China gives Baidu go-ahead for self-driving tests after U.S. crash

SHANGHAI/BEIJING (Reuters) – China’s capital city has given the green light to tech giant Baidu Inc to test self-driving cars on city streets, indicating strong support for the budding sector even as the industry reels from a fatal accident in the United States.

A Baidu’s Apollo autonomous car is seen during a public road test for self-driving vehicles in Beijing, China March 22, 2018. REUTERS/Stringer

Beijing’s move is an important step as China looks to bolster its position in the global race for autonomous vehicles, where regulatory concerns have come into the spotlight since the crash earlier this month.

The accident in Tempe, Arizona, involving an Uber self-driving car, was the first death attributed to a self-driving car operating in autonomous mode, and has ramped up pressure on the industry to prove its software and sensors are safe.

Beijing has given Baidu, best known as China’s version of search engine Google, a permit to test its autonomous vehicles on 33 roads spanning around 105 kilometers (65 miles) in the city’s less-populated suburbs, the firm said in a statement.

Baidu is leading China’s push in driverless technology, with Beijing keen to keep up with global rivals such as Waymo, the self-driving arm of Google parent Alphabet and Tesla. It has a major self-driving project called Apollo.

“With supportive policies, we believe that Beijing will become a rising hub for the autonomous driving industry,” Baidu Vice-President Zhao Cheng said in the statement.

Baidu’s Apollo autonomous cars are seen during a public road test for self-driving vehicles in Beijing, China March 22, 2018. REUTERS/Stringer

Two people close to DiDi Chuxing, China’s dominant ride-hailing company which is also working on self-driving, said earlier this week firms developing autonomous vehicles were not likely to slow down plans for testing and developing

“I am quite positive on the potential of the technology because autonomous technology makes vehicles far less prone to accidents than human drivers,” one of the people said.

Didi declined to comment.

Earlier this month China issued licenses to auto makers allowing self-driving vehicles to be road tested in Shanghai, which included Shanghai-based SAIC Motor Corp Ltd and electric vehicle start-up NIO.

Regulations in the sector are, however, still catching up with fast growth and increasing numbers of firms wanting to carry out tests on public roads.

Baidu Chief Executive Robin Li tested his firm’s driverless car on Beijing’s roads last July, stirring controversy as there were no rules for such a test at the time. The firm hopes to get self-driving cars onto the roads in China by 2019.

Baidu said that before conducting tests on public roads, autonomous vehicles using its Apollo system would go through simulation tests as well as trials on closed courses.

Reporting by Adam Jourdan and Norihiko Shirouzu; Editing by Stephen Coates

Facebook dropped from Australian Ethical ETF after data breach

(Reuters) – Facebook Inc will be removed from the Australia-based BetaShares Global Sustainability Leaders Exchange Traded Fund (ETHI) due to recent “controversies”, its Responsible Investment Committee (RIC) said on Friday.

A figurine is seen in front of the Facebook logo in this illustration taken March 20, 2018. REUTERS/Dado Ruvic

“The company has in recent times been the subject of a number of controversies and reputational issues,” the committee said in a statement here

The world’s largest social media network, with more than 2 billion monthly active users, is under scrutiny following allegations that British political consultancy Cambridge Analytica improperly accessed users’ data and helped influence the 2016 U.S. presidential election.

Facebook Chief Executive Mark Zuckerberg apologized on Wednesday, five days after the scandal broke, and promised to restrict developers’ access to such information.

The company, which has lost more than $50 billion in market value since allegations this week, ended over 2.6 percent lower on Thursday.

Facebook comprises 3.9 percent of the ETHI portfolio, the Australian ethical fund that has $170 million in funds under management.

Reporting by Vishal Sridhar in Bengaluru; Editing by Stephen Coates

Facebook's Data Scandal: There's Your Sign

If you’ve been looking to open or add to a position on the highly valued stock of Facebook (FB) at a not-too-heavy price point, your opportunity might have just arrived in a limousine – red carpet and all. But the window could be closing fast, and anyone who wants to ride Facebook’s success for the long term might need to move quickly to take advantage of what is a loaded political issue but could be resolved relatively quickly.

First of all, the stock is going to bounce back and grow even stronger. A bold assertion, perhaps, but one that can easily be validated by referring to the company’s fundamentals alone. In addition, there’s enough evidence as well as research to show that U.S. securities markets tend to exhibit knee-jerk reactions to sensational news. Remember the knee-jerk slump when the 2016 U.S. presidential election results came out? Yet, often such a negative market reaction can happen regardless of whether or not the market is actually aware of all the facts. I believe that’s what’s been happening with Facebook and the Cambridge Analytica scandal over the past few days.

Second, as swift as the negative reaction might be, there’s also evidence to suggest that sentiment will swing back in favor of fundamentals and prior valuations as soon as the news “blows over”, as it were. It happened during the elections as well. Things were down on November 8, but the very next day, The Wall Street Journal’s headline read: “Wall Street Welcomed Trump with a bang.”

In Facebook’s case the matter might be a little more complicated than an election shocker. The user data scandal could lead to a probe by the FTC even as Facebook distanced itself by kicking Cambridge Analytica and its parent company off its platform and announced that the researcher who provided the data violated the platform’s terms and conditions of use.

All the entities involved, including Facebook, have now denied that the user data was used as part of Cambridge Analytica’s campaign work for President Trump.

Nonetheless, the stock lost almost 7% on Monday and another 2.6% on Tuesday after dipping more than 6% early on Tuesday. It appears that the storm has blown over for now, but further news could still negatively impact the stock.

And that’s your opening if you want to load up on FB, but you might need to move quickly. A brief look at the company’s fundamentals should tell you that the market reaction is an aberration – albeit an understandable one – and that things will be back to normal before you know it.

Facebook by the Numbers

For the fourth quarter 2017 Facebook posted strong YoY and sequential growth across nearly every metric possible, including Daily Active Users, Monthly Active Users, Total Revenue, Revenue User by Geography, Advertising Revenue by User Geography, Average Revenue per User, Operating Income, Operating Margin… you get the idea.

The revenue jump from $8.8 billion in Q4-16 to nearly $13 billion in Q4-17 is a 47% growth rate. What company with a half-trillion-dollar valuation grows like that? Well, it’s not half a trillion right now because the dip wiped out about 10% of market cap, but that’s not likely to last.

I’ve written several articles on SA where I’ve highlighted Facebook’s growth opportunities for the future, and why the growth slowdown the company has been warning investors about is not likely to happen soon. Besides, considering the synergistic momentum that Instagram has brought to the table of late, we’re looking at strong growth in the medium term – at least, until growth in developed markets exhibits the aforementioned slowdown.


FB PE Ratio (Forward) data by YCharts

As of this writing FB is trading at around $167, for a TTM PE of 31 and forward PE of 23. Those levels haven’t been seen in a while, and not likely to be seen for a while, either.

Regardless of whether or not a possible FTC investigation yields anything, the stock is going to keep marching upward for the foreseeable future. If there’s another hiccup along the road, just pick up more FB. The price is already starting to creep back up as of Tuesday’s market close so whatever you decide, do it now.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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.

AT&T Faces Murderer's Row

Murderer’s Row

Photo Credit

Murderers’ Row was the nickname given to the first six hitters in the 1927 Yankees team lineup for their formidable batting averages.

What happened?

Opening arguments begin tomorrow in the AT&T (T)/Time Warner (TWX) antitrust trial. Reports show that the DOJ intends to call an all-star line-up of AT&T’s rival firms to testify, starting with Cox Communications’ Suzanne Fenwick.

According to the New York Post, Fenwick works in Cox’s content acquisition team and the company is concerned about “potential access to exclusive content” by a giant AT&T/Time Warner combination.

Furthermore, the Post states the DOJ will call AT&T Entertainment Chief Content Officer Dan York and question him regarding alleged moves made while running DirecTV content to discourage rivals from signing carriage deals with a Los Angeles Dodgers channel. Sources tell the Post the government’s star witness will be controversial.

According to Judge Richard Leon, companies expected to testify include: Comcast-NBCUniversal (CMCSA), Charter Communications (CHTR), CenturyLink (CTL), YouTube (GOOG) (GOOGL), Cable One (CABO) and Sony (SNE).

The stocks of AT&T and Time Warner seem unaffected by the news.



The news in no way, shape, or form shook my conviction regarding my AT&T holdings. In fact, I would be a buyer of any dip at this juncture. Here is why.

AT&T Positives

I have been in the market for nearly 25 years. Managing my portfolio through two major bubbles and corrections has taught me one thing. AT&T can weather any storm better than most. What’s more, the company’s dividend payouts have remained consistent and sure. Further, the payouts are backed by solid and predictable cash flows.

In fact, history has shown that AT&T does more than twice as well as the market on the whole during times of turmoil. That is why the Beta is 0.37. T is a solid safe haven play. This is why the risk level is low. The fact of the matter is AT&T held up much better than most during both times the bubble burst. On top of this, the company never cut the dividend even with the tremendous pressure placed upon them when the 2008 and 2000 bubbles burst.


I see the recent sell-off as short-sighted. The stock is a buying opportunity at present. Here is why.

Characteristics Of A Solid Investment

While performing extensive due diligence in search of a new opportunity, I am looking for four major factors. The company or security must have:

  • Solid long-term growth story
  • History of solid cash flow generation, dividend payouts, and a high yield with adequate coverage
  • Opportunity for capital gains as well as increased dividend income based on valuation upside and future growth
  • A positive risk/reward profile

AT&T’s stock covers all these bases very well. Let me explain.

Solid Long-Term Growth Story

AT&T has a very precise vision, albeit an extremely bold one. AT&T is transforming itself from a boring, commoditized telecom company to the world’s premiere Technology, Media, and Telecom (TMT) provider. AT&T’s objective is to capture revenue streams from top to bottom regarding the explosive growth in the TMT sector and increase their margins with the many hidden synergies those writing negative articles on the name not familiar with the business to be unaware of.

I believe many people are vastly underestimating AT&T’s prospects for growth. The fact of the matter is AT&T is and has always been at the forefront of most new communications systems and they still own the last mile in most markets places. I submit the two combined will be highly synergistic and provide an immediate boost to the bottom line.

Nonetheless, don’t expect any big upward moves in the stock price until AT&T puts the Time Warner acquisition behind it and proves they can make money. I believe they will be victorious in their legal battle. If the case does not go their way and the stock sells off on the news, I would buy more. The fact is AT&T’s growth prospects are shooting through the roof right now. The company is a fantastic dividend growth total return opportunity.

Dividend Aristocrat Status

AT&T is a Dividend Aristocrat that has grown its dividend for 33 years straight. A hefty 5.41% yield makes it an ideal investment for dividend growth and income investors alike. The company’s solid track record of paying and increasing its dividend essentially acts as a put against the stock price.

Whenever the dividend has begun to climb above 5.5%, investors have swooped in and bought up shares, which appears to be happening as we speak. Another thing I would like to point out is the payout ratio is more than adequate at 66%.

Valuation Upside

AT&T’ stock currently has a Forward P/E ratio of 10.54, a dividend yield of 5.41%, and an EPS growth rate expected to be nearly 10% over the next five years. When compared to its telecommunications peers as well as the top S&P 500 mega cap stocks, AT&T comes out on top.

AT&T vs. Telecoms

AT&T vs. S&P 500 mega caps


AT&T is current trading for well below its competitors and its peers. I posit the stock has conservatively 10% upside potential over the next 12 months. This implies a total return potential of greater than 15%. This is a highly satisfactory return for a Low risk stock.

The Bottom Line

I expect AT&T to win their court battle vs. the DOJ. I do not believe the DOJ has a solid case. AT&T no shrinking violet! I believe they will come to an agreement and the deal will go through. Even if AT&T does not come out on top, they are not going anywhere. Smart phones are now a basic utility for most at this time.

AT&T is the 800-pound gorilla of the telecom sector. During times of market volatility, blue chip mega-cap stocks like AT&T tend to hold up better than the rest of the market. The company is involved in a steadily-growing business and has proven by the test of time it has the attributes to weather any storm. AT&T managed to navigate the Great Recession of 2008 and bust of 2000 without cutting the dividend. I have complete confidence the dividend is safe.

What’s more, AT&T is investing in its future by creating an entire ecosystem wrapped around the company’s wireless network. The acquisition of Time Warner and recent integration of DirecTV will allow AT&T to not only survive the wireless wars, but thrive in a post-war environment. Furthermore, the current best-in-class yield will buoy the stock.

AT&T’s dividend yield stands at 5.41% and provides many investors with income today. For retired baby boomers, this superior yield of AT&T and the opportunity for capital gains should be reason enough alone to own the stock.

I maintain the stock is a solid buy right now. I’m hoping for a further pullback in the short-term in order to complete my position with shares accretive to my basis. Investors looking to lock in the superior yield should take any opportunity created by a sell-off to start a position. AT&T will overcome the current competitive obstacles.

The competitive environment in the telecom sector has always been fierce. The unlimited price wars won’t last forever. On top of this, 5G should be coming soon which will completely change the competitive landscape once again. And AT&T has a leg up on the competition in this regard.

With a current yield 5.41%, 33 years of dividend growth, and a forward P/E ratio of 10.54 offering the opportunity for valuation upside, now is an optimal time to initiate a position. Those are my thoughts on the subject. I look forward to reading yours. Please use this information as a starting point for your own due diligence.

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.

General Electric's Gem Should Be Sold

One of the largest and most significant assets on the books of General Electric (NYSE:GE) is the company’s Healthcare segment. The operation was founded in 1994, but its roots trace back to the late 1800s under the name Victor Electric Company. Over the years, the segment has grown to be a real powerhouse for the conglomerate, generating several billions of dollars in sales and profits annually. Undoubtedly, this adds value to General Electric and is a bright spot for the company in this time of investor pessimism.

A major player in the healthcare space

By almost every measure, GE Healthcare is a force to be reckoned with. In a prior article, I highlighted the company’s ultrasound operations, but I have yet to piece together the segment as a whole. According to management, and shown in the image below, the segment’s largest source of revenue comes from diagnostic imaging and related services, with sales at about $8 billion per year. However, the segment’s $5 billion in sales from life sciences, followed closely by mobile diagnostics and monitoring at $4 billion, is large as well.

*Taken from General Electric

In all, this major footprint has allowed the company to amass a sizable chunk of its markets. Over 1 million imaging and mobile diagnostics devices that are under the GE Healthcare banner are estimated to be installed globally today. They perform in excess of 16 thousand scans every minute and in aggregate they have over 230 million exams of varying natures under their belts. As you can see in the image below, management has utilized its position to create partnerships with players like Amazon’s (NASDAQ:AMZN) AWS, as well as other prominent names like Microsoft (NASDAQ:MSFT) and Intel (NASDAQ:INTC).

*Taken from General Electric

What’s more, management isn’t done trying to grow GE Healthcare. Last year, the firm launched 26 products and through GE Additive and Stryker Corp (NYSE:SYK) it has more than 50 active projects in its pipeline. Another area (though management hasn’t provided any meaningful detail of it) that has been entered into is providing cloud-related services. This could be a material player for the segment in the future, but until we see evidence that management can compete in what has become a very crowded (but high-growth) space, I can’t warrant putting too much stock into that bet.

Performance has been robust but growth is slow

GE Healthcare has a history of being a great source of profit for its parent company. As you can see in the chart below, sales have slowly risen over at least the past five years, rising from $18.20 billion in 2013 to $19.17 billion in 2017. As you can see in the same graph, despite seeing a tick down from 2013 to 2014, sales of the segment have been pretty flat as a percentage of General Electric’s total industrial revenue.

*Created by Author

In recent years, international exposure has become more relevant for GE Healthcare. Today, the segment employs around 52 thousand employees spread across more than 140 countries and management has listed China as an attractive growth prospect moving forward. In fact, non-US sales for the segment totaled 55.5% of aggregate segment sales for it in 2017. This represents an increase from the 53.6% of sales that came from outside of the US just one year earlier.

As revenue has risen for the segment, so too has backlog. In 2013, this figure totaled $16.1 billion, but it has since risen to $18.1 billion. Without any doubt, this metric has benefited from a growth in orders over time. In 2017, total orders for the segment amounted to $20.4 billion. This represents an increase over the $19.2 billion seen in 2013 and 2016. According to Reuters, the imaging industry is likely to see significant growth over the next few years. In 2016, total industry sales were $29.8 billion, but that number is expected to balloon to $45.1 billion in 2022. That implies an annual sales growth for this space of around 10.9% per annum. Assuming this or anything close to this comes to fruition, backlog will grow over time for the segment.

*Created by Author

From a profitability perspective, the figures over time have been even better. After seeing segment profits decline from $3.05 billion in 2013 to $2.88 billion in 2015, we saw a nice rebound over the past two years that brought profits up to $3.45 billion for 2017. That’s the highest figure I saw on record for GE Healthcare and it accounted for 23.4% of General Electric’s Industrial segment profits, which was also a record high that I could see.

*Created by Author

Based on the numbers provided, this growth in profits, driven not only by higher sales but by cost reductions (according to management) has led to GE Healthcare’s profit margin expanding as well. Over the past five years, GE Healthcare’s segment profit margin grew from 16.7% to 18% (dipping as low at one point as 16.3%). A similar trend can be seen in the graph below, which shows that the return on assets for the segment has grown over time, rising from 10.9% to 12% today.

*Created by Author

Strong growth prospects, combined with attractive and improving margins has led to the formation of a thought in my mind. At this point in time, General Electric is stuck between a rock and a hard place. On one hand, the firm has been slammed by insurance reserves, SEC investigations, and other issues in recent months. This has resulted in shares of the business declining by around 54% from their 52-week high, effectively erasing $143 billion worth of market value from the firm.

As concerns grow that cash flow may not be enough to meet spending needs (especially now that GE Capital has cut off its distribution to its parent) and the company’s dividend to shareholders, now might be the time to consider selling off GE Healthcare. It’s difficult to tell what kind of value exists here for shareholders, but one good estimate might be derived from looking at Danaher (NYSE:DHR).

According to the management team at Danaher, 63% of the company’s revenue is split between life sciences and diagnostics operations. These are essentially the same kinds of operations that GE Healthcare engages in. Another 15% of Danaher’s revenue is attributable to the dental space, which isn’t too dissimilar to make the case that Danaher is largely a proxy for GE Healthcare.

*Taken from Danaher

Like GE Healthcare, total segment profits (I’m excluding “other” that shows up as a $170 million loss), carry with them nice margins. Using 2017’s figures, the profit margin for Danaher was 17.4%. With revenue of $18.33 billion, the company is just a bit smaller than GE Healthcare as well. When you consider that Danaher’s market cap is $69.97 billion as of the time of this writing, you come to the conclusion that the firm is trading for 3.82 times revenue and 21.9 times segment profits. Applying the same figures to GE Healthcare would imply a value on the business of between $73.02 billion and $75.51 billion. Such a sale, at the high end, would be enough to reduce General Electric’s debt from $136.21 billion to $60.70 billion if management so desired.


GE Healthcare is a great business. Despite seeing sales grow slowly, margins associated with the segment are attractive and the industry’s upside is material. Additional value would probably be realized from having the company be separated from the conglomerate since a new management team could place a more concerted effort toward growing the enterprise. The value of Danaher suggests that management could also solve a lot of its issues regarding liabilities if it were to decide part ways with the segment, perhaps even freeing up capital to reinvest toward higher-growth prospects like Aviation, Renewables, and Oil & Gas.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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.

Exclusive: Kaspersky Lab plans Swiss data center to combat spying allegations – documents

MOSCOW/TORONTO (Reuters) – Moscow-based Kaspersky Lab plans to open a data center in Switzerland to address Western government concerns that Russia exploits its anti-virus software to spy on customers, according to internal documents seen by Reuters.

FILE PHOTO: The logo of Russia’s Kaspersky Lab is displayed at the company’s office in Moscow, Russia October 27, 2017. REUTERS/Maxim Shemetov/File Picture

Kaspersky is setting up the center in response to actions in the United States, Britain and Lithuania last year to stop using the company’s products, according to the documents, which were confirmed by a person with direct knowledge of the matter.

The action is the latest effort by Kaspersky, a global leader in anti-virus software, to parry accusations by the U.S. government and others that the company spies on customers at the behest of Russian intelligence. The U.S. last year ordered civilian government agencies to remove the Kaspersky software from their networks.

Kaspersky has strongly rejected the accusations and filed a lawsuit against the U.S. ban.

The U.S. allegations were the “trigger” for setting up the Swiss data center, said the person familiar with Kapersky’s Switzerland plans, but not the only factor.

“The world is changing,” they said, speaking on condition of anonymity when discussing internal company business. “There is more balkanisation and protectionism.”

The person declined to provide further details on the new project, but added: “This is not just a PR stunt. We are really changing our R&D infrastructure.”

A Kaspersky spokeswoman declined to comment on the documents reviewed by Reuters.

In a statement, Kaspersky Lab said: “To further deliver on the promises of our Global Transparency Initiative, we are finalizing plans for the opening of the company’s first transparency center this year, which will be located in Europe.”

“We understand that during a time of geopolitical tension, mirrored by an increasingly complex cyber-threat landscape, people may have questions and we want to address them.”

Kaspersky Lab launched a campaign in October to dispel concerns about possible collusion with the Russian government by promising to let independent experts scrutinize its software for security vulnerabilities and “back doors” that governments could exploit to spy on its customers.

The company also said at the time that it would open “transparency centers” in Asia, Europe and the United States but did not provide details. The new Swiss facility is dubbed the Swiss Transparency Centre, according to the documents.


Work in Switzerland is due to begin “within weeks” and be completed by early 2020, said the person with knowledge of the matter.

The plans have been approved by Kaspersky Lab CEO and founder Eugene Kaspersky, who owns a majority of the privately held company, and will be announced publicly in the coming months, according to the source.

“Eugene is upset. He would rather spend the money elsewhere. But he knows this is necessary,” the person said.

It is possible the move could be derailed by the Russian security services, who might resist moving the data center outside of their jurisdiction, people familiar with Kaspersky and its relations with the government said.

Western security officials said Russia’s FSB Federal Security Service, successor to the Soviet-era KGB, exerts influence over Kaspersky management decisions, though the company has repeatedly denied those allegations.

The Swiss center will collect and analyze files identified as suspicious on the computers of tens of millions of Kaspersky customers in the United States and European Union, according to the documents reviewed by Reuters. Data from other customers will continue to be sent to a Moscow data center for review and analysis.

Files would only be transmitted from Switzerland to Moscow in cases when anomalies are detected that require manual review, the person said, adding that about 99.6 percent of such samples do not currently undergo this process.

A third party will review the center’s operations to make sure that all requests for such files are properly signed, stored and available for review by outsiders including foreign governments, the person said.

Moving operations to Switzerland will address concerns about laws that enable Russian security services to monitor data transmissions inside Russia and force companies to assist law enforcement agencies, according to the documents describing the plan.

The company will also move the department which builds its anti-virus software using code written in Moscow to Switzerland, the documents showed.

Kaspersky has received “solid support” from the Swiss government, said the source, who did not identify specific officials who have endorsed the plan.

Reporting by Jack Stubbs in Moscow and Jim Finkle in Toronto; Editing by Jonathan Weber

GDC 2018: Who Is This Event For Anymore?

San Francisco is a little bit more crowded than usual today, thanks to the 2018 Game Developers Conference. For a week each March, developers from all over the world come to learn, play new games, and hopefully get a job—while journalists congregate to report on the activity of said developers (and also to get jobs). GDC is possibly the most important event of the year for the army of engineers, artists, and businesspeople who make up the commercial videogame industry: a hub of networking, showcases, and creative reflection, a place for both announcements and edification.

Related Stories

Yet, like videogames itself, the conference seems to be at a crossroads. As the event has continued to grow, and its profile in the industry has increased, its purpose has begun to shift. The usual excitement still exists among those in the professional gaming (not to be confused with esports) community, who change their Twitter names to include variations “at GDC” and who populate the conference’s scheduling app with selfies and meeting requests, but it seems more than ever to be undercut with restlessness: Who is this conference even for, anyway? More than ever, huge platforms are taking a huge share of the show floor and speaking schedule. Facebook, Oculus, and even Magic Leap are all hosting multiple sessions this year.

It’s not just that the industry-wide muddling of the lines between indie and triple-A creator has hit GDC, though that’s part of it. The games ecosystem is home to a complex variety of types of developers, and the intense divide between indie and major is both fuzzier and more important than it’s felt like in the past. Mid-tier titles like PlayerUnknown’s BattleGrounds or the free-to-play Fortnite can become dizzyingly popular in a relatively short amount of time (just look to this past weekend’s record-breaking result when Drake joined forces with a popular Twitch streamer to play Fortnite‘s battle-royale mode) while the difference in costs and resources between small and big games continues to balloon. This year, at least for me, it’s not quite clear what sort of games GDC is meant to showcase, and even less clarity about what sort of developers are meant to attend—and what they’re supposed to take away from their time.

GDC is considered by many in the industry to be an essential event, the core platform for connecting with colleagues, scouting new recruits, and taking stock of the industry. But it’s become increasingly clear in recent years how limited this event really is. Taking place in one of the most expensive cities in America, it’s a stretch simply to afford accommodations for the week of the conference—and that’s not counting expo passes, travel, and any extracurricular activities. For poor or disabled American developers, and especially for international developers, GDC represents a sizable, and difficult, investment. (Meanwhile, foreign developers now have to contend with the increasing risks of entering the country in the first place, particularly if they’re from Muslim or non-white countries.)

So now, in 2018, discontent is running higher than normal, as many in the industry are wondering out loud if the Game Developer’s Conference, once lauded as the Mecca of the industry, is really the event we need.

More WIRED Culture

'Socially responsible' investors reassess Facebook ownership

NEW YORK (Reuters) – With European and U.S. lawmakers calling for investigations into reports that Facebook user data was accessed by UK based consultancy Cambridge Analytica to help President Donald Trump win the 2016 election, investors are asking even more questions about the social media company’s operations.

A Facebook sign is displayed at the Conservative Political Action Conference (CPAC) at National Harbor, Maryland, U.S., February 23, 2018. REUTERS/Joshua Roberts

An increasingly vocal base of investors who put their money where their values are had already started to sour on Facebook, one of the market’s tech darlings.

Facebook’s shares closed down nearly 7.0 percent on Monday, wiping nearly $40 billion off its market value as investors worried that potential legislation could damage the company’s advertising business.

Facebook Inc Chief Executive Mark Zuckerberg is facing calls from lawmakers to explain how the political consultancy gained improper access to data on 50 million Facebook users.

Cambridge Analytica said it strongly denies the media claims and said it deleted all Facebook data it obtained from a third-party application in 2014 after learning the information did not adhere to data protection rules.

“The lid is being opened on the black box of Facebook’s data practices, and the picture is not pretty,” said Frank Pasquale, a University of Maryland law professor who has written about Silicon Valley’s use of data.

The scrutiny presents a fresh threat to Facebook’s reputation, which is already under attack over Russia’s alleged use of Facebook tools to sway U.S. voters with divisive and false news posts before and after the 2016 election.

“We do have some concerns,” said Ron Bates, portfolio manager on the $131 million 1919 Socially Responsive Balanced Fund, a Facebook shareholder.

“The big issue of the day around customer incidents and data is something that has been discussed among ESG (environmental, social and corporate governance) investors for some time and has been a concern.”

Bates said he is encouraged by the fact that the company has acknowledged the privacy issues and is responding, and thinks it remains an appropriate investment for now.

Facebook said on Monday it had hired digital forensics firm Stroz Friedberg to carry out a comprehensive audit of Cambridge Analytica and the company had agreed to comply and give the forensics firm complete access to their servers and systems.

“What would be a deal-breaker for us would be if we saw this recurring and we saw significant risk to the consumer around privacy,” said Bates.

More than $20 trillion globally is allocated toward “responsible” investment strategies in 2016, a figure that grew by a quarter from just two years prior, according to Global Sustainable Investment Alliance, an advocacy group.

New York City Comptroller Scott Stringer, who oversees $193 billion in city pension fund assets, said in a statement to Reuters on Monday that, “as investors in Facebook, we’re closely following what are very alarming reports.”

Sustainalytics BV, a widely used research service that rates companies on their ESG performance for investors, told Reuters on Monday it is reviewing its Facebook rating, which is currently “average.”

“We’re definitely taking a look at it to see if there should be some change,” said Matthew Barg, research manager at Sustainalytics.

“Their business model is so closely tied to having access to consumer data and building off that access. You want to see that they understand that and care about that.”

ESG investors had already expressed concerns about Facebook before media reports that Cambridge Analytica harvested the private data on Facebook users to develop techniques to support Trump’s presidential campaign.

Wall Street investors, including ESG funds, have ridden the tech sector to record highs in recent months, betting on further outsized returns from stocks including Facebook, Apple Inc and Google parent Alphabet Inc.

Jennifer Sireklove, director of responsible investing at Seattle-based Parametric, a money manager with $200 billion in assets, said an increasing number of ethics-focused investors were avoiding Facebook and other social media companies, even before the most recent reports about privacy breaches.

Parametric held a call with clients on Friday to discuss concerns about investing in social media companies overall, including Google.

“More investors are starting to question whether these companies are contributing to a fair and well-informed public marketplace, or are we becoming all the more fragmented because of the ways in which these companies are operating,” she said.

Reporting by Trevor Hunnicutt and David Randall; Additional reporting by Kate Duguid in New York and Noel Randewich in San Francisco; Editing by Jennifer Ablan and Clive McKeef

Lithium-Silicon Batteries Could Give Your Phone 30% More Power

A new battery technology could increase the power packed into phones, cars, and smartwatches by 30% or more within the next few years. The new lithium-silicon batteries, nearing production-ready status thanks to startups including Sila Technologies and Angstron Materials, will leapfrog marginal improvements in existing lithium-ion batteries.

Recent promises of breakthrough battery technology have often amounted to little, but veteran Wall Street Journal tech reporter Christopher Mims believes lithium-silicon is the real thing. So do BMW, Intel, and Qualcomm, all of of which are backing the development of the new batteries.

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The core innovation is building anodes, one of the main components of any battery, primarily from silicon. Silicon anodes hold more power than today’s graphite-based versions, but are often delicate or short-lived in real-world applications. Sila Technologies has built prototypes that solve the problem by using silicon and graphene nanoparticles to make the technology more durable, and says its design can store 20% to 40% more energy than today’s lithium-ions. Several startups are competing to build the best lithium-silicon batteries, though, and one —Enovix, backed by Intel and Qualcomm — says its approach could pack as much as 50% more energy into a smartphone.

One of the major battery suppliers for both Apple and Samsung is Amperex Technology, which has a strategic investment partnership with Sila. That could point to much more long-lasting mobile devices on the way. The new batteries, Amperex Chief Operating Officer Joe Kit Chu Lam told the Journal, will probably be announced in a consumer device within the next two years. BMW also says it aims to incorporate the technology in an electric car by 2023, increasing power capacity by 10% to 15% over lithium-ion batteries.

China Will Block Travel for Those With Bad ‘Social Credit’

Chinese authorities will begin revoking the travel privileges of those with low scores on its so-called “social credit system,” which ranks Chinese citizens based on comprehensive monitoring of their behavior. Those who fall afoul of the system could be blocked from rail and air travel for up to a year.

China’s National Development and Reform Commission released announcements on Friday saying that the restrictions could be triggered by a broad range of offenses. According to Reuters, those include acts from spreading false information about terrorism to using expired tickets or smoking on trains.

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The Chinese government publicized its plans to create a social credit system in 2014. There is some evidence that the government’s system is entwined with China’s private credit scoring systems, such as Alibaba’s Zhima Credit, which tracks users of the AliPay smartphone payment system. It evaluates not only individuals’ financial history (which has proven problematic enough in the U.S.), but consumption patterns, education, and even social connections.

A Wired report last year found that a user with a low Zhima Credit score had to pay more to rent a bicycle, hotel room, or even an umbrella. Zhima Credit’s CEO has said, in an eerie prefiguring of the new travel restrictions, that the system “will ensure that the bad people in society don’t have a place to go, while good people can move freely and without obstruction.”

Though the policy has only now become public, Reuters says it may have come into effect earlier — in a press conference last year, an official said 6.15 million Chinese citizens had already been blocked from air travel for social misdeeds.

Electronic Arts Will Not Sell ‘Loot Crates’ in Star Wars: Battlefront II

Video game maker Electronic Arts announced Friday that it will overhaul the progression system in the game Star Wars: Battlefront II, and that all player upgrades will be earned through gameplay. EA’s plans to sell in-game upgrades for real money, in randomized packages known in the industry as ‘loot boxes’ or ‘loot crates,’ produced a massive outcry last Fall, severely damaging the game’s financial performance.

The backlash came from both gamers and, eventually, regulators and legislators. For players, upgrades purchasable for real money seemed certain to destroy the sense of healthy competition in the primarily multiplayer game. Lawmakers and activists saw an even bigger problem, comparing the purchasable loot boxes, in a game likely to have a large audience of minors, as akin to encouraging children to gamble.

EA initially responded by hastily removing the in-game loot system, but it was unclear whether it might return, and in what form. Now EA says that items impacting gameplay “will not be available for purchase” at all, instead being rewarded to players through in-game accomplishments. Other items which don’t impact gameplay, such as character costumes, will still be purchasable with real money, and those purchases will be direct rather than randomized.

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EA’s pullback may have been influenced as much by lawmakers as consumers. Authorities in Belgium, for instance, have reportedly considered classifying video games with purchasable loot crates as forms of gambling. One Hawaii state legislator began pushing for a ban on such systems. EA’s removal of gambling-like elements will likely take some steam out of those regulatory efforts, despite less egregious versions of the idea being widespread.

Gamers’ rage, though, has already had a devastating impact. Battlefront II fell dramatically short of its sales targets, selling less than half of the 1.72 million units it was expected to in its first month. Even before that dismal performance was clear, the controversy had chopped more than $3 billion from EA’s market value.

Battlefront II’s overhauled progression system will be released on March 21st.

YouTube Kids Has Been Promoting Conspiracy-Theory Videos

YouTube Kids, an app that is purportedly more well-policed than YouTube’s own website, contains videos promoting debunked and frightening conspiracy theories. Business Insider discovered that the app, whose users are presumably mostly children, has been suggesting the videos based on otherwise innocuous search terms.

For instance, searches for “moon landing” returned videos arguing that NASA had faked that event. A search for “UFO” led to videos by David Icke, a veteran conspiracist who claims that the Earth is ruled by a secret race of “lizard people.”

The potentially devastating impacts of showing such material to young children were illustrated back in 2009, when conspiracy theorists began circulating the idea that an invisible planet called “Nibiru” would collide with the Earth in 2012, and destroy it. A NASA astrobiologist reported receiving multiple inquiries from young people who were so terrified by the theories that they were contemplating suicide.

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According to Business Insider, YouTube, which is owned by Google, removed specific videos that it highlighted to them, but many similar videos remain accessible through the app. In a statement, YouTube said that “sometimes we miss the mark” on content curation.

But in fact, YouTube Kids seems to quite faithfully following the well-worn path by which YouTube itself has grown. A recent study found that the content-suggestion system on YouTube’s main site consistently promoted more extreme takes on topics users searched for, often including conspiracy theories and fabricated stories.

Technology Meant to Make Bitcoin Money Again Just Went Live

A version of the technology that’s meant to make cryptocurrency payments faster and cheaper went live Thursday.

The software, called Lightning Network, can now be used for Bitcoin payments after more than a year in which thousands of developers tested it. Lightning Labs, one of the firms developing the technology, released this initial version, which is compatible with networks being developed by other groups, such as Blockstream and Acinq.

Bitcoin has become digital gold — or a viable investment alternative — to many, but it has been harder for it to fulfill its original purpose of becoming digital money, as transaction fees have skyrocketed to as high as $50, while confirmation times took as long as a week at their peak. Enthusiasts say the Lightning Network will solve these problems with fees at a fraction of a cent and instantaneous transactions.

The Lightning Network rolls out, another technology meant to speed up transactions, Segregated Witness, gains traction, with the number of transactions using it doubling to more than 30 percent of total Bitcoin transactions in the past month. Bitcoin transaction fees have plummeted in part thanks to this, but the total number of transactions has also declined. Lightning Network is also meant to help lower fees on the main Bitcoin network.

The Lightning Network allows Bitcoin users to open payment channels between each other. The parties can than conduct transactions without having to post them to the Bitcoin blockchain, avoiding delays and costs that result from recording those transactions each time. Once the channel is closed, only the resulting balances are recorded on the blockchain, not the full transaction history of the channel, and only then are Bitcoin fees paid. There is no required time or transaction limit required to close a payment channel, so they can potentially remain open for months of years.

Elizabeth Stark, Lightning Labs founder and chief executive officer, says merchants and especially online businesses will be the most likely users as it facilitates a high volume of payments and its near-zero fees allow for micropayments. Cryptocurrency exchanges could also use the software to accelerate deposit and withdrawal of funds, she said.

The network is currently able to process transactions in the low thousands per second, according to Stark, which is still far from Visa Inc.’s maximum of 56,000, but an improvement on Bitcoin’s five transactions per second. More than 4,000 payment channels have been opened since the technology was released in January 2017, and even though it was in testing, some merchants already started using it. Block & Jerry’s, an online ice-cream store playing on American ice-cream brand Ben & Jerry’s, is one.

“Bitcoin enthusiasts have gotten excited about this, merchants are excited about this,” Stark said. “It feels like we’re right on the edge of mass cryptocurrency adoption.”

Spotify says path to profits clear ahead of April 3 listing

LONDON/SAN FRANCISCO (Reuters) – Streaming music leader Spotify said on Thursday it has a clear path to profit as it spelled out to investors its growth plans and how it aims to fend off big rivals Apple Inc and Inc ahead of an April 3 listing.

FILE PHOTO: Headphones are seen in front of a logo of online music streaming service Spotify, February 18, 2014 REUTERS/Christian Hartmann/File Photo

Chief Executive Daniel Ek made a direct pitch to retail investors during a public webcast that stood in place of a traditional closed-door “road show” typically used to woo institutional investors in initial public offerings (IPOs).

The Stockholm-based company’s stock will hit the public markets in a unusual direct listing without traditional underwriters. Spotify must convince investors that its business is sound and that investors who buy shares in the public market debut won’t be hurt by unexpected volatility.

“You won’t see us ringing any bells or throwing any parties,” Ek said. “Since Spotify isn’t selling any stock in the listing, we’re really entirely focused on the long-term performance of the business.”

Ek portrayed Spotify as an underdog not tied to a major technology company. He pointed out that Spotify has more than twice as many paying users as its nearest rival, Apple, and that its strategy is to be an ubiquitous music service across phones, smart speakers and desktops from various makers.

Because the company will not issue any new shares, it did not specify a listing price. Based on private transactions, it is valued at roughly $19 billion, according to Reuters calculations. It has hired brokerage Morgan Stanley to match buy and sell orders to set its opening trading price.

Spotify has warned investors it faces a variety of risks.

It says the royalty costs it pays to artists and publishers are so difficult to calculate that in the past it has been unsure how much it owed, prompting what are known as “material weaknesses in internal controls” for each of the past three years with the danger of more in the future.

In addition, its music services are primarily delivered over devices such as Apple’s iPhone and’s Echo series of speakers, which could emphasize their own services over Spotify’s.

“Operating losses have grown with revenue, but the trend towards profitability is clear when you look at operating losses as a percentage of revenue,” the company said in the presentation in New York.

Revenue grew 39 percent to 4.09 billion euros ($5.04 billion) in 2017 from 2.95 billion euros in 2016, it said in a securities filing. At the same time, net financing costs of 855 million euros pushed up operating losses to 378 million euros from 349 million euros.

Reporting by Eric Auchard in London and Stephen Nellis in San Francisco; Editing by Susan Thomas and Peter Henderson

YouTube Is Limiting How Much Time Its Moderators Spend Watching Disturbing Videos

YouTube CEO Susan Wojcicki says the online video giant is placing a limit on the amount of time its human moderators can spend watching disturbing videos each day.

YouTube has vowed to rely more on human beings to review its videos for inappropriate or offensive material, but the Google-owned video service is also one of the tech companies grappling with the psychological toll that viewing a high volume of disturbing content can take on its human moderators. That’s why YouTube is starting to limit its own part-time moderators to no more than four hours per day of watching those videos, Wojcicki announced in an interview with Wired at South by Southwest in Austin on Tuesday.

Earlier this year, an article in The New Yorker took a look at the growing number of moderators employed at tech companies like Google, Facebook, and Twitter, where human employees are being asked more and more to scan online posts, pictures, and videos with the potential to offend and disturb.

“This is a real issue and I myself have spent a lot of time looking at this content over the past year. It is really hard,” Wojcicki said in the interview, according to The Verge. In addition to placing a cap on the amount of time those moderators can spend watching potentially upsetting material, the company is also providing those contractors with what the YouTube CEO described as “wellness benefits.” (Because the people hired as moderators are typically contractors, they are not provided the same health benefits that go to full-time Google employees.)

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In December, Google promised to hire 10,000 moderators to ensure that videos on YouTube, particularly popular videos that are eligible for advertising dollars, are scanned for potentially offensive content by a person, rather than just an algorithm. The move followed a rough year for YouTube, which saw advertisers flock away from the service after complaints about ads appearing next to offensive videos containing anything from terrorist or violent extremist content to disturbing videos exploiting children. YouTube also said in December that it had removed over 150,000 videos featuring violent extremism since June 2017, though the company noted that 98% of those types of offensive videos are still typically flagged by YouTube’s machine-learning algorithms.

YouTube’s moderators have faced criticism in recent months, both for failing to remove extremist videos or content featuring conspiracy theories as well as for supposedly mistakenly pulling several right-wing videos and channels last month. In her interview with Wired on Tuesday, YouTube’s Wojcicki also said the company is taking action against conspiracy theorists who use the site to spread false and misleading information. Wojcicki said that YouTube will now place links to Wikipedia pages next to conspiracy theory videos in order to debunk any misinformation that could be spread by the videos’ creators.

Amazon Alexa Can Now Get You Breakfast at Midnight With Denny’s On-Demand

If you’re hungry for some pancakes, Amazon’s Alexa has your back.

The restaurant chain Denny’s announced on Wednesday that you can now use Amazon’s Alexa voice assistant to order food through its Denny’s On Demand service. Those who use Amazon’s Alexa on a variety of devices, including the company’s line of smart home Echo devices, can enable the feature for free. Users can then input their Denny’s on Demand account and payment information through the Alexa “skill” and place an order.

Once it’s all set up, users can activate Alexa on an Echo and speak their orders of pancakes, eggs, and anything else they want from Denny’s. Payments will be processed automatically and their orders will be sent to a local Denny’s restaurant. Amazon’s Alexa will alert users to an estimated time when their Denny’s order will be available for pickup.

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Denny’s launched its Denny’s on Demand service last year to boost its digital ordering. Through the service, diners can boot up the Denny’s app to find local restaurants and place orders. All payments can be made through the app, allowing users to simply walk into a restaurant and pick up their food. In a statement on Wednesday, Denny’s said that it’s registered more than 1.3 million orders since Denny’s on Demand’s launch last May.

By launching a new Amazon Alexa skill, Denny’s on Demand is now available to Echo owners in addition to those on a smartphone and tablet. And Denny’s said that users can order via Alexa day and night. The restaurant chain cautioned, however, that the service is available only at participating Denny’s locations. It didn’t list which locations are currently offering the service.

Hybrid cloud file and object pushes the frontiers of storage

Use of public cloud services have been widely adopted by IT departments around the world. But it has become clear hybrid solutions that span on- and off-premises deployment are often superior, and seem to be on the rise.

However, to get data in and out of the public cloud can be tricky from a performance and consistency point of view. So, could a new wave of distributed file systems and object stores hold the answer?

Hybrid cloud operations require the ability to move data between private and public datacentres. Without data mobility, public and private cloud are nothing more than two separate environments that can’t exploit the benefits of data and application portability.

Looking at the storage that underpins public and private cloud, there are potentially three options available.

Block storage, traditionally used for high-performance input/output (I/O), doesn’t offer practical mobility features. The technology is great on-premise, or across locations operated by the same organisation.

That’s because block access storage depends on the use of a file system above the block level to organise data and provide functionality. For example, snapshots and replication depend on the maintenance of strict consistency between data instances.

Meanwhile, object storage provides high scalability and ubiquitous access, but can lag in terms of data integrity and performance capabilities required by modern applications.

Last writer wins

There’s also no concept of object locking – it’s simply a case of last writer wins. This is great for relatively static content, but not practical for database applications or analytics that need to do partial content reads and updates.

But, object storage is a method of choice for some hybrid cloud storage distributed environments. It can work to provide a single object/file environment across locations with S3 almost a de facto standard for access between sites.

File storage sits between the two extremes. It offers high scalability, data integrity and security and file systems have locking that protect against concurrent updates either locally or globally, depending on how lock management is implemented. Often, file system data security permissions integrate with existing credentials management systems like Active Directory.

File systems, like object storage, implement a single global name space that abstracts from the underlying hardware and provide consistency in accessing content, wherever it is located. Some object storage-based systems also provide file access via network file system (NFS) and server message block protocol (SMB).

In some ways what we’re looking at here are a development of the parallel file system, or its key functionality, for hybrid cloud operations.

Distributed and parallel file systems have been on the market for years. Dell EMC is a market leader with its Isilon hardware platform. Also, DDN offers a hardware solution called Gridscaler and there are also a range of other software solutions like Lustre, Ceph and IBM’s Spectrum Scale (GPFS).

But these are not built for hybrid cloud operations. So, what do new solutions offer over the traditional suppliers?

Distributed file systems 2.0

The new wave of distributed file systems and object stores are built to operate in hybrid cloud environments. In other words, they are designed to work across private and public environments.

Key to this is support for public cloud and the capability to deploy a scale-out file/object cluster in the public cloud and span on/off-premise operations with a hybrid solution.

Native support for public cloud means much more than simply running a software instance in a cloud VM. Solutions need to be deployable with automation, understand the performance characteristics of storage in cloud instances and be lightweight and efficient to reduce costs as much as possible.

New distributed file systems in particular are designed to cover applications that require very low latency to operate efficiently. These include traditional databases, high-performance analytics, financial trading and general high-performance computing applications, such as life sciences and media/entertainment.

By providing data mobility, these new distributed file systems allow end users and IT organisations to take advantage of cheap compute in public cloud, while maintaining data consistency across geographic boundaries.

Supplier roundup

WekaIO was founded in 2013 and has spent almost five years developing a scale-out parallel file system solution called Matrix. Matrix is a POSIX-compliant file system that was specifically designed for NVMe storage.

As a scale-out storage offering, Matrix runs across a cluster of commodity storage servers or can be deployed in the public cloud and run on standard compute instances using local SSD block storage. It also claims hybrid operations are possible, with the ability to tier to public cloud services. WekaIO publishes latency figures as low as 200µs and I/O throughput of 20,000 to 50,000 IOPS per CPU core.

Elastifile was founded in 2014 and has a team with a range of successful storage product developments behind it, including XtremIO and XIV. The Elastifile Cloud File System (ECFS) is a software solution built to scale across thousands of compute nodes, offering file, block and object storage.

ECFS is designed to support heterogeneous environments, including public and private cloud environments under a single global name space. Today, this is achieved using a feature called CloudConnect, which bridges the gap between on-premise and cloud deployments.

Qumulo was founded in 2012 by a team that previously worked on developing the Isilon scale-out NAS platform. The Qumulo File Fabric (QF2) is a scale-out software solution that can be deployed on commodity hardware or in the public cloud.

Cross-platform capabilities are provided through the ability to replicate file shares between physical locations using a feature called Continuous Replication. Although primarily a software solution, QF2 is available as an appliance with a throughput of 4GBps per node (minimum four nodes), although no latency figures are quoted.

Object storage maker Cloudian announced an upgrade in January 2018 to its Hyperstore product which brings true hybrid cloud operations across Microsoft, Amazon and Google cloud environments with data portability between them. Cloudian is based on the Apache Cassandra open source distributed database.

It can come as storage software that customers deploy on commodity hardware, in cloud software format or in hardware appliance form. Hyperfile file access – which is Posix/Windows compliant – can also be deployed on-premise and in the cloud to provide file access.

Multi-cloud data controller

Another object storage specialist, Scality, will release a commercially supported version of its “multi-cloud data controller” Zenko at the end of March. The product promises to allow customers hybrid cloud functionality; to move, replicate, tier, migrate and search data across on-premise, private cloud locations and public cloud, although it’s not that clear how seamless those operations will be.

Zenko is based on Scality’s 2016 launch of its S3 server, which provided S3 access to Scality Ring object storage. The key concept behind Zenko is to allow customers to mix and match Scality on-site storage with storage from different cloud providers, initially Amazon Web Services, Google Cloud Platform and Microsoft Azure.

Microsoft women filed 238 discrimination and harassment complaints

SAN FRANCISCO (Reuters) – Women at Microsoft Corp working in U.S.-based technical jobs filed 238 internal complaints about gender discrimination or sexual harassment between 2010 and 2016, according to court filings made public on Monday.

FILE PHOTO: The Microsoft logo is shown on the Microsoft Theatre in Los Angeles, California, U.S., June 13, 2017. REUTERS/Mike Blake/File Photo – RC177D20CF10

The figure was cited by plaintiffs suing Microsoft for systematically denying pay raises or promotions to women at the world’s largest software company. Microsoft denies it had any such policy.

The lawsuit, filed in Seattle federal court in 2015, is attracting wider attention after a series of powerful men have left or been fired from their jobs in entertainment, the media and politics for sexual misconduct.

Plaintiffs’ attorneys are pushing to proceed as a class action lawsuit, which could cover more than 8,000 women.

More details about Microsoft’s human resources practices were made public on Monday in legal filings submitted as part of that process.

The two sides are exchanging documents ahead of trial, which has not been scheduled.

Out of 118 gender discrimination complaints filed by women at Microsoft, only one was deemed“founded” by the company, according to the unsealed court filings.

Attorneys for the women described the number of complaints as“shocking” in the court filings, and said the response by Microsoft’s investigations team was“lackluster.”

Companies generally keep information about internal discrimination complaints private, making it unclear how the number of complaints at Microsoft compares to those at its competitors.

In a statement on Tuesday, Microsoft said it had a robust system to investigate concerns raised by its employees, and that it wanted them to speak up.

Microsoft budgets more than $55 million a year to promote diversity and inclusion, it said in court filings. The company had about 74,000 U.S. employees at the end of 2017.

Microsoft said the plaintiffs cannot cite one example of a pay or promotion problem in which Microsoft’s investigations team should have found a violation of company policy but did not.

U.S. District Judge James Robart has not yet ruled on the plaintiffs’ request for class action status.

A Reuters review of federal lawsuits filed between 2006 and 2016 revealed hundreds containing sexual harassment allegations where companies used common civil litigation tactics to keep potentially damning information under wraps.

Microsoft had argued that the number of womens’ human resources complaints should be secret because publicizing the outcomes could deter employees from reporting future abuses.

A court-appointed official found that scenario“far too remote a competitive or business harm” to justify keeping the information sealed.

Reporting by Dan Levine; Additional reporting by Salvador Rodriguez; Editing by Bill Rigby, Edwina Gibbs and Bernadette Baum

Toys 'R' Us Liquidation News Will Be Transient For Toy Makers

By Valuentum analysts

Image Source: Hasbro

There’s nothing like the announcement of a customer’s possible liquidation to send shares of suppliers tumbling. That’s what happened when Toys ‘R’ Us announced that it may have to cease operations as nobody appears to be coming to the rescue. Hasbro (HAS), Mattel (MAT), and JAKKS Pacific (JAKK) may feel some near-term operational discomfort, but we’re not overreacting.

If a rescue deal doesn’t happen for Toys ‘R’ Us, online verticals and big box retailers such as Walmart (WMT) and Target (TGT) may easily fill the void. Target CEO Brian Cornell noted, in particular, that his company is “playing to win in toys.” Though we’re viewing the Toys ‘R’ Us announcement as more ‘headline noise’ than anything that may impact the toy makers over the long haul, readers may expect forward near-term guidance to now have a more cautious bent, and that may disappoint some investors.

Rumors of a deal between Hasbro and Mattel haven’t let up from what we can tell, and we think the Toys ‘R’ Us possible liquidation could grease the wheels for further talks, as anti-trust interference may not be that fierce given end market troubles and concentrated online distributor power through the likes of Amazon (AMZN) and eBay (EBAY). We continue to like Hasbro the most out of the toy makers, but we caution management against the temptation to overpay for Mattel’s assets, as the Barbie franchise could very well be in terminal decline, given Disney’s (DIS) Frozen success. We also like that Hasbro continues to pull a variety of levers, the latest an agreement with Netflix (NFLX) to create toys and games from the Super Monsters animated kids series. This follows the Hasbro-Netflix’s joint effort to bring a collection of games to Stranger Things fans.

We wrote about Hasbro’s fourth-quarter report, released February 7, and at the time, we highlighted that management had pointed “to slower consumer demand for both the company and its industry in November and December,” but we also said that we think management is confident that its innovative lines and digital initiatives will deliver in 2018. What we’re watching closely at Hasbro is the long-term trajectory of its ‘Entertainment and Licensing’ business line, where on a full-year basis, operating profit in the segment nearly doubled, to $96.4 million on just ~8% revenue expansion (the division posted a near-34% operating margin). This segment may hold the keys to Hasbro’s future, but even so, Hasbro was able to still drive revenues nearly $1 billion higher during the past 5 years. Physical toy sales are under pressure, but by no means, dead.

Hasbro’s equity has advanced considerably during the past 5 years, and its 10%+ dividend increase, to a quarterly payout of $0.63, on February 7, means shares now have a forward yield of 2.8%. We’re not overreacting to the Toys ‘R’ Us announcement by any stretch, with our discounted cash-flow-derived fair value estimate of Hasbro hovering in the high-$80s at the time of this writing. For more information on our thoughts on Hasbro, in particular, and our assumptions behind our fair value estimate, please download Hasbro’s 16-page valuation report from Valuentum here (pdf).

Image: The first page of Valuentum’s 16-page report.

This article or report and any links within are for information purposes only and should not be considered a solicitation to buy or sell any security. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this article and accepts no liability for how readers may choose to utilize the content. Assumptions, opinions, and estimates are based on our judgment as of the date of the article and are subject to change without notice.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Hasbro is included in Valuentum’s simulated Dividend Growth Newsletter portfolio.

Editor’s Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

AT&T & Time Warner: Prepare For The Worst

When news broke that AT&T (T) was purchasing Time Warner (TWX) in a cash and stock deal valued at $107.50 for Time Warner holders I felt very confident that the move would improve AT&T’s profitability and widen its moat. AT&T was (and remains) one of my largest positions, so the news was welcome as I previewed the prospective ecosystem where premium original content and provider flowed seamlessly together permitting AT&T to leverage both as a compelling consumer package.

AT&T has a lucrative history marketing ‘bundle deals’ via DirecTV/U-verse, phone and internet. Adding Time Warner’s content to the mix was like adding another weapon to their arsenal. The move would fortify their position in an era where content is king and the average American residence has nearly 3 TVs per household.

With more and more customers embracing OTT services like Netflix (NFLX) and ditching cable, AT&T recognized the writing on the wall and (potentially) acquired Time Warner to help mitigate the impact and diversify them away from their reliance on legacy telecom services.

Perhaps it was not only adding a weapon to their arsenal but adding a shield to insulate them from the evolving landscape. I credit the management team led by CEO Randall Stephenson for their proactive approach getting ahead of the curve.

Obviously Time Warner’s stock popped immediately on the news while AT&T’s gyrated as investors digested the antitrust risks and whether or not AT&T overpaid.

Let’s take a look at those risks now.

Did AT&T Overpay?

The buyout offer did not come cheap ($85B) and some analysts groaned that while Time Warner was a nice asset, it came at too high a cost. But obtaining regulatory approval would be no walk in the park and AT&T knew they were in for protracted litigation. Let’s look at the EPS and Revenue numbers for the last two FYs for Time Warner:


You will note that on an EPS basis, Time Warner jumped about 9% year over year from $5.86 to $6.41. Time Warner grew EPS over 20% the year before that. When the $107.5 price tag was initially applied to the prior 4 quarters of earnings in October 2016, the P/E ratio stood at approximately 21.

That did look a bit steep.

However, the deal has not closed and when applying today’s earnings to the buyout price, the P/E ratio dips to 16.7. That looks much healthier. You have to tip your hat to AT&T’s management here since they had the prescience to realize that while the initial premium to Warner shareholders seemed lofty, it allowed them to garner unanimous approval from both boards by offering a rich enough premium to Warner holders while not seeming reckless to AT&T holders.

Stephenson and company knew earnings would continue to rise for the content king and before (IF) the deal closes, they will look like geniuses as earning would have grown into the multiple applied at the time of the offer.

Regulatory Risk

And that brings us to the elephant in the room: whether AT&T can out-litigate the DOJ in their pending antitrust case. President Trump has been vocal in his opposition to the buyout and may see it as fulfilling a campaign promise to defeat the deal. But Trump will not have the final word, it will be adjudicated in the courtroom not the political arena, however you would be naïve to believe that those worlds don’t intersect despite our system of checks and balances.

In the interim, AT&T has tried to curry favor with the Trump Administration by announcing bonuses to its employees and lauding the President for the tax bill. Nevertheless, the antitrust team is pushing ahead with bluster and bravado to paint the government as underdogs thwarting corporate strong-arming.

In November of last year I penned a post in the immediate aftermath of DOJ filing suit recommending purchasing shares of Time Warner during the turmoil called, “Time Warner: Heads I Win, Tails You Lose”. In just two days TWX share price plummeted from $95 to below $87. I quickly logged into my brokerage account to pick up shares of Time Warner in the $80’s.

In the post I explained why the volatility generated a perfect arbitrage opportunity, in summary:

This remains mostly true today, however Time Warner’s share price has since rebounded near $95 thereby shrinking some of the potential returns if the buyout is approved. While I have contacts within the antitrust division of the DOJ from my Washington days, they are not at liberty to speak about the case and therefore I know only as much as the public announcements trickling out on a daily basis.

And it is my opinion that the deal looks less likely to succeed now than it did 4 months ago when I wrote that post. But that reminds me of a saying by Clive Davis:


Prepare To Take Action:

During the previous dip, I was on vacation with my wife refilling the gas tank when I checked the market news to find out that Time Warner was selling off. We waited at that pit stop probably longer than she preferred so I could buy shares since I knew that the dip was an overreaction and would not last.

This time, I am planning ahead by placing limit buy orders at $85 and below that are good-til-cancelled in the scenario where the DOJ wins and/or impactful news hits the stock causing a knee-jerk reaction. In essence the hypothetical case looks like this:


In the portion of the chart above circled, you will see a red candlestick where news adversely impacted a stock sending it cascading into free-fall. But you will also notice the rapid rebound where the stock recovered quickly above that price.

The window to pounce and take advantage of the dip was small. That is why I am preparing to maximize the opportunity if it presents itself again. I believe that owning Time Warner shares at $85 and below provides a margin of safety if the two parties are forced to go their separate ways.

Time Warner Flying Solo?

Will I be saddled with overvalued shares of Time Warner purchased at $85? I doubt it. Here’s why:

Growth for Time Warner shows no signs of abatement as each operating division increased revenue and profits in the latest quarter (yet again). HBO’s subscription revenues increased 11% and its unparalleled show Game of Thrones is not due back until 2019. I expect an even larger increase in the months building up to the premiere.

Additionally, on the heels (pun intended) of Wonder Woman’s success, and in the backdrop of the #metoo movement, I believe Warner Bros. has incentive to continue to produce content with powerful heroines. HBO produced an amazing women focused hit with Big Little Lies and it’s due back for a second season featuring Meryl Streep. HBO made a savvy move by riding the coattails of Reese Witherspoon’s success.

On the cable news front, CNN was rated the #1 network in primetime and total day viewership among young adults and tops in digital news as well (from their 4Q earnings release). Whether you believe the treatment of the Trump Administration is favorable or not, it has been favorable to the bottom line of CNN.

And those are just a few samples of the many reasons why I remain bullish on Time Warner.

No one knows for certain how the trial will shake out, but I am positioning myself for success no matter the outcome.

Disclosure: I am/we are long T, TWX.

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.

The Kinder Morgan Dividend Story Is About To Resume

By the Sure Dividend staff

Kinder Morgan (KMI) has been a favorite dividend growth investment for many retail investors, until the company cut its payout by three quarters two years ago. After two years of low payouts, during which the company focused on reducing debt levels and finishing projects, things are about to change soon. Kinder Morgan is one of 294 dividend stocks in the energy sector. You can see all 294 dividend-paying energy stocks here.

Kinder Morgan has aggressive dividend growth plans for the coming years, but unlike in the past, this time they look very achievable. The company is about to increase its dividend meaningfully soon, and investors will very likely benefit from ongoing strong dividend growth rates over the coming years.

Since Kinder Morgan is not trading at an expensive valuation at all, shares of the pipeline giant are worthy of a closer look right here.

Company Overview

Kinder Morgan is proud of its huge asset base, and rightfully so:

(company presentation)

The company operates a giant pipeline network spanning North America, with the focus being put on natural gas pipelines. Kinder Morgan also owns terminals, pipelines and oil production assets on top of its natural gas pipeline network.

(company presentation)

The vast majority of Kinder Morgan’s revenues are fee-based, which means that there is very low commodity price risk. The company’s revenues, earnings and cash flows do not depend highly on the price of oil and natural gas. The only segment with a bigger exposure to the price of oil is Kinder Morgan’s CO2 business. Kinder Morgan is hedging its revenues from that segment, though, thus the short-term price swings for WTI do not matter very much.

Due to the fact that Kinder Morgan is much less impacted by commodity price swings than other companies in the oil & gas industry, its cash flows are not cyclical at all.

(company presentation)

During 2018 Kinder Morgan plans to increase its EBITDA as well as its distributable cash flows slightly. Distributable cash flows are operating cash flows minus the portion of capex that is needed to keep the assets intact (maintenance capex). Distributable cash flows are thus the portion of the company’s cash flows that are not needed to maintain the business, those can be spend in several ways:

– Growth capex, which expand Kinder Morgan’s asset base and lead to higher earnings / cash flows in the future.

– Shareholder returns via dividends & share repurchases.

– Debt reduction, which leads to lower interest expenses and thereby positively impacts the company’s earnings and cash flows.

A couple of years ago Kinder Morgan has paid out almost all of its DCF in dividends and financed growth capex by issuing new shares and debt. That did not work very well once its share price collapsed, which was the reason for the dividend cut, as Kinder Morgan had to finance its growth projects organically from that point.

Right now Kinder Morgan is using its DCF for a combination of growth capex, dividends and share repurchases. The company has brought down its debt levels meaningfully already, but doesn’t plan to reduce its leverage further this year.

Kinder Morgan Has Announced Aggressive Dividend Growth Plans Through 2020

In the last two years Kinder Morgan has produced about $2.00 per share in distributable cash flows, but paid out only $0.50 each year. This has allowed the company to finance billions in growth projects with excess cash flows whilst also paying down debt.

The company has stated that it wants to increase the dividend meaningfully this year as well as in 2019 and 2020:

– The dividend will be $0.80 for 2018 (which means a 60% raise year over year)

– The dividend will be $1.00 for 2019 (which means a 25% raise yoy)

– The dividend will be $1.25 for 2020 (which means a 25% raise yoy, again)

This looks like a very compelling dividend growth rate, especially when we factor in that Kinder Morgan’s current dividend yield is not low at all: Based on a share price of $16.10, Kinder Morgan’s shares yield about 3.1% right now. The forward dividend yields are thus 5.0%, 6.2% and 7.8% for 2018, 2019 and 2020, respectively.

A closer look at the company’s dividend growth plans and cash flow generation shows that those plans are not unrealistic at all:


DCF per share


Payout ratio

Excess DCF after dividend payments





$2.8 billion





$2.4 billion





$2.0 billion

Assumption: DCF grows by two percent a year

Even in a rather conservative scenario where distributable cash flows grow by only two percent annually, Kinder Morgan’s payout ratio stays below 60% through 2020. At the same time the company would generate $7.2 billion in cash flows that are not needed to pay the dividends. Those cash flows could thus be utilized for growth capex, share repurchases or for paying down debt.

Kinder Morgan Has Significant Growth Potential

The scenario laid out above (2% annual DCF growth) is rather conservative due to the fact that Kinder Morgan plans to invest heavily into new assets over the coming years:

(company presentation)

Management has identified $12 billion of potential investments which fit the company’s strategy and which promise attractive returns. The company could complete a meaningful amount of these projects in the coming years, as high after-dividend cash flows allow the company to spend on growth investments heavily.

According to management these assets could add $1.6 billion to the company’s EBITDA, which means a 21% increase over 2017’s level. When we assume that distributable cash flows would grow by 21% as well, Kinder Morgan’s DCF per share could hit $2.40 in 2022. This calculation does not yet include the positive impact share repurchases would have on the DCF per share growth rate.

Kinder Morgan has recently started a $2 billion share repurchase program and has already bought back more than 27 million shares since December. At that pace Kinder Morgan’s share count would drop by almost five percent a year, this alone would drive DCF per share up by mid-single digits each year, without any underlying organic growth.

Due to its focus on natural gas pipelines Kinder Morgan is well positioned for the future. Natural gas consumption will, according to most analysts, continue to grow for decades, as natural gas combines several positives: The commodity is significantly more environmentally friendly than oil and coal, it is inexpensive and it is available in North America in large quantities. Through LNG terminals natural gas can even be exported to other markets (primarily in Asia).

All the natural gas that gets used in the US or exported to foreign countries needs to be transported through the US by pipelines. Kinder Morgan as the provider of the vastest pipeline network should benefit from that trend, which will lead to ample cash flows for decades.


The US Energy Information Administration expects that global consumption of natural gas will grow from 130 quadrillion Btu to 190 quadrillion Btu through 2040. Since proved reserves of natural gas in the US are growing, it seems opportune to assume that the US will remain a major producer of natural gas going forward. This, in turn, means that Kinder Morgan’s asset base will not only exist for a very long time, but will remain very profitable through the coming decades.

Kinder Morgan Is Trading At A Discount Price

KMI EV to EBITDA (Forward) data by YCharts

Kinder Morgan is trading at the lowest valuation the company’s shares have traded for over the last couple of years right now. With a forward EV to EBITDA multiple of about ten Kinder Morgan is also not looking expensive at all on an absolute basis.

When we focus on the cash flows the company generates, we see that Kinder Morgan trades at eight times trailing DCF and at slightly less than eight times forward distributable cash flows. This means that shares can be bought with a distributable cash flow yield of 12.7% right now. Kinder Morgan is a non-cyclical company which has a solid growth outlook, and at the same time its size and diversified asset base mean that there isn’t a lot of risk. Based on those facts the current valuation looks pretty low.

Investors can currently acquire shares of the company with a forward dividend yield of 5.0% (the dividend increase announcement should come next month) at a DCF multiple of slightly below 8. For long term focused investors who seek an investment that provides a growing income stream that looks like an attractive investment case.

Final Thoughts

Kinder Morgan’s failed dividend growth plans hurt many retail investors in the past, but management has learned from its mistakes. This time the dividend growth plans are well thought out and look very achievable.

Thanks to high cash flows and a big growth project backlog Kinder Morgan should be able to provide a steadily growing income stream over the coming years. This, combined with a low valuation, makes shares of the pipeline giant worthy of a closer look right here.

Disclosure: I am/we are long KMI.

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.

‘Black Panther’ Should Become Marvel’s Latest Billion-Dollar Movie This Weekend

Black Panther is already the biggest movie of 2018, and now the latest superhero blockbuster from Marvel and Walt Disney is on the precipice of cracking $1 billion in worldwide box-office revenue.

Entering its fourth weekend in movie theaters, the movie still has its claws dug into the top spot at the box office as it debuts in China, the world’s second-largest movie market, for this first time. Black Panther should climb past the $1 billion mark this weekend, having reached $940 million in global grosses during the week, including $22.7 million in its opening-day haul in China on Friday. That gave Black Panther the best opening day gross in China for a Marvel movie since 2016’s Captain America: Civil War, which took in over $30 million on its first day in Chinese theaters on its way to grossing a whopping $180 million in that country overall.

Black Panther would also be the first Marvel movie to reach $1 billion since Civil War cleared $1.15 billion two years ago, and the fifth so far from Disney’s Marvel Cinematic Universe. The movie is already the second highest-grossing Marvel film domestically, with its $520 million haul in North America trailing only 2012’s The Avengers, at $623 million domestically ($1.5 billion worldwide), according to Box Office Mojo.

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Black Panther only needs roughly $60 million worldwide at this weekend’s box office to reach $1 billion after pulling in roughly $122 million globally last weekend. Barring a larger-than-expected drop-off, the film should coast past that milestone.

However, Black Panther could still lose its box-office crown this weekend to newcomer (and fellow Disney film) A Wrinkle in Time. Director Ava DuVernay‘s adaptation of the popular young-adult novel of the same name has been highly-anticipated since Disney made her the first-ever black woman to direct a movie with a budget over $100 million. Disney has been promoting the film heavily for months, though its recent mixed reviews from critics could dampen A Wrinkle in Time‘s opening weekend box-office performance. Variety reports that the film is forecasted to gross roughly $35 million domestically this weekend, which may not quite be enough to stop Black Panther from a fourth weekend of dominance.

Broadcom Shares Surge on Reports that Intel is Considering an Acquisition

Shares of semiconductor company Broadcom surged following a report on Friday that Intel is considering an acquisition.

Broadcom’s stock rose 4% in after-hours trading on Friday to $264.21 after the Wall Street Journal reported of Intel’s interest in acquiring Broadcom, which engaged in a hostile takeover attempt of mobile chip maker Qualcomm.

The Wall Street Journal reported that Intel (intc) was pondering an acquisition of Broadcom as one of a number of possible deals to help Intel remain competitive if and when Broadcom (broad) buys Qualcomm (qcom). A combination of Qualcomm and Broadcom would pose a significant threat to Intel.

Intel, which makes semiconductors for data center servers and personal computers, is the larger of the three companies and has a $244.2 billion market capitalization. Broadcom, which makes wireless and mobile computer chips, has a market value of $109.5 billion, while Qualcomm is valued at $93.3 billion.

For the past few months, Qualcomm has been trying to fend off Broadcom’s unsolicited advances and has rejected multiple Broadcom bids, the most recent being for $121 billion, or $82 a share. Qualcomm has said that each of Broadcom’s bids undervalues it and has also cited regulatory concerns.

Earlier this week, the U.S. Committee on Foreign Investment was reported to be considering an investigation of a potential Broadcom takeover of Qualcomm, which prompted Qualcomm to a shareholder meeting until April. While Broadcom is incorporated in Singapore and also operates a co-headquarters in San Jose, Calif., the semiconductor giants plans to reincorporate in the U.S.

Intel shares were relatively flat in after-hours trading on Friday at $51.90.

Intel has acquired a handful of companies over the past few years like chip maker Altera for $16.7 billion and automotive component and sensor provider Mobileye for roughly $15 billion, but a possible acquisition of Broadcom would dwarf those deals.

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Fortune contacted Intel and Broadcom for comment and will update this story if it responds.

Andreessen, others, invest in U.S. digital currency fund

NEW YORK (Reuters) – U.S.-based Multicoin Capital, an asset management firm with a long-term positive view on digital currencies, has raised capital from a slew of big individual and institutional investors led by influential venture capitalist Marc Andreessen, its co-founder and managing partner told Reuters.

Kyle Samani, who co-founded Multicoin Capital last October, said capital raised from investors would help the firm reach a $250-million funding target for its flagship crypto fund, which currently has about $50 million, by the end of the end of June.

Multicoin views cryptocurrencies as a long-term investment, typically three to four years. That’s far longer than the typical horizon of digital currency funds of just a few months.

“What you’re seeing is the next wave of serious investment coming to an exciting, recently-legitimized asset class,” Samani said in an interview late on Wednesday.

Digital currencies such as bitcoin have emerged as a new asset class over the last two years as its underlying technology called the blockchain, an online database, has gained worldwide acceptance from corporations and financial institutions.

Multicoin is one of 225 crypto funds across seven strategy types, with combined assets estimated at $3.5 billion to $5 billion, according to data from Autonomous NEXT. The funds invest in cryptocurrencies, which use cryptography for security.

Aside from Andreessen, who co-founded the Silicon Valley venture capital firm, Andreessen Horowitz, Multicoin’s investors include David Sacks, the first chief operating officer of PayPal Holdings Inc and founder of enterprise social network Yammer Inc, and Elad Gil, co-founder of genomic testing company Color Genomics, Samani said.

Chris Dixon, a general partner at Andreessen Horowitz, and Bill Lee, a partner at Craft Ventures also invested in Multicoin, he said.

Multicoin’s funding reflects a trend in which venture capital partners and investors are turning to crypto funds as individual investors. Most traditional venture capital firms have investor agreements that bar them from deploying cash into high-risk assets, such as digital currencies.

“While there are lots of similarities between crypto investing and traditional startup investing, there are many differences,” Samani said.

“Most obviously, crypto assets become liquid much sooner in their life cycles than traditional private equity,” he added. “In addition to liquidity, everything in crypto is open source, which requires thinking about investing in a fundamentally different way.”

Samani said he believes there could be consolidation in the crypto funds industry, and he expects sub-scale funds to have difficulty surviving.

Reporting by Gertrude Chavez-Dreyfuss; Editing by Peter Szekely

Apple's Swift Programming Language Is Now Top Tier

Apple’s programming language Swift is less than four years old, but a new report finds that it’s already as popular as its predecessor, Apple’s more established Objective-C language.

Swift is now tied with Objective-C at number 10 in the rankings conducted by analyst firm RedMonk. It’s hardly a surprise that programmers are interested in Apple’s language, which can be used to build applications for the iPhone, Apple Watch, Macintosh computers, and even web applications. But the speed at which it jumped in the ranks is astonishing. Swift is the fastest growing language RedMonk has seen since it started compiling these rankings in 2011. Even Go, a programming language that Google released in 2009, hasn’t been able to break into the top 10.

The second fastest grower is Kotlin, which Google now officially supports on Android. It leaped from number 46 in the third quarter of 2017 to number 27 in January.

RedMonk’s rankings don’t necessarily reflect whether companies are using these languages for real-world projects, or how many jobs are available for developers who know them. Instead, the firm tries to gauge how interested programmers are in these languages. Popularity among programmers could influence business decisions such as what languages to use for new projects.

RedMonk compiles its rankings by looking at the number of questions people ask about each language on the question and answer site Stack Overflow as well as the number of projects using particular languages on the code hosting and collaboration site GitHub. The methodology was originally created by data scientists Drew Conway and John Myles White in 2010.

Apple first released Swift in 2014. The idea was not just to make it easier for new developers to learn to program, but to simplify life for experienced coders as well. Many languages over the years have aimed to smooth the programming process by offering syntax that’s easier to read or building in features that programmers otherwise commonly write from scratch. But these sorts of languages often produced applications that ran more slowly than ones written in more difficult programming languages. Swift aimed to combine programmer-friendly features with performance.

Kotlin, which was created by the company JetBrains and officially released in 2016, has similar goals. What sets Kotlin apart is that it’s compatible with the widely used Java programming language, which means programmers can include Java code in their Kotlin programs, or even write new features for Java applications using Kotlin. Kotlin had already received widespread attention from Java developers, but once Google announced full support for the language on Android, interest skyrocketed. RedMonk analyst Stephen O’Grady pointed out in the report that Kotlin’s Java roots could help it find its way into more places than Swift, such as large enterprise applications.

Apart from the big gains for Swift and Kotlin, the RedMonk rankings changed fairly little this quarter. JavaScript and Java remained the two most popular languages, closely followed by Python, PHP, and C#. As O’Grady notes in the report, it’s becoming harder and harder for new languages to break into the top 20. That makes the rise of Swift and Kotlin all the more impressive.

Language Lessons

Amazon’s Echo Speakers Are Spontaneously Laughing—And Users Are Spooked

Amazon is trying to stop its Amazon Echos, powered by the Alexa voice-activated assistant, from suddenly laughing.

The online retail giant told to tech news publication The Verge on Wednesday that it is aware that some Echo Internet-connected speakers have a laughing problem and is “working to fix it.”

Amazon’s (amzn) acknowledgement of the issue comes after several people have reported on Twitter and Reddit that their Amazon Echo speakers have started laughing, for no apparent reason. People typically activate their Echo speakers by saying the word “Alexa,” which triggers the device to listen and respond to commands like changing the volume.

The latest laughing is causing some customers to feel unsettled and confused. Other say it’s spooky, like something out of a horror film.

Although third-party devices like some HP Inc. personal computers and certain modems work with Alexa, the problem appears to be limited to the Amazon Echo and the smaller Echo Dot.

A Reddit user also described problems with the Amazon Echo Dot two weeks ago:

We just added the echo dots two months ago. The dot we have in the master bath has twice now randomly played a track of a woman laughing at about 10 p.m. the first time I thought the fire tv was sending audio through it since I had been trying to sync them up to the tv, but tonight was completely random. No indication on the app that the device heard any command. We had the dot laugh several times and it wasn’t the laugh Alexa produces, but definitely sounded like a canned laugh, not like someone laughing live.

It’s unclear what’s causing the errors and Amazon’s brief statement did not say when the problem would be fixed or if other Alexa-enabled devices are also affected.

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Fortune contacted Amazon for more details and will update this story if it responds.

Google Just Indexed Millions of ‘Life Magazine’ Photos Using Artificial Intelligence

Google has used its artificial intelligence to automatically index millions of photographs from the defunct Life Magazine.

The search giant, which debuted a website for the photo project on Wednesday, said it was able to categorize over 4 million iconic Life Magazine photographs without human help. After clicking on a particular label like “skateboarding,” for example, users are shown photos of people performing skateboard tricks along with Wikipedia’s definition of the sport.

Google uses deep learning technology to help its computers better understand objects like dogs or cats in pictures and make its image search tool more efficient to people wanting to see a particular image.

Compared to the core Google search, the photo project’s website is slow to load, especially when there are thousands of images assigned to a particular label like “road.”

Although Google has hosted a Life Magazine archive since 2008, the new website makes using it easier. Searching Life Magazine’s photojournalism for ballet brings up relevant photos alongside the name of the photographer who took the picture, the title of the photo like “Nutcracker Ballet,” and what in the photo Google’s computers were able to recognize, like a dancer.

Although usually accurate, Google’s technology does have some hiccups that highlight some of AI’s current limitations. For instance, under the “skateboarding” label is a photo that is shown sideways of a man wearing a top hat and holding a cane who is performing what looks like a campy musical number. For unknown reasons, the computers mistakenly thought it saw a skateboard in the image.

Additionally, the computer that created the index has come up with some odd categories that human editors likely wouldn’t have. One such label is “identity document,” which brings up photos of people’s passports and railroad tickets as well as a photo of musician Paul McCartney holding a Grammy plaque. It’s likely the computers saw similarities between a typical document and McCartney’s Grammy plaque, which in this case resembled more of a small, commemorative plate than the conventional 3-dimensional Grammy statue.

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Another label, “concrete,” highlights thousands of photos, some of which appear random. There’s a picture of an old tombstone, a photo of a marine boot camp, a picture of a person hunting a snake in a small enclosure, and a photo of the “Roosevelt Raceway” that shows a man—incorrectly identified by the computer as a fisherman— sweeping. While there indeed seems to be some sort of concrete object involved with each photo, it’s still an unconventional way to group all the pictures together considering they are displaying very different subjects.

In addition to the misidentified photos, the technology also failed to create labels for some obvious topics. They include some of Life Magazine’s most iconic photos.

For instance, the computers did not create a label for the “Vietnam War,” a subject that should include some of Life Magazine’s best known and most powerful photos. The computer did create is a “war” label, but it appears to have grouped over 23,000 photos, making searching for a particular picture difficult.

Cryptocurrencies are risky for consumers, says BoE's Haldane

LONDON (Reuters) – Cryptocurrencies pose a risk to British consumers, though not to the financial system as a whole, the Bank of England’s chief economist, Andy Haldane, said on Tuesday.

FILE PHOTO: A collection of Bitcoin (virtual currency) tokens are displayed in this picture illustration taken December 8, 2017. REUTERS/Benoit Tessier/Illustration/File Photo

“There’s lots of potential risks there, one of which is the danger to the consumer from buying into this stuff,” Haldane said in a BBC television interview.

Bitcoin BTC=, the best known cryptocurrency, soared in value from around $1,000 at the start of 2017 to almost $20,000 in mid-December, before tumbling below $6,000 last month and then staging a partial recovery.

Haldane’s concerns are similar to those expressed by BoE Governor Mark Carney in a speech on Friday, and previously by Britain’s Financial Conduct Authority.

Many global regulators have warned about cryptocurrencies this year and China has banned financial institutions from processing them. Carney said this would be a step too far, given the potential of the underlying technology to improve payments and asset clearing and settlement.

Haldane said the BoE continued to monitor cryptocurrencies, and that at less than 1 percent of total global wealth, they did not pose a big danger to the world’s financial system.

But asked if he would invest in cryptocurrencies himself, Haldane said he was very risk averse, and would not.

Reporting by David Milliken; Editing by James Dalgleish

Pennsylvania Sues Uber Over Data Breach Disclosure

Uber faces more potential legal consequences for waiting to make public a major hack until a over a year after it happened. The Pennsylvania Attorney General filed a lawsuit against Uber Monday for violating the state’s data breach notification law, which says hacks should be disclosed within a “reasonable” time frame. Uber didn’t merely keep quiet about the massive breach; it reportedly paid a $100,000 ransom to the perpetrators in exchange for their silence. And while experts say Uber will likely settle the case, it may be just the latest in a cascade of similar lawsuits.

The stolen Uber data included the names and driver’s license information of around 600,000 drivers—including at least 13,500 from Pennsylvania—as well as data belonging to 25 million users in the US. It impacted over 57 million people in total. “Uber violated Pennsylvania law by failing to put our residents on timely notice of this massive data breach,” Josh Shapiro, the states’s attorney general, said in a statement. “Instead of notifying impacted consumers of the breach within a reasonable amount of time, Uber hid the incident for over a year and actually paid the hackers to delete the data and stay quiet.” Under Pennsylvania’s data breach notice law, the attorney general may seek fines up to $1,000 for each violation, leading to a maximum penalty of $13.5 million for Uber.

Pennsylvania’s joins a growing line of lawsuits against the ride-share company. Both Washington state, and cities including Los Angeles and Chicago filed suits when the breach was first made public by the company’s new CEO Dara Khosrowshahi in November. Two class-action lawsuits were also filed in California days after the breach was first disclosed. Attorneys general from New York, Missouri, and Connecticut have also said they would look into the breach. Forty-eight states, (excluding South Dakota and Alabama) currently have laws on the books regulating how and when a data breach must be disclosed.

“Since starting on this job three months ago, I’ve spoken with various state and federal regulators in connection with the data breach pledging Uber’s cooperation, and I personally reached out to Attorney General Shapiro and his team in the same spirit a few weeks ago. While I was surprised by Pennsylvania’s complaint this morning, I look forward to continuing the dialogue we’ve started as Uber seeks to resolve this matter,” Tony West, Uber’s chief legal office said in a statement. “We make no excuses for the previous failure to disclose the data breach. While we do not in any way minimize what occurred, it’s crucial to note that the information compromised did not include any sensitive consumer information such as credit card numbers or social security numbers, which present a higher risk of harm than driver’s license numbers. I’ve been up front about the fact that Uber expects to be held accountable; our only ask is that Uber be treated fairly and that any penalty reasonably fit the facts.”

The Pennsylvania lawsuit is also the first to cite a Senate hearing in February where John Flynn, Uber’s chief information security officer, testified in front of the Committee on Commerce, Science, and Transportation about the hack. Uber initially said the payment it made to the hackers responsible for the breach was not a ransom, but simply a payout under its existing bug bounty program, a system many tech companies deploy to reward security researchers for bringing vulnerabilities to their attention. But during the hearing, Flynn acknowledged that the agreement made with the perpetrators—as well as the $100,000 payment—were not typical for its bug bounty program, which usually compensates researchers only a couple thousand dollars.

“The fact that this was a multistep malicious intrusion, a downloading of data, and extortionate demands means this wasn’t consistent with the way that [the bug bounty] program normally operates,” Flynn testified. He also said that Uber “made a misstep not reporting to law enforcement.”

William McGeveran, a professor at University of Minnesota Law School who specializes in data privacy law, said it’s possible Uber will settle with Pennsylvania for a fraction of the total $13.5 million fine, and take on commitments to ensure a similar breach doesn’t happen in the future. “In these settlements many times regulators care more about fixing the problem than about being punitive,” says Mcgeveran. But more suits could follow from other states, especially because Flynn’s statements before the Senate committee provide state prosecutors with more evidence to work with.

“Given the alleged facts in this case, it wouldn’t surprise me at all to see more lawsuits,” says Woodrow Hartzog, a law and computer science professor at Northeastern University who studies privacy and data protection issues. “Oftentimes you will have state attorneys general that might even work together if that appears to be the best course of action. They’ll probably be using the facts in this case as an example of how not to respond to a data breach.”

Uber has also already faced disciplinary action from federal regulators twice, once for a separate hack in 2014 that exposed the information of 100,000 drivers, and once for misleading drivers about how much money they could make. The FTC said in November that it was also evaluating the “serious issues” raised by the 2016 breach.

Uber has yet to pay any fines to the federal government, and won’t have to if it makes good on its promises to protect its drivers’ and customers’ privacy. The agreement between the FTC and Uber lasts 20 years. If the FTC decides that the 2016 breach is considered a violation of that agreement, the ride-hailing company could face expensive consequences. In 2012 for example, the FTC fined Google $22.5 million for violating its 2011 settlement.

For now, no federal law exists requiring companies disclose a data breach within a certain time frame. But since nearly every state has a data breach law, Uber could still face a patchwork of further lawsuits. Some lawmakers are also pushing for federal legislation. In December, Democratic senator Bill Nelson introduced the Data Security and Breach Notification Act, which would require companies to report breaches within a month, or face up to five years in prison.

Federal laws punishing companies for failing to notify about a breach wouldn’t necessarily improve protections for consumers, however. “I would be skeptical of the claims that a unified data security protection law are going to provide clarity and better data protection at the same time,” says Hartzog, who has testified before Congress about data breach legislation. “A movement to have a single unified standard among the United States would be seen as an opportunity to water down those requirements.”

State laws also give attorneys general the chance to act if they perceive the Federal Trade Commission to be not aggressive enough. “I think we’re going to see more activity by state attorneys general in privacy and security cases because it’s not clear how much the FTC is going to do under its current management compared to previous,” says McGeveran. “These states have a better argument because they have specific requirements that you notify about a breach.”

Besides, it’s not hard for a major corporation like Uber to juggle multiple state regulations at once, especially because the ones governing breach disclosure mandate the same things. “Many of them are quite similar in their requirements, many of them have the same deference to industry standards,” says Hartzog. It’s far harder to navigate, say, every state’s regulations on taxis.

Uber Issues

Reddit CEO Steve Huffman Acknowledges Users Shared Russia Propaganda

Russian trolls used Reddit to spread propaganda in prelude to the 2016 U.S. presidential election, Reddit said on Monday.

Reddit CEO Steve Huffman said in a post on Reddit that the company removed a “few hundred accounts” from its social media service that it believed were linked to Russian-based entities that had spread misleading information.

Huffman did not identify the groups, but the Daily Beast reported last week that members of the Russia-based Internet Research Agency had spread misinformation on Reddit’s various message boards as well as on Tumblr blogging service. The IRA was one of three Russian groups identified in a recent Justice Department indictment alleging that Russian individuals had spread fake news and propaganda through popular social networking and messaging services like Facebook (fb) and Twitter (twtr) in an effort to exacerbate existing divisions in the U.S..

“As for direct propaganda, that is, content from accounts we suspect are of Russian origin or content linking directly to known propaganda domains, we are doing our best to identify and remove it,” Huffman wrote. “The vast majority of suspicious accounts we have found in the past months were banned back in 2015–2016 through our enhanced efforts to prevent abuse of the site generally.”

Huffman said that there’s not much evidence that Russian trolls bought online ads on Reddit to disseminate propaganda, as they are alleged to have done on Facebook and Google.

“We don’t see a lot of ads from Russia, either before or after the 2016 election, and what we do see are mostly ads promoting spam and ICOs,” Huffman said.

Huffman also said that thousands of U.S.-based Reddit users may have unwittingly promoted Russian propaganda on the service. He cited the fact that these Reddit users endorsed the postings of @TEN_GOP Twitter account, which they thought were linked to a real Republican group but was actually a “Russian agent.”

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“I wish there was a solution as simple as banning all propaganda, but it’s not that easy. Between truth and fiction are a thousand shades of grey,” Huffman wrote. “It’s up to all of us—Redditors, citizens, journalists—to work through these issues.”

The Senate Intelligence Committee now wants more information from Reddit about the possibility that Russia may have exploited the service, the Washington Post reported Monday. The committee also plans to hold a briefing with Tumblr, the newspaper said citing an unnamed source.