These Subtle Psychological Hacks Keep Japan’s Trains Running Smoothly

Japan’s trains, including local commuter systems and longer-distance routes that span most of the country, are frequent objects of admiration for their speed, efficiency, and almost excessive timeliness. The system’s overall effectiveness depends in large part on Japan’s unique geography and some very smart alignment between transportation and real estate planning. But on a day-to-day (or minute-to-minute) basis, some fascinating psychological tricks also help keep things running smoothly.

According to CityLab, Japan’s trains rely heavily on so-called “nudge theory,” or small signals that almost unconsciously influence riders’ behavior, keeping foot traffic moving smoothly through crowded stations. These go well beyond the basics of clear boarding indicators, well-designed maps, and fully audible announcements—which too many U.S. transit systems already have trouble executing.

For example, Japanese train systems use calming melodies to signal departures instead of harsh buzzers, which studies have shown prevent injuries by keeping passengers from rushing. Slightly more Machiavellian is the use of ultrasonic sound, inaudible to older passengers, to disperse crowds of potentially disruptive teenagers.

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The use of subtle nudges also extends to train operators, who are expected to gesture with their hands and state any intended action out loud. That increases mental engagement and decreases operating errors.

Much more serious is the use of calming blue lights on certain parts of platforms, which have been shown to reduce suicide attempts by people jumping in front of trains. Suicide in general is a major social problem in Japan, and suicides by train also cause frequent, serious disruptions to the otherwise smoothly operating system.

Preventing small or large disruptions is crucial to the efficient functioning of mass transit—just ask any New Yorker who has ever boiled with rage when new passengers cram into a subway car without letting exiting riders off first. But for American supporters of mass transit, such refinements may take a back seat to the chronic underinvestment that has left systems including the New York subway and Amtrak an increasingly unsafe and inefficient mess.

I Haven't Eaten for 3 Days and It's Amazing

I love food, but I have eaten nothing and drank only water for the past 72 hours.


Partly because I kept hearing from friends and the media that they enjoyed fasting. Since swimming across the Hudson River, I’ve shifted my life from analyzing and planning–what decades of school taught me to do–to experimenting.

I’ve found experimenting improved my life more so I keep practicing.

My motivation

The 4 main appeals to me of a 3-day fast were

  • New experiences: A friend told me day 3 of his 3-day fasts made him feel amazing and I wanted to experience it.
  • Delicious: Many sources told me the first meal after a long fast tasted indescribably amazing. I love food and I love delicious, so I wanted to experience what could only come this way.
  • Curiosity: I grew up hearing of one-day fasts were very hard–I thought bordering on impossible. My hunger overwhelmed me skipping one meal.
  • Vanity: I won’t lie. As I’ve become more fit I’ve found I enjoy the definition on my abs.


Many people claim fasting gives health benefits. I don’t believe any of the health claims from people saying it detoxes, extends life, or similar claims. I don’t disbelieve them. I just don’t find their evidence compelling.

I enjoy watching many videos and reading many posts by people saying they could feel the toxins exiting their bodies and such, but I found this WebMD post, Is Fasting Healthy, most compelling, which said most evidence was inconclusive.

I did find their subjective descriptions of their experiences compelling.

They also made me not afraid of taking a risk with their diversity in age, sex, fitness, and every measure that seemed relevant. Many drank only water for a week or more.

How hard could 3 days be?

One man didn’t eat for over a year, though under medical supervision and he took supplements, just not macronutrients. He started at 456 pounds and my body fat is probably in the low teens, so I have less spare fuel, but I found people with less body fat than me enjoyed their experiences.

The idea seemed mind-blowing

I grew up thinking that 1-day fasts, which people do for religion all the time, were nearly impossible. Hearing that people drank only water for days and weeks seemed impossible.

I’ve learned that believing something is impossible that people do means my belief is wrong. It points to an opportunity for growth.

I get hungry after a few hours. How could I make 72 of them?

A 24-hour test

Hearing random people doing 3 days, I tried one day a few weeks ago. It turned out easy.

I felt shockingly unremarkably normal. Most of the hunger and temptation passed. I was used to hunger subsiding on a few-hour scale. It ebbed and flowed over 24 hours, but no steady rise.

Then I looked for a 3-day period without obligations and before my summer farm share deliveries began on June 5. From then until Thanksgiving, the deliveries flood me with vegetables and fruit too delicious to let go to waste.

It was difficult to find time without food-related activities or other occasions I didn’t want to risk having no energy for. The holiday weekend gave me freedom.

My 72-hour results

It was easy! That it was even possible seemed unbelievable a couple months ago.

I became conscious of many mindless eating patterns.

I became enabled to act against mindless eating habits. I thought I was helpless about many of them. I’m not.

The motivational and emotional skills underlying eating habits underlie many habits. I’m now aware and starting to become experienced in developing and using those emotional skills. I expect I can apply them throughout life.

Hunger passes, though not as much as the videos and posts I read said. Many hours would pass without me noticing I hadn’t eaten in a while.

Since I think about food a lot when I’m eating normally, I’d estimate that I thought about the same or maybe less about food while fasting.

I went outside more. I love eating and my kitchen has delicious food in it, so I decided to go outside more. I got plenty of work done and enjoyed the beautiful weather. I didn’t miss the time I missed in front of a screen.

Not much fat loss. I don’t have a scale or calipers, so I haven’t measured with tools so I’m just gauging by pinching around my belly button and looking in the mirror. My skin feels thinner and my abs show more definition, but not that much difference.

Not much muscle loss. I continued my twice daily burpee-based calisthenics unchanged (3×9 sets of burpees, stretches, and exercises for abs, back, and arms). They make me sweat and out of breath all the time. I wasn’t sure if I’d be able to continue them, but I didn’t have to reduce them at all.

The big results

I experienced that it’s not that big a deal.

Why is it not being a big deal my big result?

My horizons were constrained by inexperience. Experience expanded my horizons and therefore my abilities.

I felt helpless to resist food for even one or two meals before. I could do it, but it felt hard.

I just skipped 9 meals and could go longer. I’m more able than I thought. I found I can sit around food for days and choose not to eat it with zero problems.

The skills and abilities that I applied to fasting I can apply to anything requiring similar skills, which exist everywhere in life, not just food.

It reinforced how life-changing activities are under my nose all the time. I found that trend in getting rid of stuff, swimming across the Hudson, performing on stage, trying open mike stand-up comedy, and so on.

I didn’t have to fly to India, jump out of a plane, or even leave my neighborhood.

It cost me zero in time, money, or other resource. I saved money and gained productivity, actually.

Will I do it again? Probably every now and then. I entered this time full of anxiety, which I expect will decrease in future times.

FBI Says You Should Reboot Your Home Office Router to Stop Russian Malware

The U.S. Federal Bureau of Investigation recommended in a Friday statement that “any owner of small office and home office routers” reboot the devices, hopefully reducing their exposure to a widespread malware attack linked to Russian government actors. The FBI has reportedly seized a server used to escalate the infection, making rebooting an effective way to disable it.

A Cisco cybersecurity team said on Wednesday that at least 500,000 routers in 54 countries were impacted by the malware, known as VPN Filter. The software reportedly targets consumer-level routers used in home and small offices, and is able to both monitor local traffic and even wipe the routers, destroying them and cutting users off from the internet. Routers from Linksys, Netgear, TP-Link, and MikroTik were reportedly vulnerable – though again, the FBI is recommending rebooting all small or home office routers.

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According to reporting by The Daily Beast, VPN Filter is a product of a group known by names including “Sofacy Group” and “Fancy Bear.” The same group was allegedly responsible for the hack of emails from the Democratic National Committee and the Hillary Clinton campaign in 2016, and has been strongly linked to the Russian government.

According to Ars Technica, the VPN Filter malware is “one of the few Internet-of-things infections that can survive a reboot,” because a persistent first stage of the infection can use automated remote systems to install or re-install its second or third stages.

The FBI’s seizure of one of those remote systems, hosted at the ominously-named domain, means the attackers will likely have to use a much more labor-intensive method to re-infect devices after they’re rebooted. Rebooting will also, according to a Department of Justice statement, help the government teams “identify and remediate the infection worldwide,” apparently by tracking communications sent by infected devices after they’re rebooted.

How to Make the Most Out of That Summer Trip You're Planning on Taking

Summer is (pretty much) finally here. The sun is staying out later, the air is warmer, and it seems like every other day someone else is out of the office.

I get to travel often for work, and like anyone else, I love my vacation time–especially when it involves taking a trip. Both experiences can be overwhelming if you don’t have a game plan.

Whether you’re making a couple of pit stops en route to a client visit, saving a few extra bucks with a simple day trip or splurging on a big trip to celebrate some Q2 successes, these tips will help you maximize your vacation for the richest experience. You can apply them to a business trip, or a true vacation.

1. Plan ahead, at least a little.

I know, I know–there’s something magical about traveling, especially to a new place, and deciding you’re just going to “wing” it, or figure things out as you go along. While this can fun, it’s also an easy way to let a day slip away.

Maybe an activity you decide to do requires booking in advance, or the easiest way to get anywhere is with the city’s public transportation. The point is, you want to have some sort of idea of what you’ll be doing.

Before I take a trip, I try to talk to anyone I know who’s been where I’m going and see what suggestions they have. This allows me to learn more about my co-workers or clients and their travels (and allows us to trade stories upon my return).

I also get a general idea of what goes on in the area, and what opportunities might be available to me. People will usually offer logistical advice, too, which is super helpful in avoiding any last-minute hiccups.

2. But–be prepared to think on your feet.

Ever been to an improv show? When they’re great, they’re hilarious.

When things are going haywire–the jokes aren’t landing, people are messing up–true improvisers don’t get fazed. That’s because they, much like entrepreneurs, can think on their feet.

There’s no time like a vacation to put your improv (or problem-solving skills, if you prefer) to the test. Even if you plan things down to the T, something is going to go wrong.

That’s not always a bad thing–it opens you up to a new opportunity. Instead of getting discouraged when things don’t go as planned, let your entrepreneurial spirit shine through, and be ready to take action.

3. Eat the food.

Between jet lag and long days in the sun, it can be easy to just settle for something familiar when it’s meal time. But think about it: If you’re traveling, you likely have to eat out anyway.

You might as well take advantage of the excuse to enjoy some local fare. Apps like Google Maps and websites like The Infatuation are life savers for figuring out the best way to eat your way through the local cuisine.

If your travels are business-related, trying new foods can be a great way to bond with clients or investors. 

4. Let yourself be a tourist.

Living in New York, I’ve become desensitized to Times Square. It’s loud, it’s crowded, I’ve seen it before, and I can go there whenever I want (which is pretty much never). Still, it’s fascinating to see the people who come from all over the world to take a photo in front of M&M world or visit the Hard Rock Cafe.

Cheesy to me, sure. For them, it’s magic, and that’s beautiful.

If you’re traveling somewhere with a popular or historic landmark, go see it. You’ll feel silly if you miss out just because you “didn’t want to be a tourist.” At the very least, having seen these spots means you can add something to a conversation about travel, which is everyone’s favorite topic–especially in the summer.

5. Write things down.

We’re lucky enough to live in the era of smartphones, which means that we have the power to document anything at any time. But sometimes, a quick pic on your phone isn’t the most effective way to create a tangible memory.

Bring a journal and write down what you did at the end of each day. Having a written memory of your trip, in your own words, is a lot more special.

You can talk about the high points, the low points and the little details. A photo of you smiling at the museum is nice, but it doesn’t tell the whole story of your experience. Those details are what you will want to look back on and remember, and who knows–revisiting them in the future may spark an idea or two. 

'Battlefield 5' Will Likely Struggle Against 'Red Dead Redemption 2' And 'Call Of Duty: Black Ops 4'

Credit: EA/Dice

Battlefield 5

I feel like there’s a lot to like about Battlefield 5, the latest in the large-scale war simulator from EA and DICE. And yet yesterday’s reveal event was a strange thing, even with the hosting skills of The Daily Show’s Trevor Noah. It was light on gameplay and ended with a confusing reveal trailer, leaving journalists who saw the game at length scrambling to explain that no, in fact, Battlefield 5 is actually cool. This is not a great position to be in.

You only get one chance to make a first impression, and I worry about its chances, particularly considering what it’s up against. It comes right after Call of Duty: Black Ops 4 and right before Red Dead Redemption 2, and it could easily get lost in the shuffle. That’s what happened to Titanfall 2, one of my favorite shooters in the recent years–that was an even tougher loss because it lost to internal competition.

It’s a tough thing, because this assessment doesn’t have much to do with Battlefield 5 itself. Despite a somewhat confusing reveal, there seems to be a lot of interesting work going on here. The idea of telling months-long stories through the Tides of War system is intriguing, as are the large-scale, multi-match conflicts in Grand Operations. The addition of co-op mode is intriguing, as is some of what we’ve heard about destruction and construction. The game is pushing the squad more than ever, which could give some much-needed organization to the somewhat chaotic clashes in Battlefield 1.

Note: There’s also some sexist rage against the inclusion of women in the game, despite the fact that plenty of women served in World War 2, many of them in the sorts of special forces and resistance settings this game seems to be highlighting. I don’t expect that to matter much in the fall. 

But that doesn’t mean Battlefield 5 won’t struggle. Battlefield 1 had a powerful hook and a mean launch trailer–it was a game set in World War 1, something nobody had seen before on this scale. It was brutal, fresh and a welcome change from Call of Duty’s sci-fi streak. The reveal was as weird as the Battlefield 5 reveal yesterday, but the trailer was more than enough to carry the day.

Battlefield 5 doesn’t have that hook. It takes place in World War 2, a conflict that we’ve seen before, we’ve guns and weapons we’ve fired in tons of games over the years. Last year it was a conflict we hadn’t seen in a long time, but Call of Duty: WW2 means that the FPS fans of 2018 have likely spent their time with an M1 Garand in recent months. The gameplay is apparently evolving in interesting ways, but those will likely be interesting only to Battlefield’s core audience: communicating to a wider audience is going to be tough.

Which brings us to the competition. Red Dead Redemption 2 is the sort of event that’s been anticipated by millions for years, and will dominate the conversation before and after its release. Call of Duty is a stronger franchise than Battlefield, and while Black Ops 4’s decision to include a battle royale mode might be a clear case of following the trend it’s still a smart move that will generate interest. Call of Duty and Battlefield are both well-established, older franchises, and that means they can have a harder time kicking up excitement for annual or bi-annual releases without a big head-turning hook. Battlefield 5 doesn’t have something like that, and so I worry. If it’s a truly excellent game it can still pick up steam in the long-run. But you only need to look as far as Titanfall 2 to see what some confusing messaging and bad release timing can get you.

3 Simple Steps A Small Home Builder Used To 'Datafy' His Business

trait2lumiere / iStockphoto

Home building doesn’t have to be inefficient and based mostly on guesswork–one builder figured out how data could drive it forward.

In 2009, Jason Adams wasn’t sure what he was going to do. The thirtysomething entrepreneur based in Bend, Oregon had built up a successful land development business. Real estate was in his blood. His mother had been a real estate agent for nearly 35 years, and his stepfather had spent the greater part of his life working in property management. After a meteoric rise in home values in the retirement and recreation community situated in central Oregon, Bend was hit hard when the housing market crashed in 2008. It experienced some of the fastest depreciating property values in the country.

Leslie Renaud

Jason Adams, President / CEO of Arbor Builders (Bend, OR)

Under these tough circumstances, Adams watched 90-95% of his fellow real estate speculators leave the market. Many of them declared bankruptcy, some fled the country to escape their creditors, and a few, sadly, even chose to take their own lives. As he stared at his own heavy debts, Adams knew what his attorney would recommend—declare bankruptcy and move on. However, Adams felt a strong commitment to his hometown and felt duty bound to pay back his loans.

After buying and selling foreclosures to stay afloat, in 2010, he noticed there were only one or two builders still left to serve the local residential market in Bend. After he was asked to build a new home that year, he was pleasantly surprised when he built three more houses the next year and then 11 more homes the following year. Before he knew it, he had unintentionally become a home builder, the CEO of Arbor Builders. As a relative newcomer to this industry, he met with other builders to learn from their experiences and hear their frustrations. Adams realized, “I was just beginning to feel some of the same pain, and I knew it was only going to get worse as I added more zeroes.” He knew the longer he waited to address the problems–such as margin management, cashflow planning, construction scheduling, and so on–the harder they would be to fix. Adams decided to turn to a new building tool—data—and it quickly gave him a competitive advantage.

Creating a data-driven construction business

For decades, the home building industry has operated the same way—highly inefficiently and based on a lot of guesswork. Adams found many seasoned builders were resistant to new approaches and ideas, especially involving technology and data. When the housing market is booming, it is easy to mask efficiency issues. However, as the housing industry becomes increasingly expensive—both in terms of inputs (materials, land) and outputs (housing prices)—mistakes are going to prove more costly. Adams felt strongly that builders who became more efficient would stay in business, those who don’t won’t survive.

Facing this industry-wide efficiency challenge, Adams had a “pure need and hunger to do something different.” When he looked at his smartphone, he was able to see all of his sports and news information in one place. He could get all kinds of insights into what was going on in the world, but he couldn’t do the same for his own business. If he could get the latest college football scores on his phone, why couldn’t he check his phone for the status of various housing projects? To achieve this goal, Adams was determined to “datafy” everything within his construction business by following three key steps.

Step 1 – Centralize intelligence

When Adams looked at his 12 different systems for accounting, purchasing, scheduling, sales and so on, the data was fragmented. Each system had its own reports and separate login, which meant he was lucky if he accessed each system more than once a month or quarter. He quickly recognized the need to have a mobile-friendly, cloud-based platform where he could aggregate all of his data in one place (Domo). After hiring a friend with more technical expertise, Adams was able to get a robust, strategic data foundation in place. They were also able to fill annoying data gaps across the various data systems. In multiple instances, Adams found they could add supplemental data directly into his cloud-based data platform in a more agile manner than routing it through his existing business applications. For example, his purchasing tool vendor took 15 months to address a feature request for a simple checkbox. Rather than waiting for slow-moving vendors, his agile technical team has built out more than 200 Box connectors to provide a more comprehensive view of business performance.

Tesla shares poised to rise after 'fever pitch' of bad news: analyst

SAN FRANCISCO (Reuters) – Immaterial negative news stories about Tesla Inc have hit a “fever pitch”, and the electric carmaker’s stock is set to surge as output of its Model 3 sedan improves, according to an analyst.

FILE PHOTO: A Tesla dealership is seen in West Drayton, just outside London, Britain, February 7, 2018. REUTERS/Hannah McKay/File Photo

Baird Equity Research analyst Ben Kallo, in a note on Wednesday, said reports about factory accidents, employee turnover and production pauses have contributed to investor pessimism, but that sentiment would recover as the company fixes factory bottlenecks and increases output of its Model 3.

“Sentiment is as negative as we have experienced around Tesla, and we want to lean into the fever pitch,” wrote Kallo, one of nine analysts who recommend buying Tesla’s stock, according to Thomson Reuters data.

He called the substantial rise of negative Tesla headlines over the past month “increasingly immaterial.”

Another eight analysts recommend selling Tesla, and nine have neutral ratings.

Shares of Tesla remain down 9 percent since the Silicon Valley company reported quarterly financial results on May 2, when Chief Executive Officer Elon Musk refused to answer questions from analysts about the electric vehicle maker’s capital requirements, saying “boring, bonehead questions are not cool.”

Musk has repeatedly missed targets for Model 3 production, which Tesla is banking on to establish itself as a mass market seller of electric cars. Tesla’s stock has lost over a quarter of its value since closing at a record high last September.

A series of fiery Tesla car crashes and executive departures have also worried investors.

After Consumer Reports said on Monday that the Model 3 had “big flaws”, including braking slower than a full-sized pickup truck, Musk responded on Twitter that Tesla would fix the car’s braking system with a software update.

Tesla’s stock was off 0.1 percent on Wednesday at $274.65.

The mean analyst price target for Tesla has dipped to $289 from $326 a month ago. Kallo’s target of $411 is about 50 percent higher than Wednesday’s price.

On Tesla’s recent quarterly results conference call, Kallo commented that the flow of negative news stories about Tesla was making it difficult for even “believers” to own the company’s stock. Musk responded that investors worried about volatility should steer clear of Tesla’s shares.

Reporting by Noel Randewich; Editing by Bill Berkrot

Macron tells global tech CEOs: 'There is no free lunch'

PARIS (Reuters) – French President Emmanuel Macron told executives from the world’s biggest technology firms that he believed in innovation but that he wanted tougher regulations and for them to contribute more to society.

FILE PHOTO: French President Emmanuel Macron speaks during the presentation of the French government’s plan for the country’s most deprived areas, at the Elysee Palace in Paris, France, May 22, 2018. Ludovic Marin/Pool via Reuters

The French leader paints himself as a champion of France’s plugged-in youth and wants to transform France into a “startup nation” that draws higher investments into technology and artificial intelligence. He is also spearheading efforts in Europe to have digital companies pay more tax at source.

In a sign of the former investment banker’s pulling power, Macron’s guestlist at his “Tech for Good” summit included Facebook Inc (FB.O) Chief Executive Mark Zuckerberg, IBM’s (IBM.N) Virginia Rometty, Intel Corp’s (INTC.O) Brian Krzanich and Microsoft Corp’s (MSFT.O) Satya Nadella.

“I believe in innovation and at the same time in regulation and working for the common good,” Macron told a press conference with Rwandan President Paul Kagame, another invitee who embraced digital technology as he engineered his country’s post-genocide economic revival.

Macron has talked about wanting France to be a world leader in artificial intelligence and ‘deep-tech’.

His youth, energy and enthusiasm for start-up companies, innovation and artificial intelligence have caught the attention of international funds and international entrepreneurs, players in the start-up space say.

A former train station now hosts Europe’s largest start-up incubator, which houses venture capital, private equity and other early-stage investors, as well as partners such as Facebook and Microsoft, too.

But as some of the world’s biggest corporate hitters lined up on the Elysee Palace steps ahead of lunch, Macron said: “There is no free lunch. So I want from you some commitments.”

As Macron spoke, IBM announced it would hire about 1,400 people in France over the next two years in the fields of blockchain and cloud computing.

Ride-hailing app Uber [UBER.UL] also said it planned to offer all its European drivers an upgraded version of the health insurance it already provides in France in a drive to attract independent workers and fend off criticism over their treatment.

Beyond a tax on the revenues of digital giants, Macron wants technology companies to get tougher on data protection and fake news. So far progress on those fronts has been elusive.

Macron held one-on-one talks with Zuckerberg, telling reporters beforehand that he would seek “commitments” from the Facebook boss a day after he faced questions from European Union lawmakers on data privacy.

“France is in favor of tough regulation and this event won’t change that,” Macron said. “I’m not here to absolve anyone of their sins.”

Zuckerberg left the Elysee without talking to reporters.

On Tuesday, he sailed through a grilling from EU lawmakers about the social network’s data policies, apologizing to leaders of the European Parliament for a massive data leak but dodging numerous questions.

Additional reporting by Richard Lough, Michel Rose, Gwenaelle Barzic and Jean-Baptiste Vey; Writing by Richard Lough; Editing by Mark Potter and Toby Chopra

Consumer Reports to retest Tesla Model 3 after brake fix

(Reuters) – Consumer Reports said Tuesday it will retest brakes on Tesla Inc’s new Model 3 sedans after Chief Executive Elon Musk promised a software update, but the potential hit to sales from the magazine’s negative review weighed on Tesla stock.

FILE PHOTO: A Tesla Model 3 is seen in a showroom in Los Angeles, California U.S. January 12, 2018. REUTERS/Lucy Nicholson/File Photo

A review by the influential magazine on Monday said the car, despite many positives, had “big flaws,” including braking slower than a full-sized pickup truck. That criticism adds to headaches for Musk, already facing pressure over a series of crashes, production issues, and the company’s finances.

“If Tesla can update the brakes over the air – an industry first – we’d be happy to retest our Model 3,” said Jake Fisher, Consumer Reports’ director of automotive testing.

In mass-market mid-sized cars, vehicles recommended by Consumer Reports account for over 80 percent of the category’s sales volume, Barclays analyst Brian Johnson wrote in a client note.

Musk in a tweet late on Monday acknowledged the brake issue and said that the magazine’s tests had used two early versions of the car before improvements had been made.

FILE PHOTO: A Tesla dealership is seen in West Drayton, just outside London, Britain, February 7, 2018. REUTERS/Hannah McKay/File Photo

“Looks like this can be fixed with a firmware update,” Musk tweeted, saying Tesla aimed to roll out a solution a few days. “With further refinement, we can improve braking distance beyond initial specs.”

Musk said he would ask Consumer Reports to retest using a more recently built car.

The Silicon Valley company uses so-called “over-the-air updates” (OTAs) to send software fixes and improvements to its cars.

FILE PHOTO: Elon Musk listens at a press conference following the first launch of a SpaceX Falcon Heavy rocket at the Kennedy Space Center in Cape Canaveral, Florida, U.S., February 6, 2018. REUTERS/Joe Skipper/File Photo

Tesla stock, down more than $100 a share since September, fell 3.5 percent to $274.67 on Tuesday. The shares had finished almost 3 percent higher on Monday, helped by news of plans to deliver higher-priced, more profitable versions of the Model 3.

The Model 3 began production in July, but the rollout has been hampered by production bottlenecks. The company now plans to build 5,000 vehicles per week by the end of June.

Musk said the variability in stopping distance was due to a braking system calibration algorithm and could indicate some Model 3s took longer to stop than others.

“If so, we will address this at our expense. May just be a question of firmware tuning, in which case can be solved by an OTA software update.”

Tesla has had a fraught relationship with Consumer Reports in the past. A year ago, the magazine pulled its top ranking for Tesla’s flagship Model S sedan due to the automaker’s failure to install an emergency braking feature, but later reinstated it after Tesla performed an OTA to add that feature.

The magazine also did not recommend Tesla’s Model X SUV, calling it “more showy than practical.”

Neil Saunders, managing director of consumer research house GlobalData Retail, said the braking reports would not deter Tesla fans, “it might raise doubts among the more casual buyer.”

Reporting by Sonam Rai and Vibhuti Sharma in Bengaluru; Writing by Alexandria Sage; Editing by Patrick Graham and Nick Zieminski

Capturing Humor in a Sea of Red Tape

When Ole Witt showed up at the police department in Jaipur, India asking if he could take some pictures of the office, an official in charge told him it would be no problem—Witt would just need to wait a few minutes. Until then, he could take a seat. Maybe have a chai.

“In the end,” Witt says, “He made me wait 14 hours.”

Thankfully, that impressive display of slow-moving bureaucracy was precisely what Witt had come to photograph. He was shooting Help Desk – Random Acts of Administration, a humorous series that visualizes the red tape for which the country is notorious. It was only natural that it would take time. “I needed to be really patient,” he says.

Studies have dubbed Indian bureaucracy among the worst in Asia, with India ranking 100th out of 199 countries on the World Bank’s Ease of Doing Business Indicator. It’s a legacy of the colonial era, when the British Empire appointed bureaucrats to oversee its affairs. Prime Minister Narendra Modi vowed change when he took office in 2014, soon launching the Digital India campaign, which aims to make more government services available online. He also ordered the country’s 3.6 million civil servants to tidy up their offices, sending truckloads of decaying files, furniture, and computers to the dump. But the struggle continues. “When you’re there, talking to Indian people, it’s something everyone has stories about,” Witt says. “It’s a big part of their daily lives.”

And Witt is no stranger to bureaucracy, either: He hails from Germany. Back home, he says, it hides behind the cool veneer of clean, sterile offices. In India, not so much. But it’s still the same thing. “People are united by this insanity,” he says.

He learned this after traveling to Ahmedabad, Gujarat, to study at the National Institute of Design in 2016. The school told him to register his stay with the police department, and he tried: zigzagging from cluttered office to cluttered office and filling out the same form a dozen different times. It took a week before someone told him he didn’t need to register at all—his trip was too short.

That debacle inspired Help Desk. Witt visited 14 governmental offices in three states unannounced, asking the first semi-official-looking person if he could photograph the place. Sometimes a friendly bureaucrat might give him a tour, but he still had trouble understanding what went on at each place. “People were really busy,” he says, “pretending to be busy.”

The sheer amount of paper overwhelmed him, but Witt pressed on. His flash photos depict offices jam-packed with the ratty wreckage of drivers’ licenses renewed, properties purchased, and other laborious transactions—some dating back to the 1960s. “I asked what they were going to do with all these things and couldn’t really get an answer for it,” Witt says.

For that, he would have to wait.

More Great WIRED Stories

IBM adds deduplication to Spectrum Virtualize, and Storwize arrays

After long professing the uselessness of data deduplication, IBM has announced that it will integrate the technology into its software-defined Spectrum Virtualize and StorWize storage arrays. This mirrors a move by Dell EMC, which recently did the same for its Unity and VMax arrays.

After stating for some months that data deduplication had little use and that only compression was needed in its storage arrays, IBM has announced that inline deduplication will arrive in Spectrum Virtualize v8.1.3 and in most of its systems powered by that software (formerly SAN Volume Controller) at the beginning of June.

Until now, the only IBM storage system to incorporate deduplication in the IBM portfolio has been the FlashSystem A9000, which runs software based on IBM’s XIV technology.

The list of IBM storage arrays supported includes FlashSystem V840 and V9000, part of the StorWize range – the V50x0 and recent v7000 models and their all-flash versions, in which controllers have the performance to support the technology – as well as the VersaStack converged platforms.

With data deduplication technology integrated with Spectrum Virtualize’s code, the 440 systems that the storage virtualisation platform can support will now benefit indirectly.

Spectrum Virtualize needs a minimum of two controllers, with a choice of servers that includes Lenovo x3650 M5 or nodes from SuperMicro SYS-2028U-TRTP+ and with Xeon E5 v3 or v4.

IBM says no additional software licensing is required to deploy data deduplication.

Speaking to a colleague from, IBM storage marketing director Eric Herzog said the launch of data deduplication in Spectrum Virtualize and other IBM storage products came with a guarantee of data reduction rates of 5:1.

The caveat to that guarantee is that to benefit, the client must allow IBM to carry out an analysis on its existing datasets. At a minimum, IBM guarantees an “express” reduction rate of 2:1 without prior analysis.

Reinforcing cloud analytics tools

Catching up with the competition, Big Blue has also unveiled an improved version of Spectrum Control Storage Insights.

Cloud Storage Insights is aimed at providing information for telemetry, planning, monitoring and system health analysis via a single console.

The tool is intended to help customers evaluate their needs in terms of capacity, to control their storage budget and simplify systems.

All the array makers have collected data from installed systems for some years, but it was Nimble, with infoSight, that pioneered the idea of using data collected to improve customer support and deliver advanced analytics on system usage.

Since then, HPE has extended InfoSight to its 3Par arrays, while Dell EMC (Cloud IQ), Pure Storage (Pure1) and NetApp (Active IQ) have launched similar functionality.

Cloud Storage Insights supports a number of IBM storage systems, including the DS8000, Storwize V5000, V5030F, V7000 and V7000F, FlashSystem 840, 900, V840, V9000, A9000, A9000 and A9000R, Spectrum Virtualize, XIV Gen 3 and VersaStack.

The free version of the service supports storage system monitoring of IBM block storage, with “call-home” events, four measures of capacity, three measures of performance, 24-hour data history, event filtering, event history and ticket history.

The Pro version costs $257 a month per 50TB and adds functionality such as monitoring non-IBM storage, as well as file and object storage.

The Pro service also offers more than 35 measures of capacity, more than 100 measures of performance, two years of data history, alerts when best practice is violated, customisable alerts, cost analysis, tiering optimisation and capacity optimisation.

Improved Spectrum Virtualize for the cloud

Besides support for data deduplication, IBM has also improved Spectrum Virtualize on the public cloud.

The software made its debut in the cloud in autumn 2017. Its latest version supports deployments up to four virtual pairs and installation is simplified. Bandwidth has improved by nearly 20%.

With these improvements, IBM wants to enable customers to deploy its technology in the cloud for primary storage or for disaster recovery.

IBM has also said it is working on an update to its scale-out file storage Spectrum NAS to allow it to be deployed in VMware virtual machines. The product, built on Compuverde code, has only been supported up to now on physical servers, although that limitation does not apply to the version sold by Compuverde.

Tesla shares hit by Consumer Reports criticism

(Reuters) – U.S. consumer bible Consumer Reports stopped short of recommending Tesla Inc’s (TSLA.O) Model 3 sedan on Monday, criticising the car for its braking and taking the shine off a day of gains for shares in billionaire Elon Musk’s venture.

The Tesla Model 3 is displayed during a media preview of the Auto China 2018 motor show in Beijing, China April 25, 2018. REUTERS/Damir Sagolj

Musk had driven shares in the electric carmaker 4 percent higher with a weekend twitter discussion which showed the company was aiming initially to deliver more profitable and higher-priced fully-loaded editions of the Model 3.

The car, which starts at $35,000, is seen as crucial to Tesla’s profitability at a time when it is battling reports of crashes involving its vehicles, questions over funding and production shortfalls. Musk said the fully-loaded version, excluding its vaunted autopilot feature, retailed at $78,000.

Consumer Reports, however, declined to recommend the Model 3 and criticised it for having overly-long stopping distances and difficult-to-use controls.

The magazine, whose scorecard is influential among consumers and industry executives, said even though its tests found plenty to like about the Model 3 and it was a thrill to drive, it had “big flaws”.

Tesla’s stopping distance of 152 feet when braking at 60 mph was far worse than any contemporary car tested by the magazine and about seven feet longer than the stopping distance of a Ford (F.N) F-150 full-sized pickup.

Responding, a Tesla spokesperson said: “Tesla’s own testing has found braking distances with an average of 133 feet when conducting the 60-0 mph stops using the 18” Michelin all season tire and as low as 126 feet with all tires currently available.

“Unlike other vehicles, Tesla is uniquely positioned to address more corner cases over time through over-the-air software updates, and it continually does so to improve factors such as stopping distance.”


Research firm Berenberg also gave Tesla a boost on Monday, raising its price target for shares to $500 from $470 and arguing that the company’s margin targets for the Model 3 were now reality and not just a hope.

The research house’s earlier forecast was already the most bullish on Wall Street and is now more than $200 above the stock’s price, which has fallen $100 from September’s peak.

Musk, whose refusal to answer analysts’ questions on a call this month also hurt company shares, said in his weekend tweets that Tesla had to focus first on delivering Model 3s that were priced higher than the $35,000 basic model, or it would “die”.

“Cost of all options, wheels, paint, etc is included (apart from Autopilot). Cost is $78k. About same as BMW M3, but 15 percent quicker & with better handling. Will beat anything in its class on the track,” he tweeted.

“With production, 1st you need achieve target rate & then smooth out flow to achieve target cost. Shipping min cost Model 3 right away wd cause Tesla to lose money & die. Need 3 to 6 months after 5k/wk to ship $35k Tesla & live,” Musk added.

He gave no details on the parameters or sources of the tests which showed the lead over BMW and other cars, and the company did not immediately respond to questions about the statistics.

On Friday, proxy adviser Institutional Shareholder Services (ISS) backed a shareholder proposal to separate Musk’s current chairman and CEO roles, suggesting that shareholders would be better served by having Musk focus on running the company..

Reporting by Vibhuti Sharma and Sonam Rai in Bengaluru; editing by Patrick Graham

Charging Electric Scooters Is a Profitable, Fun—and Occasionally Dangerous—Youth Trend

The newest big trend in tech startups is in turn fueling an emergent youth culture, as teenagers and young adults spend their free time collecting and charging electric scooters. Some compare it to a game—one that they’re getting paid pretty well for playing, but also comes with some real-world risks.

As reported by The Atlantic, the part-time gig is sometimes called ‘Bird hunting.’ That name comes from Bird, the most prominent company in a wave of new “dockless” scooter and bike rental startups, which use smartphone apps to both rent and track light vehicles.

The systems offer a potentially innovative solution to urban transportation, particularly what’s known as the “last mile” problem: how to get users of public transit from stations to their doorsteps. Because they can be dropped off anywhere, the rental vehicles can be more convenient for riders than personal scooters or bikes (though they can also, according to some city officials, create a “public nuisance”).

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The apparent convenience of those systems, though, is created by a lot of behind-the-scenes work, much of it done by contractors, known as “chargers,” who collect and charge the scooters. Several young chargers described their work to The Atlantic as a fun side-hustle—one even compared it to playing Pokémon GO, since it involves using an app to find the GPS-tagged scooters. The “prizes” for finding scooters are also game-like, with chargers paid more for retrieving scooters that are harder to find. Young chargers report teaming up to do the work faster, starting what amount to small businesses with some socializing thrown in for good measure.

Rewards can range up to $20 for a single scooter, and chargers described making up to several hundred dollars per night. Those rewards are likely to decline, assuming that Bird and other startups are following the standard tech-industry model of sacrificing revenue for market share early on (at least $250 million in venture capital supports Bird and similar companies). But the game-like aspects of charging may make workers less price sensitive.

That said, just as Uber has become a primary source of income for many of its drivers, it’s clear that recharging scooters is not a game for everyone. Chargers interviewed by The Atlantic describe occasional conflicts over scooter bounties, manipulation of the reward systems, and outright theft of the scooters, which criminals have been known to chop up for parts. Perhaps worst of all, some report that criminals are hunting the hunters—using scooters as bait, then mugging the chargers who arrive to retrieve them.

Tesla: Tsunami Of Sales And Profits In Q3

Bullish expectations for Q3

This article explores the bullish projection that Tesla (NASDAQ:TSLA) is about to become profitable in Q3.

Among the expectations discussed below are that Tesla Model 3 sales in Q2 will be 20,000 cars fewer than production due to federal tax credit rules. This will appear to be poor sales, but in reality will be due to stockpiling cars for sale in Q3 due to the way the tax rules are written.

While this means Q2 revenue will be reduced, it also means Q3 revenue will be increased. As a result, Model 3 should become a top 20 selling vehicle in the US in Q3 with a potential of 80,000 units sold into the US.

This is an average per month sales of about 27,000 Model 3 cars, making it the 12th best selling vehicle in the US ahead of the Nissan Altima (see list below).

Tesla Q3 sales will match the total number of cars sold by Tesla in all of 2017.

Elon Musk has adopted “profits” as his current goal. This replaces his previous goal of fast expansion of the product lineup. The former goal required capital input to fund rapid expansion. The new goal will flip the losses upside down and generate profits now that the bottlenecks are being eliminated one after another.

Most authors write that Tesla is shutting the production line down to “fix problems”. I suggest that Tesla is shutting the production line down to install new machinery that will increase the production speed. Increased production speed means increased gross margin, and if the increase is large enough, net profits.

Showing profits will potentially increase stock price and eliminate the potential for bankruptcy. This in turn will eliminate the bear thesis that Tesla is about to go under and is therefore a good stock to short.

With the short thesis proven wrong, I expect the stock to increase to a new plateau above $400 per share. This was my expectation a year ago, but the bottlenecks delayed the realization until now.

However, sales will likely remain low for May and June. I don’t expect this share price increase to be realized until after a barrage of sales in July make what I’m suggesting here obvious.

Let’s now explore why I’ve come to the above conclusions.

Model 3 may enter top 20 selling US cars in Q3

This week, Tesla has reached 500 cars per day, or, 3,500 cars per week. Bloomberg just increased their production estimate to 3,523/wk.

According to Electrek, Tesla is well on its way to reaching 5,000 cars per week by the start of Q3 in July.

If Tesla reaches this target for next quarter, the Model 3 will enter the top 20 list of US vehicles sold. A rate of 5,000 cars per week means an annual rate of 250,000 cars and a monthly rate around 20,000 cars. I expect Tesla will sell 80,000 Model 3 cars in Q3 so look for 27,000 or so cars per month on the list below.

That rate is between the Jeep Grand Cherokee and the Toyota Tacoma. If realized, the Model 3 will become a top 20 selling car in the US, next quarter.

This data was published by Focus2move here:

Today, the Model 3 is the best selling EV, but it isn’t on the top 100 list. Neither is any other EV. Every one of the top 100 selling cars in the US have an internal combustion engine. And while Tesla is now projected to be building more than 3,000 cars per week, which is to say over 12,000 cars per month (which would place the Model 3 around the #40 position of vehicles sold in the US), I expect this will not happen in May or June.

The reason? The federal tax credit.

It is beneficial for any company to cross the 200,000th car sold into the US threshold, early in a new quarter. Doing so wins that company an extra quarter of sales where customers receive the full tax credit.

Tesla would likely cross that mark this quarter if it sold all the cars it builds, as soon as they are built. To avoid this, Tesla is likely already stockpiling vehicles for a blow out delivery rush starting in July.

Several authors have noticed that the production figures are higher than reported sales figures. Tesla should have built over 6,500 cars in April, but sold fewer than 4,000. That’s a 2,500 or so discrepancy.

There are articles projecting that the discrepancy results from poor build quality and cars piling up for re-work and being stored in parking lots until Tesla can get around to fixing them.

I contend that thesis is wrong, and instead, Tesla is piling up a tsunami of cars for sale in Q3. Here’s why.

How the Federal Tax Credit works

The federal tax credit phases out over a 4-quarter (1-year) period beginning the second quarter after a company sells their 200,000th car.

If Tesla actually sold the cars produced, I expect the company would cross the threshold this quarter. By delaying the 200,000th US sale until after July 1, Tesla adds nearly an entire extra quarter of sales to the program, benefiting their customers. Tesla will sell nearly 60,000 more cars under full tax credit.

For this reason, I think one should expect sales to be flat this month and next (in Q2), while a 20,000 car stockpile ready for Q3 sales is accumulated.

Musk’s Increased Confidence

Elon Musk has stated several times that Tesla will not need to raise money this year. During the recent earnings call, he explicitly stated Tesla will not raise money this year.

Much was written about Musk’s behavior on that call. Most articles in one fashion or another, assert that Musk is cracking under the pressure. If so, Tesla may be headed for a crash near term.

So many people bought into that notion that 400,000 new shares sold short overnight after the earnings call. The stock price dropped 10% in one day.

Since then, however, the stock price has fully recovered and the divide between the bullish and bearish theses has widened.

Listening to the call, it made perfect sense to me that Elon was annoyed by the callers who had read the release and yet asked questions about things specifically stated in that paper. It was as if the callers were saying they knew the paper said they would be profitable, but they don’t believe it and so are trying to figure out what Elon is lying about. Feeling like he was being called a liar, I believe, is why he lost his cool.

But that isn’t what’s interesting. What’s interesting is that he is so confident that he will not need to raise funds that he didn’t bite his tongue.

What this means is that for the first time, Musk is placing profits ahead of expansion and rapid growth. And what’s more, he fully expects to reach profitability.

Bloomberg’s Model 3 Tracker diverging from reality

Bloomberg’s Model 3 Tracker website has been excellent at following the ramp up in Model 3, until April. The analysis has a flaw that doesn’t account for the federal tax credit deviation from business as usual.

The Tracker assumes that when a car is built and ready for sale, that Tesla will sell it as quickly as possible. This has been true, until this past month. Now, and until the end of June, Tesla can benefit its customers best by holding back about 20,000 (total) cars built in Q2 and then selling them in Q3.

Here’s the VIN data from the wild, plotted as yellow dots. Notice the gap in the numbers from about 23,000 to 25,500 representing about 2,500 cars that are absent from the public. Where did they go? Were they built?

Tesla should have built around 6,500 Model 3 cars in April. This is based on Tesla statements that they built 2,000+ cars per week for 3 weeks in a row (2 in April), and then shut down the line to add improvements and further speed the line production. April production should have been ~6,500 cars.

Instead of 6,500 Model 3 cars sold in April, Tesla only sold 3,875 M3 cars according to InsideEVs here.

We know Tesla built over 4,000 Model 3 cars in the first 2 weeks of April and would have needed to shut the line down for the rest of the month if cars produced were the same as cars sold. That makes no sense.

One logical explanation is that Tesla “sold” fewer cars than it “produced” by around 2,500. If these cars are being stockpiled, then in May and June this discrepancy should get much worse.

Tesla should build around 10,000 Model 3 cars in May and around 18,000 cars in June. But Tesla will likely sell just 5,000 per month for those two months to remain below 200,000 cars sold into the US. That means Tesla may accumulate 2,500 + 5,000 + 13,000 = 20,500 cars more than it sells in Q2.

Bloomberg’s model averages the estimates of cars produced with cars sold. But that’s averaging apples and oranges, it doesn’t work.

Last week the production estimate was 1,752 and this week it is 3,523.

Bloomberg needs to separate the sales and production projections into two different values. Otherwise they are trying to average apples and oranges. This would be fine any other time except now, where unusual strategy makes sense to benefit customers who desire to receive the federal tax credit.

Potential Q3 Sales

This brings us to estimate potential Q3 sales based on these optimistic expectations.

First, if Tesla succeeds at ramping to 5k/wk by the beginning of Q3, then it should have produced about 30,000 M3 cars in May and June. If it sells 10k of those to hold #1 BEV position for those months, there would remain 20,000 cars in stock.

Second, Tesla should pass 5k/wk build rate and increase to higher than that during the middle of Q3. That means Tesla should build more than 60,000 cars in Q3. VIN filings must significantly increase to meet that pace, and those filings will be public information.

For the past month, VIN filings are about 3,800 cars per week. This is well on its way to 5,000 per week by the end of the quarter. Tesla should also build about 25,000 of Models S and X in Q3.

Tesla will be coming out with the dual motor and possibly also ludicrous mode variants of the Model 3 in Q3. Tesla is taking orders for the higher cost variants of Model 3 first, so I expect the average price to remain high and will use $50k for these estimates.

The total M3 cars sold in Q2 should be around (20k + 60k) * $50k = $4B.

The total MS and MX sold should be around 25k * $100k = $2.5B.

The total revenue from cars should be in the range of $6.5B with a gross profit of $1.3B if they make the 20% margin figure claimed. I’ll ignore the energy side for this treatise as small by comparison.

Given that Musk has firmly asserted the company will not need cash, and also that it will be profitable and cash flow positive, I suspect that Musk is thinking Tesla will manage something like the above.

Model 3 is about to enter the US Top 20 list

The Model 3 is about to climb the ranks of other vehicles, and if the above figures are met, it will pass Toyota Corolla and Honda Accord, landing in a tie with the Jeep Grand Cherokee for top selling vehicles in the US for Q3.

I admit that this comparison is, and isn’t, fair. The Model 3 is an EV whereas all of the top 100 cars sold in the US today have internal combustion engines, ICE.

The Model 3 is the best selling EV and the only mass produced EV. In this regard, the comparison is NOT fair since it is different from all of the rest of the cars on that top 100 list.

However, any other car company could have launched an EV instead of their ICE models. And, they could have built their own equivalent of the Supercharger Network instead of relying on other businesses to do so for them. So in this regard, the comparison IS fair and demonstrates that people want electric cars with good range and a fast charging system that is already deployed.

That this is so is confirmed by a recent Consumer Reports article about a AAA survey showing that 20% of Americans expect their next vehicle purchase to be an EV. US car sales dropped by 2% in 2017 according to JDPowers. That marked the end of a 7-year run of steady sales growth. Given the AAA survey of intentions combined with blooming sales of Model 3, I expect we will see US sales of internal combustion engine cars drop by a larger figure in 2018.

There are not enough good EVs to replace the drop in ICE vehicle sales.

Jaguar I-Pace, for example, claims 350kW charging capability. But the claim is a farce. Today, no 350kW chargers exist out on the open road and it will likely be several years (if ever) before a network of charging stations is built. It isn’t clear yet that the 350kW charging standard will even work.

Upon introduction this summer, anyone that purchases an I-Pace will be forced to use the only chargers actually deployed… the same ones used by the Bolt and Leaf that only charge at 50kW instead of Tesla’s 120kW. Charging an I-Pace will take more than double the time to charge a Tesla.

What this means is that counter to claims that Tesla is about to face a swarm of new contenders, the fact is that none of them can hold a candle to the charging speed of the Supercharger Network. Ironically, all of the contenders should increase Tesla sales, as once anyone reviews charging infrastructure, Tesla is the only logical brand choice.

Introduction of the competition should further increase Model 3 sales until such time as a new charging infrastructure is actually in place, and, assuming Tesla is unable to use that new infrastructure. If Tesla CAN use that new infrastructure, then Tesla remains the best EV choice bar none, simply for its enhanced number of charging stations.


Tesla is building more cars than it is selling. This may indicate that Tesla is accumulating cars to be sold in Q3 due to tax phase out rules.

If Tesla makes the production targets it has disclosed, it would generate approximately $6.5B in Q3 gross sales with around $1.3B in gross margin. Even without cutting back on spending, that much extra gross margin should yield net profits.

The Model 3 may rise from below rank #100 for sales into the US now, to above position #20 next quarter. That is, the Model 3 appears poised to jump 80 positions in the US top 100 vehicle sales list, beginning in July.

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.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

Spotlight On Gambling Reset And Banking Bill

Welcome to Seeking Alpha’s Stocks to Watch – a preview of key events scheduled for the next week. Follow this account and turn the e-mail alert on to receive this article in your inbox every Saturday morning.

While investors will surely have their eyes on trade talks, developments in the oil market and rising interest rates in the week ahead — a sideline show will continue to be the complete reset in the gambling industry following the Supreme Court decision that opens up legalized sports betting. Notable movers since the SCOTUS decision came down include Dover Downs (NYSE:DDE) +46%, Scientific Games (NASDAQ:SGMS) +13%, Churchill Downs (NASDAQ:CHDN) +11%, Penn National Gaming (NASDAQ:PENN) +8%, The Stars Group (NASDAQ:TSG) +8% and Caesars Entertainment (NASDAQ:CZR) +8%. Across the pond, bookmaker stocks William Hill (OTCPK:WIMHY), Paddy Power (OTC:PDYPF), GVC Holdings (OTCPK:GMVHF) and 888 Holdings (OTCPK:EIHDF) also jetted higher. Expect even more price swings with new names as the ramifications become clearer. Nomura Instinet analyst Harry Curtis reminds that the upside potential from the Supreme Court decision down the road includes higher traffic and customer engagement at land-based casinos, as well as digital offerings and tech/financial partnership opportunities. On that last point, there’s a sense major players such as Facebook (NASDAQ:FB), Apple (NASDAQ:AAPL), Visa (NYSE:V), Mastercard (NYSE:MA) and Google (GOOG, [GOOGL]]) aren’t going to completely ignore the developments. On the economic calendar this week, data on new and existing home sales will capture some attention.

Notable earnings reports: Monro (NASDAQ:MNRO) on May 21; International (NASDAQ:CTRP), Urban Outfitters (NASDAQ:URBN), The Container Store (NYSE:TCS) and TJX Companies (NYSE:TJX) on May 22; Target (NYSE:TGT), Hewlett-Packard Enterprise (NYSE:HPE), Lowe’s (NYSE:LOW) and Lion’s Gate (NYSE:LGF.A) on May 23; GameStop (NYSE:GME), Best Buy (NYSE:BBY), Gap (NYSE:GPS) and Splunk (NASDAQ:SPLK) on May 24; Foot Locker (NYSE:FL) on May 25. See Seeking Alpha’s Earnings Calendar for the complete list.

IPOs expected to price: Evo Payments (EVOP) on May 22; CLPS (CLPS), Kiniksa Pharmaceuticals (KNSA), Scholar Rock (SRRK) and GreenSky (GSKY) on May 23; Iterum Therapeutics (ITRM) on May 24.

Analyst quiet period expirations: Ceridian HCM (NYSE:CDAY) and Nlight (NASDAQ:LASR) on May 21; DocuSign (NASDAQ:DOCU), Goosehead Insurance (NASDAQ:GSHD) and Smartsheet (NYSE:SMAR) on May 22.

Upcoming stock splits: DDR (NYSE:DDR) 1-for-2 on May 21, China Lodging (NASDAQ:HTHT) ADS-to-ordinary share ratio to change on May 24 from one ADS per four ordinary shares to one ADS per one ordinary.

Banking bill: The House of Representatives is expected to vote on a banking reform bill next week. The bill would raise the threshold at which banks are considered risks to the system to $250B from $50B. The legislation also exempts banks with less than $10B in assets from some proprietary trading rules. Zions Bank (NASDAQ:ZION), BB&T (NYSE:BBT), Bank of New York (NYSE:BK), State Street (NYSE:STT) and SunTrust (NYSE:STI) are just a few of the banks to keep an eye on with the new rules. On a broader scale, John Hancock Regional Bank Fund’s Lisa Welch observed that the S&P 500 bank index trades at 11.34X earnings estimates for the next 12 months compared with the historical mean of 12.56X. “It’s a sector that benefits from rising rates, a growing economy and a more favorable regulatory environment that’s trading at attractive valuations,” she noted.

Projected dividend hike announcements: Donaldson (NYSE:DCI) to $0.185 from $0.180, DXC Technology (NYSE:DXC) to $0.21 from $0.18, Flower Foods (NYSE:FLO) to $0.18 from $0.17, National Storage to $0.30 from $0.28, Tiffany (NYSE:TIF) to $0.55 from $0.50.

Notable Analyst/investor meetings: Micron (NASDAQ:MU), Monro (MNRO) and (NASDAQ:GLAD) on May 21; Walgreen Boots Alliance (NASDAQ:WBA), Brooks Automation (NASDAQ:BRKS), National Instruments (NASDAQ:NATI), Sanmina (NASDAQ:SANM), Xilinx (NASDAQ:XLNX), Atlas Financial (NASDAQ:AFH) on May 22; Align Technology (NASDAQ:ALGN), Thermo Fisher Scientific (NYSE:TMO), Phototronics (NASDAQ:PLAB), Pure Storage (NYSE:PSTG), Qorvo (NASDAQ:QRVO) and Huntsman (NYSE:HUN) on May 23; Cabot (NYSE:CBT) on May 24.

FDA watch: Loxo Oncology (NASDAQ:LOXO) and Bayer (OTCPK:BAYRY) are expected to hear on a FDA review for larotrectinib NDA, while Lexicon Pharmaceuticals (NASDAQ:LXRX) and Sanofi (NYSE:SNY) should find out whether sotagliflozin NDA for type 1 diabetes has been accepted for FDA review.

Wolfe Research 11th Annual Global Transportation Conference: Companies due to talk at the transportation industry get-together include Genesee & Wyoming (NYSE:GWR), American Airlines (NASDAQ:AAL), Delta Air Lines (NYSE:DAL), United Continental (NYSE:UAL), Alaska Air (NYSE:ALK), USA Truck (NASDAQ:USAK), J.B. Hunt Transport (NASDAQ:JBHT), Werner Enterprises (NASDAQ:WERN), ArcBest (NASDAQ:ARCB) and Daimler Trucks (OTCPK:DDAIF). The high cost of freight transportation has been a common topic on the Q1 earnings conference calls of retailers.

Crypto watch: The big blockchain event in New York last week didn’t light a fire under cryptocurrencies as regulatory concerns still linger. Over the last seven days, Bitcoin (BTC-USD) is down 2.3%, Ethereum (ETH-USD) is up 4.6%, Litecoin (LTC-USD) fell 2.5% and Ripple (XRP-USD) dropped 1%. ZCash (ZEC-USD) was one of the cryptos that did break significantly higher, with a 50% pop during the week,

Eyes on crude oil: Saudi Energy Ministry Khalid al-Falih will meet with Russian Minister of Energy Alexander Novak at a St. Petersburg economic summit next week. An election in Venezuela on Sunday could also impact oil prices if President Nicolas Maduro is re-elected to a six-year term. WTI crude oil trades at $71.28 per barrel, while Brent crude is at $78.51.

M&A watch: Shareholders with Bravo Brio Restaurant Group (NASDAQ:BBRG) will hold a special shareholder meeting on May 22 to approve the merger transaction with Spice Private Equity. The deadline for the start of the tender offer by Lilly (NYSE:LLY) for Armo BioSciences (NASDAQ:ARMO) hits on May 23. The go-shop period on the acquisition of VeriFone Systems (NYSE:PAY) by Francisco Partners expires on May 24.

60 Minutes: Alphabet will be featured in a story on the Sunday night news show. Critics are expected to take aim at the tech company over some of its anti-competitive practices.

Box Office: Fox’s (NASDAQ:FOXA) Deadpool 2 is expected to dominate the weekend box office. The Marvel comic book mashup is expected to take in $138M in a wide release of 4,439 theaters. Disney’s (NYSE:DIS) Avengers: Infinity War is predicted to come in second place with $29M to add to its eye-popping $1.69B global box haul through this week. Next Friday, Disney’s Solo: A Star Wars Story opens in a highly-anticipated holiday weekend debut. The U.S. box office is up 4.4% YTD.

Barron’s mentions: Procter & Gamble (NYSE:PG), Coca-Cola (NYSE:KO) and PepsiCo (NYSE:PEP) are lined up as attractive high-dividend stocks at knockdown prices. All three trade with a forward price-to-earnings ratio of lower than 20 and below their historic norms. Chinasoft International (OTC:CFTLF) and Baozun (NASDAQ:BZUN) are mentioned as two other ways for investors to play the digital explosion in China beyond first-movers Alibaba (NYSE:BABA), Baidu (NASDAQ:BIDU) and Tencent (OTCPK:TCEHY). Lowe’s is seen as having limited downside into its earnings report.

Sources: EDGAR, Bloomberg, CNBC and Reuters.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

Fed Up With Apple's Policies, App Developers Form a 'Union' Ahead of WWDC

Nearly two years ago, Apple revealed its plans for a revamped App Store. It introduced ads within search results in the iOS portion of the store, rolled out more ways for developers to offer subscriptions, and sweetened the revenue deal for app makers who did offer subscriptions. The changes marked the most significant update to the App Store since it had opened for business, and it was part of an effort by Apple to show that the company was attuned to developers’ needs, even as the company raked in billions of dollars from their apps each year.

But as the iOS App Store approaches its tenth anniversary, some app developers are still arguing for better App Store policies, ones that they say will allow them to make a better living as independent app makers. Now a small group of developers, including one who recently made a feature-length film about the App Store and app culture, are forming a union to lobby for just that.

In an open letter to Apple that published this morning, a group identifying themselves as The Developers Union wrote that “it’s been difficult for developers to earn a living by writing software” built on Apple’s existing values. The group then asked Apple to allow free trials for apps, which would give customers “the chance to experience our work for themselves, before they have to commit to making a purchase.”

The grassroots effort is being lead by Jake Schumacher, the director of App: The Human Story; software developer Roger Ogden and product designer Loren Morris, who both worked for a timesheet app that was acquired last year; and Brent Simmons, a veteran developer who has made apps like NetNewsWire, MarsEdit, and Vesper, which he co-created with respected Apple blogger John Gruber. (“Brent’s been developing for Apple products since before any of us were born,” Schumacher quipped.)

The union, so far, is loosely-formed. There’s no official strategy in place for collective bargaining and no membership requirements (like dues). The union has goals of reaching a thousand members this week and hitting a mass of 20,000 signees by early June, when Apple will host its annual Worldwide Developers Conference in San Jose, California. But at launch, the four representatives will be the only names attached to the letter. Non-developers are welcome to join as well, they said.

“It’s a non-union union in a way,” Morris, the product designer, said when reached by phone. “I’m not super interested in creating a traditional union; I’m more interested in bringing the voice of indies back into the spotlight and this is a step in that direction.”

“We might eventually incorporate voting on certain things, but right now it’s really about the unification of developers,” Ogden added.

Free app trials have been a sticking point over the past several years for some iOS app developers, who believe that mobile apps–especially premium ones that cost more than a few bucks and aren’t games–should mimic the experience that people have had for years with desktop apps. It’s a particularly thorny issue for app makers who don’t make subscription apps, but who still want to give potential customers a free trial of their apps.

Apple has given developers some ability to offer free app trials, for time periods ranging from three days up to a whole year. But a free trial can only accompany a subscription app. This means that when opting to get the free trial, the customer has to authorize Apple to automatically charge them when a trial ends, developers say. The ideal situation, they say, would allow them to offer free trials for all apps, at lengths they determine, and without barriers that might make people shy away from trying their apps.

Apple has not responded to a request for comment on this story.

Another topic The Developers Union says it will attempt to tackle is revenue sharing. Apple’s longstanding policy gives App Store developers 70 percent of the money made from most apps, while Apple takes 30 percent. Back in 2016, Apple changed this split to 85/15 percent for developers who are able to maintain long-term subscription customers. Google soon followed suit, offering the same revenue split for subscription apps sold through the Google Play Store. But Microsoft is taking it a step further: later this year it will give 85 percent of any non-gaming app revenue to Windows developers if the app was purchased through the Microsoft Store; while 95 percent of the money will go to developers if the customer discovers the app through an external web page or app.

While the open letter says that the union plans to “advocate for a more reasonable revenue cut,” the members have not yet shared specifics beyond that.

Slice of the Pie

Making a living off of making apps is something that’s felt increasingly out of reach for independent developers. Some have described a kind of divergence that’s happening: Apple’s services business is booming, while some developers’ own businesses are floundering.

Apple, in recent years, has started sharing how much it pays out to developers. In January, it said that iOS developers were paid a total of $26.5 billion in 2017, a 30 percent jump from the year before. Since the inception of the App Store, developers have earned more than $86 billion dollars.

But that revenue is credited largely to in-app purchases and currencies–essentially, games. Ben Thompson, who writes the Stratechery blog and who has extensively analyzed the business of app stores, has identified these as “games with repetitive mechanics that can monetize existing users through in-app purchases,” and wrote back in 2013 that other apps, like premium productivity apps, are “a terrible match for app store economics.” Schumacher, Ogden, and Morris call the biggest money-making apps “the guys with the angry faces”–referring to the app icons for games that feature, well, men with angry faces.

Not all developers are thrilled by the union. Schumacher told me that one notable developer he reached out to said that, while he hopes the grassroots effort makes progress, he wasn’t inclined to join. “He said, ‘I make all my income from Apple. I don’t know if I should be throwing rocks,'” Schumacher told me.

And despite the issues they have with the App Store, even the union organizers themselves–with the exception of Simmons, who wasn’t available for an interview–acknowledged that developing for the App Store carries a kind of cache that other software stores don’t.

“Apple is getting a lot right, especially around security,” Schumacher said. This new group is just looking for a few more breadcrumbs, he said. And not the kind you buy in mobile games.

More Great WIRED Stories

Silicon Valley startup peddles 3D-printed bike

(Reuters) – After a career that included helping Alphabet Inc’s Google build out data centers and speeding packages for Inc to customers, Jim Miller is doing what many Silicon Valley executives do after stints at big companies: finding more time to ride his bike.

A 3D-printed carbon fiber commuter bicycle by Arevo Labs is seen in Santa Clara, California, May 10, 2018. REUTERS/ Stephen Lam

But this bike is a little different. Arevo Inc, a startup with backing from the venture capital arm of the Central Intelligence Agency and where Miller recently took the helm, has produced what it says is the world’s first carbon fiber bicycle with 3D-printed frame.

Arevo is using the bike to demonstrate its design software and printing technology, which it hopes to use to produce parts for bicycles, aircraft, space vehicles and other applications where designers prize the strength and lightness of so-called “composite” carbon fiber parts but are put off by the high-cost and labor-intensive process of making them.

Chris Lee, an engineer at Arevo Labs, watches a 3D-printing robot print a bicycle frame in Santa Clara, California, May 10, 2018. REUTERS/ Stephen Lam

Arevo on Thursday raised $12.5 million in venture funding from a unit of Japan’s Asahi Glass Co Ltd and Leslie Ventures. Previously, the company raised $7 million from Khosla Ventures and an undisclosed sum from In-Q-Tel, the venture capital fund backed by the CIA.

Slideshow (11 Images)

Traditional carbon fiber bikes are expensive because workers lay individual layers of carbon fiber impregnated with resin around a mold of the frame by hand. The frame then gets baked in an oven to melt the resin and bind the carbon fiber sheets together.

Arevo’s technology uses a “deposition head” mounted on a robotic arm to print out the three-dimensional shape of the bicycle frame. The head lays down strands of carbon fiber and melts a thermoplastic material to bind the strands, all in one step.

The process involves almost no human labor, allowing Arevo to build bicycle frames for $300 in costs, even in pricey Silicon Valley.

“We’re right in line with what it costs to build a bicycle frame in Asia,” Miller said. “Because the labor costs are so much lower, we can re-shore the manufacturing of composites.”

While Miller said Arevo is in talks with several bike manufacturers, the company eventually hopes to supply aerospace parts. Arevo’s printing head could run along rails to print larger parts and would avoid the need to build huge ovens to bake them in.

“We can print as big as you want – the fuselage of an aircraft, the wing of an aircraft,” Miller said.

Reporting by Stephen Nellis; Editing by Lisa Shumaker

With Or Without Sprint, T-Mobile Stock Is A Bargain

The best investments are oftentimes those that come with multiple ways to win. Shares of T-Mobile (TMUS) are now trading well below the levels they were prior to the announcement that they will try to get government approval for a Sprint merger (implying negative odds of approval), as well as at multi-year lows despite strong operating performance that exceeds the competition.

Below are four ways investors can win by buying TMUS today in the mid 50’s:

1) On a standalone basis, TMUS is performing superbly

A few short years ago T-Mobile was uncool and sitting firmly in fourth place within the U.S. wireless sector. CEO John Legere has focused on attracting younger customers (where the growth is) and is willing to gamble on new sales and service initiatives to transform the sector. As a result, other competitors are forced to copy TMUS, on ideas such as including Netflix (NFLX) with service plans and scrapping data limits and contracts.

The results have been no less than staggering, with TMUS adding more net new postpaid customers in 2017 than Verizon (VZ), AT&T (T), and Sprint (S) combined:

Source: Fourth quarter financial reports from each company

2) The stock’s current valuation is around 11x 2019 free cash flow ex-Sprint

T-Mobile’s success has not come with any compromise from the financial side of the equation (after all, it is easy to add customers when profits are not important). According to TMUS’s annual 10-K filings, free cash flow has surged from $690 million in 2015 to $2.725 billion in 2017. On a per-share basis, the figures amount to a jump from $0.84 to $3.13. With high fixed costs, each new customer is incrementally very profitable.

TMUS has laid out guidance for 2019 free cash flow of $4.55 billion, or roughly $5.30 per share. That puts today’s valuation at just 11x next year’s free cash flow, a very low price for a company that is still adding new customers.

3) The company is using free cash flow to aggressively repurchase shares, which supports investors even if no merger with Sprint occurs

Despite a possible deal to buy Sprint, TMUS’s board of directors authorized a $1.5 billion stock repurchase plan in December 2017. As of April 27, 2018, the company has spent the entire $1.5 billion on 23.7 million shares and announced a new authorization for another $7.5 billion through 2020. And that announcement was made knowing full well about the Sprint merger aspirations (only $500 million is slated for the rest of 2018).

4) A deal with Sprint could very well be approved and the potential synergies are impressive

It seems odd that T-Mobile shares are lower today than they were when the Sprint deal was announced. Not only does there appear to be a decent chance of getting approval (the arguments for the #3 and #4 wireless players teaming up to battle the two juggernauts in 5G technology are very strong), but it is hard to argue that T-Mobile has not done a lot to bring down prices in recent years. The idea that they would completely shift strategies after merging with Sprint holds little water. After all, T-Mobile’s disruptive business model is working well and they are adding more customers than anyone else.

To give you an idea of how big the cost synergies are in this deal, consider that T-Mobile has announced a projected annual run-rate of $6 billion for the combined entity (on a net present value basis, they estimate $43 billion of synergies). Compared with T-Mobile’s current stand-alone market value of $49 million, this deal would serve investors extremely well. If the deal happens, it is not unreasonable to think the stock could rise by 60% ($43 billion of synergies layered onto the combined current equity values of both firms of $68 billion) to a level of $90 per share within 2-3 years post-closing. That price would equate to roughly 13 times a $7 per share free cash flow figure (and that $7 could be low given TMUS should surpass $5 on their own next year).

In summary, investors can win with TMUS regardless of whether the coin lands on heads or tails. On a standalone basis, TMUS should continue to take market share, boost free cash flow, and buy back stock. In baseball terms, that is probably a double. However, if the government decides they would not mind three companies of roughly equal size vying for 5G dominance, the Sprint deal could very well happen (no reason to think 25% odds are unreasonable, although I think it might be as high as 50/50). If that happens, TMUS should be a home run for shareholders and customers alike.

Disclosure: I am/we are long TMUS.

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.

Big Tech shares the most crowded trade for 4th straight month-BAML fund survey

LONDON (Reuters) – Global investors clung to their preference for the tech sector in May, with shares in so-called FAANG and BAT firms remaining the most crowded trade for the fourth straight month, according to a survey by Bank of America Merrill Lynch.

FILE PHOTO: The company logo of the Bank of America and Merrill Lynch is displayed at its office in Hong Kong March 8, 2013. REUTERS/Bobby Yip

The bank said on Tuesday that its monthly survey of fund managers had found “FAANG + BAT” shares most preferred by the market and most often held in portfolios. FAANG groups the U.S. tech giants Facebook, Apple, Amazon, Netflix and Google while BAT comprises the Chinese trio of Baidu, Alibaba and Tencent.

Being “short” U.S. Treasuries as well as the dollar were also in the top three in terms of crowded trades, according to the survey of 233 fund managers managing $643 billion.

Investors remain concerned about the global economy as signs multiply that growth is decelerating. Only a net one percent of the investors thought the global economy will strengthen over the next 12 months, BAML said.

This increased pessimism was reflected in relatively high cash holdings in portfolios; while average cash balance edged down to 4.9 percent in May from 5 percent in April, they remain above the 10-year average of 4.5 percent.

Allocation to bank stocks rose to a net 36 percent overweight, the second highest level on record.

Reporting by Helen Reid; editing by Sujata Rao

Stop Using Common Email Encryption Tools Immediately, Researchers Warn

Throughout the many arguments over encrypted communications, there has been at least one constant: the venerable tools for strong email encryption are trustworthy. That may no longer be true.

On Tuesday, well-credentialed cybersecurity researchers will detail what they call critical vulnerabilities in widely-used tools for applying PGP/GPG and S/MIME encryption. According to Sebastian Schinzel, a professor at the Münster University of Applied Sciences in Germany, the flaws could reveal the “plaintext” that email encryption is supposed to cover up—in both current and old emails.

The researchers are advising everyone to temporarily stop using plugins for mail clients like Microsoft Outlook and Apple Mail that automatically encrypt and decrypt emails—at least until someone figures out how to remedy the situation. Instead, experts say, people should switch to tools like Signal, the encrypted messaging app that’s bankrolled by WhatsApp co-founder Brian Acton.

“There are currently no reliable fixes for the vulnerability,” Schinzel tweeted Monday morning. “If you use PGP/GPG or S/MIME for very sensitive communication, you should disable it in your email client for now.”

When contacted by Fortune, Schinzel declined to divulge further details ahead of Tuesday’s announcement, but he pointed to a blog post from the world’s biggest digital rights group, the Electronic Frontier Foundation (EFF,) for further advice.

The EFF’s post is also light on detail, but the organization has seen what the researchers are preparing to announce and said it “can confirm that these vulnerabilities pose an immediate risk to those using these tools for email communication, including the potential exposure of the contents of past messages.”

“Our advice, which mirrors that of the researchers, is to immediately disable and/or uninstall tools that automatically decrypt PGP-encrypted email. Until the flaws described in the paper are more widely understood and fixed, users should arrange for the use of alternative end-to-end secure channels, such as Signal, and temporarily stop sending and especially reading PGP-encrypted email,” the EFF wrote.

Specifically, the group urged everyone to temporarily disable these mail client encryption add-ons: Enigmail for Thunderbird, GPGTools for Apple Mail, and Gpg4win for Outlook.

GPGTools and Gpg4win are Mac- and Windows-friendly versions of GnuPG—an open-source version of the 27-year-old PGP encryption toolkit. In a tweet on Monday morning, the GnuPG project said the security researchers had found vulnerabilities in the mail clients, not in the underlying protocols.

Werner Koch, the German free software developer who started GnuPG in 1997, wrote that he found the EFF’s warnings “pretty overblown.” He said the researchers had not contacted the GnuPG team, but he had accessed their paper anyway.

Despite what the EFF said, Werner insisted, the encrypted email plugin for Outlook was not vulnerable.

Cyber Saturday—As Blockchain Week Kicks Off, Remember The DAO

Good afternoon, Cyber Saturday readers.

In honor of “blockchain week,” which is kicking off in New York City, I’ve been thinking about the security of smart contracts, self-executing computer programs designed to encode business relationships. A smart contract might codify, for example, an agreement like this: If Justify, a racehorse, wins the Kentucky Derby, pay $10 in Bitcoin to some lucky fellow’s digital wallet. The code eliminates the need for a bookie.

Now imagine a future in which such contracts automate tasks once relegated to lawyers, pencil-pushers, and other intermediary parties. Blockchain boosters dream of a day when they can route around middlemen with these sorts of self-driving computer programs, thereby making markets more efficient, so the thinking goes. There’s a snag though: Smart contracts are software applications, and software applications have bugs.

Sometimes, as with The DAO, an ill-fated, decentralized venture capital fund built on Ethereum, a popular cryptocurrency network, those bugs can be ruinous. Hackers stole $50 million in cryptocurrency from the project in 2016 thanks to a simple “reentrancy” flaw. The bug allowed an attacker, or group of attackers, to continually withdraw money from the smart contract-powered organization until its coffers had been thoroughly pilfered.

Similar flubs abound in the field of cryptocurrency. Chris Wysopal, cofounder and chief technologist at Veracode, an application security shop bought by CA Technologies for $614 million in cash last year, gave a keynote talk at Collision conference in New Orleans earlier this month in which he provided an overview of the security challenges posed by smart contracts. “The blockchain is really secure, but the things that have to interact with it, those things aren’t secure,” Wysopal told the audience. “It’s probably one of the toughest problems right now” in security, he said.

Although I did not catch Wysopal’s talk in person (you can watch it here), I chatted with him afterward at B.B. King Blues Club and Grill and in between jazz sets at various bars along Frenchman Street. He said that if he were a thief, smart contracts are where he would focus the majority of his attention and energy today. Target the youngest projects with the worst quality assurance processes, the highest valuations, and the weakest defenses. It’s a recipe for success; in this world, baddies no longer have to worry about monetizing the data they steal. They can steal (virtual) money itself.

If you happen to be in New York for blockchain week, temper your enthusiasm with that alarum. It’s what the smartest folks will do.

Have a great weekend.

Robert Hackett


[email protected]

Welcome to the Cyber Saturday edition of Data Sheet, Fortune’sdaily tech newsletter. Fortune reporter Robert Hackett here. You may reach Robert Hackett via Twitter, Cryptocat, Jabber (see OTR fingerprint on my, PGP encrypted email (see public key on my, Wickr, Signal, or however you (securely) prefer. Feedback welcome.

Your Business Deserves the Same Quality Ingredients, Patience, and Character as Your Favorite Wine

Recently, my wife and I returned from a trip to Europe. While we were there, I enjoyed some tremendous wines. It got me thinking how fine wine and good business share many characteristics. They both require quality inputs, time to develop, and character, and they need to find the right customers at the right time.

Here are other reasons why your business is like a fine wine:

1. You Don’t Have to Spend a Lot

There’s a lot of wine out there, but price does not always correlate with quality. The biggest name does not always produce the finest work. Similarly, businesses need to be careful how they spend their money. Businesses leaders must consider carefully where and how their raw materials are generated. And you don’t necessarily need to hire the candidate who requires the highest salary. There’s a great deal of quality to be found if you dig a little deeper, and the fit for your company might be even better.

2. Be Smooth

Drinking wine should be a great experience. The flavors should blend with the food and highlight the appropriate notes. The whole experience should come together seemingly effortlessly. A business should also function like a well-oiled machine. The team should coordinate efforts efficiently, and the experience for the customer should be smooth and effortless.

3. Quality Over Quantity

I love wine. And while a lot of wine can be fun, if I’m being serious, I’d much rather have a few sips of excellent, highest quality wine than a bottle of rotgut. Encouraging huge quantity can be fun for a while, and cause a flash in the pan for businesses. But for both businesses and consumers, the short-term gain almost always fizzles out, and carries long-term consequences that make everyone uncomfortable. As wine improves with age and businesses develop slowly, patience will be required. But the payoff will be well worth the effort.

4. Know Your Sourcing

Any good chef knows his vintners and vintages. The chef must know the grapes and the land that produce the wine he uses so he can understand how the flavors will meld and will be able to predict any problems. Likewise, business leaders need to know the people they work with and the resources they use. A big mistake in the beginning of the process filters down throughout the product and almost inevitably reaches the customer, putting your reputation and livelihood at risk.

5. Use an Advisor

Restaurants hire sommeliers because they want their guests to have the best experience possible. They want to ensure that the pairing between wine and food is the best possible match, and that the wine tastes exactly as it should. Business leaders, too, should use advisors. Mentoring is an important part of any leader’s development, ensuring that leaders use their time well, guide their team efficiently, and learn from their mistakes.

6. It’s About Relationships

Just like chefs must ensure that their wines match the foods, businesses must ensure that their products fit their market. You can have excellent quality product, but if it doesn’t work in the context of your target market, your businesses will not succeed. That doesn’t mean you can’t do something a little different; chefs and sommeliers sometimes get creative, and businesses should to. But make sure the proposition is compelling – don’t be different just for the sake of being different.

Global Consumer Sentiment Supports Bullish Growth View

There is a little-watched and relatively obscure set of indicators produced by Thomson Reuters and Ipsos, called the primary consumer sentiment indexes. These provide a standardized approach to measuring consumer sentiment across a number of countries, and provide timely insight into consumer trends globally.

With the release of the May data this week I thought it would be good to take a quick look at the key trends in global consumer confidence (I have aggregated these indexes using GDP weights to provide a global as well as EM vs. DM view). Basically, global consumer sentiment has held up surprisingly well, which is a positive sign.

The key takeaways on the global consumer sentiment picture are:

-The global aggregate index of consumer sentiment strengthened in May.

-Global consumer sentiment held up well through the global equity market correction and actually strengthened vs. weakening seen in the manufacturing PMI.

-EM consumer confidence has been outperforming DM.

-Overall it supports a bullish global growth outlook.

1. Global Consumer Confidence vs. PMI and Global Equities: The May round of the Thomson Reuters/Ipsos consumer sentiment indexes (which I have aggregated based on IMF calculated PPP adjusted GDP weights), shows that globally the consumer is still doing well and if anything is going from strength to strength.

Interestingly, the global consumer confidence index held up well and actually strengthened through the global equity market correction and bucked the trend seen in the manufacturing PMI. So to my mind it is a nod to the underlying strength in the global economy.

2. Consumer Sentiment – EM vs. DM: Looking at the split between emerging vs. developed economies, the same picture of an apparent structurally different level (EM generally stronger) continued, but in terms of the signal, EM has continued its strengthening trend and in the month of May outperformed DM.

This one is also key as there has been some doubt around emerging markets as EM equities have seen substantial volatility and a reversal of previously hot fund flows.

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.

Chipmaker Nvidia sees fewer crypto miners, more gamers in future

(Reuters) – Too many cryptocurrency clients and fewer cloud computing orders than expected underwhelmed Nvidia Corp (NVDA.O) investors on Thursday, although the graphics chip maker said a supply shortage that hit its core video game audience had eased.

FILE PHOTO: The logo of Nvidia Corporation is seen during the annual Computex computer exhibition in Taipei, Taiwan May 30, 2017. REUTERS/Tyrone Siu/File Photo

The U.S. company best known for chips that enhance video game graphics has diversified into an array of businesses including artificial intelligence, self-driving cars and digital mining, but investors are most concerned with its inroads in the market for cloud computing.

Revenue from Nvidia’s data center business, which powers cloud-based services such as’s (AMZN.O) Amazon Web Services, Microsoft Corp’s (MSFT.O) Azure as well as Alphabet Inc’s (GOOGL.O) Google Cloud, rose 71 percent to $701 million, but missed analysts’ estimate of $703 million, according to Thomson Reuters I/B/E/S.

The Santa Clara, California company for the first time disclosed that it made $289 million in sales – about 9 percent of its overall $3.2 billion in revenue – from chips for mining cryptocurrencies.

Analysts had expected $200 million and the greater reliance on the fast-growing but volatile business contributed to shares falling 3.3 percent to $251.66 in extended trading. Nvidia shares have gained 34.4 percent this year, propelling the stock to the top of the Philadelphia Semiconductor Index .SOX. They touched a record high at $260.50 on Thursday before the announcement.

Chief Financial Officer Colette Kress said that the company expects cryptocurrency-related revenue to fall 65 percent to about $100 million in the next quarter. Retail prices for Nvidia’s gaming chips surged earlier this year as miners snapped up chips, a development Nvidia addressed by releasing mining-specific chips.

“While supply was tight earlier in the quarter, the situation is now easing,” Kress told investors on a conference call. “Gamers who had been priced out of the market last quarter” were able to get their hands on new chips a reasonable price, she said.

Analyst Kevin Cassidy from Stifel said the reliance on cryptocurrency concerned some investors. Moreover, he said, Nvidia’s earnings were mostly in line with expectations, “which may not be good enough for shares trading at 40x forward earnings.”

Data center industry sales have boomed as cloud services build out new facilities. Intel Corp (INTC.O) last month said it had posted its biggest-ever quarterly jump in its data center business. For its part, Nvidia said it doubled sales of chips used by cloud companies for so-called deep learning.

Patrick Moorhead of Moor Insights & Strategy said he was not concerned by the lower-than-expected data center revenue because the buying patterns of huge cloud customers were “lumpy.”

Revenue from Nvidia’s best-known business of gaming chips rose 68 percent to $1.72 billion, beating analysts’ average estimate of $1.65 billion.

“At the core of it, gaming is strong,” Chief Executive Jensen Huang told investors on the conference call. “The pent-up demand is quite significant and I’m expecting the gamers to be able to buy new GeForces pretty soon.”

A cryptocurrency boom has powered growth at Nvidia and rival Advanced Micro Devices Inc (AMD.O), but the sector is battling volatility caused by swings in the currency’s value.

Revenue from Nvidia’s automotive business, which includes its Drive platform used in self-driving cars, rose 4 percent to $145 million, also topping analysts’ estimate of $132 million.

Nvidia in March suspended self-driving tests across the globe, a week after an Uber Technologies Inc [UBER.UL] autonomous vehicle struck and killed a 49-year-old woman crossing a street in Arizona. But CEO Huang remained optimistic.

“I expect that driverless taxis will start going to market about 2019,” Huang told investors.

The company’s net income rose to $1.24 billion, or $1.98 per share, in the first quarter ended April 29, from $507 million, or 79 cents per share, a year earlier.

Total revenue rose to $3.21 billion from $1.94 billion.

Excluding items, Nvidia earned $2.05 per share.

Analysts on average had expected revenue of $2.91 billion, according to Thomson Reuters I/B/E/S.

Reporting by Sonam Rai in Bengaluru and Stephen Nellis in San Francisco; editing by Peter Henderson and Lisa Shumaker

Chinese gaming firm Huya prices IPO in New York at $12 per share: source

(Reuters) – The initial public offering of Chinese game-streaming platform Huya Inc on the New York Stock Exchange was priced at $12 per share, a source familiar with the matter said on Thursday, at the upper-end of the indicated price range.

Huya offered 15 million American Depository Shares (ADS), raising $180 million. The company had indicated a price range of $10-$12 each.

Following the offering, Huya’s parent company YY Inc will hold 54.9 percent voting power in the company, while a Tencent Holdings investment unit will hold 39.5 percent, Huya said in a statement.

Huya is one of China’s biggest live-streaming platforms for online gaming, covering over 2,600 different mobile, PC and console games.

China had the world’s largest video games market in terms of revenues and number of gamers in 2017, Huya said. The company had nearly 40 million average mobile monthly active users in the fourth quarter of 2017.

Huya’s revenue almost tripled to 2.18 billion yuan ($344 million) in 2017 from the year previous. It made a loss of 80.9 million yuan.

Credit Suisse, Goldman Sachs and UBS are lead underwriters to the offering.

Reporting by Diptendu Lahiri and Nikhil Subba in Bengaluru, Editing by Rosalba O’Brien

Samsung faces new pressure on group structure after criticism by antitrust head

SEOUL (Reuters) – South Korea’s biggest conglomerate, Samsung Group [SAGR.UL], came for fresh criticism about its ownership structure on Thursday, with the country’s antitrust chief saying it was unsustainable.

FILE PHOTO – Samsung Group chief, Jay Y. Lee, is surrounded by media as he arrives at the Seoul Central District Court in Seoul, South Korea, January 18, 2017. REUTERS/Kim Hong-Ji/File Photo

Korea Fair Trade Commission chief Kim Sang-jo took aim at the group’s circular shareholdings between companies such as Samsung C&T, Samsung Life Insurance, and Samsung Electronics.

The structure has enabled the family of Samsung heir Jay Y. Lee to retain control of the companies in the conglomerate, especially crown jewel Samsung Electronics, with minimum investments, critics have said.

“The clear fact is, the current ownership and control structure of Samsung Group, which goes from Vice Chairman Jay Y. Lee to Samsung C&T to Samsung Life Insurance to Samsung Electronics, is not sustainable,” Kim told reporters on the sidelines of a meeting with business leaders.

Samsung Group’s complex ownership structure has come for criticism earlier too, most notably from U.S. activist hedge fund Elliott Management, which proposed as a solution in 2016 that Samsung Electronics split itself into two.

Samsung Electronics rejected that proposal but accepted part of the fund’s proposals by announcing plans to cancel its existing treasury shares worth over $35 billion by 2018.

Fair Trade Commission’s Kim said he urges Jay Y. Lee to make a decision concerning the ownership structure, adding that Samsung Electronics Vice Chairman Yoon Boo-keun, who attended the meeting, had told him it will be considered.

A Samsung Electronics spokesman did not have an immediate comment.

Others have also questioned the group’s ownership structure recently.

The country’s top financial regulator said on Wednesday that Samsung Life Insurance must consider ways to lessen the risk of having too much of its assets concentrated in one place, including selling some or all of Samsung Life’s stake in Samsung Electronics.

“Lessening the risk of concentrated assets is key to securing financial stability, which is what we are interested in,” said Choi Jong-ku, Chairman of the Financial Services Commission.

“If there are any concerns about retaining management control (of Samsung Electronics) we are saying, look for ways to keep it while lessening the risk.”

Samsung Life Insurance is at the heart of a cross-shareholding structure in which it owns about 8 percent of Samsung Electronics, which has a market value of about $340 billion, according to Thomson Reuters data.

Reporting by Heekyong Yang and Yuna Park; Additional reporting and writing by Joyce Lee; Editing by Muralikumar Anantharaman

​Red Hat and Microsoft bring OpenShift to Azure

Video: Microsoft gains protected-level cloud classification from ASD

At Red Hat Summit in San Francisco, Red Hat and Microsoft announced they were bringing Red Hat OpenShift, Red Hat’s Kubernetes container orchestration platform, to Microsoft’s Azure, Microsoft’s public cloud. The two software powers proclaimed that was the first jointly managed OpenShift offering on the public cloud.

This is a fully managed service. You need not learn how to crack the whip over containers with Kubernetes. Red Hat and Microsoft will take care of that for you.

Read also: From Linux to cloud, why Red Hat matters for every enterprise

Companies are turning to containerized applications and Kubernetes to help address customer, competitive, and market demands at a rapid rate. Indeed, Gartner predicts that container use in the enterprise will jump from 20 percent now to over 50 percent of global organizations by 2020.

That’s great, but there’s nothing like enough Docker and Kubernetes experts to manage all these new containers. Users need solutions to easily orchestrate and manage these applications, across the public cloud and on-premises. Red Hat OpenShift on Azure reduces the complexity of container management. As the companies’ preferred offering for hybrid container workflows for our joint customers, Red Hat and Microsoft will jointly manage the solution for customers, with support from both companies.

In addition to being a fully managed service, Red Hat OpenShift on Azure will bring enterprise developers the following:

  • Flexibility: Freely move applications between on-premises environments and Azure using OpenShift, which offers a consistent container platform across the hybrid cloud.
  • Speed: Connect faster, and with enhanced security, between Azure and on-premises OpenShift clusters with hybrid networking.
  • Productivity: Access Azure services like Azure Cosmos DB, Azure Machine Learning, and Azure SQL DB, making developers more productive.

By enabling the hybrid cloud with OpenShift on-premises and on Azure Stack, the pair offers a consistent on- and off-premises foundation for the development, deployment, and management of cloud-native applications on Azure. This enables customers to pair the Azure public cloud with the flexibility and control of OpenShift on-premises on an Azure Stack private cloud.

With this new offering, you will be able to more easily move your applications between on-premises environments and Microsoft Azure. This is because they are leveraging a consistent container platform in OpenShift across the hybrid cloud. At Red Hat Summit, Burr Sutter, Red Hat’s director of developer experience, showed off a hybrid cloud using an on-site rack, Azure in Texas, and an Amazon Web Services (AWS) in Ohio. Using Kubernetes, Red Hat demonstrated you can load-balance across all three clouds automatically and in real time.

It can do this by using Kubernetes to run a multi-architecture container management that spans both Windows Server and Red Hat Enterprise Linux (RHEL) containers. Red Hat OpenShift on Microsoft Azure will support both Windows containers alongside RHEL containers.

With this new offering comes expanded integration of Microsoft SQL Server across the Red Hat OpenShift landscape. This will soon include SQL Server as a Red Hat certified container for deployment on Red Hat OpenShift on Azure and Red Hat OpenShift Container Platform across the hybrid cloud, including Azure Stack.

More ways for developers to use Microsoft tools with Red Hat, too, as Visual Studio Enterprise and Visual Studio Professional subscribers will get Red Hat Enterprise (RHEL) Linux credits. For the first time, developers can work with .NET, Java, or other popular open-source frameworks

Microsoft had also announced at Microsoft Edge that its own inhouse Kubernetes offering, Azure Kubernetes Service (AKS), is now generally available. AKS is also meant to simplify the process for building out container-based applications.

What customers will get from Red Hat OpenShift on Azure is a managed service backed by operations and support services from both companies. Support extends across their containerized applications, operating systems, infrastructure, and the orchestrator. Further, Red Hat’s and Microsoft’s sales organizations will work together to bring the companies’ extensive technology platforms to customers, equipping them to build more cloud-native applications and modernize existing applications.

Red Hat OpenShift on Azure will be available in preview in the coming months. Red Hat OpenShift Container Platform and Red Hat Enterprise Linux on Azure and Azure Stack are currently available.

Read also: RHEL 7.5, the latest version of Red Hat Enterprise Linux, arrives

Paul Cormier, Red Hat’s president of products and technologies, said: “Hybrid cloud is the only practical way forward. Very few organizations are able to fully silo their IT operations into a solely on-premises or public cloud footprint; instead, it’s a hybrid mixture of these environments that presents a path forward. By extending our partnership with Microsoft, we’re able to offer the industry’s most comprehensive Kubernetes platform on a leading public cloud, providing the ability for customers to more easily harness innovation across the hybrid cloud without sacrificing production stability.”

Scott Guthrie, Microsoft’s executive vice president, Cloud and Enterprise Group, added in a statement: “Microsoft and Red Hat are aligned in our vision to deliver simplicity, choice and flexibility to enterprise developers building cloud-native applications. Today, we’re combining both companies’ leadership in Kubernetes, hybrid cloud and enterprise operating systems to simplify the complex process of container management, with an industry-first solution on Azure.”

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Uber sets safety review; media report says software cited in fatal crash

(Reuters) – Uber Technologies Inc [UBER.UL] on Monday said it has retained a former top U.S. transportation official to advise it on safety after a fatal self-driving crash in March, but it declined to comment on a technology website’s report that a software flaw was responsible for the accident.

The Uber logo is displayed on a screen during the Women In The World Summit in New York City, U.S., April 12, 2018. REUTERS/Brendan McDermid

The Information reported on Monday that Uber has determined the likely cause of the collision in March that killed a pedestrian was a problem with the software that decides how a self-driving car should react to objects it detects. The outlet said the car’s sensors detected a pedestrian but the software decided the car did not need to react right away.

“We can’t comment on the specifics of the incident,” Uber said regarding the report, citing an ongoing investigation by the National Transportation Safety Board (NTSB).

In the March 18 accident an Uber self-driving vehicle struck and killed a 49-year-old woman who was walking across a street in the Phoenix suburb of Tempe.

Uber, which suspended testing of autonomous vehicles after the accident, on Monday said it was looking at its self-driving program and said it retained Christopher Hart, a former chairman of the NTSB, to advise it on safety.

“We have initiated a top-to-bottom safety review of our self-driving vehicles program, and we have brought on former NTSB Chair Christopher Hart to advise us on our overall safety culture,” Uber said. “Our review is looking at everything from the safety of our system to our training processes for vehicle operators, and we hope to have more to say soon.”

Hart, who was named chairman of the Washington-area Metrorail safety commission in March, did not immediately respond to a request for comment.

In a video of the crash released by police, the Uber vehicle appeared not to brake before it struck the woman. There was a human driver sitting behind the wheel, who in the video appeared to be looking down and not at the road. Just before the video stopped, the driver looked upward toward the road and suddenly looked shocked.

The NTSB is expected to issue a preliminary report on the Arizona Uber crash in the coming weeks, a spokesman said.

The National Highway Traffic Safety Administration (NHTSA) is also investigating the incident and declined to comment.

Bryant Walker Smith, a self-driving car expert and law professor at the University of South Carolina, said in an email that the report by The Information raised the question of whether Uber’s “software might have detected something but misclassified as something other than a human (which could include determining that the probability of that something being a human was low).”

False positives and negatives have long been a challenge for self-driving and semi-autonomous driving systems, he said, but said that detecting a pedestrian crossing a street “doesn’t seem like a edge case” that would have been difficult for a self-driving car to handle.

Uber’s chief executive officer, Dara Khosrowshahi, said in April that Uber still believed in prospects for autonomous transport, saying that “autonomous (vehicles) at maturity will be safer.”

Hart, who was chairman of the NTSB when it opened a probe into a fatal Tesla crash involving a driver using the vehicle’s Autopilot system, in 2016 said that self-driving cars will not be perfect.

“There will be fatal crashes, that’s for sure,” Hart said, but he said that would not derail the move toward driverless cars.

Reporting by David Shepardson; editing by David Gregorio and Leslie Adler

Snap hires Amazon veteran Tim Stone as CFO

(Reuters) – Snapchat-owner Snap Inc (SNAP.N) said Tim Stone, an Inc (AMZN.O) veteran who had led the integration of the online retailer’s $13.7-billion Whole Foods acquisition, would replace Andrew Vollero as chief financial officer.

FILE PHOTO: The Snapchat messaging application is seen on a phone screen August 3, 2017. REUTERS/Thomas White/File Photo

Stone, 51, joined Amazon in March 1998 and is currently vice-president of finance. He served as vice-president of the company’s physical stores from August 2017 until February 2018.

Vollero, who guided Snap’s transition to a public company, is leaving to pursue other opportunities and will receive an amount equal to one year of his base salary.

The resignation is not related to any disagreement on any matter related to the company’s management or finances, Snap said in a regulatory filing. (

The appointment comes a week after Snap reported quarterly results that disappointed Wall Street following a recent redesign of its Snapchat messaging app that turned off some long-time fans and advertisers.

Snap’s shares, which have lost 24 percent of their value since reporting last Tuesday, were up 1.6 percent at $10.91 in extended trading on Monday.

“I think somebody had to take the blame for SNAP’s missing numbers and there was likely frustration with both the CFO and management team,” said Summit Insights Group analyst Jonathan Kees.

Snap will likely experience a rocky transition due to the market conditions, app redesign, layoffs, and now senior management disruption, Kees said, who holds a “sell” rating on the stock.

Stone will take charge on May 16, while Vollero will remain as an adviser until August 15.

Stone will have an annual salary of $500,000, according to the filing.

Reporting by Laharee Chatterjee and Munsif Vengattil in Bengaluru, David Ingram in San Francisco; Editing by Shounak Dasgupta and Sriraj Kalluvila

A 66-Year-Old Woman’s Brain Implant Was Shut Off By a Lightning Strike

A doctor in Slovenia has reported on a case with a lesson you might want to remember. If you wind up with a brain implant at some point down the road—including the kind that might someday allow you to control computers with your mind—be sure you don’t try and charge it during a thunderstorm.

According to the report, published earlier this month and spotted by Ars Technica, a 66-year-old patient with a brain implant was in her apartment when it was struck by lightning. The strike was strong enough to “burn and destroy” electrical appliances in the apartment, including a television and air conditioner.

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It was also strong enough to trigger a failsafe that shut off the woman’s brain implant, even though it wasn’t connected to the home’s wiring. The patient was being treated for involuntary neck spasms using a procedure called Deep Brain Stimulation, or DBS. It’s a well-established therapy that has been used for Parkinson’s disease for more than two decades, and was approved to treat severe obsessive-compulsive disorder in 2009. DBS treatment relies on an implant called a neurostimulator, in this case a unit from Medtronic, that sends electrical impulses to electrodes implanted in the brain.

The patient didn’t notice anything was wrong until an hour after the storm, when her spasms returned. She was able to get her implant reactivated and her tremors back under control quickly, and no damage to the implant was found.

But that outcome, according to the reporting doctor, could have been much worse if the implant had been plugged in to recharge during the lightning strike. Though the report doesn’t speculate on just how badly the patient could have been harmed, it does refer to “serious brain injury” in cases where patients with implants were exposed to strong electromagnetic fields. Electrical implants can be shut off or damaged when they get too close to generators, arc welders, or even medical equipment like MRI machines.

A medical neurostimulator isn’t precisely analogous to the kind of brain implants that entrepreneurs including Elon Musk want to develop. In fact, simple brain-computer interfaces have already been shown to work without any implant at all. But more sensitive versions of the technology probably will involve implants, so if you ever decide to literally hack your brain, be careful when you plug it in.

Buffett craves more Apple shares, endorses its buybacks

OMAHA, Neb. (Reuters) – Billionaire Warren Buffett has been buying a boatload of Apple Inc shares and on Saturday suggested he would buy even more shares at the right price.

At Berkshire Hathaway Inc’s annual shareholder meeting, Buffett credited Apple with developing “extremely sticky” products to which consumers become attached and endorsed Apple’s decision to buy back its own stock, saying it was the technology company’s most productive use of cash.

“We would love to see Apple go down in price,” Buffett said. Berkshire is now Apple’s third largest shareholder, behind Vanguard Group and BlackRock Inc.

“I’m delighted to see them repurchasing shares,” Buffett said, just two days after he revealed having bought 75 million additional Apple shares, and four days after Apple said it may repurchase $100 billion of stock. At the end of 2017, Berkshire had owned 165.3 million shares.

“I love the idea of having our 5 percent, or whatever it is, maybe grow to 6 or 7 percent without our laying out a dime.”

And Buffett described it as a mistake that he never thought Alphabet Inc’s Google and Inc made sense as investments for Berkshire.

Buffett, 87, and his longtime partner and fellow billionaire Charlie Munger, 94, also took pointed questions on China, Wells Fargo & Co, guns, healthcare and their investment choices from shareholders, journalists and analysts at the more-than-six-hour meeting in Omaha, Nebraska.

The questions also elicited views on politics from the “Oracle of Omaha” and Munger.

Buffett said it was unlikely that the United States and China would come to loggerheads on trade and believed the countries would avoid doing “something extremely foolish.”

“The United States and China are going to be the two superpowers of the world, economically and in other ways, for a long, long, long time,” Buffett said, and that any tensions should not jeopardize the win-win benefits from trade.

“It is just too big and too obvious … that the benefits are huge and the world is dependent on it in a major way for its progress, that two intelligent countries (would) do something extremely foolish,” he said. “We both may do things that are mildly foolish from time to time.”

The Trump administration has drawn a hard line in trade talks with Beijing, demanding a $200 billion cut in the Chinese trade surplus with the United States, sharply lower tariffs and advanced technology subsidies, people familiar with the talks said on Friday.

Buffett suggested U.S. President Donald Trump should be an “educator-in-chief” on the invisible benefits of trade.

Munger, meanwhile, answered a question on steel tariffs imposed by the White House by acknowledging that U.S. producers are hurting.

“Even Donald Trump can be right on some of this stuff,” he said.

Asked why Buffett was willing to do business with gun makers, he retorted, “I do not believe in imposing my political opinions on the activities of our businesses.”

The billionaire investor said U.S. corporate tax cuts were good for shareholders but cautioned that the long-term effects of economic choices could be hard to gauge.

And Buffett predicted “bad endings” for cryptocurrencies, such as bitcoin, and said long-term U.S. government bonds were a terrible investment because inflation would consume their returns.


Buffett defended Wells Fargo and its chief executive, Tim Sloan, when asked when Berkshire would ditch the bank, one of its largest common stock holdings. Many shareholders applauded the question.

Buffett said the bank had committed the “cardinal sin” of incentivizing employees into “kind of crazy conduct.” U.S. regulators imposed $1 billion of fines last month over lending abuses.

But he maintained that the bank was not “inferior,” as an investment or morally, to its main rivals.

Warren Buffett, CEO of Berkshire Hathaway Inc, talks to a reporter in the exhibit hall at the company’s annual meeting in Omaha, Nebraska, U.S., May 5, 2018. REUTERS/Rick Wilking

Berkshire owned $25.2 billion of Wells Fargo stock as of March 31, down 14 percent from year end as a series of scandals weighed on the bank’s reputation.

Wells Fargo investors last week gave strong backing to the bank’s directors and executives on Tuesday, indicating confidence in its overhauled leadership to rebound.

Buffett addressed his alliance with another banker, JPMorgan Chase & Co’s Jamie Dimon, and Amazon’s Jeff Bezos to tackle healthcare. Buffett said U.S. healthcare costs are a tapeworm on the economy, and he said the venture partners expect to name a chief executive within a couple months.


Buffett faces a challenge investing Berkshire’s more than $108 billion of cash and equivalents, including for acquisitions, saying his “phone is not ringing off the hook with good deals.”

Shortly before the meeting, Berkshire ended its more than year-long stretch of falling operating profit, while a new accounting rule caused the conglomerate chaired by Warren Buffett to suffer an overall net loss. Buffett said the net results were not representative of the business.

The accounting change required Berkshire to report unrealized losses in its equity portfolio, which totaled $170.5 billion at year end, regardless of whether it planned to sell those stocks.

Berkshire’s net loss was $1.14 billion, compared with profit of $4.06 billion a year earlier.

But operating profit, which excludes investment and derivative gains and losses, rose 49 percent to a record $5.29 billion, or about $3,215 per Class A share, higher than the $3,116 per share analysts had expected, according to Thomson Reuters I/B/E/S.


Shareholders have been enthusiastic about Berkshire, which sent out slightly more tickets to this year’s extravaganza than in 2015, when an estimated 42,000 celebrated Buffett’s 50th year at the helm. An even larger audience likely watched online via Yahoo Finance.

Outside the convention center, Berkshire shareholders lined up for prime seats in the middle of the night.

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William Robertson, a Scotland native who fights fires and does forestry work in Switzerland, said he lined up at 11:30 p.m. Friday, 7-1/2 hours before doors opened. This year’s meeting is his third.

“It gets me first place in the queue, I think when people go to so much effort it shows Warren how important he is for us,” Robertson said.

Reporting by Trevor Hunnicutt and Jonathan Stempel in Omaha; Editing by Jennifer Ablan, Nick Zieminski and Richard Chang