Apple, Amazon called out for 'incorrect' Taiwan, Hong Kong references

TAIPEI/SHANGHAI (Reuters) – One of China’s top government-linked think tanks has called out Apple Inc, Amazon.com Inc and other foreign companies for not referring to Hong Kong and Taiwan as part of China in a report that provoked a stern reaction from Taipei.

FILE PHOTO: An electronic screen displays the Apple Inc. logo on the exterior of the Nasdaq Market Site following the close of the day’s trading session in New York City, New York, U.S., August 2, 2018. REUTERS/Mike Segar/File Photo

The Chinese Academy of Social Sciences (CASS) said in a report this month that 66 of the world’s 500 largest companies had used “incorrect labels” for Taiwan and 53 had errors in the way they referred to Hong Kong, according to China’s Legal Daily newspaper. It said 45 had referred to both territories incorrectly.

Beijing considers self-ruled Taiwan a wayward province of China and the former British colony of Hong Kong returned to Chinese rule in 1997 and operates as a semi-autonomous territory.

China last year ramped up pressure on foreign companies including Marriott International and Qantas for referring to Taiwan and Hong Kong as separate from China in drop down menus or other material.

The report was co-written by CASS and the Internet Development Research Institution of Peking University. An official at the Internet Development Research Institution told Reuters that it had not yet been published to the public and declined to provide a copy.

A spokesman for Taiwan President Tsai Ing-wen said Taiwan would not bow to Chinese pressure.

“As for China’s related out-of-control actions, we need to remind the international community to face this squarely and to unite efforts to reduce and contain these actions,” Alex Huang told reporters in Taipei.

Beijing has stepped up pressure on Taiwan since Tsai, from the pro-independence ruling party, took office in 2016.

That has included rising Chinese scrutiny over how companies from airlines, such as Air Canada, to retailers, such as Gap, refer to the democratic island in recent months.

Nike Inc, Siemens AG, ABB, Subaru and others were also on the list. Apple, Amazon, ABB, Siemens, Subaru and Nike did not immediately respond to Reuters’ requests for comment.

Reporting By Yimou Lee, Jess Macy Yu, Josh Horwitz; Additional Reporting by Shanghai Newsroom, Gao Liangping, Cate Cadell, Pei Li, Brenda Goh and Naomi Tajitsu in TOKYO; Editing by Paul Tait and Nick Macfie

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On the autofarm: China turns to driverless tractors, combines to overhaul agriculture

Xinghua, China (Reuters) – A brand new combine harvester buzzes up and down a field in eastern China without a driver on board, chopping golden rice stalks and offering a glimpse of what authorities say is the automated future of the nation’s mammoth agricultural sector.

Staff members taking part in the experiment on automated farming machinery load fertilizer onto an automated tractor near a field in Xinghua, Jiangsu province, China October 30, 2018. Picture taken October 30, 2018. REUTERS/Hallie Gu

The bright green prototype was operating last autumn during a trial of driverless farm equipment as the government pushes firms to develop within 7 years fully-automated machinery capable of planting, fertilizing and harvesting each of China’s staple crops – rice, wheat and corn.

That shift to automation is key to the farming sector in the world’s No.2 economy as it grapples with an ageing rural workforce and a dearth of young people willing to endure the hardships many associate with toiling on the land.

Other countries like Australia and the United States are taking similar steps in the face of such demographic pressures, but the sheer scale of China’s farming industry means the stakes are particularly high in its drive to automate agriculture.

“Automated farming is the way ahead and demand for it here is huge,” said Cheng Yue, general manager of tractor maker Changzhou Dongfeng CVT Co Ltd, which provided an autonomous vehicle that was also used at the trial in the rice field in Xinghua, a county in the eastern province of Jiangsu.

However, the road to automation is long and littered with obstacles such as high costs, the nation’s varied terrain and the small size of many of its farms.

“I have heard of driverless tractors. But I don’t think they are practical, especially the really large ones,” said Li Guoyong, a wheat farmer in China’s northern Hebei province.

Most farms in his area are only a few hectares in size, he said by phone.

GOING LOCAL

To try to achieve its ambitious 7-year goal, Beijing is supporting trials of local technology across the country organised by industry group Telematics Industry Application Alliance (TIAA).

Members include state-owned tractor maker YTO Group, navigation systems producer Hwa Create and Zoomlion Heavy Industry Science & Technology Co Ltd, which helped develop the combine harvester used in the Xinghua trial along with Jiangsu University.

The next trials are slated for the northeastern province of Heilongjiang and for the hills around the southwestern city of Chongqing in the first half of this year.

Those come after a string of automated developments in the sector.

YTO developed its first driverless tractor in 2017 and is aiming to start mass production soon, depending on market demand, said Lei Jun, an executive at the firm’s technology center, without giving a more detailed timeline.

Lovol Heavy Industry Co Ltd signed a deal with Baidu in April to apply the tech giant’s Apollo automated driving system to its agricultural machinery.

“China is expected to climb the autonomous technology ladder very quickly, mainly because Chinese companies can access the local navigation satellite system, which gives them an advantage over their international peers,” said Alexious Lee, Head of China Industrial Research at Hong Kong brokerage CLSA.

He was referring to China’s ‘Beidou’ homegrown satellite navigation system, a rival to the U.S. Global Positioning System (GPS).

Beijing has included agricultural machinery in its ‘Made in China 2025’ campaign, meaning the vast majority of its farm equipment should be produced at home by that time.

Semi-automated technology is already fairly common on farms in places such as the United States, but fully-automated tractors and combines have yet to be mass-produced anywhere.

TOO SMALL

But with many Chinese farms still too small for a regular tractor, driverless ones that could be as high as four times more expensive at around $90,000 will be a long way out of reach for many in the short-term.

More than 90 percent of farms in China are less than 1 hectare, while in the United States nearly 90 percent are larger than 5 hectares.

“It is not about whether you have the product. It is about the entire system. It is about commercializing agriculture,” said Lee.

Although analysts and industry officials said that the underlying trend would be for farms to get larger as ongoing reforms to land rights should allow farmers to lease more space.

Sensors in equipment that help monitor crop conditions also need to be improved so that machines can adjust more quickly to different situations, said Wei Xinhua, deputy director of the school of agriculture equipment engineering at Jiangsu University.

China’s $60 billion farm machinery industry has been burdened by overcapacity and low profit-margins after a years-long subsidy scheme to promote mechanization in farming led to mass production of low-quality tractors. Analysts said it was too early to say how much the automated farming machinery sector could eventually be worth.

Slideshow (5 Images)

Automated farming machines are also useful in recording data on details such as volumes of fertilisers or other materials used in churning out crops, potentially helping farmers target consumers demanding higher-quality produce as some of that information could be included on food labels.

“Take a bowl of rice. I want to know exactly how it was planted, and how much fertilizer or pesticide was applied to it,” said Cheng at Changzhou Dongfeng.

($1 = 6.8450 Chinese yuan renminbi)

Reporting by Hallie Gu and Dominique Patton; Editing by Joseph Radford

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The Final Season of 'Game of Thrones' Has a Launch Date

Happy Monday, and welcome to another installment of The Monitor, WIRED’s roundup of the latest in the world of culture. In today’s news, HBO has finally coughed up a release date for the final season of Game of Thrones, Netflix is facing a lawsuit, and it looks like the Super Bowl won’t be marooned without a halftime show act.

Finally, a Date to Watch the Thrones

Always one to keep fans waiting in anticipation, HBO waited until three months out before to announce the launch date for Season 8 of Game of Thrones. Sunday night, just before the season premiere of True Detective, the network aired a teaser revealing that the epic fantasy’s final run will begin on April 14. What will the show look like when it does return? Snowy, as the Stark children—Arya, Sansa, Jon Snow—are about to confront some family demons at Winterfell. Or, at least, that’s what it seems like if the show’s new vague-as-hell-trailer is to be believed. Don’t worry, we’re sure plenty of third cousins you don’t remember will show up as well. And maybe Ed Sheeran.

If You Want to Sue Netflix, Turn to Page Petty-Seven

In “Huh, didn’t see that coming!” news—there’s a lot of that these days, admittedly—Chooseco, the publisher behind the Choose Your Own Adventure books, is suing Netflix over its interactive Black Mirror episode, Bandersnatch. In the interactive episode, a young videogame programmer designs a game based on a “choose your own adventure” book, and the episode itself lets viewers make choices about what the characters will do in the story. Chooseco’s suit claims it has the trademark to the phrase “choose your own adventure” and that Netflix doesn’t have a license to use it. The company is seeking at least $25 million in damages, though it’s also possible that if the judge doesn’t like the way the arguments proceed, she’ll just bang her gavel and restart things from an earlier point.

Hold Up, Is That Adam Levine?!

After Rihanna, Adele, Jay-Z, and others reportedly passed on the gig, the NFL announced Sunday that Maroon 5 will be playing the halftime show at this year’s Super Bowl. The band—along with Big Boi and Travis Scott, who are joining them in hopes of stemming a mass Puppy Bowl exodus—will bring their Jagger-like moves to Atlanta’s Mercedes-Benz Stadium in Atlanta on February 3. And while he’s not part of the proceedings, we can only hope A$AP Ferg is nearby, his long quest at an end.


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The 1 Big Lesson that this AI Startup Learned

My 2018 wrapped with a fulfilling finish after mentoring entrepreneurs in the Techstars Montreal AI Accelerator. The selected startups were an eager, smart group of founders focused on the development and application of artificial intelligence across all industries and markets.

Through the Techstars program, they gained traction through deep mentor engagement, rapid iteration cycles, and fundraising preparation. It was an immersive and busy three months, but at the end of the accelerator, the companies had leveraged their mentors and learned to balance vision with execution.

As many entrepreneurs and investors can attest, the balance of staying true to your company’s vision while building with customer-centered needs is a tricky one.

Stay too fixated on your vision, and fail at market-fit and execution of the idea.

Swing too far into the customer-needs camp and risk-taking orders from a customer’s perceived problem, and missing the solution for the customer’s real problem.

To achieve this balance, take a page from the Techstars program curriculum and mentor-focused network: build your business with intentional balance.

Find and listen to mentors that challenge your assumptions.

Identify mentors that will challenge you, share insights, and ask the right questions to help identify the right problem and market fit.

One participating startup, Crescendo, learned first-hand how mentorship can help drive a vision beyond strategy, into execution.

Crescendo strives to create inclusive workplaces by helping employees develop empathy. Their technology delivers bite-sized content to employees on a weekly basis, using machine learning to create unique learning paths for each individual.

At the start of the Techstars program, Crescendo planned to solve the problem of toxic workplaces by creating a system that would analyze workplace communication to create a learning profile for each employee, then recommend how they could change their behavior.

Through different mentor sessions, the mentors questioned whether the solution was something customers would buy. While it may fit the founders’ vision, would an HR executive buy a solution that created a polarized work environment where employees felt policed?

The team listened and worked to challenge their own assumptions by talking with more of their potential customers. Initially, their feedback was that they loved the idea of improving workplace diversity and inclusion. But through more interviews, Crescendo learned that the product they were building wasn’t something they would buy.

The customers appreciated Crescendo’s vision but felt only a small portion of their company’s employees would feel comfortable using it, and that it wasn’t worth the data privacy risks. In short, they wouldn’t buy it.

As Crescendo co-founder Daniel Tuba D’Souza shared with me, “The best advice we got from a mentor: don’t build anything until you sell it.”

The mentors helped the founders to get beyond their vision and think about business viability and customer needs.

Rally around the problem statement.

Crescendo went back to their vision and evaluated what solution would be a market fit. The founders believed their vision was on target, but the product didn’t fit the customer’s needs.

As a team, they did a post-it note session to articulate a clear and concise problem statement, outlining the issue they wanted to solve. They wanted to identify what their solution could do to change workplace bias behaviors. This centered the team, giving them a place to validate ideas and a vision of what the world would look like if they solved the problem.

The founders wanted to ensure that with every pivot the company made, they stayed grounded to their ultimate vision.

The team went back to mentors and customers and conducted 360 degrees of feedback. Some of the feedback helped to shape the product and others were considered and disregarded when it didn’t fit the vision and customer’s needs.

“Advice came in from all directions. One thoughtful mentor suggested we focus just on the technology and build a one-time assessment tool. It was a cool idea, but it didn’t help us solve the problem we want to solve,” D’Souza shared.

Ultimately, the team landed on a solution that balances vision and customer needs. Crescendo built a solution integrating bite-sized diversity and inclusion education within a company’s slack community, building empathy and creating change in behaviors.

The tension of staying true to your north star while attuned to the customer-centered needs is a tricky one. Engaging with mentors for feedback, and grounding in the right problem statement will help you guide your team and product toward success.

In reflecting over coffee on the first cohort in the Montreal program, Managing Director of Techstars Montreal, Bruno Morency shared that successful entrepreneurs will surround themselves with people that question the vision of the company.

“For an entrepreneur, find mentors that will ask the right questions, and help you to turn a vision into execution.”

Feeling like your startup would be a fit for Techstars? They are opening applications in late February for the second class in Fall 2019!

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Why Building a Business Today Is More About Selling Skills Than Selling Products

Most of you who start new ventures don’t think of yourselves as sales experts. In fact, you may feel on the opposite end of the spectrum, more focused on delivering the perfect solution and managing the finances to grow the business.

Yet in today’s competitive and rapidly changing world, top notch sales and marketing skills are critical to the success of every business.

As an advisor to technical entrepreneurs, the most common mistake I see is the “If we build it, they will come” approach with no sales plan, under the assumption that the technology is so spectacular that customers will buy the product.

In todays’ rapidly changing world, there are over 30,000 new products introduced every year, so it’s easy to slip into that unseen majority and fail.

Thus, in my view, it’s never too early to brush up on your selling and marketing skills. Here are the key steps I have found to work from my own experience in large companies, as well as startups:

1. Practice showing some passion in every conversation.

Being positive and excited about what you offer should not be reserved for stand-up pitches and closing large deals.

Everyone inside your company, as well as potential customers, needs to be inspired by your message before they believe it. Stand tall – keep your fears and doubts to yourself.

It always helps to ask questions first, and keying off an element of passion in the other person’s perspective. For example, if they show a passion for fitness and life balance, highlight how your solution shortens the time and pain of solving their business problems.

2. Work hard on perfecting your value proposition.

The value of your solution may be self-evident to you, but everyone has a different perspective.

Make sure you engage fully and often with your ideal customer, to understand what will appeal most to their heart, mind, and pocketbook. Then craft an irresistible pitch, and iterate often to keep tuning it.

Effective value propositions are quantified and personalized for each customer or target segment. For example, “reduces your cost per application by 30 percent” is far better than “easier and faster to apply.” Eliminate the fuzzy hype words from your message.

3. Hone in and capitalize on your best assets.

Your strongest asset may be your personality, expertise, location, or your solution. Highlight what you do best, unique benefits to your customers, and an honest statement of why you do what you do.

Make it real for your customers with professionally prepared collateral based on these assets.

Dale Carnegie, for example, was recently ranked as one of the ten greatest salespeople of all time, by virtue of his presence and conviction, even though his courses on public speaking contained no great innovations or breakthroughs. He was the asset he sold.

4. Build real relationships with people who can help.

Starting and growing a business is not a solo operation. You need all the help you can get, and people will help you if they know and trust you.

These may be partners who can complement your skills, mentors who can show you what you need, or customers who can be your best sales people.

Even the most successful business executives have mentoring relationships with helpful peers. Bill Gates has a long-standing mentor relationship with Warren Buffett, and Mark Zuckerberg openly acknowledges that he was mentored in the early days by Steve Jobs.

5. Don’t forget to ask for the close, with confidence.

You can’t win if you don’t ask, and confidently asking a customer for their decision shows leadership on your part.

The best sales people look for ways to inspire a customer’s emotional involvement, create the urgency to take ownership, and then ask for the decision. Don’t be shy on this point.

Five basic rules for closing include treating closing as a process, setting a closing objective, waiting for the right moment, wrapping a conversation around it, and then celebrating every victory. If you can’t close deals, you don’t have a business, no matter how great the product.

I’m not suggesting that you as the business founder has to do all the selling, but you do have to be the role model that the rest of team follows. You also have to deeply understand what sells to your customers, or you can’t properly lead the other key business areas of development, finance, and operations.

In reality, leadership requires first selling yourself, so these same steps apply.

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Lawsuit Claims Google Board Covered Up Sexual Misconduct

A shareholder lawsuit filed Thursday claims that Alphabet’s board of directors, including Larry Page, Sergey Brin, and Eric Schmidt, covered up sexual harassment by numerous Google executives, including Andy Rubin, whose $90 million exit package was approved by the board after an internal investigation found sexual harassment claims against Rubin credible.

At a press conference in San Francisco, attorneys representing Alphabet shareholder James Martin said that Page and Brin, the company’s cofounders, were among the people directly involved in the cover-up and should compensate shareholders for the value lost when Alphabet shares declined after the payments to Rubin and others were revealed.

The lawsuit is supported by nonpublic evidence, including minutes from Alphabet board meetings in 2014 and 2016, obtained through a shareholder inspection demand. In the public filing, the minutes are heavily redacted, which Google demanded as a condition of providing the documents. But attorney Frank Bottini, managing partner at Bottini & Bottini, said he hopes the judge will unseal the information.

“You won’t believe what’s in these minutes,” Bottini said.

The minutes cover both meetings of the full board, as well as its leadership development and compensation committee, which approved payments to Rubin. The meetings from 2014 concern Rubin, while the 2016 minutes concern Amit Singhal, another Google executive who left after harassment complaints that the company did not publicly acknowledge at the time.

Bottini’s theory is that had Rubin been fired for cause, he would have exposed sexual misconduct allegations against other executives and directors, including Schmidt, the company’s former executive chairman, and David Drummond, its chief legal officer, who were both referenced in an October New York Times investigation, which first reported the $90 million payment to Rubin.

The lawsuit is seeking significant changes to Google’s corporate governance, including allowing non-management shareholders to nominate at least three new board members and changes to the company’s stock structure, which gives Page and Brin a supermajority voting share. The suit also asks that Rubin and others return their severance payments.

The complaint was filed in San Mateo County, California, Superior Court on Thursday. Google and Rubin did not immediately respond to requests for comment.

The reports of Rubin’s $90 million severance package, and other harassment allegations inside Alphabet, incited a backlash at the company. In November, 20,000 workers in dozens of Google offices around the world walked out to demand better policies, holding signs saying things like “Happy to quit for $90M—no sexual harassment required.”

After the protest, Google CEO Sundar Pichai said the company would change its policies to allow alleged victims of sexual harassment or assault to file lawsuits, rather than force them into private arbitration. The new policy is limited to individual lawsuits, so class action cases are still restricted. Walkout organizers say the changes fall short of their demands. At the press conference, attorneys said they were also seeking an end to arbitration agreements and non-disclosure agreements that prevent openness and transparency and allow victims to discuss bad conduct without getting fired, demoted, or transferred.


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Get to Know Jeff Bezos’ Almost-Ex, MacKenzie Bezos, Who Could Soon Be One of the World’s Richest Women

Jeff and MacKenzie Bezos are divorcing after 25 years of marriage. While the Amazon founder’s name is well known, the news has left some people wondering, who is MacKenzie Bezos? Who is the wife of the richest man in the world, someone who has led a relatively private life as the partner of the powerful founder and executive?

MacKenzie Bezos was also instrumental in the founding of Amazon in 1994, a year after marrying Jeff in 1993. She was one of the first employees at the online bookseller, according to USA Today. MacKenzie and Jeff were married six months after they first met at Wall Street hedge fund firm D.E. Shaw, where Jeff was a vice president and interviewed MacKenzie. Together, they have four children.

But she is perhaps best known as the author of several novels, including Traps and her debut, The Testing of Luther Albright, which won an American Book Award. She studied at Princeton University and served as a research assistant to famed author Toni Morrison, who called Bezos “one of the best students I’ve ever had in my creative-writing classes” in a 2013 Vogue profile. And in 2014, she founded an anti-bullying organization, Bystander Revolution.

In 2018, the Bezoses also jointly committed $2 billion of their combined fortune to create the Day One Fund, which will fund a network of preschools in low-income communities as well as support existing nonprofits that assist homeless families.

MacKenzie may also soon be one of the world’s richest women. Jeff Bezos is worth roughly $139 billion, and under communal property laws in Washington State, that could mean each individual Bezos could walk away from the marriage with around $69.5 billion. That would make MacKenzie roughly 26 times richer than Oprah Winfrey and 100 times richer than the Queen of England, according to Marketwatch. She would also end up with some serious real estate holdings, as the Bezoses reportedly own at least five homes around the country.

Jeff Bezos announced the couple’s plan to divorce in a tweet posted Wednesday. MacKenzie Bezos has yet to release her own statement.

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Amazon Just Revealed a Surpris Secret It's Refused to Talk About for Years. But Why Now?

Amazon has had a big secret for years. Now suddenly, it’s coming clean.

You might have noticed that Amazon pushes the Echo and its Alexa voice activated system, very hard. The premium real estate at the top of the Amazon.com home page is taken up with an Echo or Echo Dot more often than not, and the company offers continual steep discounts.

But ever since its introduction in 2014, Amazon has simply been unwilling to reveal exactly how many Alexa equipped units it’s sold.

They’ve held this number more closely than perhaps any other secret–at least since the days when people were clamoring to know how many Kindles Amazon sold (but Amazon just wouldn’t say).

Now the numbers can be told, apparently. Amazon has sold “100 million devices with Alexa on board,” as Amazon’s senior vice president of devices and services, Dave Limp revealed to writer Dieter Bohn of The Verge.

Limp also revealed that Amazon beat its expectation for sales of the smaller Echo Dot during the holidays, but wouldn’t give hard numbers there. (Old habits die hard, I guess.)

But setting aside the Dot, why the change of heart? And, is 100 million a good number or not? According to Bohn, it seems like the second question provides part of the answer to the first.

Selling 100 million of anything is pretty fantastic, unless you were to compare it to the number of devices sold with Apple’s Siri, or Google Assist.

But, are people buying the iPhone or an Android phone for the assistant alone? Probably not; but they are buying Amazon Echoes for basically no other reason than the Alexa technology.

“Depending on how you count, it’s either seriously impressive or a serious problem for Amazon,” Bohn writes. 

As for why Amazon would reveal the number now, well, it’s in advance of CES, the big consumer electronics convention in Las Vegas. 

While Limp insists he doesn’t think that Amazon, Apple, or Google will completely dominate voice-activated platforms in the near term, both of those other companies have big presences at CES. Apple even took out a full-size billboard overlooking the convention.

Amazon hasn’t traditionally had as much of a presence. But this year, it appears perhaps it’s making a bit of a splash by releasing a bit of closely held information. 

“Customers do not care about an ad campaign on the Las Vegas Strip,” he said. “They just don’t. It’s playing to the industry. It’s not playing to who really matters.” 

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The Simple Engineering That Will Keep NYC's L Train Rolling

Ever since the last of the brackish water slithered out of the Canarsie Tunnel in the aftermath of 2012’s Superstorm Sandy, New Yorkers have been bracing for the pain. Public transit officials have long warned that the water damage to the 94-year-old tunnel, full of just-as-old subway equipment, would eventually require a long, painful, deeply inconvenient rehabilitation. That’s the tunnel that runs under the East River, carrying many of the L subway train’s 400,000 daily riders from popular Brooklyn neighborhoods like Williamsburg and Bushwick into Manhattan.

The surgery was scheduled for April 2019, when the stretch of L train that takes New Yorkers across Manhattan and into Brooklyn was scheduled to shut down for a 15-month repair job. Ahead of what they officially deemed the “L-pocalypse,” local officials created piles of plans to ramp up bus service, encourage biking, and run new ferry routes, and everything else they could think of to keep all those commuters from taking to cars and making already bad traffic fully catastrophic.

Those plans (as well as wilder ones proposed by concerned citizens) became a lot less necessary Thursday morning, when Governor Andrew Cuomo called a surprise press conference to proclaim that no, the L train won’t close completely, and yes, it will still be fixed for the future.

The new plan for the next few years is to keep the train open and running as normal during weekdays, whilst doing repairs on nights and weekends (the details remain fuzzy). The board of the Metropolitan Transportation Authority, which runs the subway, has yet to adopt the new plan, which was proposed by a commission of half a dozen engineers based at Columbia and Cornell Universities that Cuomo assembled last month, two years after the decision was made to close the line. But the agency put out a press release Thursday afternoon saying it “accepted the recommendations.”

Curious politics are clearly at work here, but New Yorkers are unlikely to care, as long as the subway keeps running. And if it does, it’ll be thanks to two bits of subway engineering infrastructure: benchwalls and cable racking.

Let’s start with benchwalls. If the train stopped in the tunnel and you had to get out, these are the stretches of concrete, running along each wall and resembling big benches, that you’d be walking on. Facilitating emergency exits is one of their main functions—without them, you’d have to jump out of the train, onto the ground and risk hitting the third rail. Benchwalls also hold most of the goodies that make the subway work, including the power and communications cables. When workers were building the line, which started service in 1924, putting the cables in the concrete was the best way to protect them from things like hungry rats and water damage.

Over the past century, those benchwalls have started to deteriorate, a process accelerated by the flooding from Hurricane Sandy. Explaining its full shutdown plan in 2016, the MTA said the tunnel’s bench walls “must be replaced to protect the structural integrity of the two tubes [east and west] that carry trains through the tunnel.”

Replacing these things involves jackhammering away concrete, removing the rubble, replacing the cabling inside, setting new concrete, and having it dry. It’s work you can’t do overnight or on weekends, because any one section takes several days. And you can’t run trains without leaving a walkway to lead people to safety in an emergency.

The new plan involves giving those benchwalls a bit of a demotion. They’ll still be used for emergency egress, but they won’t hold the cables anymore. Instead, the L train will use a “cable racking” system, in which new power and comms lines will be strung up and attached to the sides of the tunnel, above the benchwalls. Turns out, their protective jacketing has advanced since the Prohibition Era. “We’ve had tremendous progress in materials,” says Peter Kinget, a Cornell electrical engineer who served on the panel. , If the jacketing catches fire, it doesn’t produce noxious fumes. It’s impervious to vermin and H2O, obviating the need for the concrete armor. The workers will also shore up the sections of benchwall that are crumbling with fiber reinforced polymer, Cuomo says, leaving the old, inactive cables entombed inside.

That decoupling of the benchwall’s duties is a big deal, because it makes the work much easier to execute. You can cut back service at night and on weekends (by running trains in just one of the tunnel’s twin tubes) and have workers slip underground, setting up the racks and new cables segment by segment. During normal hours, the train operates as it usually does, pulling power from the cables already in the benchwalls. Once the work is done, the MTA will switch the trains over to the new set of cords.

Cable racking has been used for new metro lines in London, Hong Kong, and the Saudi capital of Riyadh, Cuomo says. This would be its first use in the US, and the first time it’s been used to fix up an existing line.

“It’s a clever solution,” says Matt Cunningham, a civil engineer and global director of infrastructure for Canadian engineering firm IBI. It’s cheaper and easier than replacing all the cable-filled benchwalls, and it’s a proven method. “It’s going to work.”

Which brings up the unanswered question of why this idea is just surfacing now. Why not before the MTA decided on the full shutdown, then spent two years preparing for it? It makes Cuomo the politician who averted the traffic-spewing L-pocalypse—but it also makes one wonder why he didn’t come to the rescue earlier. (He’s been governor of New York since 2011.) In his press conference, he presented this as new solution, which is true if you compare it to the techniques used to build the subway in the previous century, but not if you take a slightly narrower view. “It’s not new technology that’s only now become available,” Cunningham says.

Of course, limiting service during nights and weekends to make this fix will still inflict some suffering, and the MTA has a terrible record of mismanaging this sort of operation, so any promises about deadlines or costs should be doubted. “You’re not getting a root canal on five teeth, you’re getting a root canal on three teeth,” says Allan Rutter, of Texas A&M’s Transportation Institute. “There’s gonna be pain.”

In infrastructure as well as in dental surgery, you’ve got to accept some drilling and discomfort. But less is definitely more.


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How Can We Best Prepare for Job Automation?

The best way to prepare is to transition away from things that are largely routine and predictable. Try to find a role that is largely focused on tasks that are not easy to automate.

I think this generally includes 3 areas:

  1. Creative work — where you are building something new, thinking outside the box in non-predictable ways, etc.
  2. Human-centered work — where you build sophisticated relationships with people. This would include caring roles, as with a nurse or social worker, but also business roles where you need a need understanding of your clients.
  3. Skilled trade work — this includes jobs that require lots of mobility, dexterity and flexibility in unpredictable environments. Examples would be electricians or plumbers. Building a robot that can do these jobs is probably far in the future.

What you do NOT want is to be the person who’s only role is to sit in front of a computer performing some predictable task–like cranking out the same report again and again. If you have a job like this you should worry and look to transition in other roles in the 3 areas I listed above.

One very important part of adapting is to realize that future careers will nearly all require continuous learning. So whether you are concerned with yourself or your children, a focus on learning–getting good at it and truly enjoying it–will be one of the most important components of success.

This question originally appeared on Quora – the place to gain and share knowledge, empowering people to learn from others and better understand the world. You can follow Quora on Twitter, Facebook, and Google+. More questions:

Published on: Jan 3, 2019

Categories: Uncategorized

Google wins U.S. approval for radar-based hand motion sensor

WASHINGTON (Reuters) – Alphabet Inc’s Google unit won approval from U.S. regulators to deploy a radar-based motion sensing device known as Project Soli.

Google signage is seen at the Google headquarters in the Manhattan borough of New York City, New York, U.S., December 19, 2018. REUTERS/Shannon Stapleton

The Federal Communications Commission (FCC) said in an order late on Monday that it would grant Google a waiver to operate the Soli sensors at higher power levels than currently allowed. The FCC said the sensors can also be operated aboard aircraft.

The FCC said the decision “will serve the public interest by providing for innovative device control features using touchless hand gesture technology.”

A Google spokeswoman did not immediately comment on Tuesday, citing the New Year’s Day holiday.

The FCC said the Soli sensor captures motion in a three-dimensional space using a radar beam to enable touchless control of functions or features that can benefit users with mobility or speech impairments.

Google says the sensor can allow users to press an invisible button between the thumb and index fingers or a virtual dial that turns by rubbing a thumb against the index finger.

The company says that “even though these controls are virtual, the interactions feel physical and responsive” as feedback is generated by the haptic sensation of fingers touching.

Google says the virtual tools can approximate the precision of natural human hand motion and the sensor can be embedded in wearables, phones, computers and vehicles.

In March, Google asked the FCC to allow its short-range interactive motion sensing Soli radar to operate in the 57- to 64-GHz frequency band at power levels consistent with European Telecommunications Standards Institute standards.

Facebook Inc raised concerns with the FCC that the Soli sensors operating in the spectrum band at higher power levels might have issues coexisting with other technologies.

After discussions, Google and Facebook jointly told the FCC in September that they agreed the sensors could operate at higher than currently allowed power levels without interference but at lower levels than previously proposed by Google.

Facebook told the FCC in September that it expected a “variety of use cases to develop with respect to new radar devices, including Soli.”

The Soli devices can be operated aboard aircraft but must still comply with Federal Aviation Administration rules governing portable electronic devices.

Reporting by David Shepardson; editing by Jonathan Oatis

Categories: Uncategorized

The 10 Most Googled People of 2018 (Who'd You Look Up?)

There’s perhaps no better log of what’s on your mind than your browser search history. (Who hasn’t deleted their search history on a shared computer?)

It stands to reason, then, that getting a window into our collective psyche is as simple as perusing Google’s list of most-searched terms of the year. Google recently released The Year In Search–a comprehensive breakdown of everything we searched for this year, organized by category.

So what was on our minds in 2018? When it comes to people, these individuals were. Don’t worry–if you don’t know one … I Googled it for you:

10. Cardi B

American rapper whose standout hits include Bodak Yellow and this year’s breakout, I Like It, which currently has 674M streams on Spotify and counting. 

9. Stormy Daniels

Her legal name is Stephanie Clifford, and she is an American stripper, porn star, and director who got into a legal battle with Trump and his lawyer Michael Cohen this year. Trump and company paid Daniels $130,000 to stay quiet about an affair she says had with Trump in 2006.

8. Hailey Baldwin

Daughter of Stephen Baldwin, she’s a model and TV personality who married Justin Bieber this year. While legally married, the couple has yet to stage a large-scale wedding with family and friends.

7. Brett Kavanaugh

A polarizing figure, Kavanaugh was appointed to the Supreme Court this year following what some described as an excruciating and exhausting battle for confirmation. Multiple allegations of sexual misconduct were levied against him. 

6. Jair Bolsonaro

Bolsonaro was elected president of Brazil in October, 2018. A very right-wing figure, many have compared him to Trump.

5. Khloé Kardashian

Younger sister of Kim Kardashian, Khloe nearly broke the internet this year when she had her baby girl, True Thompson, in April 2018.

4. Logan Paul

On December 31, 2017, controversial vlogger Paul uploaded a YouTube video showing the corpse of a suicide victim. The video gained 6.3M views within 24 hours, sparked outrage on many fronts, and almost cost Paul his YouTube channel. Paul has since been reinstated on the platform and contributed $1M to suicide prevention agencies.

3. Sylvester Stallone

Stallone did not die this past year, but a lot of people feared otherwise. In February, popular searches included “Sylvester Stallone dead 2018” and “Did sylvester stallone die.” The countries where the hoax was passed around the most? South Africa, Ghana, and Bolivia (the U.S. came in 22nd on the list of Stallone searches).

2. Demi Lovato

A Grammy-nominated musical artist, Lovato was hospitalized this year for a suspected overdose. “I have always been transparent about my journey with addiction,” Lovato said on social media. “What I’ve learned is that this illness is not something that disappears or fades with time. It is something I must continue to overcome and have not done yet. I will keep fighting.”

1. Meghan Markle

Markle married Prince Harry in a royal wedding this year, the guest list of which included Serena Williams, George Clooney, Oprah, Elton John, and the Spice Girls.

Categories: Uncategorized

General Electric's Healthcare IPO Is Actually Just What The Doctor Ordered

2018 has been an eventful year for General Electric (GE) and its shareholders, as this storied company will finish the year with a new CEO, Mr. Larry Culp, and in the midst of major restructuring efforts (not the first time hearing this, right?). As such, it should come as no surprise that GE shares have significantly underperformed the broader market over the last 12 months.

Chart

GE data by YCharts

Yes, it has been that bad. GE is positioned to spin/sell off several major businesses, including GE Healthcare, and I believe that most of the bad news is already baked into the stock. However, as I described in GE: It Ain’t Goin’ Be Easy, it is going to be tough sledding to turn around this large conglomerate, but, in my opinion, Mr. Culp is the right guy for the job. But, it is important to also remember that Mr. Culp and team have some great assets that can be utilized to jump start the recovery process, and it all starts with the GE Healthcare spinoff, in my mind.

Therefore, while I agree with many of the points made in General Electric Healthcare IPO Is Too Risky In This Environment, I believe that the GE Healthcare spinoff is just what the doctor ordered, even in this market.

GE Healthcare, Just What The Doctor Ordered

The GE Healthcare spinoff should be viewed as a direct attempt to unlock shareholder value. Many people ask why it would make sense for GE to get rid of a promising business like GE Healthcare, and while it would be great if a large collection of “good” businesses could be managed under one umbrella, I believe that it is now time for GE to create a more focused, simpler business.

Source: GE, Investor Presentation

To the point of unlocking shareholder value, GE Healthcare does not get the respect/love that it deserves from the market so, at the end of the day, something has to be done. In my mind, this is the overarching reason to proceed with a spinoff.

Let’s consider a few important points:

1) A promising business with an impressive track record

GE Healthcare is a growing business that has been able to report strong operating results over the last five years.

Source: 2017 10-K

The segment’s revenue is up single digits (5%) over the last five years, but, more importantly, profit is up by an impressive 13%. Additionally, management has been able to improve GE Healthcare’s operating profit margin by over 100 bps.

$ – in mil 2017 2016 2015 2014 2013 (Chg ’13 to ’17)
Revenue $19,116 $18,291 $17,639 $18,299 $18,200 $916
Chg 5% 4% -4% 1% 5%
Profit $3,448 $3,161 $2,882 $3,047 $3,048 $400
Chg 9% 10% -5% 0% 13%
Operating Profit Margin 18.0% 17.3% 16.3% 16.7% 16.7% 1.3%
8%

2) The recent results for GE Healthcare tell a similar story

Over the first nine months of 2018, GE Healthcare’s operating results show that this business unit is in a great position heading into 2019.

Source: Q3 2018 10-Q

And management has continued to improve the unit’s cost structure, as shown by the fact that the profit margin is up 50 bps YoY.

Source: Q3 2018 10-Q

3) What really matters, it’s all about creating value

The takeaway from the first two points is: GE Healthcare is a collection of assets with promising business prospects, and the numbers prove it. When taking a step back, I believe that the benefits of a GE Healthcare spinoff are threefold: (1) GE Healthcare will be valued like it should be, (2) the new GE will receive some much needed capital [let’s also not forget that approximately $18B in liabilities are going with the business unit], and (3) Mr. Culp and team will be able to focus their attention on a more streamlined business, which is especially important given the current state of this conglomerate – the Power unit should be front of mind.

It was reported that GE confidentially filed for the GE Healthcare IPO, and Mr. Culp recently floated the idea of spinning off a larger portion of the unit, so the market should get ready for this soon-to-be new publicly traded entity.

There are several good examples for what type of valuation GE Healthcare may receive when it’s eventually spun off and, as a shareholder, I like what I have seen so far. For example, American Money Management LLC provided this breakdown:

Source: AMM Research Report

Observations from AMM’s results:

  • GE Healthcare could have a market cap in the range of $33B-$60B.
  • GE Healthcare represents a material amount of the current share price for GE (the stock is trading at $7.51 per share).

I could provide at least three additional research reports estimating the value that GE Healthcare may receive, but I will save you the time by saying that most, if not all, analysts believe that the business unit makes up at least 50% of GE’s total market cap as of today (approximately $65B). I previously calculated a pre-liability market cap for GE Healthcare of $75B. AMM’s report is more conservative, and probably a little more realistic given the broader market dynamics.

Risks

Downside risks: (1) The company has significant fines related to the DOJ/SEC investigations, (2) Power takes longer than 18-24 months to recover and burns through cash, (3) management has a fire sale and disposes of assets at rock bottom prices, (4) the company’s credit rating hits junk status, and (5) additional insurance reserve charges are booked.

Upside risks: (1) the spins [Transportation, Healthcare, and Baker Hughes (NYSE:BHGE)] bring in more capital than anticipated, (2) the pension deficit shrinks as a result of the positive tailwinds, and (3) well-known investors put money to work in GE which leads to a positive change in sentiment.

Bottom Line

Make no mistake about it, GE is a high risk/high reward stock at this point in time. A turnaround will not be easy, and it will likely take an extended period of time (years instead of months), but I believe that management is already heading in the right direction. In my mind, the GE Healthcare spin will be a giant step forward.

Mr. Culp has a finite amount of capital that can allocated across the business portfolio so, at this point in time, it simply makes more sense for GE Healthcare to operate as a standalone entity. It helps that GE Healthcare is a great business that operates in a promising environment. In my opinion, GE Healthcare could turn out to be the catalyst that gets GE’s stock back into the double-digit range.

Lastly, I believe that the spins (Healthcare, Baker Hughes, & Transportation) will eventually lose the conglomerate discount that is currently being applied in the years ahead. As such, the asset disposals (including the GE Healthcare spin) will benefit the newly created entities and the “New GE” in 2019 and beyond. GE is definitely still a 3- to 5-year story, but I believe that the stock is a great long-term investment, if it meets your risk/return profile.

Disclaimer: This article is not a recommendation to buy or sell any stock mentioned. These are only my personal opinions. Every investor must do his/her own due diligence before making any investment decision.

Disclosure: I am/we are long GE. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Categories: Uncategorized

Got a McDonald's or Burger King Coupon? Here's the Smart, Surprising Thing to Do With It. (You Only Have 3 Days)

This is a story about a smaller restaurant chain trolling McDonald’s, Burger King, and other giants of the business. And it’s kind of brilliant. Before the details, a quick explanation.

The fast food industry is a smart and fun one to follow no matter what business you’re in, and for two big reasons.

First, there’s the pure scale. Make a menu change at McDonald’s for example, and you’re upending the routines of hundreds of thousands of hungry Americans. You can learn a lot just by watching how they develop and test new products.

But second, there’s the marketing.

Think of McDonald’s, which spends $2 billion a year on marketing and ads. That’s half the entire value of its much smaller competitor, Wendy’s. It’s an incredible chance just to unpack what they do, and figure out why they think that various ideas will work.

Which brings us to some shoot-the-moon marketing campaigns that can actually turn the big chains’ efforts on their heads.

The only catch? You had to place the order from a McDonald’s restaurant. (Technically, just being within 600 feet was close enough to trigger the offer.)

Of course, Burger King isn’t small; just smaller than McDonald’s. But it shows how if you’re creative, you can use a competitor’s strength–in that case the fact that there are roughly twice as many McDonald’s in the U.S. than there are Burger King locations–to your advantage.

But what if you don’t have 1.7 million Twitter followers and a full time social media marketing operation, like Burger King, to get word of your deal out.?

What if you don’t even have a mobile app (or a burning desire to get people to download your app, which is what the Burger King promotion and so many others these days are all about)?

Ladies and gentlemen, I give you: Smoothie King.

Again: not exactly tiny, although very small compared to McDonald’s and Burger King. Smoothie King has close to 800 stores, heavily concentrated in warmer weather parts of the country.

It’s privately held, and even if you’ve never tried it, you might recognize the name from the $40 million naming deal it has for the NBA New Orleans Pelicans home arena (“Smoothie King Center“).

Now, like its bigger competitors, Smoothie King also has a rewards app, and it’s launched a contest to try to incentivize people to download and use it. (The “Change-a-Meal Challenge.”)  

But what attracted me to this whole thing is how Smoothie King is kicking off its promotion: By letting you use any coupon from any other fast food restaurant — McDonald’s or Burger King included — at Smoothie King.

It’s good for only one day, New Year’s Eve, and regardless of the competitor’s coupon’s value, it gets you $2 off a smoothie at Smoothie King on December 31.

And in truth, I don’t know how many people would take advantage of it. But that doesn’t really matter in a way; what matters in this social media age is whether you can find a truthful, fun way to troll your competitors and turn their strengths to your advangage.

As a marketing strategy, I think it’s brilliant.

As for the Smoothies, well, I don’t know. I’m writing this from New Hampshire, and it looks like the nearest Smoothie King would be a three hour drive away. You’ll have to let me know in the comments.

Categories: Uncategorized

Exclusive: White House mulls new year executive order to bar Huawei, ZTE purchases

WASHINGTON (Reuters) – President Donald Trump is considering an executive order in the new year to declare a national emergency that would bar U.S. companies from using telecommunications equipment made by China’s Huawei and ZTE, three sources familiar with the situation told Reuters.

FILE PHOTO: A man walks past a sign board of Huawei at CES (Consumer Electronics Show) Asia 2018 in Shanghai, China June 14, 2018. REUTERS/Aly Song

It would be the latest step by the Trump administration to cut Huawei Technologies Cos Ltd [HWT.UL] and ZTE Corp, two of China’s biggest network equipment companies, out of the U.S. market. The United States alleges that the two companies work at the behest of the Chinese government and that their equipment could be used to spy on Americans.

The executive order, which has been under consideration for more than eight months, could be issued as early as January and would direct the Commerce Department to block U.S. companies from buying equipment from foreign telecommunications makers that pose significant national security risks, sources from the telecoms industry and the administration said.

While the order is unlikely to name Huawei or ZTE, a source said it is expected that Commerce officials would interpret it as authorization to limit the spread of equipment made by the two companies. The sources said the text for the order has not been finalized.

The executive order would invoke the International Emergency Economic Powers Act, a law that gives the president the authority to regulate commerce in response to a national emergency that threatens the United States.

The issue has new urgency as U.S. wireless carriers look for partners as they prepare to adopt next generation 5G wireless networks.

The order follows the passage of a defense policy bill in August that barred the U.S. government itself from using Huawei and ZTE equipment.

Huawei and ZTE did not return requests for comment. Both in the past have denied allegations their products are used to spy. The White House also did not return a request for comment.

The Wall Street Journal first reported in early May that the order was under consideration, but it was never issued.

HIT TO RURAL NETWORKS

Rural operators in the United States are among the biggest customers of Huawei and ZTE, and fear the executive order would also require them to rip out existing Chinese-made equipment without compensation. Industry officials are divided on whether the administration could legally compel operators to do that.

While the big U.S. wireless companies have cut ties with Huawei in particular, small rural carriers have relied on Huawei and ZTE switches and other equipment because they tend to be less expensive.

The company is so central to small carriers that William Levy, vice president for sales of Huawei Tech USA, is on the board of directors of the Rural Wireless Association.

The RWA represents carriers with fewer than 100,000 subscribers. It estimates that 25 percent of its members had Huawei or ZTE equipment in their networks, it said in a filing to the Federal Communications Commission earlier this month.

The RWA is concerned that an executive order could force its members to remove ZTE and Huawei equipment and also bar future purchases, said Caressa Bennet, RWA general counsel.

It would cost $800 million to $1 billion for all RWA members to replace their Huawei and ZTE equipment, Bennet said.

Separately, the FCC in April granted initial approval to a regulation that bars giving federal funding to help pay for telecommunication infrastructure to companies that purchase equipment from firms deemed threats to U.S. national security, which analysts have said is aimed at Huawei and ZTE.

The FCC is also considering whether to require carriers to remove and replace equipment from firms deemed a national security risk.

FILE PHOTO – The logo of China’s ZTE Corp is seen on the building of ZTE Beijing research and development center in Beijing, China June 13, 2018. REUTERS/Jason Lee

In March, FCC Chairman Ajit Pai said “hidden ‘back doors’ to our networks in routers, switches — and virtually any other type of telecommunications equipment – can provide an avenue for hostile governments to inject viruses, launch denial-of-service attacks, steal data, and more.”

In the December filing, Pine Belt Communications in Alabama estimated it would cost $7 million to $13 million to replace its Chinese-made equipment, while Sagebrush in Montana said replacement would cost $57 million and take two years.

Sagebrush has noted that Huawei products are significantly cheaper. When looking for bids in 2010 for its network, it found the cost of Ericsson equipment to be nearly four times the cost of Huawei.

Reporting by Diane Bartz and David Shepardson; Editing by Chris Sanders and Leslie Adler

Categories: Uncategorized

Hate Telemarketers? This Brilliantly Simple Legal Trick Totally Destroys Most of Them (Why Did It Take So Long?)

My fellow Americans, we live in a divided time. But there is one thing we all agree on.

It’s only getting worse. By next month, nearly half of all incoming cell-phone calls will be spam. Half! Sure, the government cracks down on a few of the worst offenders. But they’re fighting with a hand tied behind their back. Now, a small group of lawmakers wants to change that.

So here’s the problem, the reason why it hasn’t been fixed before — and why a laughably simple legal trick could very likely be the solution.

Surprise: it’s totally legal!

The scenario has to do with spoofed Caller ID. You’re at home, or at work, or wherever, and you’re suddenly interrupted by a call you don’t recognize. Only… it’s from the same area code and exchange as your cell phone. 

As an example, my phone number is (424) 245-5687. I might get a call from say, (424) 245-9999.

Now, the call isn’t really originating from that number — or likely from any real traceable number. It’s just set up that way to make it look like a local call, so I might be more likely to answer.

You might assume that doing this would be illegal. I mean, I’m a lawyer (not practicing, but still), and I was pretty sure people had been prosecuted for wire fraud for doing less.

But it turns out that’s not the case at all. In fact, the Federal Communications Commission says it’s only illegal to make this kind of spoofed Caller ID call if you do so “with the intent to defraud, cause harm or wrongly obtain anything of value.”

No provable bad faith or fraud? No problem, under the current law.

Welcome to Kentucky

It’s in this context that an unlikely savior might come to the rescue.

Meet Kevin Bratcher, a state legislator in Kentucky who introduced a bill to make it illegal to spoof a Caller ID for almost any reason at all.

It wouldn’t matter if you could later prove that, for example, “technically if the person jumped through all these hoops and paid these upfront fees they could get a free trip to the Bahamas.” 

Simply “causing misleading information to be transmitted to users of caller identification technologies, or to otherwise misrepresent the origin of the telephone solicitation,” would result in a very significant fine: $500 for a first offense, and $3,000 for each subsequent offense.

There would be  few minor exceptions for things: things like if the recipient knew his or her true phone number or location, or friends playing an innocuous prank on one another.

But beyond that, it would be a strict law.

“I came up with this because I just had a campaign, and everywhere I went people were asking me, ‘Why can’t you do something about all these calls with fake IDs?'” Bratcher, a Republican who has been in office for 22 years, told me recently. “And I was receiving them too. Just a light bulb went off on my head: Why is anyone trying to give you a call with a fake ID? That needs to stop.:

A big part of the problem

I realized something after Bratcher and I talked: it’s not just the scammers who have latched onto this spoofing strategy. 

For example, Bratcher didn’told me about receiving spoofed Caller ID phone calls from a 501(c)(3) he supports, and that’s based in Washington, D.C. The calls looked like they were coming from Kentucky.

That’s also what he says to those who might suggest that anyone sophisticated enough to spoof a Caller ID might also be sophisticated enough not to get caught. For a big part of these calls — maybe even a majority — the fraud stops with the spoofed number.

Legitimate charities aren’t going to want to be tarred with this brush.

Why can’t the government work for us?

For now, if the law were only changed like this in one state, it would be a complicated and potentially expensive strategy for legitimate charities to risk fines and bad press for spoofing IDs in Kentucky.

But while the initial news coverage of Bratcher’s bill suggested it might be the first attempt like this in the country, I’ve talked with Indiana officials who say they’ve been doing something similar.

It’s hard to believe that other states and the federal government itself would be far behind.

I’ve written a lot recently about other ways to cut down on telemarketing calls. There’s the “Lenny” bot, which is truthfully one of my favorites from an entertainment standpoint, as it’s simply an Australian chatbot designed to waste telemarketers’ time.

And since Lenny hasn’t actually been widely released, I also suggested perhaps we could all team up to do a sort of “manual Lenny” — basically stringing telemarketers along, wasting their time, and driving up their employers’ costs so as to destroy their business model.

Those stories got a giant response. Because it’s a problem everyone faces.

And so, shouldn’t our government work for us, instead of us having to hack together ideas on our own to solve these kinds of problems?

It feels like a winner issue for any lawmaker who wants to run to the head of the crowd, and become known as a champion of the people. People seem to want this.  

Categories: Uncategorized

3 Coaching Strategies To Help Your Employees Overcome Uncertainty

To keep a business running smoothly, managers need to train their employees on how to perform pre-prescribed duties on a consistent basis. It’s also every leader’s responsibility to hold their team accountable to a high standard of quality and to work with them on streamlining their processes to increase efficiency.

A big challenge, however, is in preparing teams to excel when circumstances take an unexpected turn. Uncertainty is a given in business interactions, whether with clients, partners or colleagues, and leaders must take steps to coach their employees on best practices for handling uncommon situations well.

At my company Amerisleep, we encourage our staff to approach unfamiliar problems with an inquisitive mind. Rather than get flustered by the introduction of new variables, our team members are expected to ask questions to identify the key issue, diagnose the cause, and research the best solution.

Below are three things other leaders can do to ensure their team is comfortable dealing with uncertainty — and that they are capable of thriving too.

1. Create contingency plans teams can use to guide next steps.

When you anticipate the possibility of alternative scenarios, you can pre-plan different ways to respond.

In sales, for instance, one of the most dependable strategies is creating a script that features curated response patterns a salesperson can use to guide conversations based on each client’s reaction. This reduces the negative impact of resistance and rejections because it gives the salesperson a model for how they can best overcome the situation.

When negotiating with vendors, too, you may encounter obstacles that could derail the deal. To prepare our managers for those situations, we walk them through the most common sticking points such as price and timeline. If the costs are too high, we seek ways to cut back on expected deliverables to decrease the overall scope and rework the engagement so that it fits our budget. If the delivery schedule is longer than expected, we dissect the process to discover which steps we can expedite.

As a regular part of the training process, department leaders should provide their team members with guidance for how they should process uncertainty and proceed with a solutions-based approach.

2. Train staff to identify elements under their control and act accordingly.

The unknown can be quite jarring for some people. It often causes those unprepared to abandon all hope of influencing the situation and to accept whatever happens. But participants always have some measure of control, even when the expected outcomes seem less likely to manifest.

Teach your employees to look for elements they can leverage — such as historical data, rapport with other team members or participants, and available tools and technology — to allow them to reestablish their composure. Otherwise, they may view new variables as an obstacle instead of an opportunity. This will also help them become more self-reliant, empowering them to independently push more projects through to completion.

Our employees at Amerisleep take this to heart. When website outages occur, rather than panic, our development team follows a pre-defined process for troubleshooting and resolving the issue. Additionally, they take this opportunity to identify ways to further strengthen the reliability of our online experience, mitigating the risk of future failures. Although it’s impossible for us to predict when our site may experience a bit of downtime, what’s certain is the fact that our engineers are both skilled and process-oriented enough to find the perfect solution in a timely manner.

3. Promote strong analytical and critical thinking skills.

When unforeseen circumstances disrupt a plan, it’s common for people to immediately begin thinking about the ramifications of the uncertainty on their future. In these instances, they’re focusing too heavily on the consequences when they should exert more energy finding meaningful solutions.

Those who excel at dealing with the unknown stay in the moment and follow a successful roadmap: prepare as much as possible beforehand; anticipate the unexpected; look for ways to make a difference; and act decisively.

By taking a structured and strategic approach to addressing unfamiliar scenarios, you maintain your ability to think through the problem rationally rather than reacting emotionally.

Categories: Uncategorized

Ready, headset, go: Retailers racing ahead with VR for staff training

The circa 5,000 virtual reality (VR) videos viewed over two weeks by Costa Coffee staff, looking to understand how best to prepare the company’s Christmas drinks range, highlight the appetite for learning in the organisation using this technology.

That is the view of Laura Chapman, head of learning at Costa, who says festive-themed training videos were not mandatory for its workforce, but they really captured the imagination of its people at this busy time of year.

“It’s still early days for us, but feedback show us teams are motivated to learn this way,” she says, commenting on the recent introduction to over 1,500 Costa stores of Google Cardboard headsets and associated tools, enabling teams to access 360-degree footage of coffee-making tips and techniques.

The move was announced at the end of October, and was primarily a way of helping induct new staff in the ways and methods of Costa baristas ahead of the busy Christmas trading period. However, it’s a platform that can be used for training all year round.

Chapman says the VR element is embedded into what she describes as an already comprehensive training programme, and currently includes tips on how to make an Americano or the Black Forest Hot Chocolate which appears on the menu in December.

And as consumers continue to seek out more compelling experiences, expertise and different types of engagement during a trip to a retail or food and beverage outlet, there are several ways the Costa VR staff training tool is catering for these demands by preparing staff accordingly.

“We have a high volume of millennials in the workforce, so we wanted to be able to provide an engaging and innovative way of training them, one which would really excite them to learn,” says Chapman.

“The VR 360 videos we currently have provide a wider insight into the coffee growing process with footage of coffee plantations in Peru along with sneak peaks inside our state of the art roastery and coffee lab in Basildon.

“In addition to this, we also feature drinks tutorials on our key products, so teams can learn faster by immersing themselves in a real-life environment.”

Walmart is another big retail business that is well under way with its use of VR for operational gain. Facebook-owned Oculus Go VR headsets are being used by the grocer’s staff across the US, with the STRIVR-created content teaching people about technology and compliance, and aiding soft skill development like empathy and customer service.

To indicate the scale of the technology’s usage, the plan is for four VR headsets in every Walmart “supercenter”, and two units to every neighbourhood market and discount store. In total, the retailer says 17,000+ headsets are in use at Walmart today.

VR training must run deep

Ed Greig, chief disruptor at Deloitte, agrees that some of the best cases of VR usage in retail are around staff training.

“If you want to change the behaviour of your staff, that’s something you can do with VR in a way you couldn’t do with text-based e-learning,” he says.

“Some organisations are still using paper-based learning, and these are organisations that in other areas are very technical, but VR can enhance this process.”

Greig backs VR’s ability to improve the soft skills of store associates to align them with company values or to provide a platform for helping more senior staff improve management and empathy, but ultimately he sees the biggest gains for retailers coming from its wider deployment by human resources departments.

Wider recruitment

He acknowledges the idea of VR being used as a staff training tool has opened up conversations with Deloitte clients about their wider recruitment and subsequent learning strategy. As retailers embark on widescale digital transformation, he sees VR playing a central role in improving store design, supply chain operations, and general processes.

“Our motto is ‘fall in love with the problem not the solution’,” says Greig.

“There is a real danger with a new tech like VR and the subsequent modifications to that tech that people can fall in love with the solution [and forget why they need it in their businesses]. If you’re going to use VR, it should be about reshaping your entire learning strategy and how you look to develop people throughout the organisation.”

“It’s really effective when it’s used as part of the recruitment process, providing a consistency of experience for employees right from the first moment they have contact with a certain company,” he says.

“If retailers can nail that, it gives them a whole load of additional time where they’ve got people thinking about their brand values, and they can hit the ground running once they’re on the team.”

In a future internet of things (IoT) environment, Greig predicts multiple ways VR could play a part in the “digital twin” process, where a retailer’s physical premises are effectively digitally cloned. One can imagine staff using VR in this format to remotely change a retail store’s lighting or signage setting in real time, he asserts.

VR as standalone entertainment

VR is cropping up in various guises across retail, be it Virgin Holidays using Google Cardboard in stores to help customers experience locations before they book them, or Tommy Hilfiger kitting out global flagships with WeMakeVR-loaded SamsungGear devices to showcase its catwalk shows to in-store visitors.

But some of the most impactful uses of it revolve around creating an event out of VR technology. At Westfield Stratford City in 2016, Samsung ran an in-shopping-centre pop-up, enabling around a quarter of a million people to try out its Gear VR to experience roller coaster rides in North America or holidays in remote destinations.

Judging by that success, it is perhaps clear why ImmotionVR, a company that designs content for VR and operates simulators in public places around the UK, is continuing to scale its business based on a similar cinematic-like premise.

With 12 locations across the country, including at Manchester’s Arndale Centre, Birmingham’s Star City, Intu Derby, and most recently, Wembley’s London Designer Outlet, the company is creating theme-park-like, family-friendly experiences starting from £5 in shopping centres around the UK.

Martin Higginson, CEO of Immotion Group, says his company is looking to help the wider retail industry not by selling it VR technology as an internal solution, but by setting up its simulators and VR installations deep within retail – in the aisles of shopping centres or in locations left behind by collapsed or down-sizing retail chains.

“We’re focused on delivering an out-of-home experience,” he says.

“Currently shopping in general needs to bring theatre, because without that retail will wither on the vine. The high street and shopping malls need to change and start creating more theatre be it additional dining spaces, VR or something else; there needs to be a unique mix that creates a ‘theme park’ within shopping centres.”

Incentivising shopping mall visits

Higginson argues that venues from ImmotionVR, which creates its own content from its Manchester studios and offers VR experiences covering scenarios ranging from roller coaster rides to swimming with sharks off the coast of Tonga, can give families an added incentive to visit a shopping mall.

There is also a focus within the business on providing VR-enabled destinations for work parties and educational trips for schoolchildren.

“We want to create Disneyland in Westfield or Lakeside, or wherever – shopping centre owners have massive challenges with the likes of House of Fraser and Debenhams going through turmoil,” he says.

“We can bring experiences to shopping centres and fill them with guests throughout the week, helping malls become leisure destinations rather than venues for straight-out shopping.”

Higginson also argues the continued growth of his brand will open up VR to the mainstream. As a result, the tech might become more widely used in the home and in the workplace. In short, society could be about to see more of it in its various forms.

Costa and Walmart are clearly on the start of their VR journeys, but the staff engagement it has resulted in, and – in the case of Walmart – the rapid extended roll-out of the technology to date, suggests further exploration and usage is imminent.

VR roll-out a reality

Walmart announced in September that its VR technology was set to be accessible for all employee training across its entire US store portfolio, following initial usage solely for staff development in Walmart Academies. More than one million Walmart associates will now receive the same level of training as those in the academies, the retailer said.

Meanwhile, all of Costa’s fully owned stores – as opposed to its franchise and concession partners – have a Google Cardboard headset that allows staff to experience VR. And Chapman acknowledges the business is looking to make them available to its partnerships and international stores, while additional ideas for its usage keep arising.

“We could provide ‘on-the-job’ experiences to potential candidates so they get an idea as to what it’s like working in one of our stores,” she says.

“The coffee growing process and following the coffee journey from bean to cup is also something that we feel would be useful for inductions for everyone in the Costa family both among our store teams and in our support centre.”

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Treasury Secretary Mnuchin Raises Questions of Bank Stability: Hold Onto Your Hat

The entire financial system that everyone, including all businesses, depends on sits on the need for trust. And in a couple eof tweets, the Treasury Department and Treasury Secretary Steven Mnuchin may have shaken that trust loose.

The Treasury Department said that Mnuchin held a series of calls with CEOs of major banks: Bank of America, Citi, Goldman Sachs, JP Morgan Chase, Morgan Stanley, and Wells Fargo.

The CEOs confirmed that they have ample liquidity available for lending to consumer, business markets, and all other market operations. He also confirmed that they have not experienced any clearance or margin issues and that the markets continue to function properly.

Equity markets have been rocky for various reasons, including tariff wars, general uncertainty, and the Fed increasing interest rates. No markets rise forever and we’ve seen a long run. A recent survey of global CEOs showed that chief financial officers overwhelmingly expect a recession by 2010 and many think 2019 will be the year.

In turbulent times, there are tremendous reasons for businesses to be wary and for governments to be concerned about basic banking issues like liquidity. Without enough money available, institutions can’t lend money and an economy can grind to a halt.

But aside from public inquiries like bank stress tests mandated by law, deep inquiries happen out of public views. No one wants to start a panic, undermine public confidence, and potentially start runs on banks, with people looking in total to take out more money than the banks actually have. (The lending business depends on institutions leveraging deposits, which means lending out many times more than they have on hand.)

Mnuchin’s move might have made sense if there were public concerns about bank stability. Bank stocks have been taking a hit with market oscillations. When people worry about the economy, they expect that banks may suffer. When things slow, fewer people and companies take out the loans that are the source of institutional income.

But there hasn’t been a lot of concern about underlying bank stability. At least, there wasn’t until Sunday evening when the tweets hit the fan. Particularly as Mnuchin was reportedly on vacation in Mexico.

While apparently intended to as a pre-emptive reassurance to investors, the tweet may have done just the opposite, stoking fears that the government is bracing for the worst.

MarketWatch then copied a number of investor tweets. Here’s one.

The substance was much of what I heard in my circle of financial people and business and economics reporters. One could only manage “WTF?”

It may be that all is well. But markets react to expectation and emotion and things have been shaken already. You now much reexamine your strategy in the wake of decreasing confidence in the economy and keep a close eye on new statements that could further shake things up.

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California lets self-driving startup Zoox offer autonomous rides

SAN FRANCISCO (Reuters) – Self-driving car startup Zoox Inc has become the first company to receive approval from California regulators to operate an autonomous ride service for public passengers, state regulators said on Friday.

The California Public Utilities Commission said Silicon Valley-based Zoox is the first company to join a state pilot program in which self-driving cars will transport members of the public, marking a step forward in the development of fully autonomous urban transportation options.

The ability to test cars with members of the public allows self-driving companies to refine their technology and begin to smooth out rides so they are more enjoyable for public consumption. Many autonomous cars drive slowly, making jerking movements and hesitating.

Many companies, including Zoox, have been testing their self-driving cars with employees and family members.

“This is a really, really significant milestone as we head towards commercial launch, which we have stated is toward the end of 2020,” said Bert Kaufman, head of corporate and regulatory affairs at Zoox.

However, the robot cars will not be unleashed without human oversight. Regulators are requiring that a backup test driver remain in the driver’s seat to take over if necessary. Zoox is also not allowed to charge passengers, keeping the prospect of a profitable business model elusive.

Zoox is one of 62 companies with a permit to test self-driving cars in California, according to the state Department of Motor Vehicles, although most operate in the shadow of Alphabet Inc’s business unit Waymo, which began work on the technology a decade ago.

Waymo this month launched an autonomous ride-hailing service in Arizona, where regulations are far more lax. Waymo is charging customers there, although it also keeps a backup driver in the front seat.

Waymo in October became the first company to receive a permit from the state of California to test driverless vehicles without a backup driver in the front seat, and the company has also submitted an application to the CPUC to transport passengers, like Zoox. A spokeswoman for the regulator said last month that Waymo’s application is under review.

Zoox has remained secretive about its progress until recently. This week, the company published its first safety assessment, providing details about its sensors, hardware and testing.

The company was thrown into turmoil in August when CEO and co-founder Tim Kentley-Klay was abruptly fired by the board of directors. Carl Bass, who joined as interim director last year, has filled the role on an interim basis, as the search for a new CEO continues.

Reporting by Heather Somerville; editing by Jonathan Oatis and James Dalgleish

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Here Are All of the Google Doodle Games Released in 2018

Since it was founded 20 years ago, Alphabet’s Google has dressed up the company name and main search page using themed “Doodles,” including interactive Doodle Games. Though the company doesn’t post the interactive games with great frequency, older Doodle games remain popular and can be accessed trough the Google Doodle archive.

Classic Google Doodle Games include Pac-Man and the interactive Hip Hop Doodle, which can help you hone your DJ skills, and a Rubik’s Cube people can play via clicks. In 2018, the team added several more Doodle Games, and several other themed Doodles worth noting.

Here are all of the Doodle Games that (goog) Google released in 2018.

Game of the Year

Much like a Doodle game that lets you play to win, Google’s Game of the Year is an interactive quiz that tests your knowledge of all that happened in 2018. Perhaps not surprisingly, the game is based on search engine data, such as which topics or words were searched for most frequently.

Playful Halloween

It only took two decades for Google to make it possible to trick-or-treat without leaving your laptop. For Halloween 2018, Google released its first-ever interactive, multiplayer game. In the charmingly-named, four-player Great Ghoul Duel, individual players join a two-person team and compete with players from around the world to collect the most points, or “spirit flames,” as they’re known in the game. Get scary good at it, and you can unlock special bonuses.

Gnome Games

Another popular Google Doodle Game from 2018 featured what must be Germany’s best known, most whimsical garden feature: the garden gnome. Players use a catapult to launch the tiny statues into the farthest corners of the virtual garden, planting flowers as they fly through the air. The more flowers you plant, the more points you earn.

Snow Games

In honor of the 2018 Winter Olympics in PyeongChang, South Korea; Google released a series of so-called Snow Games Doodles that users of the search engine can enjoy at home, no athletic ability required. Google released one Snow Games Doodle for every day of the winter games, bringing the grand total to 17 in all.

Because the year’s Winter Olympics overlapped with Valentine’s Day, one of the Snow Games Doodles featured two figure-skating grebes, which, while not an interactive game, sure are sweet. Another holiday that overlapped with the Games, the Lunar New Year, was also given its own Google Doodle.

Civic Duty

Technically not a Google game—and certainly, democracy is no game either—the 2018 National Voter Registration Day Doodle nevertheless served an important purpose: reminding any eligible U.S. citizen to be sure to register to vote in the midterm elections.

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How Iceland Used Brilliant PR to Bounce Back from a Natural Disaster

In business, your reputation is just as important as the quality of your service.

So what do you do when that reputation is damaged? Take a page from Iceland‘s book, which rose to the occasion when its own reputation was damaged after a natural disaster.

In April 2010, a volcano in Iceland named Eyjafjallajökull (pronounced AY-yah-fyad-layer-kuh-tel) suddenly erupted, spewing ash and lava into the surrounding environment.

Over the next six days, the ash cloud the volcano created spread across all of Europe and grounded millions of travelers. It was the worst air traffic disruption since World War II.

Suddenly, any searches for Iceland brought up scary news reports of environmental damage and videos of black ash clouds and molten lava. Though the eruption wasn’t anyone’s fault, Iceland suddenly had a huge reputation problem on their hands.

Flash forward to today, and Iceland now sees more than two million tourists per year, and those numbers have never dropped–not even in the summer after the eruption.

So how did its leaders avoid disaster and transform a bad reputation into an overwhelmingly positive one? They used this five-step checklist:

1. Overtake the bad coverage with good.

To combat its negative online reputation at the time, the government of Iceland called on the public to write as many good stories about Iceland as they could. The idea was to flood out the negative press with good press.

More than 1.5 million stories were posted in the first week on social media and on the campaign’s dedicated website. This was the beginning of the PR campaign that would reverse Iceland’s reputation and reposition it as a popular travel destination.

Instead of spending time and energy responding to negative PR, sometimes time is better spent creating new and positive content for your business.

2. Leverage the power of word of mouth.

The name of that campaign is “Inspired by Iceland.” A survey of tourists at the time reported that 80 percent of tourists would recommend Iceland as a travel destination, the highest among any European country.

Brooklyn Brothers, a U.K.-based ad agency that worked on the campaign, realized that word of mouth would be a powerful force in turning the tide of public opinion. If enough everyday, relatable people sung the praises of Iceland, their friends and colleagues could change their opinions, too.

If you want to influence public opinion, get real, satisfied customers to speak out about your business. Testimonies from regular people are much more powerful than a slick ad campaign.

3. Get everyone involved.

To pull off such an ambitious rebranding effort, everyone needed to take part: government and public agencies, corporations, local businesses, people, celebrities, and tourists.

Iceland succeeded in pulling together people from diverse industries and uniting them in their love for Iceland to contribute to the campaign. It includes regular people and celebrities alike–even the president of Iceland.

When facing a big PR problem, reach beyond the PR team and get everyone on board. Your entire company be motivated to succeed, and you’ll be able to draw on everyone’s strengths.

4. Turn a negative into a positive.

To some, the idea of active, possibly-dangerous volcanoes is a negative aspect. To others, though, visiting a country with such a dynamic landscape is an exciting adventure.

Instead of pushing issues like active volcanoes under the rug, Iceland embraced its natural landscape and made it a central part of its brand.

Here’s how one ad agency expresses it: “Iceland is an active landscape constantly in flux…A volcanic island, our nation rose from the pristine Atlantic Ocean creating fertile pastures and some of the world’s most impressive natural wonders.”

Inspired by Iceland also makes the country’s beauty and adventurous aspect a focus of its campaign. The website lists over 400 “Nature” attractions including glaciers, mountains, cliffs, fjords, caves, islands, and waterfalls.

Through the eyes of this campaign, to visit Iceland is to experience true adventure. A characteristic that some people see as a negative can sometimes be rebranded as a positive.

5. Coordinate a strategic campaign with an authentic message.

Every year, the Inspired by Iceland campaign continues to create new, original content that sparks interest in the country, like a recent video entitled “The Hardest Karaoke Song in the World,” which teaches you Icelandic words at a dizzying pace.

At the same time, the messages of the campaign have always been authentic and in the voice of real people. It’s never had a slick, advertising feel, which is why it’s been so successful.

Both of these factors–strategy and relatability–are important in creating a positive PR campaign. Plan strategically for your PR campaign, but research your audience well to make sure the message is relatable. If you can, have everyday people deliver the messages for you.

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Juul Accepts Altria Investment and Embraces Big Tobacco

Juul’s deal to accept a big investment from the maker of Marlboro cigarettes will snuff out its chance to take the high road with critics, but it will buy the embattled e-cigarette company time and credibility with regulators.

Juul said on Thursday it had accepted a $12.8 billion cash investment from Altria, one of the nation’s largest cigarette makers, for a 35 percent stake that values the three-year-old startup at $38 billion, according to Wells Fargo.

It’s tempting to see the financial tie to big tobacco as Juul selling out. The company has marketed itself as a way for smokers to transition away from cigarettes by satisfying their nicotine addiction without the hazardous byproducts produced by burning tobacco. When Juul launched in 2015, its mission was to design a better e-cig—one that gave consumers the same buzz and could fit in their pocket.

But Juul, which styles itself as a Silicon Valley startup, has always had a messianic philosophy around growth, arguing that persuading smokers to switch to vaping outweighs the potential dangers of encouraging new nicotine addicts. To that end, Altria’s marketing and distribution machine will vastly accelerate Juul’s reach. As part of the deal, Altria promised top-shelf placement in convenience stores next to its cigarettes, as well as ads inserted inside packs of cigarettes and sent through direct mail.

Juul’s growth-first strategy has been evident over the past year. Even as government agencies, public health advocates, and parents warned about an e-cigarette epidemic among teens, the company kept its popular fruit-flavored e-liquid pods, which have a notoriously high concentration of nicotine, on the market until the Food and Drug Administration cracked down this summer, following a raid of the company’s San Francisco headquarters.

“JUUL partnering with Altria, maker of the nation’s number one cigarette brand Marlboro, and adjudicated racketeers, proves they are not in the business of saving lives and never have been,” Robin Koval, CEO of the advocacy group Truth Initiative, said in a statement.

The perks of the deal certainly support a more cynical interpretation. Cofounders James Monsees and Adam Bowen could become the world’s first vaping billionaires, at least on paper. Juul’s hedge fund investors also have the prospect of making a killing. But the windfall that caught the public’s eye is a report from CNBC that Juul received a $2 billion bonus to be distributed among its 1,500 employees, depending on how much stock they have and how much is vested. Juul declined to comment on the existence of the bonus or whether it came with golden handcuffs, but that would be one way to placate employees who were reportedly unhappy when news of the talks with Altria broke in November, bemoaning Juul’s “deal with the devil.

Juul has annual revenue of about $2 billion, according to a report released Thursday by Wells Fargo senior analyst Bonnie Herzog, who noted that the deal requires antitrust clearance. Herzog says Juul appears to have had more leverage over the terms than expected, including limiting Altria’s stake to 35 percent for six years.

Chris Howard, general counsel for the vaping products company E-Alternative Solutions who previously worked as a legal representative for RJ Reynolds, says the deal is a big help to Altria because its own cigarette alternatives were flops. “If history is any guide, Altria will one day complete the acquisition. [Combustible] cigarettes may go away, but Altria won’t,” he says.

Howard says the investment is one of several bold moves by Altria to maintain its dominance, no matter what happens to traditional cigarettes. The company also recently acquired substantial stakes in marijuana growing company Cronos Group and Avail Vapor, a chain of vape shops. Add in Marlboro, and Altria’s got all its bases covered, he says. “Go back 10 years, Altria didn’t have much a message other than, ‘Keep smoking our cigarettes,’” says Howard. But as the popularity of e-cigarettes has grown the company altered its approach.

Azim Chowdhury, a partner with Keller and Heckman who leads the firm’s tobacco and e-vapor practice, believes the deal was largely motivated by Juul’s concerns around the FDA’s compliance process. Altria has been living under the FDA’s microscope for years. “Altria is not going to market to kids. They’re not going to do anything that puts that kind of target on their back. They will be responsive to FDA requests, they will not market to minors.”

Chowdhury has noticed Altria and FDA officials speaking at similar conferences. “I think the relationship is professional, It’s copacetic. I think there’s mutual respect, again from the FDA’s standpoint.”


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Elon Musk unveils his first Los Angeles-area tunnel

LOS ANGELES (Reuters) – Billionaire entrepreneur Elon Musk made a brief public appearance late on Tuesday to unveil the first tunnel completed by the underground transit venture he launched two years ago as an ambitious remedy to Los Angeles’ infamously heavy traffic.

Tesla Inc. founder Elon Musk speaks at the unveiling event by “The Boring Company” for the test tunnel of a proposed underground transportation network across Los Angeles County, in Hawthorne, California, U.S. December 18, 2018. Robyn Beck/Pool via REUTERS

But contrary to some of his own hype from several months ago, free rides were not part of the grand opening.

In a 30-minute presentation carried by live webcast, Musk touted the newly finished 1.14-mile (1.83 km) tunnel segment as a breakthrough in low-cost, fast-digging technology being pioneered by his nascent tunneling firm, the Boring Company.

Musk has advertised the proof-of-concept tunnel as a first step toward developing a high-speed subterranean network capable of whisking vehicles and pedestrians below the “soul-destroying” street traffic of America’s second-largest city at up to 150 miles per hour. But such a system has a long way to go.

The new tunnel was excavated along a path that runs not through Los Angeles but beneath the tiny adjacent municipality of Hawthorne, where Musk’s Boring Company and his SpaceX rocket firm are both headquartered.

Musk, best known as head of the Tesla Inc electric car manufacturer and energy company, launched his foray into public transit after complaining on Twitter in December 2016 that L.A.’s traffic was “driving me nuts,” promising then to “build a boring machine and just start digging.”

In May, the company gave the world a preview of the Hawthorne tunnel, posting a fast-forward video of its interior shot by a camera traveling the length of the cylindrical passageway, which measures about 12 feet (3.7 m) in diameter.

On Tuesday, Musk put the total price tag for the finished segment at about $10 million, including the cost of excavation, internal infrastructure, lighting, ventilation, safety systems, communications and a track.

By comparison, he said, digging a mile of tunnel by “traditional” engineering methods costs up to $1 billion and takes three to six months to complete.

FASTER THAN A SNAIL?

Musk boasted of several cost-cutting innovations, including higher-power boring machines, digging narrower tunnels, speeding up dirt removal, and simultaneous excavation and reinforcement.

He also invoked his favorite comparison with a snail, a creature he said moves 14 times faster than the speed of a typical tunneling machine. “Aspirationally, we should be slightly faster than a snail,” he said.

Musk did not say how long it took to burrow his new tunnel, which ended up running short of the 2-mile easement his company originally requested for the project.

But he showed pre-recorded video footage of a newly built elevator station designed to carry passengers from street level to the tunnel’s subterranean entryway. The video featured a modified Tesla Model X luxury car on the elevator.

When fully operational, the “loop” system as Musk envisions it will consist of passenger- and automobile-carrying platforms called “skates” that can zip through the tunnels by way of electric power once they descend into the underground network.

Alternately, he said, passenger cars could be outfitted with retractable side wheels allowing them to travel through the loop autonomously.

Musk arrived at Tuesday night’s event in a Tesla vehicle so equipped, emerging from the car at one end of the tunnel – bathed in green and blue interior lights – as he was cheered by a small, enthusiastic crowd gathered for the presentation.

Musk created a stir earlier this year by promising free trips through the tunnel once it opened. However, no such rides were in the offing on Tuesday night. A company message posted online beforehand said tunnel tours “are by invitation only,” citing “unbelievably high demand.”

If successful, the Hawthorne tunnel is envisioned as eventually connecting to a network of other tunnels, yet to be built.

Slideshow (19 Images)

Last month, the Boring Company scrapped plans for a 2.7-mile segment under a West Los Angeles neighborhood, settling litigation brought by community groups opposed to that project.

But Musk’s company said it was moving ahead with a proposed tunnel across town to connect Dodger Stadium, home of the city’s Major League Baseball team, to an existing subway line.

In June, Boring was selected by Chicago to build a 17-mile underground transit system linking that city’s downtown to its main airport. The company also has proposed an East Coast Loop that would run from Washington, D.C., to the Maryland suburbs.

Reporting by Steve Gorman, Editing by Bill Tarrant and Rosalba O’Brien

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Elon Musk Unveils the Boring Company’s Car-Flinging Tunnel

From a parking lot in a quiet, manufacturing-dominated suburb of Los Angeles, Elon Musk and his Boring Company tonight unveiled what he believes is the future of “mass transit” and the best way to eliminate the scourge of traffic: electric, autonomous vehicles carrying an extra set of wheels, shooting through layers of thin tunnels at speeds up to 150 mph.

If that sounds a little fantastical—well, duh. Musk’s presentation, punctuated by a glitzy entrance aboard a Tesla Model X that traveled through the company’s accent-lit, 1.4-mile test tunnel, filled in a few details about his ambitious plans to destroy LA congestion with new and improved tunnel boring processes. But the test tunnel still seems to be a test tunnel, and the Boring Company in a deeply experimental phase. A bevy of questions remain.

“I think this is, like, really a panacea,” Musk said standing in front of the tunnel, which extends from a SpaceX parking lot into the city of Hawthorne. A panacea for a terrible ill. Traffic, he said, “is like acid on the soul.”

A few big elements of the Boring Company’s “mass transit” concept, which it’s calling “the Loop”, have changed since Musk last presented it in May. Gone are the “electric skates”, the platforms that were to ferry vehicles throughout an extensive tunnel network whose tendrils BoCo would like to one day spread throughout the LA metro area / the world. Instead, users will now have to mount specialized wheels on their own electric, autonomous vehicles, which will guide the vehicles along the tracks in the tunnels. These look a bit like bicycle training wheels, but sit parallel to the ground:

Gone, too, is the Boring Company’s 16-passenger pod concept, the centerpiece of what Musk once said was a system that would put pedestrians and cyclists first. This is a system meant to carry people’s cars—as long as they are fully electric and capable of driving themselves. For those without such vehicles, Musk said, cars would continually circulate the Loop system to pick up and drop off anyone who wants a ride. Press materials provided by the Boring Company say each tunnel should one day be able to support 4,000 cars per hour—about 16,000 passengers, provided each car is nearly full. That’s the capacity of about 11.5 full (but not packed) New York City subway trains.

Boring

“We are no way saying there shouldn’t be other means of public transport,” Musk said during the Tuesday night event. “Let us do everything we can along every direction to alleviate traffic.”

The technology is also far from finished. The car that traveled through the test tunnel, which the company used to give demo rides to fans and journalists, only hit speeds of around 50 mph, not 150 mph. (Musk said it was capable of traveling 110 mph.) And Musk admitted to The LA Times that the ride was bumpy, and that the Boring Company “kind of ran out of time.”

“The bumpiness will not be there down the road,” he told the Times. “It will be as smooth as glass. This is just a prototype. That’s why it’s just a little rough around the edges.”

Hawthorne’s city council allowed the company’s project to fast track through the environmental review process because it’s a demonstration, not a functional form of mass transit, and because the city concluded its construction wouldn’t disturb neighbors. Musk says the company digs so deeply beneath the earth that its tunneling isn’t perceptible from above and rightly notes tunnels are safe in earthquake-prone spots like LA. BoCo spent just under two years and $10 million building this test tunnel.

Musk tweeted the Boring Company into existence in December 2016, when he cracked a joke about being so frustrated by LA traffic that he would buy a tunnel boring machine and “just start digging”. By early 2017, there was an honest-to-God hole in the SpaceX parking lot, the beginnings of the test track that the company unveiled today. Musk has argued that cities like LA can only quash traffic by going “3D down or 3D up”, and that flying cars (that would be up) are too dangerous.

Thus, his vision: layers of underground road carrying hundreds of thousands of vehicles traveling at high speeds, transported into the netherworld by thousands of elevators woven throughout the sprawling city. (Musk likened system to “wormholes”.) Boring has said it will charge riders $1 each, will finance this vision itself, and won’t accept government funds.

Transportation engineers and urban planners have criticized the plan, which they argue does not address the underlying causes of traffic, like bottlenecks at highway on- and off-ramps (or the elevator entrances and exits where cars will enter the system) and urban sprawl. The plan faces another foe: the public environmental review process, which can sometimes take over a decade for an infrastructure project of this ambition.

To pull this off, Musk has acknowledged that he will have to bring down the cost of digging tunnels and speed up the process—dramatically. Eventually, Musk has said, he would like his modified boring machine to beat his pet snail, Gary, in a race, increasing the standard boring pace by a factor of 14. (Professional tunnel engineers have publicly cast doubt on whether Musk’s innovations are possible. Also, the original Gary is long dead. BoCo now cares after Gary VI.) He has also said his tunnels’ reduced width—about 12 feet at their widest—will also bring down costs.

Musk also announced last summer that the soil unearthed by his tunneling efforts would be repurposed into bricks, which will be sold through another Muskian spinoff, The Brick Store LLC. The bricks have already been used to build a Monty Python and The Holy Grail-type tower on the grounds of SpaceX’s headquarters. BoCo has also promised to release life-size LEGO sets.

The Boring Company has also popped up all over the country. There’s this test tunnel, in Hawthorne, and the company’s plan to build a small system running between one of three LA Metro subway stations to Dodger Stadium. (Musk told reporters Tuesday that he would like to build out the entire LA system by 2028, when the city will host the Olympics.)

Boring has also promised a DC to Baltimore connection, but hasn’t received all the permits needed to make that project truly go. Plus, there’s a high-speed connection between downtown Chicago and O’Hare International Airport, which Musk has promised to build for no more than $1 billion, a pittance for a major infrastructure project. Boring is reportedly in the midst of an environmental review process there. (That project, which had been championed by Mayor Rahm Emanuel, may face political challenges now that Emanuel is leaving office.)

One project that’s no longer on the Boring Company’s list: another test tunnel in West Los Angeles. BoCo pulled out of that project after settling a lawsuit with two local neighborhood groups, which argued the company was attempting to circumvent city rules by getting a metro-wide project appealed piecemeal.

So yes, it’s been a long and confusing road to this point. Musk has proposed a raft of ideas associated with his tunneling. Many have been questionable, but most have been exciting, if for nothing but their audacity. But maybe this meandering is the way to the future. It’s certainly the way of Musk, a man who’s never been much for the traditional, stodgy way of doing things, where you mull over a plan, announce it in a carefully worded press release, then spend the next few years executing it just like you said you would. Some CEOs wear suits and sit in the backs of limos. Others emerge from tunnels in rumpled flannel. You decide which group make better showmen—and which change how things really work.


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Foxconn not in settlement talks with Qualcomm in Apple battle: attorney

SAN FRANCISCO (Reuters) – The lead attorney for the group of Apple Inc device assemblers seeking at least $9 billion in damages from Qualcomm Inc said on Sunday the contract manufacturers are not in settlement talks with the mobile chip supplier and are “gearing up and heading toward the trial” in April.

FILE PHOTO: A motorcyclist rides past the logo of Foxconn, the trading name of Hon Hai Precision Industry, in Taipei, Taiwan March 30, 2018. REUTERS/Tyrone Siu/File Photo

The conflict is but one aspect of the global legal battle between regulators, Apple and Qualcomm, which supplies modem chips that help phones connect to wireless data networks.

Last week, Qualcomm secured a preliminary victory in a patent lawsuit in China that would have banned sales of some Apple iPhones there. Apple later said it believed it was already in compliance but would change its software “to address any possible concern” about its compliance.

But Qualcomm was also handed a setback in an antitrust lawsuit brought against it by the U.S. Federal Trade Commission when a judge said it will not be able to mention that Apple ditched Qualcomm chips for competing ones from Intel Corp when the case goes to trial next month.

Qualcomm representatives did not immediately return a request for comment on Sunday outside of U.S. business hours.

The group of contract manufacturers – which includes Foxconn parent Hon Hai Precision Industry Co Ltd, Pegatron Corp, Wistron Corp and Compal Electronics Inc – became embroiled in the dispute between Apple and Qualcomm last year.

In the supply chain for electronics, contract manufacturers buy Qualcomm chips and pay royalties when they build phones, and are in turn reimbursed by companies like Apple. Qualcomm sued the group last year, alleging they had stopped paying royalties related to Apple products, and Apple joined their defense.

The contract manufacturers have since filed claims of their own against Qualcomm, alleging the San Diego company’s practice of charging money for chips but then also asking for a cut of the adjusted selling price of a mobile phone as a patent royalty payment constitutes an anticompetitive business practice.

They are seeking $9 billion in damages from Qualcomm for royalties they allege were illegal. That figure could triple if the manufacturers succeed on their antitrust claims.

Ted Boutrous, a high-profile partner at Gibson, Dunn & Crutcher LLP who is representing the contract manufacturers, told Reuters that statements from Qualcomm executives suggesting there were meaningful settlement talks with the contract manufacturers were “false.”

“To the extent Qualcomm has indicated there have been licensing discussions with the contract manufacturers, they’ve basically made the same sort of unreasonable demands that got them to where they are right now, which impose significant preconditions to even discuss a new arrangement,” Boutrous said.

In July, Qualcomm CEO Steve Mollenkopf told investors on the company’s quarterly earnings call that Qualcomm and Apple itself were in talks to resolve the litigation.

At a hearing in the case in San Diego on Nov. 30, one of Apple’s attorneys disputed that notion, saying there had not been “talks in a number of months. So the parties are at loggerheads and are going … to have to go into trial.”

Reporting by Stephen Nellis in San Francisco; Editing by Chris Reese and Himani Sarkar

Categories: Uncategorized

What Should I Do With My IBM Shares?

On October 28, 2018 Seeking Alpha’s News Editor Brandy Betz announced the following IBM acquires Red Hat for $34B, which I am sure left many investors scratching their heads as to why IBM (IBM) would do such a thing? In this article, I will not discuss the various operations of the proposed merged company and how each is doing, as you can read many such articles on Seeking Alpha, both pro and con. What I will simply do is a quantitative analysis of IBM’s results on Main Street and then relate them to what an investor should do on Wall Street, using zero emotion.

Since 2013 IBM has struggled on both Main Street and Wall Street and this under performance has forced many investors (including legendary investor Warren Buffett) to cut and run from IBM and sell their shares in disgust. This has occurred for the simple reason that IBM’s management has struggled to grow the company’s revenue. Over the last four decades, I have learned one very important lesson as an Analyst and that is that investors on Wall Street hate negative revenue growth more than anything else. IBM has been the poster child of negative revenue growth over the past five years , achieving 21 consecutive quarters of negative revenue growth, before having the streak recently end.

This negative revenue growth rate has unfortunately forced IBM’s management to go outside of the company (in its acquisition of Red Hat), in order to find revenue growth, as it has tried internally for 21 consecutive quarters before eventually doing so. Here is our Friedrich datafile and quantitative chart (not technical chart) of Red Hat (RHT).

So in hunting for revenue growth, IBM ended overpaying by a large margin for Red Hat. The white line you see in the chart above is the Wall Street price for Red Hat and the yellow line is our Friedrich algorithms Main Street price (or what the algorithm believes the company is worth to a private buyer on Main Street if s/he were to buy the entire company per share) At $190 offered per share in cash for Red Hat, we believe that IBM paid over 4 times what the company is really worth. So in effect the decision making at IBM has gone from bad to worse. Let us now go and analyze IBM and then see what our Friedrich algorithm has to say about what you should do with your shares.

Main Street vs. Wall Street

In analyzing IBM, we will present some unique ratios that our Friedrich Investing System uses and will present a real-time quantitative analysis that will demonstrate the power of free cash flow in the investment process. In doing so, we will also teach everyone how to analyze one’s portfolio holdings on Main Street vs. Wall Street. At the same time, we will explain how the methodology involved in this analysis came about.

Main Street is where IBM operates and Wall Street is where its shares trade. The IBM shares that one can purchase on Wall Street are traded publicly on exchanges and the company has little control over how each share will trade. IBM is required to release its earnings reports each quarter and, from time to time, it also provides press releases to its shareholders (and the general public) giving updates on how its operations are doing on Main Street.

Main Street is where IBM invests in its own operations and sells to its customers. How well the CEO of IBM and its management do in selling those products determines how profitable the company will be. Wall Street then reacts based on the success or failure of management to meet its goals. Main Street and Wall Street are thus interlinked, but because anyone with a computer (or even just a smart phone), an internet connection, and a brokerage account can buy or sell any stock at any time, expertise is not a requirement in order to invest on Wall Street.

This results in Wall Street being a very dangerous place to operate as many investors tend to invest through emotion or follow the herd in and out of stocks. During bull markets, investors feel like they can do no wrong as “the rising tide lifts all boats.” But when a bear market suddenly shows up, these same investors tend to panic and like lemmings stampede over the cliff. Thus, we have the classic case of “greed vs. panic.”

Creation of the Friedrich Algorithm

Having noticed this problem some 35 years ago, I spent the last three decades building an algorithm called Friedrich. Our algorithm was designed to assist all investors (both Pro and Novice alike) and give them the ability to quickly compare a company’s Main Street operations, to its Wall Street valuation (Overbought or Oversold condition). Friedrich can do this on an individual company basis or assist users in analyzing an entire index like the S&P 500, an ETF, Mutual Fund, or individual portfolio with the use of our Portfolio Analyzer. I recently did so when I compared Apple (AAPL) to the S&P 500 Index (SPY) Apple Vs. The S&P 500: Which Is The Better Investment?

Many years ago, while reading Berkshire Hathaway’s ( BRK.A) ( BRK.B) 1986 letter to shareholders, I discovered a ratio, which Mr. Buffett called “Owner Earnings,” or what we may consider to be Mr. Buffett’s version of FCF, or “Free Cash Flow.” To my amazement, in that little footnote, Mr. Buffett explained how to use it and basically states that it is one of the key ratios that he and Charlie Munger used in analyzing stocks. In that article, he defined the term “owner earnings” as the cash that is generated by the company’s business operations.

“[Owner earnings] represent [A] reported earnings plus [B] depreciation, depletion, amortization, and certain other non-cash charges… less [C] the average annual amount of capitalized expenditures for plant and equipment, etc. that the business requires to fully maintain its long-term competitive position and its unit volume.”

I have used the free cash flow ratio for decades, using data from the Value Line Investment Survey, whose founder was Arnold Bernhard. Mr. Bernhard was a big fan of free cash flow and probably introduced it sooner than Mr. Buffett did. I know this as I was able to calculate the FCF ratio using old Value Line sheets for my 60-year backtest of the DJIA from 1950 to 2009.

The backtest mentioned above demonstrated that if one can purchase a company whose shares are selling for 15 (or less) times its Price to Free Cash Flow Ratio, that the probability of success will dramatically increase in most cases. I have renamed the ratio the Bernhard Buffett Free Cash Flow ratio in honor of both men. The following is how that ratio is calculated.

Wall Street Analysis

Price to Bernhard Buffett Free Cash Flow Ratio = Sherlock Debt Divisor / [(net income per share + depreciation per share) + (capital spending per diluted share)]

Sherlock Debt Divisor = Market Price Per Share – ((Working Capital – Long-Term Debt)/Diluted Shares Outstanding))

The above are the ratios I use when analyzing a stock on Wall Street, and below are the ratios I use when analyzing a stock on Main Street.

Main Street Analysis

FROIC means “Free Cash Flow Return on Invested Capital”

Forward Free Cash Flow = [((Net Income + Depreciation) (1+ % Revenue Growth rate)) – (Capital Spending)]

FROIC = (Forward Free Cash Flow)/(Long-Term Debt + Shareholders’ Equity)

The FROIC ratio tells us how much forward free cash flow we can expect the company to generate on Main Street relative to how much total capital it has employed. So, if a company invests $100 in total capital on Main Street and generates $20 in forward free cash flow it, therefore, has a FROIC of 20%, which we consider excellent. This is just one of the key ratios (66 in total) that we use to identify how a company is performing on Main Street, as it is our belief that if a company is making a killing on Main Street, Wall Street will eventually take notice.

So, let us begin our analysis and at the same time try to teach everyone how to do a similar analysis on one’s own portfolio. In analyzing IBM’s Price to Bernhard Buffett FCF ratio, we must first adjust IBM’s Wall Street Price to account for its debt using our Sherlock Debt Divisor. Below is a detailed definition of that ratio and how we use it.

Sherlock Debt Divisor

A major concern that I have these days in analyzing companies is the debt burden relative to its operations and whether management is abusing this situation by taking on more debt than it requires. Debt, when used wisely, allows for what is called leverage, and leverage can be extremely beneficial within certain parameters. On the other side of the coin, the use of debt can also be excessive and put a company’s future in jeopardy. So, what I have done to determine if a company’s debt policy is beneficial or abusive is to create the Sherlock Debt Divisor.

What the Divisor does is punish companies that use debt unwisely and rewards those who successfully use debt as leverage. How do I do this? Well, I take a company’s working capital and subtract its long-term debt. If a company has a lot more working capital than long-term debt I reward it but punish those whose long-term debt exceeds its working capital. So, if this result is higher than the current stock market price, then leverage is being used and the more leveraged a company is, the worse the results of this ratio will be and the less attractive its stock will be as an investment.

Thus, having successfully defined the Sherlock Debt Divisor, we need the following four bits of financial data in order to calculate it for IBM. TTM (trailing twelve months) is as close to real-time data as we can get, based on when each company reports. The current analysis is taken from the IBM’s September 30, 2018 filing with the SEC (except the Market Price per share).

Market Price Per Share = $119.90

Working Capital = Total Current Assets – Total Current Liabilities

Total Current Assets = $48,258,000,000

Total Current Liabilities = $36,823,000,000

Working Capital = $11,435,000,000

Long-Term Debt = $35,989,000,000

Diluted Shares Outstanding = 915,200,000,000

Sherlock Debt Divisor = Market Price Per Share – ((Working Capital – Long-Term Debt)/ (Diluted Shares Outstanding))

Sherlock Debt Divisor = $119.90 – ((11,435,000,000 – $35,989,000,000)/ 915,200,000))

Sherlock Debt Divisor = $119.90 – ($-26.83) = $146.73

Since IBM has more Long-Term Debt vs. Working Capital, we, therefore, must punish it and use the new $146.73 as our new numerator in all our calculations.

Wall Street Analysis of IBM

Price to Bernhard Buffett FCF Ratio = Sherlock Debt Divisor/[(net income per share + depreciation per share) + (capital spending per diluted share)]

Sherlock Debt Divisor = $146.73

Net Income per diluted share = $5,720,000,000/ 915,200,000= $6.25

Depreciation per diluted share = $4,517,000,000/ 915,200,000 = $4.93

Capital Spending per diluted share = $-3,569,000,000/ 915,200,000 = $3.89

$6.25 + $4.93 – ($3.89) = $7.29

Price to Bernhard Buffett Free Cash Flow Ratio = $146.73/$7.29 = 20.13

Now, if one goes to our FRIEDRICH LEGEND (on what is considered a good or bad result), you will notice that our result of 20.13 is considered average where anything under 15 is considered excellent.

We last ran our data file for IBM on December 15, 2018, and our Friedrich Algorithm gave a recommendation to our subscribers that IBM is a “Hold” as our Friedrich Data File and Chart below shows. There you will also find the last ten years of IBM’s Price to Bernhard Buffett Free Cash Flow results.

Main Street Analysis of IBM

Now that we have taught everyone how to calculate our Price to Bernhard Buffett Free Cash Flow ratio, let us now move on and teach everyone how to calculate our FROIC ratio.

This is how we calculate it:

FROIC means “Free Cash Flow Return on Invested Capital”

Forward Free Cash Flow = [((Net Income + Depreciation) (1+ % Revenue Growth rate)) + (Capital Spending)]

FROIC = (Forward Free Cash Flow)/(Long-Term Debt + Shareholders’ Equity)

Net Income per diluted share = $5,720,000,000/ 915,200,000= $6.25

Depreciation per diluted share = $4,517,000,000/ 915,200,000 = $4.93

Capital Spending per diluted share = $-3,569,000,000/ 915,200,000 = $3.89

$6.25 + $4.93 – ($3.89) = $7.29

Revenue Growth Rate TTM = 2%

[(($6.25 + $4.93) (102%)) – ($3.89) =$7.51

Long-Term Debt = $35,989,000,000

Shareholders Equity = $19,784,000,000

Diluted Shares Outstanding = 915,200,000

FROIC = (Forward Free Cash Flow)/ (Long-Term Debt + Shareholders’ Equity)

$7.51/$60.94 =12.3%

FROIC = 12.3%

Now, if one goes to my FRIEDRICH LEGEND again (on what is considered a good or bad result), you will notice that our result of 12.3% is considered good and tells us that IBM produces $12.30 in forward free cash flow for every $100 it invests in total capital employed on Main Street .

On Main Street, IBM is doing ok, while on Wall Street it is considered a hold.

What To Do?

Going forward, IBM in our opinion bought Red Hat in order to help it achieve a consistent positive revenue growth rate, but that it way overpaid for that privilege. Not only that, but it paid 10.77 times Red Hat’s TTM (Trailing Twelve Months) revenue and 118 times its TTM earnings. Those are dot.com boom and bust numbers and will only make matters worse at IBM. Once the merger is complete we will come back and write another article about the combined firm and you will probably find that though revenue growth maybe positive, every other result will be greatly reduced. The WARNINGS that you see in the IBM Datafile above are given when a company has one of three things happen to it.

1) Revenue growth is negative for two periods in a row

2) Badwill to Price is greater than 33%. (Badwill = Goodwill + Intangible Assets)

3) Sell price achieved.

Well, IBM has overcome its 21 consecutive periods of negative growth and may further do so when merging operations with Red Hat, but it will probably increase its Goodwill and Intangible assets substantially and that we see as a serious “Badwill to Price” negative. As you can see from our Red Hat Datafile at the beginning of this article, that Red Hat has had WARNINGS over the entire 10 year period under analysis and that is because it has always sold above its sell price. The reason for this is because its revenue growth has been excellent and that is what Wall Street loves more than anything. All I can say is that Warren Buffett is probably very happy he sold his entire stake in IBM prior to this disastrous merger being announced. In our opinion IBM dramatically overpaid for Red Hat and it should come back to haunt them sooner than later. We also recommend that investors follow Warren Buffett’s lead, as management keeps creating more problems for the company with every attempt they make to save it. Management’s days in our opinion are numbered.

In conclusion, it is my belief that free cash flow analysis is the ultimate tool when analyzing companies, and my hope is that you may add these ratios to your own investor toolbox in order to help you in your own due diligence. If you have any questions, please feel free to ask them in the comment section below.

Disclosure: I am/we are long AAPL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: This analysis is not an advice to buy or sell this or any stock; it is just pointing out an objective observation of unique patterns that developed from our research. Factual material is obtained from sources believed to be reliable, but the poster is not responsible for any errors or omissions, or for the results of actions taken based on information contained herein. Nothing herein should be construed as an offer to buy or sell securities or to give individual investment advice.

Categories: Uncategorized

Quantum Computers Threaten the Web’s Security. We Must Take Action Now.

Inside the stark and sweeping Eero Saarinen-styled exterior of the Thomas J. Watson Research Center in Yorktown Heights, IBM’s blue jeans-wearing boffins are assembling a new generation of super-powered computers built on quantum mechanical principles. These otherworldly machines dangle from sturdy, metal frames, looking like golden chandeliers, or robotic beehives. The devices perform their magical-seeming operations inside vacuum-sealed, super-cooled refrigerator encasements. It’s a technology that combines both brains and beauty.

Future iterations of these quantum computers will be able to solve mathematical problems ordinary computers have no hope of computing. They will vastly speed up classical calculations, accurately model complex natural phenomena like chemical reactions, and open as yet unexplored frontiers for scientific inquiry. Despite seeming arcane, machines like these will touch every aspect of our lives—from drug discovery to digital security.

IBM scientists examine quantum computing hardware.

IBM scientists examine quantum computing hardware.

Courtesy of IBM.

This latter area presents significant challenges. One advantage quantum computers have over traditional ones is a knack for factoring large numbers, an operation so difficult for present-day computers that it has become the foundation for almost all today’s encryption schemes. A sufficiently advanced quantum computer, on the other hand, can chew through these math problems with the destructive force of that metal-melting Xenomorph blood in the Alien film franchise. The prospect of quantum computing necessitates a complete rethinking of cryptography.

Today’s encryption may be rendered obsolete sooner than most people anticipate. As Adam Langley, a senior software engineer at Google, has pointed out in a recent blog post, some experts predict this latter-day Y2K could occur within the decade. Michele Mosca, cofounder of the Institute for Quantum Computing in Waterloo, Ontario, has estimated a 1-in-7 chance that quantum breakthroughs will defeat RSA-2048, a common encryption standard, by 2026. If that’s true, then the time to begin reengineering our digital defenses is now. As Langley writes, waiting around for guidance on standards “seems dangerous”; there’s no time to lose.

Buttressing Langley’s view is a recent paper out of the National Academies of Sciences, Engineering, and Medicine. The research organization determined that, while the advent of an encryption-busting quantum computer is unlikely within the decade, preparations to defend against one must be undertaken as soon as possible. Since web standards take more than a decade to implement, a press release accompanying the paper warned, developing new, attack-resistant algorithms “is critical now.”

The era of quantum computation fast approaches. Fortune 500 companies like IBM, Google, Microsoft, and Intel, are plugging away on the tech alongside smaller startups, like Calif.-based Rigetti. Nation states like China are, meanwhile, dumping billions of dollars into research and development. Whichever entity achieves so-called quantum supremacy first will find itself in possession of unprecedented power—the equivalent of X-Ray goggles for the Internet.

That is, unless we act with urgency to armor up.

A version of this article first appeared in Cyber Saturday, the weekend edition of Fortune’s tech newsletter Data Sheet. Sign up here.

Categories: Uncategorized

AT&T Dividend Increase: Interactive Exploration On The Impact On The Stock

It has been a dismal year for AT&T (T) investors. While the dividends kept rolling in like clockwork, the rest of the business performed nothing close to Swiss clockwork, and as a result, the stock tanked up to 25% before making up some lost ground at the end of November but has since then continued to exhibit unusually high volatility.

Source: AT&T – Media Gallery

AT&T has a stellar and long-term dividend track record, and while recent increases have only come in the 2% region, the stock remains a cornerstone of many long-term dividend and retirement portfolios. As expected, AT&T followed its previous pattern of a conservative $0.04 per share dividend increases putting the dividend at $2.04.

Over the past few weeks two of Wall Street’s biggest banks have upgraded AT&T with Citi going to buy and a $34 target price and J.P. Morgan overweighting the stock with a juicy $38 price target. Although this has lead to an initial daily 1-2% gain, the “sell-any-rally-no-matter-how-small” pattern with AT&T continues.

AT&T has recently outlined its 2019 expectations predicting very strong cash flow, substantial debt reduction and the launch of a new streaming service. Potentially, the upcoming dividend hike can help establish some degree of optimism with investors.

This article now analyzes how AT&T’s stock has reacted in the past to these dividend hikes. Are we observing investors buying the stock in the run-up to the declaration date? Are we observing people buying the stock after the dividend hike? Let’s find out!

How Do Dividend Increases Impact AT&T’s Stock Price?

To do so, I have analyzed AT&T’s stock price behavior in the 9 trading days leading up to the dividend declaration date and the 9 trading days following the dividend hike. The period covers 14 years over which AT&T’s dividends developed as follows:

Figure I: Dividend History with declaration date

Source: Seeking Alpha Dividend History – author’s visualizations

With AT&T raising its dividend like clockwork every year before Christmas, we can expect that the market is aware of this. Thus, any patterns we find are not just anecdotal evidence but proven by back-testing analysis.

By plotting how the stock behaved in the 9 days leading up to the dividend declaration date vs. the performance over the 9 days following the dividend declaration data, we get a correlation matrix which looks like this:

Figure II: PRIOR and POST dividend declaration performance of AT&T with all dividend increases colored in GREEN

Let’s run through what this means by focusing on the dividend declaration in 2017, which has the “FOCUS!” label attached to it as well as the part highlighted in green and yellow.

In 2017, AT&T announced an increase in its dividend on December 15. Over the respective time periods mentioned above, AT&T’s stock closed as follows:

  • 9 trading days before declaration date: $37.27
  • On the declaration date: $38.24
  • 9 trading days following declaration date: $38.88

This then leads to the following performances:

+2.6% prior to the declaration date

+1.7% following the declaration date

This was an exceptionally strong period for AT&T’s stock price and very few expected what happened in 2018 to the stock. Could we see the reversal this year?

Visually, this looks like this:

Figure III: Stock price changes before and after declaration date

Source: Author’s calculations and visualization

In Figure II we can see that in the lower section the performance in the Q4 cluster following the dividend declaration clearly outperforms those of the other three. This certainly implies that the dividend increases in Q4 have a meaningful and relevant impact on the stock price, even though this pattern does not repeat every single year. Also, this only reflects performance of the 9 days following the dividend declaration but does not disclose even higher highs within these 9 days.

This is where Figure III comes in handy. For the most recent dividend increase the stock reacted very favorably and consistently over the next days and surprisingly already rose strongly into the expected dividend declaration date.

So now that we know what this is all about, let’s explore whether it is a good idea to buy AT&T in anticipation of a dividend hike or better wait once it has been announced. Or does the stock rather stay flat in anticipation and following those announcements?

To do so, I have plotted that behavior mentioned above for all the 16 years covered in that analysis:

Figure IV: Tree-map of stock reactions POST dividend hikes

Source: Author’s calculations and visualization

As regards the stock’s reaction to the dividend increase that tree-map easily shows that there are far more green than red squares with the size of the square indicating the overall performance. Over the 15-year time horizon, AT&T’s stock rose in 12 out of 15 years post the declaration date.

It rose in 6 out of 15 into the declaration date but only in three years throughout both periods (2003, 2007 and 2017).

Figure V: Tree-map of stock reactions PRIOR to dividend hikes

As a result, we can observe a clear trend that investors start flocking into the stock once this heavyweight and super reliable dividend payer has raised its dividend as it does year after year after year. This behavior is also evident in the correlation map shown in Figure II.

Combining these more detailed findings with the quarterly overview shown in Figure II we can conclude that the distinct behavior that the stock rises post the dividend declaration can only be observed in Q4 throughout all those years and only randomly during the other quarters. I am not speculating on the reasons but the initial thinking that for a company like AT&T which always raises its dividend in December by a fraction it shouldn’t have any influence on the impact but in fact it more often than not has provided all other factors like general market sentiment remain equal. This is an omnipresent assumption in all kinds of statistical analysis where we try to infer the future from movements in the past and by no means guarantees that it will be the same this year. Still, it may be another relevant point to consider for investors when buying into AT&T now.

Interactive Exploration

Finally, to bring it all together and allow for individual analysis, I have built a dashboard that you can interact with. This allows you to select different years and find out how AT&T’s stock price reacted to its dividend increases, respectively. All you have to do here is to simply select a year on the right and then hover with your mouse over the data for further descriptions.

Figure VI: How does AT&T stock react to dividend hikes – Dashboard

Source: author’s calculations and visualization

In the screenshot above, only the year 2017 and Q4 have been selected, but if you select all the years, you will be able to reproduce the views from Figure IV and V. Regarding the 2017 dividend hike, you see two squares, one indicating stock performance “post AT&T’s dividend declaration date!” and the other showing the performance “prior AT&T’s dividend declaration date!” If you hover over the top left square, you will, for instance, see the following:

The “2.6%” figure mentioned in that “tooltip” information can also be found in the stock price chart below:

Investor Takeaway

AT&T is my largest position, and as such, I am constantly eyeing the stock for further investment opportunities. I was shocked that AT&T almost declined to a 7% yield but also delighted to be able to buy more at these generous prices.

After a dismal 2018, it seems logical that 2019 will be better but only if AT&T delivers on its cash flow generation, pays down debt substantially and ultimately limits the impact from the erosion of its traditional TV business. 2019 will be the decisive year to gauge whether its business transformation and strategy can succeed. That said, 2020 when the all-new streaming service will be fully in place will be big as well. For 2019, though, I have outlined three main topics that will shape AT&T’s financial year and thus also how its stock performs.

Historic analysis has shown the stock is expected to trend upwards now that AT&T has raised its dividend yet again. A current yield of 6.8% beats the broad market by a mile and should be considered one of the safest bets in this yield segment in the entire market.

I am also patiently waiting for January, precisely January 9, 2019, when the stock will go ex-dividend as well as its Q4/2018 earnings release around the same time. Here I will likely buy even more following the regular ex-dividend date drop.

This strategy does not consider AT&T’s underlying business model and business performance and is assuming the historic ceterus paribus conditions will be applicable to the future as well. Investors may take further aspects into consideration before making a decision.

Disclosure: I am/we are long T. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am not offering financial advice but only my personal opinion. Investors may take further aspects and their own due diligence into consideration before making a decision

Categories: Uncategorized

Amazon and Apple: Here's the $3 Billion Difference

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Let’s talk about Amazon, Apple, New York City, and Austin, Texas.

New York got half of Amazon’s HQ2 pseudo-headquarters, but the cost was high: $3 billion reportedly for a guarantee of 25,000 jobs. And now the deal faces a serious backlash, with the New York City Council holding hearings and demanding a renegotiation. (They’re not likely to change much, but it tells you how the council members think their constituents feel about the whole thing.)

Juxtapose that with Austin, which has paid a comparative pittance to entice Apple to build its largest employment hub outside of Cupertino, California: 15,000 total jobs.

In fact, Apple is doubling down on an expansive workforce, adding a few thousand more jobs in Seattle, San Diego and Culver City, California, and hundreds more in New York, Pittsburgh, Boston, Boulder, Colorado, and Portland, Oregon. 

All of which leads to some obvious questions: Here you have the #1 and #2 tech companies in America on any given day. They both need to expand and employ thousands of people. Do cities need to offer big breaks to get them to build and create jobs? 

And if governments are going to spend this kind of money — $125,000 per job in the case of Amazon and New York — maybe it would be better to spend it in smaller chunks, boosting a wider array of startups, small businesses, and even existing firms.

Only problem: Smaller businesses don’t have the kind of massive marketing, public relations, and lobbying budgets to make these kinds of deals happen in the first place. 

Here’s what else I’m reading today:

Half of Google’s workers aren’t treated like the other employees

An internal training document reveals that Google’s temp workers, vendors, and contractors (known internally as TVCs) are treated very differently than its full-time employees. Perks like free Google t-shirts? Only for full-timers, who make up 50.05 percent of the company. Google’s all-hands meetings and professional development training programs are similarly exclusive. It’s due to concerns over information leaks and the risk of being identified as a joint employer (which would cost Google a pretty penny).

Could you give up your smartphone for a year?

If so, you could win $100,000 in a contest hosted by Vitaminwater. Ironically, you can only enter by posting a photo to Twitter or Instagram–and if you’re selected, you’ll have to pass a polygraph test once the year ends. Science says spending less time on your phone will make you happier, so ditching the phone could be worth your time, whether you win all that money or not.

Americans aren’t retiring at 65 anymore

Median wages have barely changed in 20 years. Many employers offer 401(k)s instead of pension plans. The result: Nearly 10 million Americans over the age of 65 are still working today. Luckily, Americans are also living longer than ever before, but that’s hardly an excuse–especially for workers with health issues or disabilities.

The 8 best brand moves of 2018

Every once in a while, an inflection point for your brand comes along. How you respond can make or break you. Toyota, for example, gave a free truck to a heroic nurse whose car got torched during California’s deadly Camp Fire. An IKEA in Catania, Italy, literally went to the dogs when staffers opened the store’s doors to local stray canines. They’re just two of the many companies that handled those moments perfectly in 2018.

These co-founders really want to get into your bathroom

Need a new bathroom? If you live in New York or New Jersey, new startup Block Renovation promises to simplify your renovation process: no more bidding wars, upcharges, or unexpected results. The most interesting part isn’t what the company does, though. It’s who the company’s founders are: Luke Sherwin, one of Casper’s five co-founders, and ex-Rent the Runway executive Koda Wang. Keep an eye on this duo.

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