests from “domestic beneficiaries” to extend the tariffs, said Olave Monday: “We know what the statute says, but we do not have regulations or precedent to rely upon on how to read the statute.” It’s possible USTR “could consider the 301 Actions for Lists 1 and 2 as part of the same investigation,” he said. “The original move by USTR approved tariffs for up to $50 billion, so the two lists are in fact linked to that first scope of action. Therefore, USTR could consider tackling both lists at the same time with regards to comments.” USTR alternatively could try splitting the lists into “two separate tranches and ask for comments on List 1 first and then List 2,” said Olave. “I do not see major legal reasons against doing that, only the overall procedural burden of dealing with two separate and similar issues almost parallel to one another,” he said. “We’ll see what USTR’s next step is soon.” USTR didn’t respond to questions Tuesday.
GameStop invested in a “dedicated blockchain team” during its fiscal year ended Jan. 29, and is on pace to launch its nonfungible tokens marketplace by the late-July end of its fiscal Q2, said CEO Matt Furlong on a Q4 earnings call Thursday. “We are going to continue taking steps to create new offerings and make targeted bets in blockchain gaming and cryptocurrency,” said Furlong, who joined GameStop as CEO in June after a nine-year career at Amazon. “We have learned from the mistakes of the past decade when GameStop failed to adapt to the future of gaming.” GameStop had a string of interim CEOs after Paul Raines left for medical reasons in November 2017. GameStop was so “capital-starved” when Furlong arrived “that we have had to rebuild it from within,” he said. “We’ve also had to change the way we assess revenue opportunities by starting to embrace, rather than run from, the new frontiers of gaming. Although there is a lot more hard work and necessary execution in front of us, GameStop is a completely different company today than it was at the beginning of the fiscal year.”
The “big period” of consumer e-commerce growth “is now behind us,” conceded FedEx President-Chief Operating Officer Raj Subramaniam on an earnings call Thursday for fiscal Q3 ended Feb. 28. “We are not counting on huge consumer spend in our numbers,” he said.
U.S. Magistrate Judge Sallie Kim in San Francisco scheduled a June 6 case management Zoom conference Friday on a complaint by Finnish inventor Lauri Valjakka that the Netflix Open Connect program infringes his July 2013 U.S. patent (8,495,167) on data communications networks. Kim was reassigned the case after U.S. Magistrate Judge in San Jose Virginia DeMarchi recused herself a day after it was transferred from U.S. District Court in Waco, Texas, where it was filed Sept. 13. Netflix lawyers haven’t responded to the merits of Valjakka’s arguments, but asked the Waco court in an improper-venue motion in December to move the case to Northern California. It was transferred there March 9 after Valjakka's lawyers didn't oppose the motion. Netflix describes its Open Connect program as providing opportunities for internet service provider partners to improve their customers' Netflix user experiences “by localizing Netflix traffic and minimizing the delivery of traffic that is served over a transit provider.”
Battery recycler Li-Cycle sees its total addressable market (TAM) opportunity in North America growing to more than 420,000 metric tons (463,000 U.S. tons) of lithium-ion “battery equivalent” by 2025, said CEO Ajay Kochhar on an earnings call Thursday for fiscal Q1 ended Jan. 31. Li-Cycle’s European TAM is projected to exceed 300,000 metric tons (331,000 U.S. tons) “available for recycling” by 2025, he said. “This is largely attributable to surging demand for electric vehicles, which is driving incumbent and emerging electric vehicle OEMs to accelerate their demand for battery materials with increased gigafactory investments,” he said. “We have seen a supply and demand imbalance for these critical battery materials, driving pricing to all-time highs, particularly for nickel and lithium.”