'Unacceptable.' 'Ridiculous.' 'Inhumane.' More American Airlines Flight Attendants Speak Out About Their Airline's New Policy

Short answer: If your employees quickly start using words like “unacceptable,” “ridiculous,” “inhumane,” “horrible,” and “suitable for robots,” you might want to consider taking another look at your policy.

Or at least, take a second look at the way you decided to roll it out.

(Seriously, the last time we saw something that created this kind of unified opposition was when United Airlines tried to roll out its “bonus lottery program” six months ago.)

The policy is described in greater detail here, but basically American says it will now “award” flight attendants points for things like taking off more than two personal days or calling in sick during certain busy periods. Accumulate 10 points in 12 months, and the penalty is “termination.”

Almost every flight attendant who shared their thoughts with me objected to the policy, some quite vehemently. Most said that flight attendants get sick more often than others workers because of their working conditions, and it’s unfair to penalize them further as a result.

Here’s a representative sample of comments from currently serving American Airlines flight attendants, after I asked about the new policy:

  • “Unacceptable … [T]hey are implementing [the policy] to get rid of more flight attendants. … This attendance policy is HORRIBLE!”
  • “I’m an American Airlines flight attendant. Every year I come down with colds, flu and sore throats I’ve caught on the airplanes. I do not think sick flight attendants should be rewarded for coming to work with contagious illnesses.”
  • “We’re transporting upwards of 600 people a day in a flying Petri dish with recycled air, of course we’re going to get sick more often.”
  • “In a tube with all those germs we are more prone to get sick.”
  • “I invite you to fly a four day trip with me that consists of 12 legs with [a] common cold, Good luck hearing at the end of that trip, not to mention what your sinuses will feel like…”
  • “This is the most ridiculous policy I’ve seen in my 28 years with AA.”
  • “No, and NO!!!! We work in a steel tube with sick people, germs everywhere, long days, not enough sleep, we are going to get SICK!!! Just ridiculous.”
  • “Although this may be a good and accountable fair system for other departments, it is not fair for flight attendants. They clearly didn’t consider the outrageous trip schedules we get, short layovers [and] not enough rest time, commuting … being on reserve and sleep deprived.” 
  • “We are in a closed, confined area, touching all the same items. …  I think most of us dedicated flight attendants should stay home while sick, without worrying we’ll lose careers we’ve worked so hard to achieve.”
  • “It’s inhuman! This new attendance policy is suitable for robots.”
  • “How does a company give you sick days but penalize you being sick and for using them?”
  • “This new policy is inhumane. … We have to deal with sick people in a confined tube. Poor air quality, toxic fumes, jet leg, three or four flights a day.”

A handful of flight attendants did say they thought some of their colleagues were taking advantage of the current system. One flight attendant said she regretted that the way some flight attendants try to find “loopholes” might lead the airline to restrict things for everyone.

Another flight attendant said: “I do like that the peak time [costs] more points, because people take advantage and call in on major holidays, and that makes it really difficult for the ones actually flying to be home as well.”

This whole situation comes about against two backdrops:

A silver lining for American Airlines? It looks like they’ve found a way to unite their flight attendants–even if it’s in opposition to their own airline’s policy.

Why Being First Might Lead To Being Last

I was excited for her as well, but not for the same reasons.

First, without squashing her hopes, I had to point out that her idea was not as unique as she believed. In fact, it was not unique at all, and a few Google searches revealed services identical to hers by other aspiring entrepreneurs. Granted, these other “businesses” were hardly large and intimidating in the way of competition, but I could see the air let out of her sails, as the saying goes, just a bit.

I shifted our conversation from being a “first mover” to being a “successful copier,” which I admit does not sound nearly as glamorous as the prior. In truth, I told her, countless companies have found success being a successful copier (otherwise known as “second mover advantage“).

In fact, according to a 2014 article in KelloggInsight, first movers “were more successful than late movers in just 15 of 50 product categories.”

More important, I pointed out that being a “first mover” with any business can often be a significant challenge to young and inexperienced entrepreneurs. Consider:

  • First movers must deal with far more unknowns, given the idea is untested in the market.
  • First movers have far less data to leverage for decisions making.
  • First movers have fewer opportunities for collaborating with other professionals who might add value to the idea.
  • First movers will have a more difficult time assembling a team that can execute, because more than likely there are few people available with the experience needed.
  • First movers will often find it difficult to lead, as the business inevitably will hit bumps and meet hurdles that will require consistent adaptation and even deciding to pivot entirely

Fred Wilson, co-founder of Union Square Ventures, a New York City-based venture capital firm well known for its early-stage investments in some of the most progressive (and “first mover”) technology companies, believes “life gets harder, not easier, when you have established yourself as the market leader.”

According to Wilson, in addition to sailing into the unknown, you also need to make significant investments in your products and team to stay relevant, which includes properly managing your balance sheet. Failing to do so could mean that you end up as one of those other memorable first movers that failed.

See, I can’t think of any either.

In the end, first mover advantage is a great strategy to pursue, as long as you and your team are prepared to dive into the unknown and make the necessary investments in time and resources to make it successful.

Otherwise, it is a great strategy — and can even be a competitive advantage — to accept that you are not first and simply allow yourself to be a better second, or third, or so on.

What do you think? Have you had an experience introducing a new product or service to an industry? Share your thoughts with me at @PeterGasca.

Top 6 Career Myths That Make People Miserable

I end up hearing a lot of people complain about their jobs (in general) and specifically about how their career expectations haven’t been met. In almost every case, the complainer has a false belief that is creating the discrepancy between expectation and reality. Here are the most common:

Myth 1: If I skip my vacation, I’ll get a promotion.

Skipping vacation sounds like a great way to impress the boss, but statistically it hasthe opposite effect. According to a recent study of vacation usage, “only 23 percent of those who forfeited their days were promoted in the last year, compared to 27 percent of “non-forfeiters.” 

Rather than skip your vacation, schedule it ahead, and then resist the urge to “check in.” Your ability to separate yourself from work tells your boss that you’re independent and not in the slightest doubt of your value to the firm. 

Myth 2: If I work really hard, I’ll get a raise.

Most people interpret “carrot and stick” as using reward and punishment to motivate. In the original story, though, the carrot was tied to one end of the stick and the other end of the stick was tied to the donkey’s harness. The donkey never gets the carrot. Get it?

The way to get a raise is create more value for the firm, and then documenting that you created that value. But even before that, get a commitment from your boss that if you exceed your goals you’ll get an appropriate raise.  

Myth 3: If I help others, they’ll help me in return.

While humans theoretically value reciprocity, at work you’ll find that often “no good deed goes unrewarded.” If you’re too helpful, you can become a dumping ground where everyone throws tasks they’d rather not do themselves.

This isn’t to say you shouldn’t be helpful, but that it’s wise to temper your helpfulness with a little bit of cynicism. Try negotiating beforehand what the other person will do for you, before you do a favor.

Myth 4: If I’m more accessible, people will value me more.

Just because you’ve got a phone in your pocket and a computer on your desk doesn’t mean you should allow anybody and everybody to monopolize your time based on their convenience.

One of the great truths of marketing is that people place a higher value on resources that are scarce than identical resources that are plentiful. Making yourself available all the time is great way to say “my time isn’t worth much.”

Myth 5: If I turn down a project, my boss won’t like me.

Look, the top priority in your relationship with your boss isn’t to be liked but to be respected. If you accept donkey-work or extra projects when you’re already running at 100%, the boss may be pleased but will secretly think “what a chump!”

As with all work situations, your argumentative watchword should be “what’s best for the team?” It’s almost never good for the team or the company to utilize a high-priced resource (you) to do a low level task.  

Myth 6: If I provide more information, customers will buy.

Contrary to all the biz-blab about the “information economy,” information isn’t valuable. (Everyone has too much already.) What’s valuable is the right information at the right time. And the right time to provide information is when the customer asks for it.

As an aside, this particular myth is responsible for the 90% of marketing campaigns (especially email marketing) that fall flat. Look, the customers are only interested in themselves. So if you’re not talking about them you’re boring them.

The Incredible McDonald's With Butlers, a String Quartet and Reservations Required

Absurdly Driven looks at the world of business with a skeptical eye and a firmly rooted tongue in cheek. 

One way of achieving this noble goal is to appear, well, more noble.

If your experience is more pleasurable, the quaint thought process goes, you’ll want to spend more money.

Last week, however, McDonald’s climbed the mountain to veritable poshness.

Naturally, this happened in the home of posh, the (Dis)United Kingdom.

Here was a McDonald’s with white-gloved butlers. It also enjoyed fancy tableware and candelabra. Red velvet abounded.

And of course you needed a reservation.

This attempt at taste was inspired by a snooty British TV personality named Mark Vandelli.

Here he is in this Haute McDonald’s.

Please believe me, he really is snooty.

Why was McDonald’s pushing the boat out so far toward an exotic island of luxury?

Though this was a one-night-only affair, it isn’t even the first time a McDonald’s has required reservations.

This is merely the latest drift toward competing with the likes of Shake Shack, where quality of food and customer experience are rather significant.

But will there ever come a day when you have to make a reservation to get your Big Mac?

That would, indeed, be a very strange day.

Facebook Ads ‘Unlawfully Discriminate’ by Race, Gender, and Disability, HUD Complaint Charges

The Department of Housing and Urban Development filed a complaint Friday accusing Facebook of allowing advertisers to illegally discriminate against certain groups through its ad system.

The housing-discrimination complaint, filed under the Fair Housing Act, said that advertisers can use Facebook’s ad platform to create target ads that unlawfully favor certain people by suggesting options based on gender or race.

“Facebook unlawfully discriminates by enabling advertisers to restrict which Facebook users receive housing-related ads based on race, color, religion, sex, familial status, national origin, and disability. Facebook mines extensive user data and classifies its users based on protected characteristics,” the complaint said.

“Facebook’s ad-targeting tools then invite advertisers to express unlawful preferences by suggesting discriminatory options, and Facebook effectuates the delivery of housing-related ads to certain users and not others based on those users’ actual or imputed protected traits,” it said.

For example, advertisers can choose to show ads only to one gender, filter out disabled users who show an interest in “assistance dog” or “deaf culture,” and discriminate by national origin by not advertising to people interested in, say, “Latin America” or “Somalia.”

In a statement, Facebook said: “There is no place for discrimination on Facebook; it’s strictly prohibited in our policies. Over the past year we’ve strengthened our systems to further protect against misuse. We’ll continue working directly with HUD to address their concerns.”

Last year, Facebook turned off the ability of its advertisers to exclude racial groups from their audience of ads while it studied how the feature could be use in discriminatory ways.

The 25 Most In-Demand Job Skills Right Now, According to LinkedIn

A whopping 94% of recruiters actively use LinkedIn to vet candidates.

Professionals use LinkedIn when looking for new jobs and to showcase a career and stand out to recruiters.

Does your profile have what it takes stand out from the masses?

If you have any of the following skills, make sure to highlight them on your LinkedIn profile.

Discover all 25 skills, plus key jobs that use those skills and the salary (national average) of a U.S. professional in that industry according to Glassdoor.

Cloud and Distributed Computing Skills

Jobs in this field:

  • Platform Engineer: $104,000

  • Cloud Architect: $142,000

Statistical Analysis and Data Mining Skills

Jobs in this field:

Middleware and Integration Software Skills

Jobs in this field:

Web Architecture and Development Framework Skills

Jobs in this field:

User Interface Design Skills

Jobs in this field:

  • UX Designer: $97,000

  • UI Designer: $82,000

Software Revision Control Systems Skills

Jobs in this field:

Data Presentation Skills

Jobs in this field:

SEO/SEM Marketing Skills

Jobs in this field:

  • SEO Analyst: $53,000

  • SEM Manager: $68,000

Mobile Development Skills

Jobs in this field:

  • Mobile Engineer: $103,000

  • Mobile Application Developer: $91,000

Network and Information Security Skills

Jobs in this field:

  • Information Security Specialist: $86,000

  • Cyber Security Specialist: $58,000

Marketing Campaign Management Skills

Jobs in this field:

  • Online Marketing Manager: $71,000

  • Digital Marketing Specialist: $67,000

Data Engineering and Data Warehousing Skills

Jobs in this field:

  • Software Engineer: $104,000

  • Database Developer: $86,000

Psst! My future unicorn software startup MobileMonkey, world’s best Facebook Messenger marketing platform, is hiring unicorn engineers!

Storage Systems and Management Skills

Jobs in this field:

  • Database Administrator: $77,000

  • System Administrator: $73,000

Electronic and Electrical Engineering Skills

Jobs in this field:

  • Electrical Engineer: $83,000

  • Electronic Engineer: $85,000

Algorithm Design Skills

Jobs in this field:

Perl, Python, and Ruby Skills

Jobs in this field:

Shell Scripting Languages Skills

Jobs in this field:

  • System Engineer: $84,000

  • Java Developer: $72,000

Mac, Linux, and Unix Systems

Jobs in this field:

  • Linux System Administrator: $73,000

  • Unix Administrator: $79,000

Java Development Skills

Jobs in this field:

Business Intelligence Skills

Jobs in this field:

  • Business Intelligence Analyst: $80,000

  • Forecast Analyst: $60,000

Software QA and User Testing Skills

Jobs in this field:

  • User Experience Engineer: $138,000

  • Software Test Engineer: $82,000

Virtualization Skills

Jobs in this field:

  • Network Engineer: $77,000

  • Network Administration: $61,000

Automotive Services, Parts and Design Skills

Jobs in this field:

Economics Skills

Jobs in this field:

  • Business Development Manager: $74,000

  • Research Analyst: $66,000

Database Management and Software Skills

Jobs in this field:

  • Database Specialist: $74,000

  • Database Administrator: $77,000

Take Charge. Another Boring Net Lease REIT

In a recent Seeking Alpha article, I explained that “as a REIT analyst, it’s critical to understand the benefits of fragmentation and consolidation. I have found that over the years, many investors seem to get confused by the concept and, more importantly, the benefits to building a competitive scale advantage”.

While many REITs struggle to move the needle by growing externally, the Net Lease REITs are unique because they can seek new properties in practically any market. As I went on to explain:

“More specifically, within the $4 trillion REIT universe, we have witnessed a growing evolution of companies that have built powerful scale advantages by utilizing low cost of capital, acquisitions, development, and dispositions.”

When I was a new lease developer (over 15 years ago), there were just a handful of Net Lease REITs, and today the list is growing in size, with each company hoping to carve out a differentiated slice of the market share.

Some REITs, like Realty Income (NYSE:O), utilize their size and cost of capital advantages, while others, like EPR Properties (NYSE:EPR), seek to carve an “experiential” niche focusing on theaters, waterparks, golf entertainment, and charter schools.

I like to compare Net Lease REITs to banks, remembering that there are super regional banks, regional banks, and community banks. All provide a valuable service based on scale, cost of capital, customer service, and location.

Similarly, the bank industry blossomed in the early ’80s as intrastate banking restrictions were lifted, allowing new players to enter new markets. Many banks shifted funds to commercial real estate lending (during the ’80s). When total real estate loans of banks more than tripled, commercial real estate loans nearly quadrupled.

In my backyard (South Carolina), I witnessed the “merger mania” whereby many southeastern banks were acquired by each other (hoping to keep the New York and West Coast banks out), and eventually, they were acquired by the gorillas: Wells Fargo (NYSE:WFC) and NationsBank.

And as I reflect on history, it seems that the Net Lease REITs are becoming the modern-day banks for corporately-owned real estate. The sale/leaseback business model gives corporations the enhanced ability to monetize real estate assets, allowing capital to be utilized more efficiently, thus generating more attractive returns.

Thanks to the time-tested REIT laws, the Net Lease REITs have become an important property sector in which highly predictable rent checks are turned into highly sustainable dividends.

Today, I plan to provide readers with a new name to the Net Lease REIT sector and one in which we are initiating coverage (in our Intelligent REIT Lab). Excerpts from this article first appeared in the August edition of the Forbes Real Estate Investor.

(Photo Source)

Introducing Essential Properties

Essential Properties Realty Trust (NYSE:EPRT) began trading on June 21st and will join Realty Income, STORE Capital (NYSE:STOR), EPR Properties and others within our Net Lease coverage universe. I have known the company’s president and CEO, Pete Mavoides, for a few years (when he was at Spirit Realty Capital (NYSE:SRC)), and I decided to provide subscribers with an exclusive interview.

Bio: Pete previously served as President and COO at Spirit Realty Capital from 2011 until 2015. During his time at Spirit, he helped transition the company from a privately held $3.2 billion company to a publicly traded $9.1 billion enterprise. Prior to joining SRC, Pete was the president and CEO of Sovereign Investment Company, a private equity firm that focused on investment opportunities relating to long-term, single-tenant, sale-leaseback opportunities. Before Sovereign, Pete worked as an investment banker for five years, helping corporations monetize their real estate assets. He graduated from the United States Military Academy (West Point), served as an officer in the army and received an M.B.A. from the University of Michigan.

Brad Thomas (BT): How is EPRT different from the other peers?

Pete Mavoides (PM): First and foremost, our CEO and COO have over 43 years of collective experience investing and managing net lease assets over multiple credit cycles. As a result, the majority of our annualized base rent (ABR) was acquired from parties who had previously engaged in one or more transactions that involved a member of our senior management team.

In addition, we have deliberately concentrated on smaller-scale, fungible properties that are leased to service-oriented and experience-based tenants, which represent approximately 88% of our ABR as of March 31, 2018.

Furthermore, given our focus on sale-leaseback transactions with middle-market companies, approximately 65% of our ABR as of March 31, 2018, comes from properties subject to master leases, while over 97% of our ABR as of the same date is required to provide us with unit-level financial reporting.

PM: We believe the following points further highlight our differences relative to our peers:

Management is comprised of experienced net lease investment professionals -Essential’s CEO, Pete Mavoides, and COO, Gregg Seibert, have over 43 years of collective experience investing in net lease real estate, which includes purchasing and managing several billions of assets through multiple credit cycles during their careers.

Highly e-commerce resistant portfolio – With 87.6% of our annualized base rent (ABR) being derived from service-oriented and experience-based tenants as of March 31, 2018, we believe we have one of the most e-commerce resistant portfolios in the net lease REIT sector. Customers must come to our tenants’ locations in order to receive a service and/or have an experience, which we believe insulates us from e-commerce pressures.

Focused approach to investing in industry verticals – Essential has chosen a focused approach towards investing in net lease properties as our top seven industries: quick-service restaurants, car washes, casual dining, medical/dental, convenience stores, early childhood education, and automotive service; [these] collectively represent approximately 72% of our ABR as of March 31, 2018.

Smaller-scale, granular properties – As of March 31, 2018, our average investment per property was $1.9M, which is indicative of: 1.) the less specialized nature of our real estate, 2.) our general lack of exposure to Big Box retail assets, and 3.) the highly fungible nature of our properties, which we believe are easier to sell and re-lease in comparison to larger retail boxes.

Strong weighted average four-wall EBITDAR coverage of 2.9x and high portfolio transparency, with over 97% of our tenants (by ABR) reporting unit-level financials to us – As of March, 31, 2018, we received unit-level financials from 97.4% of our tenants as a percentage of ABR, and our weighted average four-wall EBITDAR coverage for those same tenants was 2.9x.

Long-weighted average lease term of 13.8 years – We have no exposure to pharmacy, apparel, general merchandise, electronics, sporting goods, and other soft goods retailers.

BT: Given your background at Spirit Realty, do you believe EPRT will be most comparable with SRC?

PM: Spirit is a large-cap diversified net lease REIT with a portfolio that has been assembled by multiple management teams over the past 15 years. Spirit also generates a portion of its revenues from asset management fees and preferred dividends. Conversely, Essential has a purpose-built portfolio of smaller-scale net lease properties that have been assembled by the same management team over the last 24 months.

BT: What are EPRT target credit metrics, and do you expect to achieve investment grade ratings in the near term? Also, can you tell us about your cost of capital?

PM: Our stated objective is to manage our net debt / EBITDA under 6.0x, which we believe is a balance sheet statistic that is consistent with investment grade issuers in the REIT industry. As such, we would expect to become an investment grade issuer over time.

We recognize that maintaining an attractive cost of capital is critical for any REIT that is external growth-focused. Our recent IPO and private placement give us ample investable capital to execute our growth plan over the near term.

BT: On the sourcing side, how does EPRT expect to grow – one-off deals, portfolios, or a combination thereof?

PM: Similar to our past deal flow, we would anticipate using our long-standing industry relationships to generate the bulk of our external growth from sale-leaseback transactions with middle-market tenants.

BT: What are EPRT’s favored categories? Do you expect to own casual dining properties?

PM: As of March 31, 2018, our largest industry exposure was quick-service restaurants at 18% of ABR, followed by car washes, casual dining, medical/dental, convenience stores, early childhood education, and automotive service. Collectively, these seven industries represent approximately 72% of our ABR as of March 31, 2018, with casual dining being our third-largest industry exposure at approximately 11% of ABR.

BT: Does EPRT plan to become a developer or provide developer funding? If so, how will you mitigate these risks?

PM: We have no intention of becoming a developer. However, we will agree to fund new development for existing tenants that we know and trust. We believe we mitigate risk by investing with relationship tenants that have a proven track record of operating performance.

BT: How about sale/leasebacks? Will EPRT be competitive in that arena?

PM: Most of our acquisitions since inception have come from internally originated sale-leaseback transactions with middle-market tenants. The vast majority of these deals were acquired from or through parties that had previously engaged in one or more transactions that involved a member of our senior management team. As such, we would anticipate the bulk of our future external growth to come from sale-leaseback transactions with middle-market tenants and relationship-based deals.

BT: AMC is listed as a top tenant. How do you mitigate the risks within the theatre business?

PM: As of March 31, 2018, we owned five theaters that represented 4.6% of our ABR. We mitigate risk by focusing on newly renovated and highly profitable movie theaters that are leased to the top theater operators in the U.S.

BT: Finally, what is your targeted AFFO payout ratio? Why?

PM: Our new Board of Directors will decide our future dividend policy and the resulting AFFO payout ratio. We would anticipate our policy on both matters to be generally consistent with our peer group.

Earnings Update

In Q2-18, EPRT’s total revenue increased 63% to $21.7 million, as compared to $13.3 million for the same quarter in 2017. Total revenue for the six months ended June 30, 2018, increased 79% to $41.9 million, as compared to $23.4 million for the same period in 2017.

The company’s net income increased 71% to $3.5 million, as compared to $2.0 million for the same quarter in 2017. Net income for the six months ended June 30, 2018, increased 75% to $4.6 million, as compared to $2.6 million for the same period in 2017.

Its FFO increased 81% to $9.6 million, as compared to $5.3 million for the same quarter in 2017. FFO for the six months ended June 30, 2018, increased 87% to $17.8 million, as compared to $9.5 million for the same period in 2017.

EPRT’s AFFO increased 68% to $8.5 million, as compared to $5.0 million for the same quarter in 2017. AFFO for the six months ended June 30, 2018, increased 79% to $15.9 million, as compared to $8.9 million for the same period in 2017.

The REIT’s Net Debt-to-Annualized Adjusted EBITDAre was 4.4x times, while Pro Forma Net Debt-to-Annualized Adjusted EBITDAre was 3.9x (i.e., adjusted for the receipt of net proceeds resulting from the underwriters’ partial exercise of an option to purchase additional shares).

It has a $300 million unsecured credit facility with no amounts outstanding as of August 7, 2018. The credit facility includes an accordion feature to increase, subject to certain conditions, the maximum availability of the facility by up to $200 million. In addition, we had approximately $151 million of cash and cash equivalents and restricted cash as of August 7, 2018.

Peer Comps

EPRT hasn’t declared a dividend yet; however, the company provided the below commentary on the Q2-18 conference call as it pertains to a potential dividend. The CEO said:

“Our objective is to maximize shareholder value by generating attractive risk-adjusted returns through owning, managing and growing a diverse portfolio of assets leased to tenants operating in service-oriented and experience-based industries. These returns will come from a combination of growing our cash available for distribution and paying a current dividend. To that end, as we disclosed in our S-11 filing, we anticipate paying an $0.84 per share initial annual dividend. I would anticipate our board to review that dividend policy and make a declaration for the third quarter and the five-day stub period very shortly.”

Note: $.84/$13.90 share price = 6.0% (estimated)

EPRT’sconsensus AFFO/share in 2019 for the eight analysts that cover the company is $1.09. Using analyst estimates, we arrive at EPRT’s projected AFFO payout ratio:

Again, based on analyst estimates, we arrive at our P/AFFO multiple for EPRT of 12.8x.

Summary

EPRT has all of the ingredients to become the next Realty Income. Keeping in mind that the way that O was able to become a premium brand is because of the company’s size and cost of capital advantages. As noted, it is becoming increasingly evident that M&A is likely in the Net Lease sector, and it is only a matter of time before consolidation transforms the top players into the next Wells Fargo and Bank of America in the Net Lease sector.

Source: Yahoo Finance

Source: F.A.S.T. Graphs and EPRT Investor Presentation.

Note: Brad Thomas is a Wall Street writer, and that means he is not always right with his predictions or recommendations. That also applies to his grammar. Please excuse any typos, and be assured that he will do his best to correct any errors, if they are overlooked.

Finally, this article is free, and the sole purpose for writing it is to assist with research, while also providing a forum for second-level thinking. If you have not followed him, please take five seconds and click his name above (top of the page).

Peers: O, National Retail Properties (NYSE:NNN), W.P. Carey (NYSE:WPC), Agree Realty Corp. (NYSE:ADC), Four Corners Property Trust (NYSE:FCPT), Getty Realty Corp. (NYSE:GTY), STOR, EPR, VEREIT, Inc. (NYSE:VER), SRC, Global Net Lease, Inc. (NYSE:GNL), and Lexington Realty Trust (NYSE:LXP).

Disclosure: I am/we are long ACC, AVB, BHR, BPY, BRX, BXMT, CCI, CHCT, CIO, CLDT, CONE, CORR, CTRE, CXP, CUBE, DEA, DLR, DOC, EPR, EQIX, ESS, EXR, FRT, GEO, GMRE, GPT, HASI, HT, HTA, INN, IRET, IRM, JCAP, KIM, KREF, KRG, LADR, LAND, LMRK, LTC, MNR, NNN, NXRT, O, OFC, OHI, OUT, PEB, PEI, PK, PSB, PTTTS, QTS, REG, RHP, ROIC, SBRA, SKT, SPG, SRC, STAG, STOR, TCO, TRTX, UBA, UMH, UNIT, VER, VICI, VNO, VNQ, VTR, WPC.

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.

SEC scrutiny of Tesla grows as Goldman hints at adviser role

WASHINGTON (Reuters) – The U.S. Securities and Exchange Commission has sent subpoenas to Tesla Inc (TSLA.O) regarding Chief Executive Elon Musk’s plan to take the company private and his statement that funding was “secured,” Fox Business Network reported on Wednesday, citing sources.

The electric carmaker’s shares fell as much as 4 percent but cut their losses after Goldman Sachs Group Inc (GS.N) said it was dropping equity coverage of Tesla because it is acting as a financial adviser on a matter related to the automaker.

Investors viewed the Goldman statement as confirming a tweet from Elon Musk on Monday about working with Goldman, even as the reported subpoenas indicated the SEC has opened a formal investigation into a matter.

The latest news extended the roller-coaster ride for Tesla investors in recent days, adding to uncertainty about the future course of the company and whether a deal can be done amid growing regulatory complications.

Tesla and the SEC declined to comment.

Musk stunned investors and sent Tesla’s shares soaring 11 percent when he tweeted early last week that he was considering taking Tesla private at $420 per share and that he had secured funding for the potential deal.

FILE PHOTO: A Tesla sales and service center is shown in Costa Mesa, California, U.S., June 28, 2018. REUTERS/Mike Blake/File Photo

The shares fell 2.6 percent to $338.69 on Wednesday, below $341.99, their closing price the day before Musk tweeted his plan to take Tesla private.

The Tesla CEO provided no details of his funding until Monday, when he said in a blog on Tesla’s website that he was in discussions with Saudi Arabia’s sovereign wealth fund and other potential backers but that financing was not yet nailed down.

Musk also tweeted late Monday night he was working with Goldman Sachs and private equity firm Silver Lake as financial advisers. However, as of Tuesday, Goldman was still negotiating its terms of engagement with Musk, according to a person familiar with the matter.

The 47-year old billionaire’s tweet about secured funding may have violated U.S. securities law if he misled investors. On Monday, lawyers told Reuters Musk’s statement indicated he had good reason to believe he had funding but seemed to have overstated its status by saying it was secured.

The SEC has opened an inquiry into Musk’s tweets, according to one person with direct knowledge of the matter. Reuters was not immediately able to ascertain if this had escalated into a full-blown investigation on Wednesday.

This source said Tesla’s independent board members had hired law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP to help handle the SEC inquiry and other fiduciary duties with respect to a potential deal.

The Wall Street Journal said the SEC was seeking information from each Tesla director.

Reporting by Sonam Rai, Michelle Price and Supantha Mukherjee; Editing by Anil D’Silva, Nick Zieminski and Cynthia Osterman

Tinder founders sue parent IAC, saying it undervalued company

NEW YORK (Reuters) – A group of founders, executives and early employees of Tinder on Tuesday sued IAC/InterActiveCorp (IAC.O), claiming the parent company deliberately undervalued the dating app to avoid paying them billions of dollars and deprived some employees of stock options.

Job seekers and recruiters at the Tinder table gather at TechFair in Los Angeles, California, U.S. March 8, 2018. REUTERS/Monica Almeida

The lawsuit filed in state Supreme Court in Manhattan stated that IAC and its subsidiary Match Group Inc (MTCH.O) deliberately prevented the plaintiffs from cashing in stock options they could exercise and sell to IAC. They are seeking damages of not less than $2 billion.

“The defendants made contractual promises to recruit and retain the men and women who built Tinder,” Orin Snyder, a lawyer for the plaintiffs, said in a statement.

“The evidence is overwhelming that when it came time to pay the Tinder employees what they rightfully earned, the defendants lied, bullied, and violated their contractual duties, stealing billions of dollars,” he said.

IAC and Match did not immediately respond to requests for comment.

The plaintiffs, including Tinder founders Sean Rad, Justin Mateen and Jonathan Badeen and several executives and employees were given stock options in Tinder as part of their compensation in 2014, according to the lawsuit. Because Tinder is a private company, they were not able to exercise their options and then sell stock on the open market.

Instead, they were allowed to exercise their options and sell only to IAC and Match on four specific dates, in 2017, 2018, 2020 and 2021, on which the stock options would be independently valued, according to the lawsuit.

Match and IAC, which owns 80 percent of Tinder-owner Match, appointed Greg Blatt, Match’s then chairman and chief executive, as interim CEO of Tinder in 2016. The plaintiffs said this allowed the two companies to “control the valuation of Tinder.”

The plaintiffs claimed that IAC and Match engaged in a “disinformation campaign” to obtain a “bogus” $3 billion valuation for the 2017 date. Some plaintiffs who had left the company were contractually forced to exercise their options using that valuation, according to the lawsuit, while other plaintiffs kept their options.

However, IAC and Match then merged Tinder into Match without the consent of Tinder’s board of directors and canceled the future dates for exercising options, the lawsuit said.

IAC shares dipped 0.5 percent to $190.25.

Reporting By Brendan Pierson in New York; Editing by Jeffrey Benkoe and Susan Thomas

Kroger to sell private label products in China through Alibaba

(Reuters) – Alibaba Group Holding Ltd has partnered with Kroger Co to sell the grocer’s private label products on its Tmall platform in China, an Alibaba spokesperson told Reuters on Tuesday.

The Kroger supermarket chain’s headquarters is shown in Cincinnati, Ohio, U.S., June 28, 2018. REUTERS/Lisa Baertlein/File Photo

Kroger will sell its Simple Truth products in China, marking the U.S. grocer’s first foray overseas.

Krogers’s shares rose 2.6 percent in afternoon trading.

Reporting by Uday Sampath in Bengaluru, Lisa Baertlein in Los Angeles; Editing by Anil D’Silva

Musk says talking to Saudi fund, others on Tesla buyout

(Reuters) – Tesla Inc (TSLA.O) Chief Executive Elon Musk said on Monday he was in discussions with Saudi Arabia’s sovereign wealth fund and other potential backers of his plan to take the electric car-maker private, but said financing was not yet nailed down.

Musk’s disclosure, made in a blog post on Tesla’s website, comes six days after the Silicon Valley billionaire shocked investors with a post on Twitter saying he was considering taking Tesla private at $420 a share and that funding was “secured.”

Tesla shares fell 1.2 percent after opening sharply higher.

Musk’s tweet last Tuesday is under investigation by the U.S. Securities and Exchange Commission, according to the Wall Street Journal, and is the subject of lawsuits brought against him by investors.

Wall Street has voiced doubts about Musk’s ability to pull off what could be the largest-ever go-private transaction, valued at as much as $72 billion.

Musk said on Monday he expects two-thirds of existing Tesla shareholders would roll over into a private company, but said he was in talks with major shareholders about his proposal.

He added that most capital for the deal would come from equity and it would not be “wise” to burden the company with added debt. Discussing full details on the plan, including the source and nature of the funding, would be “premature” now, he said.

FILE PHOTO: Tesla CEO Elon Musk at a press conference at the Kennedy Space Center in Cape Canaveral, Florida, U.S., February 6, 2018. REUTERS/Joe Skipper/File Photo

“I left the July 31st meeting (with the Saudi fund) with no question that a deal with the Saudi sovereign fund could be closed, and that it was just a matter of getting the process moving,” Musk said.

“This is why I referred to ‘funding secured’ in the August 7th announcement.”

He said that since his Twitter posts on the possibility of a deal the managing director of the Saudi fund had expressed support for proceeding subject to financial and other due diligence.

“I continue to have discussions with the Saudi fund, and I also am having discussions with a number of other investors, which is something that I always planned to do since I would like for Tesla to continue to have a broad investor base,” Musk wrote.

Saudi Arabia’s Public Investment Fund (PIF) is known for its technology investments, including the $45 billion it has spent in SoftBank Group Corp’s (9984.T) Vision Fund.

Yasir Othman al-Rumayyan, managing director of the PIF, when contacted, referred Reuters to the corporate communications team.

PIF officials have said in the past that decisions at the sovereign wealth fund are made with care, emphasizing corporate governance. The PIF board is headed by the Crown Prince Mohammed bin Salman.

Tesla declined to comment further beyond Musk’s blog post.

Moody’s Investor Services on Friday had said Musk’s consideration to take Tesla private was credit negative, noting the company’s negative cash flow in the second quarter and maturities of $1.2 billion in convertible debt through March 2019.

Reporting by Supantha Mukherjee in Bengaluru; editing by Patrick Graham and Bill Rigby

Want to Stop Hiring Mediocre Salespeople? Look for These Red Flags

I’ve had a lot of experience in this area and made some great hires and a few mistakes. Based on my experience, what I look for in a salesperson is: 1) A track record of success, 2) Enthusiasm and passion for the product, 3) Customer-focused mentality, 4) That they are organized and prepared for the interview, and 5) Strong business acumen.

On the other hand, a big red flag for me is someone who has moved sales positions every two years. I want to see someone who has perseverance and drive to overcome challenges and be successful. I really like it when you see on their resume that they were at a company for four to six years and they’ve had multiple promotions. It shows that they can grow and take on additional responsibility. This is definitely something I would look for when hiring a sales manager too.

When looking for sales managers, I also ask myself the following questions: 1) Are they competent, savvy, and successful in their current role selling the product or service? 2) Do they genuinely want to help people? 3) Do they care more about other people than themselves? (This can be hard to tell so you have to ask a lot of probing questions and look at past behaviors.) 4) Do I think this is a person would could hire and retain top talent? (Would I want to work for them if I were a sales person?) 5) Will they represent our company values? and 6) Are they a good mentor and coach? A top salesperson should always make more money than their manager. If the person is in it for the money only, they will likely make a great sales rep, but not a great manager. Managers have to be empathetic and care about their team’s and company’s success more than their own.

When I interview, the first thing I do is look at their LinkedIn profile, hoping to find successes, tenure, and common connections. For a senior role, if it’s not a confidential hire, I will actually reach out to a couple trusted common connections before the interview to see what they think of the candidate. Then during the interview, I give an overview of the company and the role, and then I want to hear their story and what they’ve learned that will serve them well in this role. I spend a lot of time on behavioral questions and real-life experiences and scenarios. The best candidates have done their research and have thoughtful questions for someone at my level. When I ask if someone has any questions and they don’t, it’s unlikely they’ll get the job.

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

The Techies Turning Kenya Into a Silicon Savannah

People hunched over greasy computer screens, crunching data, writing code: The scenes in Janek Stroisch’s photographic series Co.Ke are familiar to anyone who’s ever been to a coffee shop in Silicon Valley. But this isn’t San Francisco. It’s Nairobi, in Kenya’s Silicon Savannah.

Kenya’s $1 billion tech hub is home to more than 200 startups, as well as established firms like IBM, Intel and Microsoft. They’re working to solve problems through tech, though here the problems are a little different than finding a parking spot or getting your laundry folded. The company BRCK, for instance, is connecting off-the-grid schools to the internet through solar-powered routers and tablets. AB3D turns electronic waste into affordable 3D printers that spit out artificial limbs. According to Stroisch, AB3D founder Roy Mwangi “wants Kenya to be understood as a country that has innovation and creative potential.”

That creative potential was unleashed about a decade ago, thanks to a strong private sector, government support, and outside investment. The first major successes came in 2007 with the wildly popular money-transferring app M-PESA and crowdsourcing platform Ushahidi; the latter, launched to track election violence, has since been used to monitor disasters and conflicts everywhere from Haiti to Syria. The Kenyan government poured diesel on the flames in 2009 with TEAMS, the undersea fiber-optic cable that gave Kenyans cheap, reliable broadband—with average speeds faster than those in the US. The next year, incubator and coworking space iHub set up shop and began spawning dozens of companies. Though growth recently slowed, the government hopes to spur development with the construction of a $10 billion smart city 40 miles south of the capital.

All this was news to Stroisch when he heard about it two years ago at a tech panel in Munich, where he lives. And that bothered him. His understanding of Kenya had been shaped by photojournalistic images of poverty, war, and disease—depictions that didn’t paint a full picture of the country. “There was no space for technical innovation in my old-fashioned image of Kenya,” he says. So last year, he traveled to Kenya last year to update that image.

Over two months in Nairobi, Stroisch visited 10 companies, tech hubs, and coworking spaces where developers race to build the next big app, stopping only for coffee and pizza. He photographed them with a DSLR, fixed lens, and two-camera-triggered flashes. “The light stands for knowledge and enlightenment,” he says.

The images present a brighter vision of Kenya, one that narrows the gap between western perceptions of the country and a silicon-shaped reality that is strikingly familiar.

How To Retire Comfortably By 62 With A Million

Let’s say you and your spouse both are 50-years old right now. You have saved about $200,000 in retirement savings in addition to some equity in the house. It is not bad at all. In a short 12 years from now, you will be 62. You may or may not retire at 62, but you decide to at least make plans to retire at 62. You also plan to accumulate retirement assets worth $1 million.

To help with an illustration of this journey, we take the help of our hypothetical couple, John and Lisa.

Why Retire at 62?

We admit it is just a number and so many people, continue to work beyond 62 years of age. However, it is significant in many ways. At 62, you become eligible to draw on your social-security benefits even though your benefits are lower than if you were to wait until the full retirement age between 66 and 67. After you are 59 and a half, you can withdraw money from your retirement saving vehicles like IRA and 401K without any penalty. However, please note that one does not qualify for Medicare until the age of 65. So, if one does decide to retire at 62, he/she would have to buy their own medical insurance for the intervening period (from 62 to 65).

Another reason 62 is a good number from a planning perspective. Even if you continue to work beyond 62, it is better to plan for early to cover any exigency.

Is $1 Million Enough To Retire?

Until the early 2000s, there used to be a consensus amongst the financial planners that one million dollars were sufficient to have a very comfortable retirement. However, not everyone agrees to this milestone anymore. Obviously, one million dollars are not the same as it used to be 20 years ago. Even though the inflation has been low in the last 20 years, one million in the year 2000 would be the same as $1.45 million in 2018 due to inflation. A one million dollar mark does not guarantee a rich retirement, but with some prudent planning and strategies, one million dollar worth of savings can go a long way to fund a comfortable retirement for a couple provided we believe that the other pillars of retirement security like Social Security and Medicare will remain viable.

On the other side of the fence, there is an argument to be made that it is too high a target for so many folks, who may have done everything right but invariably run into the tough times due to corporate layoffs, constant shift in the job market and age discrimination in later years. This is why it is so important to have an emergency reserve of one year worth of living expenses.

Start Saving Early Is Critical:

Still, we believe, the most important factor that determines how rich you are going to be later in life has to do with how soon you are willing to start saving paying yourself first, in other words, start saving for retirement. The table below shows how the early savings can impact the quality of life in later years. Mark starts contributing $6000 a year ($500 a month) at age 29 and increases it by 3% every year until 62. However, Steve waits for another 10 years but starts saving the same amount as Mark at age 39. Assuming they both get 8% return annually, Mark ends up almost double what Steve could accumulate.

Table: Power of saving early in life.

Age

Contribution

Net balance

Contribution

Net Balance

30

6000

6,480

0

0

31

6180

13,673

0

0

32

6365

21,641

0

0

33

6556

30,453

0

0

34

6753

40,183

0

0

35

6956

50,910

0

0

36

7164

62,720

0

0

37

7379

75,707

0

0

38

7601

89,972

0

0

39

7829

105,625

0

0

40

8063

122,784

8063

8,708

41

8305

141,576

8305

18,374

42

8555

162,141

8554

29,082

43

8811

184,629

8811

40,924

44

9076

209,201

9075

53,999

45

9348

236,032

9347

68,414

46

9628

265,313

9628

84,285

47

9917

297,249

9916

101,738

48

10215

332,060

10214

120,908

49

10521

369,988

10520

141,943

50

10837

411,291

10836

165,001

51

11162

456,249

11161

190,255

52

11497

505,165

11496

217,891

53

11842

558,367

11841

248,110

54

12197

616,209

12196

281,131

55

12563

679,073

12562

317,188

56

12940

747,374

12939

356,537

57

13328

821,558

13327

399,453

58

13728

902,108

13727

446,234

59

14139

989,547

14139

497,202

60

14564

1,084,440

14563

552,706

61

15000

1,187,395

15000

613,122

62

15450

1,299,073

15450

678,857

You are 50 and have saved $200,000:

According to the Economic Policy Institute, the national average of retirement savings for 45-49 years olds is $81,000 and $124,000 for 50-54-year-olds. So, 50 being right in the middle would be about $100,000. Considering that for a couple, it should be twice of that figure, let’s assume that you have saved $200,000. Obviously, it is not enough. Once you get to the retirement planning process, suddenly the seriousness of the matter downs upon you. You realize you cannot delay it any further. Sure, you may have other pressing needs such as saving and paying for kid’s college tuition fees. As a good parent, you want to fund the college for the kids, but there are other ways to meet these needs like tuition loans at least partially. Also, kids can work part-time to fund their own education partly. At this stage, retirement savings have to become the priority number one.

Let’s bring in our hypothetical couple: John and Lisa

In the past, we have taken help of our hypothetical couple John & Lisa for our retirement case studies. This time is no different, and we will seek their help.

This is where John & Lisa stand today. Both of them are 50 years old. Their combined annual salary is modest at $125,000. They have $200,000 in their retirement accounts. John and Lisa decide to take their retirement planning to the next level. After all if not now, when will it be? They only have about 12 years left for retirement. Sure they can work longer, but that may not always be their choice.

  • John and Lisa decide to save 16% of their salary towards their 401Ks. These savings will be tax-deferred and reduce their tax liabilities. Until now they have been saving only 6% of their incomes.
  • Their employers, on average, match 80% of the first 6% of the contributions.
  • They have had no IRAs until now. They will put away $10,000 ($5,000 each) towards IRAs. Since they qualify for tax-deductible IRAs, they will use this option instead of Roth IRAs. This will also help bring down their taxes.
  • They will also open a college education fund for their kid and deposit $5,000 every year. However, this will be after-tax, but the qualified tuition withdrawals including the growth will be tax-free.
  • Their target is to reach one million in retirement savings, excluding the primary house.

With the above decisions, and after accounting for the tax-savings (due to pre-tax contributions), their take-home income will reduce by $1,500, even though they will be saving an extra $1,980 every month.

Where to find an extra $1,500 a month?

There are several ways that they can cut down their monthly budget to save this extra $1,500. They are going to look at the several options and choose the ones that are appropriate for them. Some of the options that they are going to look for are:

  • They could cut their spending budget drastically from every expense item and save $1,500 a month. Though doable, but seems difficult to achieve.
  • Alternatively, sell the current house and move to a smaller but newer house, and keep the same standard of living

Their house is worth about $350,000. They still have a mortgage balance of $150,000. After mortgage payout and commissions, they can get about $190,000 net. If they move a little further out in the suburbs and buy a smaller house, they could get a new house for $250,000. If all that works out, they can take only about $100,000 new mortgage on a 15-year term, put 150,000 cash down on the house, put $25,000 away as an emergency fund, and still will be left with $15,000. They will use this $15,000 towards paying off one of the cars. Their monthly mortgage would be about $775. After property taxes, insurance, etc. their monthly expense would be approximately $1,500.

They save about $500 a month in house payments, plus they will immediately save $400 in car payments. Also, the house is new and smaller, so they would save about $150 a month in utilities; however, that will be a washout partially since Lisa will spend more fuel on the car for office commute.

They realize that they spend an unbudgeted amount of about $1,500 a month on things that are wants and mostly not essentials. They can easily cut $600 a month without too much sacrifice.

With the budgeted savings of about $1,500, they can fund the college savings as well as fund the 16% pre-tax contributions to 401K and $5,000 each to the IRAs.

Retirement Planning Part-II: Investing Successfully

The first very important part of the retirement planning is to save enough and save regularly. It is best achieved when it is done on auto-pilot. Being on auto-pilot means you always get paid first before you get money into your checking account to spend on things that essential, and non-essentials.

The second part of the retirement planning is the Investment Planning. This is equally important if not more because after all, you cannot get rich by just sitting on cash. You have to protect your cash from inflation. You also need to compound it over time. After all, Albert Einstein famously called “Compound interest being the eighth wonder of the world.”

John & Lisa decide to take charge of their investments and implement the following strategy:

John’s 401K:

John decides to deploy a risk-adjusted strategy to ensure that he gets most of the gains of the market, but at the same time, he will hedge the risks in case of this bull market turns into a bear market. This strategy is discussed in the later section.

Lisa’s 401K:

Lisa’s company provides a set of funds that she can choose from. Lisa decides the following combination of funds. Once this has been set-up, rest would really be on auto-pilot. Every pay-check, her contributions will be invested in the proportions as selected by her. Since this portfolio is very balanced, she hopes to get growth of about 8% annual for the next 12 years.

  • 20% in S&P500 fund
  • 20% in the equal-weighted S&P500 fund
  • 20% in the Developed International fund
  • 5% in Emerging Markets fund
  • 20% in Bonds
  • 10% in Treasury funds.

IRAs:

Since both John and Lisa will be funding their IRAs every year to the extent of $5,000 each, they will self-manage these funds.

Lisa is a fan of DGI (Dividend Growth Investing) stocks and decides to implement a DGI Portfolio (described in the later section).

John decides to be a little aggressive and will like to implement an income-oriented strategy for his IRA. He will implement a “ High-Income portfolio,” which would aim to generate about 8% income. John does not need income today, so all of the distributions/income will get re-invested. Also, since they are going to contribute the funds gradually for many years, they will be taking advantage of dollar-cost-average while building this portfolio. Since this portfolio is a bit high-risk, the staggered buying approach will reduce the risks as he will be buying high as well as low.

Investment Portfolios:

Lisa’s DGI Portfolio:

This is the portfolio that Lisa will be building for her IRA. She decides to build a portfolio of about 20-30 blue-chip stocks, which in theory she could hold for the next 10-20 years. Obviously, things will change over time, and occasionally she may have to make changes. All the stocks will generally meet the following conditions, however, exceptions can be made sometimes:

  • Market cap > 20 Billion
  • The company has paid dividends in the last 10 years and never cut the dividend.
  • It has increased the dividend payout at least 5 times during the last 10 years.
  • The yield at the time of buying is at least 2%, but preferably more.
  • The price is at least 10% below the 52-week high.

Keeping these rules in mind, she shortlists the following 20 stocks to start with:

Company Name

Ticker

in Billions

Div. Yield %

5 Yr Hist. Div. Growth %

Industry

52-week high

The Kraft Heinz Company

(KHC)

74.8

4.08

4.78

Consumer Staples

-29.53%

Philip Morris International Inc.

(PM)

133.0

5.33

3.29

Tobacco

-28.08%

PPL Corporation

(PPL)

20.2

5.67

2.13

Utility

-27.34%

AbbVie Inc.

(ABBV)

149.3

4.08

16.02

Healthcare/Biotech

-23.66%

UBS Group AG

(UBS)

61.6

4.32

29.25

Financial- Wealth Mgmt.

-23.50%

General Mills, Inc.

(GIS)

27.6

4.22

6.23

Consumer Staples

-22.79%

Broadcom Limited

(AVGO)

95.1

3.18

53.31

Technology

-22.60%

CVS Health Corporation

(CVS)

66.5

3.06

19.97

Healthcare/Retail

-21.74%

Anheuser-Busch InBev SA/NV

(BUD)

170.6

3.68

9.95

Beverages

-20.05%

3M Company

(MMM)

122.3

2.61

14.13

Industrial

-19.36%

Lam Research Corporation

(LRCX)

30.5

2.37

42.31

Technology

-18.69%

Walmart Inc.

(WMT)

265.9

2.32

2.07

Retail

-18.06%

AT&T Inc.

(T)

198.9

6.17

2.18

Telecom/Media

-18.00%

MetLife, Inc.

(MET)

46.8

3.65

8.10

Insurance

-17.37%

Dominion Energy Inc.

(D)

46.5

4.7

8.39

Utility

-16.30%

Ventas, Inc.

(VTR)

20.8

5.41

2.73

REIT – Healthcare

-15.93%

Starbucks Corporation

(SBUX)

70.2

2.3

23.93

Beverages/Restaurants

-15.59%

Enbridge Inc

(ENB)

61.5

5.81

13.10

Energy

-14.53%

Lockheed Martin Corporation

(LMT)

90.4

2.52

11.09

Defense

-12.07%

Johnson & Johnson

(JNJ)

352.7

2.74

6.40

Healthcare/Drugs

-11.26%

Average

105.3

3.91%

13.97%

-19.82%

John’s High Income Portfolio:

John’s IRAs will be used to implement this strategy. This basket will consist of high-income securities to generate roughly 8% income.

The funds will be divided into three types of securities:

Realty Income Corp. (O), Omega Healthcare Investors (OHI), STAG Industrial (STAG), STORE Capital Corporation (STOR), Ventas, Inc. (VTR).

  • BDCs/ mREITS:

Ares Capital Corporation (ARCC), Main Street Capital Corporation (MAIN), Annaly Capital Management, Inc.(NLY), Golub Capital BDC (GBDC), New Residential Investment Corp. (NRZ).

Cohen & Steers Tot Ret Realty (RFI), Cohen & Steers Infrastructure (UTF), BlackRock Taxable Municipal Bond (BBN), Kayne Anderson MLP (KYN), Tekla Healthcare Investors (HQH), PIMCO Dynamic Credit Income (PCI), Columbia Seligman Premium Tech (STK).

John’s Risk-Hedged Strategy (for 401K):

Since John is implementing this strategy within his 401K, the strategy needs to be simple and implantable. Most 401K accounts offer a limited number of funds that one has to choose from. John decides to implement one such strategy which rotates on a monthly basis. This strategy may not be most efficient or provide the most return, but it is simple and easy to implement.

The strategy will be invested in one of the following 3 securities (or equivalent funds), which are:

  • Vanguard 500 Index Investor (VFINX)
  • Vanguard Total Intl Stock Index Inv (VGTSX)
  • Vanguard Total Bond Market Inv (VBMFX)

VBMFX is the hedging asset and will be used only when the other two main securities are not performing well. By deploying this strategy, since 1997, the worst year return was -7.86% in 2015. In the year 2008, it was down only -5.50% compared to -37% for S&P500.

Equivalent ETFs for the above mutual funds:

VFINX

SPY

VGTSX

VTI

VBMFX

TLT

Every month, the strategy will check the performance of the three assets for the previous six months and select the best performing asset. The portfolio will be invested in the top performing asset for the next month. The process will be repeated every month. Below is the back-testing results since 1997 and performance comparison with S&P500. The model portfolio accumulated more than double of the S&P500, mainly because of smaller drawdowns during the bear markets of 2001-2003 and 2008-2009.

Portfolios Values at 62 years:

Lisa’s Returns:

Assumed annual growth for Lisa’s 401K: 8%

Assumed annual growth for Lisa’s IRA: 9.5%

Lisa’s

401K

IRA

Total

Starting capital

Contribution

Ending Capital

Starting capital

Contribution

Ending Capital

(401K+IRA)

Growth %

100,000

8.0%

9.5%

Year 2019

100000

12340

$120,340

0

5000

$5,000

$125,340

2020

120340

12340

$142,307

5000

5000

$10,475

$152,782

2021

142307

12340

$166,032

10475

5000

$16,470

$182,502

2022

166032

12340

$191,654

16470

5000

$23,035

$214,689

2023

191654

12340

$219,327

23035

5000

$30,223

$249,550

2024

219327

12340

$249,213

30223

5000

$38,094

$287,307

2025

249213

12340

$281,490

38094

5000

$46,713

$328,203

2026

281490

12340

$316,349

46713

5000

$56,151

$372,500

2027

316349

12340

$353,997

56151

5000

$66,485

$420,482

2028

353997

12340

$394,657

66485

5000

$77,801

$472,458

2029

394657

12340

$438,569

77801

5000

$90,193

$528,762

Year 2030

438569

12340

$485,995

90193

5000

$103,761

$589,756

John’s Returns:

Assumed annual growth for John’s 401K: 9.5%

Assumed annual growth for John’s IRA: 9.0%

John’s

401K

IRA

Total

Starting

Contribution

Ending Capital

Starting

Contribution

Ending Capital

(401K+IRA)

Capital

Capital

Growth %

100000

9.5%

9.0%

Year 2019

100000

12340

$121,840

0

5000

$5,000

$126,840

2020

121840

12340

$145,755

5000

5000

$10,450

$156,205

2021

145755

12340

$171,942

10450

5000

$16,391

$188,332

2022

171942

12340

$200,616

16391

5000

$22,866

$223,482

2023

200616

12340

$232,014

22866

5000

$29,924

$261,938

2024

232014

12340

$266,396

29924

5000

$37,617

$304,013

2025

266396

12340

$304,043

37617

5000

$46,002

$350,046

2026

304043

12340

$345,268

46002

5000

$55,142

$400,410

2027

345268

12340

$390,408

55142

5000

$65,105

$455,513

2028

390408

12340

$439,837

65105

5000

$75,965

$515,801

2029

439837

12340

$493,961

75965

5000

$87,801

$581,763

Year 2030

493961

12340

$553,228

87801

5000

$100,704

$653,931

Total Savings for both Lisa and John at 62 years of age:

Lisa:$589,700

John:$653,900

Total:$1,243,600

Conclusion:

As you would observe, in the above model, John and Lisa actually exceeded their targets. Some would question the constant rate of return in the above portfolios. It is almost guaranteed that some years, they would have negative returns but then high returns in some other years. So, we do expect them to balance out. We particularly feel confident of the long-term performance of the DGI portfolio and the Rotational Portfolio using SPY/VTI/TLT. The idea here is that John and Lisa are not only diversifying in various stocks, but also in the form of various strategies and assets.

Also, another important message this exercise is trying to send is the importance of a high rate of savings. Out of the final total $1.25 million, their own contributions were nearly 50% at $616,000, besides $627,000 from growth. Savings and Investing wisely are the two legs of the three-legged retirement stool, the third being the Social security.

Disclaimer: The information presented in this article is for informational purposes only and in no way should be construed as financial advice or recommendation to buy or sell any stock. Please always do further research and do your own due diligence before making any investments. Every effort has been made to present the data/information accurately; however, the author does not claim 100% accuracy. Any stock portfolio or strategy presented here is only for demonstration purposes.

Disclosure: I am/we are long ABT, ABBV, JNJ, PFE, NVS, NVO, CL, CLX, GIS, UL, NSRGY, PG, ADM, MO, PM, KO, PEP, D, DEA, DEO, ENB, MCD, WMT, WBA, CVS, LOW, CSCO, MSFT, INTC, T, VZ, VOD, VTR, CVX, XOM, ABB, VLO, MMM, HCP, O, OHI, NNN, STAG, WPC, MAIN, NLY, ARCC, DNP, GOF, PCI, PDI, PFF, RFI, RNP, STK, UTF, EVT, FFC, HQH, KYN, NMZ, NBB, JPS, JPC, JRI, TLT.

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.

Intel Is Starting To Look Attractive Again

Like many “old tech” names, Intel (INTC) seems to be a bit of a battle ground stock. In other words, it’s a company that people love to hate. I’m not quite sure why, but I see the same sort of sentiment when it comes to other old school big tech names like IBM (IBM), Cisco (CSCO), Microsoft (MSFT), Oracle (ORCL), etc. Basically, if a company was around during the dot.com boom, the history associated with that sort of survival in the volatile tech space is going to have created a lot of friends and foes.

Money is made and lost with fierce velocity in this space. I’m not surprised that emotions run rampant when it comes to the old tech names. It’s hard to let go of a grudge. However, this piece isn’t about emotion, but instead a hyper focus on the rationality of fundamentals. I’ve owned Intel for years now, but after its recent sell-off, I thought it was time to revisit the name and see if its fundamental valuation pointed towards a buy.

The last piece I wrote on INTC was published on September 20th, 2017. I was bullish then, though not enough to add to my position. In hindsight, I was being greedy. I compared INTC’s recent performance to its peers and saw that it had massively underperformed. This was concerning, but then again, I like to buy weakness and INTC’s 12.7x P/E ratio at the time was attractive. It was yielding 2.95% with a healthy 49% TTM payout ratio. Sure, the company’s 5-year DGR of 5.86% wasn’t extremely attractive, but ~6% growth on a ~3% yield isn’t anything to sneeze at.

In the end, I passed, deciding to simply let the shares I already owned run, instead of adding more. Unfortunately for me, this turned out to be a mistake. In relatively short order, INTC shares ran up from the $37 they were trading at when I wrote that piece to the nearly $58 that they hit in mid-2018. During this run, the P/E ratio shot up from 12.7x to nearly 15x on a TTM basis. Well, after its recent sell-off, the TTM P/E is back down to that 12.7x range, and now I must ask myself, am I going to play it safe and potentially let history repeat itself?

Before I go on, I want to highlight the fact that my goal with this piece is to focus solely on Intel’s fundamentals. I know there’s been a lot of debate lately regarding the quality of INTC’s management, especially with CEO Brian Krzanich out and a lot of changes going on in the c-suite. Investors and analysts alike have been concerned with chip delays and potential market share being taken away from Intel by peers. In short, I’m not a Silicon Valley insider and I know it’s not my place to make calls on those sorts of things. But, what I can do well is take a look at Intel’s fundamentals, past, present, and future, using the various consensus estimates and make valuation-based decisions.

So, with that being said, let’s start at my favorite place when it comes to relative value analysis: F.A.S.T. Graphs. As you can see below, after cresting above their 10-year normal P/E for a bit back in June, shares have crossed back below that long-term average (I use the 10-year chart for INTC’s long-term average instead of the 20-year because the 20-year includes P/Es of ~50x back during the early 2000s and those really distorted the average and made the comparisons unrealistic).

Source: F.A.S.T. Graphs

I don’t think INTC is absurdly cheap by this relative metric. Shares were much cheaper than they are today back in 2012-2013 and during the summer of 2017. With that said, INTC has made 5 runs up to the ~15x range since 2014, and I wouldn’t be surprised to see sentiment change and push shares higher again.

15x has served as a pretty strong ceiling for INTC, and I think at this point, it makes sense for investors to consider using the ~12x and ~15x areas as boundaries for a potential trade since the company has been essentially stuck in this range since the start of 2014.

But, for longer-term oriented investors who don’t like the idea of trading in and out of the stock at the peaks/troughs, it’s also worth noting that INTC’s EPS continues to rise, which means that the stock’s price at both the low and high end of this multiple spectrum also rises over time. INTC has been in a bumpy uptrend since the bottom of the Great Recession, and although growth is expected to slow over the next year or two, I think the bull market in the semiconductor space will be powerful enough to continue to serve as a tailwind for this longer-term trend.

Speaking of the semiconductor industry as a whole, I think it’s important to note that Intel remains cheaper than many of its peers. There are the highflying names like NVIDIA (NVDA) and Advanced Micro Devices (AMD) that trade in the 40-50x range. Texas Instruments (TXN) trades for 22x. Analog Devices (ADI) trades for 17.7x. Taking a broader step back, the iShares PHLX SOX Semiconductor ETF (SOXX) trades for 24.5x (which is essentially double Intel’s valuation).

And as much as haters like to hate, while INTC has certainly underperformed its peers in the recent past, it has outperformed the broader market by a wide margin.

Are there other semis with better growth prospects than Intel? Sure there are. However, when you factor in Intel’s cash flows and dividend yield, I have a hard time believing that it deserves to trade at such a discount to the market and its peer group.

Broadcom (NASDAQ:AVGO) trades with a similarly low P/E ratio, but that company has been mired down with M&A news. Micron’s (MU) P/E is much lower than Intel’s even, but it focuses primarily on the DRAM/NAND memory chip area which many believe to be much more cyclical than Intel’s much more diversified portfolio of products. I understand that Intel has its problems too. C-suite uncertainty is never viewed in a positive light by the market. And maybe I’m biased because of it, but I’ve made good money buying Intel shares on CEO related weakness before (I originally bought INTC shares when Paul Otellini stepped down and Krzanich took over.

I realize that move has little bearing to the present, though I typically believe that high-quality, mega-cap operations like Intel aren’t dependent on just one person to succeed, and when billions of dollars are shed from the market cap because of a CEO’s departure, I feel comfortable buying on what I deem to be an overreaction.

This is especially the case after INTC raised both top- and bottom-line guidance during the most recent quarter. FY18 estimates for revenues increased from ~$67.5b to ~$69.5b. The midpoint of FY GAAP EPS estimate is $4.10 a share now, up from $3.85 before. The management is guiding for ~$15b of free cash flow on a non-GAAP basis. All in all, these are numbers that I like to see as a DGI investor.

After Friday’s sell-off, shares are yielding nearly 2.5%. This yield isn’t quite as attractive as it was last time INTC was trading for ~12.7 earnings, but it is still well above the S&P 500’s yield.

I didn’t add to my position on Friday because I’ve become averse to making purchases on Fridays since the trade war spats have begun (a lot of market moving news seems to come out over the weekend). With that said, Intel has moved to the top of my watch list, and assuming nothing major changes before now and then, I will be strongly considering buying share early next week.

Disclosure: I am/we are long INTC, AVGO, NVDA, IBM, CSCO, MSFT.

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.

Intel Is Starting To Look Attractive Again

Like many “old tech” names, Intel (INTC) seems to be a bit of a battle ground stock. In other words, it’s a company that people love to hate. I’m not quite sure why, but I see the same sort of sentiment when it comes to other old school big tech names like IBM (IBM), Cisco (CSCO), Microsoft (MSFT), Oracle (ORCL), etc. Basically, if a company was around during the dot.com boom, the history associated with that sort of survival in the volatile tech space is going to have created a lot of friends and foes.

Money is made and lost with fierce velocity in this space. I’m not surprised that emotions run rampant when it comes to the old tech names. It’s hard to let go of a grudge. However, this piece isn’t about emotion, but instead a hyper focus on the rationality of fundamentals. I’ve owned Intel for years now, but after its recent sell-off, I thought it was time to revisit the name and see if its fundamental valuation pointed towards a buy.

The last piece I wrote on INTC was published on September 20th, 2017. I was bullish then, though not enough to add to my position. In hindsight, I was being greedy. I compared INTC’s recent performance to its peers and saw that it had massively underperformed. This was concerning, but then again, I like to buy weakness and INTC’s 12.7x P/E ratio at the time was attractive. It was yielding 2.95% with a healthy 49% TTM payout ratio. Sure, the company’s 5-year DGR of 5.86% wasn’t extremely attractive, but ~6% growth on a ~3% yield isn’t anything to sneeze at.

In the end, I passed, deciding to simply let the shares I already owned run, instead of adding more. Unfortunately for me, this turned out to be a mistake. In relatively short order, INTC shares ran up from the $37 they were trading at when I wrote that piece to the nearly $58 that they hit in mid-2018. During this run, the P/E ratio shot up from 12.7x to nearly 15x on a TTM basis. Well, after its recent sell-off, the TTM P/E is back down to that 12.7x range, and now I must ask myself, am I going to play it safe and potentially let history repeat itself?

Before I go on, I want to highlight the fact that my goal with this piece is to focus solely on Intel’s fundamentals. I know there’s been a lot of debate lately regarding the quality of INTC’s management, especially with CEO Brian Krzanich out and a lot of changes going on in the c-suite. Investors and analysts alike have been concerned with chip delays and potential market share being taken away from Intel by peers. In short, I’m not a Silicon Valley insider and I know it’s not my place to make calls on those sorts of things. But, what I can do well is take a look at Intel’s fundamentals, past, present, and future, using the various consensus estimates and make valuation-based decisions.

So, with that being said, let’s start at my favorite place when it comes to relative value analysis: F.A.S.T. Graphs. As you can see below, after cresting above their 10-year normal P/E for a bit back in June, shares have crossed back below that long-term average (I use the 10-year chart for INTC’s long-term average instead of the 20-year because the 20-year includes P/Es of ~50x back during the early 2000s and those really distorted the average and made the comparisons unrealistic).

Source: F.A.S.T. Graphs

I don’t think INTC is absurdly cheap by this relative metric. Shares were much cheaper than they are today back in 2012-2013 and during the summer of 2017. With that said, INTC has made 5 runs up to the ~15x range since 2014, and I wouldn’t be surprised to see sentiment change and push shares higher again.

15x has served as a pretty strong ceiling for INTC, and I think at this point, it makes sense for investors to consider using the ~12x and ~15x areas as boundaries for a potential trade since the company has been essentially stuck in this range since the start of 2014.

But, for longer-term oriented investors who don’t like the idea of trading in and out of the stock at the peaks/troughs, it’s also worth noting that INTC’s EPS continues to rise, which means that the stock’s price at both the low and high end of this multiple spectrum also rises over time. INTC has been in a bumpy uptrend since the bottom of the Great Recession, and although growth is expected to slow over the next year or two, I think the bull market in the semiconductor space will be powerful enough to continue to serve as a tailwind for this longer-term trend.

Speaking of the semiconductor industry as a whole, I think it’s important to note that Intel remains cheaper than many of its peers. There are the highflying names like NVIDIA (NVDA) and Advanced Micro Devices (AMD) that trade in the 40-50x range. Texas Instruments (TXN) trades for 22x. Analog Devices (ADI) trades for 17.7x. Taking a broader step back, the iShares PHLX SOX Semiconductor ETF (SOXX) trades for 24.5x (which is essentially double Intel’s valuation).

And as much as haters like to hate, while INTC has certainly underperformed its peers in the recent past, it has outperformed the broader market by a wide margin.

Are there other semis with better growth prospects than Intel? Sure there are. However, when you factor in Intel’s cash flows and dividend yield, I have a hard time believing that it deserves to trade at such a discount to the market and its peer group.

Broadcom (NASDAQ:AVGO) trades with a similarly low P/E ratio, but that company has been mired down with M&A news. Micron’s (MU) P/E is much lower than Intel’s even, but it focuses primarily on the DRAM/NAND memory chip area which many believe to be much more cyclical than Intel’s much more diversified portfolio of products. I understand that Intel has its problems too. C-suite uncertainty is never viewed in a positive light by the market. And maybe I’m biased because of it, but I’ve made good money buying Intel shares on CEO related weakness before (I originally bought INTC shares when Paul Otellini stepped down and Krzanich took over.

I realize that move has little bearing to the present, though I typically believe that high-quality, mega-cap operations like Intel aren’t dependent on just one person to succeed, and when billions of dollars are shed from the market cap because of a CEO’s departure, I feel comfortable buying on what I deem to be an overreaction.

This is especially the case after INTC raised both top- and bottom-line guidance during the most recent quarter. FY18 estimates for revenues increased from ~$67.5b to ~$69.5b. The midpoint of FY GAAP EPS estimate is $4.10 a share now, up from $3.85 before. The management is guiding for ~$15b of free cash flow on a non-GAAP basis. All in all, these are numbers that I like to see as a DGI investor.

After Friday’s sell-off, shares are yielding nearly 2.5%. This yield isn’t quite as attractive as it was last time INTC was trading for ~12.7 earnings, but it is still well above the S&P 500’s yield.

I didn’t add to my position on Friday because I’ve become averse to making purchases on Fridays since the trade war spats have begun (a lot of market moving news seems to come out over the weekend). With that said, Intel has moved to the top of my watch list, and assuming nothing major changes before now and then, I will be strongly considering buying share early next week.

Disclosure: I am/we are long INTC, AVGO, NVDA, IBM, CSCO, MSFT.

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

The Dead Stocks Are Coming Back – Cramer's Mad Money (8/9/18)

Stocks discussed on the in-depth session of Jim Cramer’s Mad Money TV Program, Thursday, August 9.

There are lot of ways to win in the stock market, and looking at stocks that were left for dead is one sure-shot way of winning. Thursday was one of those days where stocks that were ignored by the Street for long soared.

Viacom (NYSE:VIA) reported a great quarter after it saw a good turnaround, which was started in December 2016 by CEO Bob Bakish. Viacom, which owns film and television properties, including MTV, Nickelodeon, Comedy Central, BET, VH1 and Paramount Pictures, has been put through cost-cutting and has boosted its intellectual property wares. The company is also refurbishing the company’s balance sheet and driving sales with low-budget hits. “You know what’s the most amazing thing about this turn? So few people know that it’s happening – most people aren’t even aware that Viacom even owns this stuff,” said Cramer.

“After today, I wouldn’t be so sure CBS is the better business. However, I’d certainly rather own Viacom here than CBS. Everyone’s given up on Viacom, which means it’s got much more opportunity for upside than a stock everyone fawns over, like CBS,” added Cramer.

Century Link (NYSE:CTL) also surprised the Street with a good quarter, rising guidance, which led to the stock rallying 13%. The company had merged with Level 3 Communications, and its turnaround has been incredible.

Talking about turnarounds after being left for dead, how can Yelp (NYSE:YELP) be left behind? The company reported good earnings and beat on all counts, which led to the stock rallying 26%. It’s back in the spotlight. DowDuPont (NYSE:DWDP) also went up after its CEO, Ed Breen, purchased $2 million worth of stock.

Other stocks that were left for dead but are coming back into the spotlight are Michael Kors (NYSE:KORS), Spotify (NYSE:SPOT) and Roku (NASDAQ:ROKU).

CEO interview – Magna International (NYSE:MGA)

The stock of Magna International is down 5% for the year after the company missed in its recent quarter and cut guidance. Cramer interviewed CEO Don Walker to find out more about the quarter.

Walker said that the company had a record quarter in terms of revenue. Though it missed consensus, there were headwinds in the form of tariffs and the China joint venture. “If the tariffs stay the way they are – and who knows if anything more gets ratcheted up in China – it’s about a $60M a year hit,” he added.

There is no clarity on how much of the increased costs will be passed on to customers. “But I also think, at some point in time, NAFTA does get re-negotiated and the tariffs within NAFTA go away, because it’s bad for all three countries,” said Walker.

The company has entered into JVs with Lyft (LYFT) and Beijing Automotive Group, and it sees brighter times ahead. “I think the industry is the highest-tech industry in the world. We have lots of technology, we’re spending a lot in R&D, so I think there’s huge opportunities globally in the automotive industry,” he concluded.

World Wrestling Entertainment (NYSE:WWE)

The stock of WWE is up 250% since Cramer first recommended it in March 2017. “When you’ve got a triple, you need to take something off the table. That’s common sense. It’s portfolio management,” he said. Is it too late for investors to buy in? Cramer digs deeper to find out.

In the past few years, WWE has transformed itself from a traditional television and pay-per-view play to a direct-to-consumer colossus. Its digital properties are driving growth, and the company’s online streaming platform has made it the most followed sports brand in the world on social media.

Despite digital subscriber growth, the company has not overlooked its traditional TV roots. It extended its long-time deal with NBCUniversal subsidiary to air Monday Night Raw, and it agreed to air WWE Smackdown on Fox Sports (FOX, FOXA). “The really amazing thing with this story, though, is that WWE has both a thriving online subscription business, where people pay them directly for premium content, and they can negotiate better deals with their traditional TV partners,” added Cramer.

The company not only produces content for paid television, but also different content for YouTube and Facebook. “On the 2020 numbers, WWE’s trading at less than 25 times earnings, which seems a lot more reasonable, doesn’t it, when you’ve got a 37% long-term growth rate? WWE has caught fire here, so if you already own it from when I first recommended it, book partial profits,” Cramer concluded.

For those who do not own the stock, wait for a pullback before buying some.

CEO interview – CyberArk Software (NASDAQ:CYBR)

CyberArk reported good earnings and the stock rallied. Cramer interviewed chairman and CEO Udi Mokady to find out what lies ahead.

Mokady said the company had a good quarter in all three geographies. The new regulations in EU gave it momentum, government spending on cybersecurity in the US has increased and companies are taking cybersecurity seriously to protect their sensitive assets.

Mokady adds that cybersecurity is getting important which each day as threats from North Korea and Iran still loom. With the upcoming elections, the interference remains a top focus.

Viewer calls taken by Cramer

Mylan (NASDAQ:MYL): Cramer doesn’t like the company because it doesn’t have good margins and it did not have a good quarter either.

Boot Barn Holdings (NASDAQ:BOOT): The sales momentum and rising same-store sales are impressive.

AMC Entertainment Holdings (NYSE:AMC): Cramer did not opine on the stock, as the viewer knew more about it than he did. He said he needs to work more on the stock.

::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::

Jim Cramer’s Action Alerts PLUS: Check out Cramer’s multi-million dollar charitable trust portfolio and uncover the stocks he thinks could be HUGE winners. Start your FREE 14-day trial now!

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Gorilla Glass 6 Is More Durable and Built For the Future

There’s no shame in cracking your smartphone’s screen. It happens, especially to the bold and the caseless. Better to focus on all the times it doesn’t happen, those fumbles where the phone hits the floor and bounces back unscathed. For that, you can thank Gorilla Glass, the miracle material found in every iPhone and Android flagship display for over a decade. And Gorilla Glass 6, announced this week, isn’t just tougher—it’s built for the future of phones.

Start with what Gorilla Glass 6 can do. Corning, the company that makes it, says it has focused here on durability over time. In its own testing, the next generation of Gorilla Glass held up over 15 drops from a height of 1 meter on rough surfaces. That’s up to twice what Gorilla Glass 5, released two years ago, could manage.

“That’s what we were trying to solve, that kind of competitive, continuous drop,” says Corning division vice president Scott Forester. By contrast, Gorilla Glass 5 prioritized surviving a single drop from what Forester calls “selfie height.”

To accomplish that priority shift without making trade-offs, Corning turned not just to clever chemistry, but an entirely new composition. Specifically, Corning increased what’s called the compressive stress of the glass, which is what helps it withstand impacts.

“There’s always two fundamental components for Gorilla Glass. One is the actual glass composition at the atomic level, which elements are in the glass itself. And what we do is combine it with an ion exchange process, basically a strengthening process,” says Forester. The glass gets dipped into a molten bath of salts, where sodium ions leave while larger potassium ions enter. “You’re jamming them into the glass. And what that does is create this compressive stress at the surface.”

The process of creating a new generation of Gorilla Glass, then, becomes a bit like reinventing the wheel, or maybe more accurately two gears—the composition and the strengthening process—that align to meet your objectives.

“You get to a point where there’s only so much you can do within a given family of glass compositions, and that’s when it becomes necessary to go to a completely new family of glasses that can offer some enhanced property that was not previously available,” says John Mauro, a professor of materials science and engineering at Penn State University, who had previously spent 18 years at Corning and worked on early versions of Gorilla Glass. “Every time we would come up with something, it would be the best we could do at that point, and then we’d have to top ourselves.”

A caution on Corning’s claims: The glass’s actual, real-world performance will differ from what happens in the lab, and Mauro notes that manufacturers can request a thinner version, or a specific shape, that might reduce some of its resilience. “There are some trade-offs that the cell phone manufacturers can work with. It’s really up to them to figure out what the optimal trade-off is.”

Regardless of what an individual manufacturer does, Gorilla Glass 6 can handle repeated drops better than its predecessor, and deal with scratching and high-up drops just as well. But maybe more importantly, it’s keeping up with the tempo of smartphone innovation.

When Apple put glass on both the front and back of the iPhone 4 in 2010, it doubled the chances you’d need a repair without much practical gain. Eight years later, glass has begun to envelop more and more smartphone surface area, and for good reason.

“Things like wireless charging, you couldn’t do that before with metal backs. You can now with glass,” says Forester, who notes that metal backs can also interfere with daily smartphone use, or require design compromises—think of the bands on the back of the iPhone 6—to work around them. “Things like NFC or Apple Pay, all those antennas, you want those in a transparent type material like glass. GPS, your Bluetooth, your Wi-Fi, ubiquitous internet. All those things aren’t enabled by glass, but they’re being assisted and aided in the designs of the devices.”

To that end, Corning has also developed an inkjet process, called Vibrant Gorilla Glass, that allows manufacturers to etch any color or design onto the glass itself, creating a custom look without necessitating a case. Forester says Corning is currently exploring adding textures and gradients as well.

You can expect to see Gorilla Glass 6 devices within the next several months, and it’ll eventually land on every major mobile device. (For a better sense of its ubiquity: Gorilla Glass is on over 6 billion consumer devices worldwide.) And while it improves each generation, what’s even more remarkable may be how much more important its role becomes.

“If we look over the almost 20 year period, what strikes me the most is the change in the paradigm in how we interact with our computing devices. Glass used to just be something you would look through on your screen. It was there but it was invisible, and nobody paid any attention to it,” says Mauro. “It has become the primary interface between the human and the computer. To me, that’s really astounding.”


More Great WIRED Stories

Veon cuts management in return to traditional telecoms model

AMSTERDAM (Reuters) – Veon, the mobile phone operator formerly known as VimpelCom, said it would cut management jobs and simplify its structure as it goes back to basics with a focus on telecom services in emerging markets.

In recent years, Veon, with stakes in operators in Russia, Pakistan and Algeria, had tried to reinvent itself as a new high-tech player, in hopes of making money from apps and service commissions instead of classic voice and data subscriptions.

The Amsterdam-based company with roots in Russia said country managers in the 11 markets where it operates will now report directly to its corporate headquarters. It will cut regional operating structures in Eastern Europe and Pakistan.

In a statement announcing the moves, Veon, one of the world’s top 10 mobile operators by customers, signaled it aimed to reduce staff and cut costs at its Dutch headquarters.

“The new high-level structure has now been established as Veon continues to create a leaner headquarters with clear accountability,” the statement said. “This work is ongoing as Veon transitions to a more efficient operating model.”

A spokesman declined to comment on whether more jobs could be cut. It has cut its global workforce over the last three years by around one-third to 40,000 employees at the end of 2017.

On Thursday, the company said it had appointed Kjell Morten Johnsen as Group Chief Operating Officer, a role he had held on an interim basis since March, when the company pushed out Chief Executive Jean-Yves Charlier. Veon Chairwoman Ursula Burns, the former head of Xerox, took over as chief executive.

Burns has said Veon’s four immediate priorities are to increase its focus on emerging markets, control costs, improve its balance sheet and supporting its current dividend.

A spokesman denied that this marks a retreat from its digital strategy, adding that the company plans further pilot tests of a new mobile apps marketplace and messaging service across additional markets over the coming year.

Under Charlier, Veon went through a three-year house cleaning of previous management, job cuts and asset sales. The company’s name was changed to Veon from VimpelCom after a bribery scandal in Uzbekistan that was settled with Dutch and American authorities in 2016 for $795 million.

On July 2, Veon said it would sell its stake in Italian mobile network Wind Tre for 2.45 billion euros in an exit from Western Europe to pare debt and to take full ownership of its Pakistan and Bangladesh businesses. (reut.rs/2mqvFwh)

Reporting by Eric Auchard in London; editing by Emelia Sithole-Matarise and Alexandra Hudson

How IBM Cloud Is Superior To Amazon AWS

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Tesla Fires A Shot Across The Bow

ARS Technica reported Friday that Tesla (NASDAQ:TSLA) has removed the $35,000 version of Model 3 from its orders page. Though the company claims the lower-priced, short-range version of Model 3 will be available eventually, some Model 3 reservation holders are sure to be disappointed. On the other hand, focusing on more heavily optioned, higher-margin Model 3 cars should cheer the company’s shareholders. Tesla “shorts” would do well to look carefully to this development because it suggests an aggressive and potentially winning strategy.

Tesla Model 3

Background

Tesla has this month sold its 200,000th electric car in the US, beginning the 18-month wind-down of the federal income tax credit for US Tesla buyers. Elon Musk announced on July 1 that the 5,000 per week Model 3 production goal had been achieved (more or less). Both of these events conform to a Tesla strategy described last April for maximizing the gross amount of federal incentives for its customers.

For Tesla, a key factor in a credits maximizing strategy is that initial high-rate Model 3 production can be skewed toward higher-end configurations because early US customers will enjoy the full $7,500 tax credit (in addition to any state and/or local incentives), making these higher-priced cars affordable for a wider range of buyers. We see exactly this in Tesla’s producing long-range, AWD and performance configurations of Model 3, while delaying the lower-priced, short-range versions. Higher-end Model 3 configurations, particularly those carrying Autopilot and Full Self-Driving software options, will give Tesla higher margins. These fancier models are also likely to appeal to BMW’s (OTCPK:BMWYY) 3 Series and Mercedes’s (OTCPK:DDAIF) C Class higher-end customers.

Let us remember briefly what happened in the high-end luxury sedan segment when Tesla brought Model S to the party. The fun part happened in 2014 and 2015. In an essentially static market, Model S sales took off, while all the other players lost ground.

Luxury segment change in sales 2014-15

And Tesla’s Model S ended up king of the hill.

2015 US Luxury car sales

Images from Author’s February 18, 2016 article here.

Will it happen again?

Could Model 3 grab market share in the much larger entry-luxury car segment like Model S did in the high-end luxury car market? Because, if Tesla were to carve the heart out of the BMW 3 Series, Mercedes C Class, and similar models from Audi (OTCPK:AUDVF), Lexus (NYSE:TM), Cadillac (NYSE:GM), Acura (NYSE:HMC) and others, these carmakers will feel a lot of pain. And Tesla might just make a go of its Model 3.

The first thing to understand about the market for entry-luxury cars is that buyers don’t have to buy these cars. Anyone purchasing or leasing even a base model BMW 320i ($34,900 base price) can buy or lease a Toyota, Hyundai (OTCPK:HYMLF) or Chevy that will take them to where they need to go and bring them back for a lot less money. Entry-luxury cars offer something “special” beyond basic, efficient transportation that buyers are willing to pay extra to have. The “special” something may be quicker acceleration or cushier seats, or fancy wheels, or special headlights, or any of a bunch of other nice, cool or trick features, gizmos and tasteful brand badges that set one of these cars apart from those driven by the hoi polloi motoring public. And at least some buyers in the entry-luxury market are willing to pay a lot more to drive a “special” car. Many entry-luxury cars are offered with an array of optional configurations and optional features that allow a customer to spend much more than the base car price. A Mercedes C Class sedan (base price $40,250) in the AMG C63 S configuration can be optioned-up past six figures by just checking the boxes (and it’s still not as quick as the AWD Performance Model 3.)

Tesla Model 3 doesn’t have to be cheaper than the competition to win in the entry-luxury market. It just needs to be price competitive and have better “special stuff”. And Model 3 has special stuff – smooth, quick acceleration; clean, futuristic interior; Full Self-Driving; batteries; SuperCharging; a Tesla badge – that other cars in in this market do not have. (Let’s not get into an argument about Tesla’s Full Self-Driving being “real”. The company offers the feature. Its cars have the hardware. You can’t tick the box for this for any non-Tesla car.)

This leaves the question of Tesla’s pricing compared to the ICE competition. Let’s take a look at how three different Tesla Model 3s compare to three roughly similar BMW 3 Series cars. Using Tesla’s Model 3 website and BMW’s US website, I configured three Tesla Model 3 cars and three roughly comparable BMW 3 Series sedans: base models, AWD models and performance models. The following table gives an idea of how these cars compare on performance and pricing. For simplicity, the 0-60 time is used as the performance metric and only to show that chosen car configurations are of generally similar performance. Pricing shown is the manufacturers’ US list before any tax credit, incentives, discounts, etc.

Model 0-60 Base Optioned

Tesla Model 3 – Base Model

5.6 35,000 35,000

BMW 320i – Base Model

7.1 34,950 34,950

Tesla Model 3 – Long Range, AWD

Blue Paint; 19″ Wheels; Auto Pilot; Self-Driving;

Delivery

4.5 53,000 64,500

BMW 340ix – AWD

Premium Pkg; Executive Pkg; Blue Paint; 19″ Wheels

Drive Asst; Park Ctrl; Blind Spot; Active Cruise;

Heated Rear Seats; Heated Steering Wheel;

Charging + WiFi; Apple Play; Destination

4.6 50,950 63,535

Tesla Model 3 – Long Range, AWD, Performance

Blue Paint; 19″ Sport Wheels; Auto Pilot; Self-Driving;

Delivery

3.5 64,000 74,000

BMW M3 – RWD Performance

Blue Paint; 19″ Wheels; Drive Asst; Executive Pkg;

Automatic Trans; Stainless Pedals; Blind Spot;

Charging + WiFi; Apple Play; Destination

3.9 66,500 78,320

This comparison shows that in order to match the performance and features of a Tesla Model 3, one is looking at a BMW 3 Series that costs about the same. While many investors think of Tesla cars as being “expensive” compared to the touted $35,000 base price, quite the same thing can be said of BMW cars – and, presumably, those of its competitors as well. Tesla’s “effective” pricing is lower by the amount of federal tax credit, any state and local incentives, and any purported fuel cost savings over the ownership period. BMW’s prices are also lower by the amount of any dealer discounts, promotional incentives, trade-in allowances and the like.

The big price differential between Tesla and BMW (and most legacy players) comes in the guise of Tesla making higher-end configurations, while (for now) avoiding lower-cost versions of the Model 3. It isn’t that Tesla cars are more expensive, the company just makes more expensive [versions of its] cars…

Shot Across The Bow

This is where Tesla’s strategy and the outlook for the entry-luxury car market starts to look interesting. What the company has done in reaching 5,000 per week Model 3 production, delivering its 200,000th US car at the beginning of Q3 and delaying the Model 3 short-range configuration is to tell the car market this: Tesla will make a quarter million high-end BMW 3 Series comparable cars a year, sell these (primarily in the US for Q3 and Q4) and not bother with entry-level product (yet). Or, to put it more bluntly, the company just told BMW, Mercedes, Audi, Lexus, Cadillac and the other entry-luxury segment carmakers that it will eat their lunch. Because if Tesla sells a half million highly optioned entry-luxury cars into the market, the other companies will be left mostly with the entry-level end of the market. Ouch!

Tesla is aiming to repeat what it did with Model S, but this time on a much, much larger scale. And we are not talking about someday. The company’s plan is up, running and in play right now, today.

The competition has nothing ready to put in Tesla’s way. The GM Bolt electric car is not an entry-luxury product, and no versions are offered that effectively compete with higher-end Model 3 configurations. Jaguar’s (NYSE:TTM) iPace is coming to the market, but it is aimed at the costlier Tesla Model X, and no robust cross-country Supercharger-like network exists to support the iPace at this time.

How It Will Go

Entry-luxury carmakers offer cars from low-end entry models through AWD and performance cars. Unit sales are largely at the low end, but a disproportionate amount of carmakers’ profit is earned from higher-margin, highly optioned cars. In a market of competing, mature technology ICE cars, and with a need to sustain dealer networks and maintain market share, legacy carmakers must deliver a full range of product. Build only high-end cars and most of their customer base will defect and market share and dealer networks collapse. Build only entry-level cars and most of the profit goes away.

In 2016, BMW sold 545,116 3/4 Series (sedan/coupe) cars. To achieve this sales volume, the company offered entry-level as well as higher-end configurations of its 3/4 Series cars. Arguably, to steal half a million sales from BMW’s 3/4 Series for the Model 3, Tesla would need (at least) to deliver both high-end and entry-level Model 3 cars, because that covers the price range of cars that BMW 3/4 Series customers buy. But such does not appear to be the company’s plan.

Tesla aims to take market share from the high end of the entry-luxury car segment mix. It has put off making the short-range, $35,000 version of Model 3, so buyers with $35,000 to spend can’t buy a Model 3, at least for now. This means Tesla has no chance, for now, of stealing half a million BMW 3/4 Series customers for Model 3 and wiping the BMW 3/4 Series cars from the face of the earth. But Tesla doesn’t need every BMW 3/4 customer. There are plenty of Acura, Alfa Romeo (NYSE:FCAU), Audi, Cadillac, Infiniti (OTCPK:NSANY), Jaguar, Lancia, Lexus, Lincoln (NYSE:F), Mercedes and Volvo (OTCPK:VOLAF) entry-luxury customers to be had. Tesla may even bag some BMW 5 Series, Audi A6 and Mercedes E Class customers with its long-range, AWD and performance versions of the Model 3.

If Tesla pulls off this high-end, cream-skimming strategy – like it did with Model S – that will be good for the company and for shareholders. It will be disastrous for legacy competitors because profits come largely from selling high-end configuration, highly optioned vehicles, and Tesla is going after those high-margin sales. It is one thing for a company like BMW to see, say, 20% of its 3 Series customers across the board go over to Tesla and quite a different thing should the top (high end) 20% of its customers defect.

Conclusions

Tesla has embarked on a bold strategy, choosing to target Model 3 sales at the high end of the entry-luxury car market rather than offering Model 3 configurations covering the entire segment. Tesla is following a strategy that will “cream-skim” high-end, high-profit customers from the likes of BMW, Mercedes, Lexus and Cadillac. Tesla did this same thing with Model S. Its strategy is already in play. Within the next quarter or two, investors may expect to see a rout of legacy carmakers even greater than was seen in 2014-15 with Model S as Tesla takes on the entry-luxury segment in earnest with Model 3.

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.

Additional disclosure: These writings about the technical aspects of Tesla, electric cars, components, supply chain and the like are intended to stimulate awareness and discussion of these issues. Investors should view my work in this light and seek other competent technical advice on the subject issues before making investment decisions.

No blank checks: The value of cloud cost governance

How much does you’re public cloud cost month to month? If you don’t know, you’re hardly alone. Most people in IT don’t have a good understand of what a public cloud service costs per month. Most wait to find out what the bill says rather than proactively monitor cloud consumption, much less have cloud cost governance in place.

Even if your financial budgeting model can handle uncertain costs, not knowing what you’re spending has a downside. When you moved to the public cloud, your company put a value driver in place when defining the business cases—and part of that was based on ongoing costs per month.

If those costs are higher than originally estimated, the value metrics won’t support your goals. Although you can make a case for the cloud’s value around agility and compressing time to market, that will fall on deaf ears among your business leaders if you’re 20 to 30 percent over budget for ongoing cloud costs.

There’s no reason to not know your ongoing cloud costs. In the planning phase, it’s just a matter of doing simple math to figure out the likely costs month to month. In the operational phase, it’s about putting in cost monitoring and cost controls. This is called cloud cost governance.

Cloud cost governance uses a tool to both monitor usage and produce cost reports to find out who, what, when, and how cloud resources were used. Having this information also means that you can do chargebacks to the departments that incurred the costs—including overruns.

But the most important aspect with cloud governance is not monitoring but the ability to estimate. Cloud cost governance tools can tell you not just about current use but also about likely costs in the future. You can use that information for budgeting.

Cloud cost governance also means placing limits on cloud computing usage based on allocation of costs. If the devops team is allocated $150,000 a month but spends $200,000, the tools should take automated corrective action—meaning turning off cloud services after multiple warnings. The idea is not to stop productivity but to make people aware of what costs they are incurring over that of what’s been budgeted.

Data protection for containers: Why, and how to do Docker backup

Containers are a great way to run applications, with much less overhead than traditional bare metal or virtualised environments. But what about data protection? Do containers need backup and data protection? The answer is yes – and no. In this article, we will look at the possible ways we can backup containers and their data,…

as well as products available that can help.

Containers have been around for many years, but the use of container technology has been popularised in the last five years by Docker.

The Docker platform provides a framework to create, configure and launch applications in a much simpler way than in the native features of the Linux and Windows operating systems on which they run.

An application is a set of binary files that run on top of an operating system. The application makes calls via the operating system to read and write data to persistent storage or to respond to requests from across the network. Over the past 15 years, the typical method of application deployment has been to run applications within a virtual machine (VM).

VMs take effort to build and manage. They need patching and have to be upgraded. Virtual machines can attract licensing charges, such as operating system licences and application licences per VM, so have to be managed efficiently.

Containers provide a much more lightweight way to run applications. Rather than dedicate an entire VM for each application, containers allow multiple applications to run on the same operating system instance, and these are isolated from each other by segregating the set of processes that make up each application.

Containers were designed to run microservices, be short-lived and not require persistent storage. Data resiliency was meant to be handled by the application, but in practice, this has proved impractical. As a result, containers can now be easily launched with persistent storage volumes or made to work with other forms of shared storage. 

Container data protection

A container is started from a container image that contains the binary files needed to run the application. At launch, time parameters can be passed to the container to configure components such as databases or network ports. This includes attaching persistent data volumes to the container or mapping file shares.

In the world of virtual machines, the VM and the data are backed up. Backup of a virtual machine is for convenience and other potential uses. So, for example, if the VM is corrupted or individual files are deleted they can be recovered.

Alternatively, the whole VM and its data can be brought back quickly. In practice though, with a well configured system, it may be quicker to rebuild the VM from a gold master and configure it using automation or scripts.

With containers, rebuilding the application from code is even quicker, making it unnecessary to backup the container itself. In fact, because of the way containers are started by platforms such as Docker, the effort to recover a container backup would probably be much greater than simply restarting a new container image. The platform simply isn’t designed to recover pre-existing containers.

So, while a running container instance doesn’t need to be backed up, the base image and configuration data does. Without this the application can’t be restarted.

Equally, this applies to implementing a disaster recovery strategy. Restarting an application elsewhere (eg, in the public cloud or another datacentre) also needs access to the container image and runtime configuration. These components need to be highly available and replicated or accessible across locations. 

Application data

Containers provide multiple ways to store application states or data.

At the simplest level – using Docker as an example – data can be written to the root file system (not a good idea) or stored in a Docker volume on the host running the container. It’s possible that this host could also be a virtual machine.

A Docker volume is a directory on the root file system of the host that runs the container. It’s possible to backup and restore this data into a running container, but this isn’t a practical solution or easy to manage when containers can run on many hosts.

It would be very hard to keep track of where a container was running at any one time to know which server to use for recovery. Backup software isn’t aware of the container itself, just a set of directories.

Other alternatives

One is to use another file system on the host that has been structured to match the application. Rather than having directories named using random GUIDs, directory names can match application components.

So, when a container is started a directory is mapped into the container with a name that is consistent across container restarts and can easily be identified in traditional backup software.

This still doesn’t provide full recovery and disaster recovery in the event of a server loss.

In this instance, Docker and Kubernetes provide the capability to connect external storage to a container. The storage is provided by a shared array or software-defined storage solution that exists independently of any single host.

External storage provides two benefits:

  • Data protection can leverage the capabilities of an external array, such as snapshots or remote replication. This pushes persistence down to the storage and allows the container host to be effectively stateless.
  • Data can exist on an external device and be shared with traditional infrastructure like virtual machines. This provides a potential data migration route from VMs to containers for certain parts of an application.

Storage presented from shared storage could be block or file-based. In general, solutions offered by suppliers have favoured connecting block devices to a single container. For shared arrays, the process has been to mount a LUN to the host, format it with a file system and then attach to the container. In Kubernetes, as an example, these volumes can be pre-existing or created on demand.

For software-defined storage solutions, many are natively integrated into the container orchestration platform to offer what look like file systems without the complexity and management configuration of external devices.

Solutions for container data protection

What are suppliers doing in this area? Docker provides a set of best practices for backup of the Docker infrastructure although this doesn’t cover application data. Meanwhile, Kubernetes uses etcd to manage state, so instructions are provided on the Kubernetes website on how to configure backups.

Existing backup suppliers are starting to offer container backup. Asigra was probably first to this in 2015. Commvault offers backup of data on container-based hosts.

Vendors including Pure Storage, HPE Nimble, HPE 3PAR, and NetApp all provide docker plugins to mount traditional LUNs to container infrastructure. This enables the capability to take snapshots at the array level for backup and to replicate the LUNs to other hardware if required.

Portworx, StorageOS, ScaleIO, Ceph and Gluster all offer native volumes for Kubernetes. These platforms also work with Docker and offer high availability from a clustering perspective and the ability to take backups via snapshots and replicas. Kubernetes is moving to support the Container Storage Interface, which should enable additional features like data protection to be added to the specification.

If containers are run within virtual machines then the VM itself could be backed up and individual files restored. However, if the backup solution isn’t container-aware, it may be very difficult to track down individual files unless they’ve been put into the structure already outlined above.

Cloud: A gap in container backup?

This discussion on container backup is focused on the deployment of containers in the datacentre. Public cloud represents a bigger challenge. As yet, solutions like AWS Fargate (container orchestration) don’t offer data persistence and are designed to be stateless.

This represents a potential operational gap when looking to move container workloads into the public cloud. As always, any solution needs to consider all deployment options, which could make the adoption of some public cloud features more difficult and push data management closer towards the developer.

Let Advanced Auto, AutoZone and O'Reilly's Pick Up the Repair Bills

FORT WASHINGTON, MD – JULY 03: Automobile traffic moves along the Capitol Beltway during rush hour one day before the 4th of July holiday July 3, 2018 in Fort Washington, Maryland. The American Automobile Association (AAA) is predicting that 39.7 million Americans will drive 50 miles or more away from their homes during the Independence Day holiday week, a 5 percent increase over last year. (Photo by Chip Somodevilla/Getty Images)

The following statistics can make you wonder why would anyone would want to drive on their vacation. AAA stated in 2015 that, “U.S. drivers reported making an average of 2.1 driving trips per day, covering an average of 29.8 miles and spending an average of 48.4 minutes driving, which translates to an average of 763 trips, 10,874 miles, and 294 hours of driving annually.” The Federal Highway Administration notes that these averages have increased consistently every year since 2013, and in 2018 travel in the U.S will reach an all time high of 3,188,711 million vehicle miles per year.

This summer, many people are looking towards the all-American road trip to satisfy their vacation needs. A recent study posted by ISPOS in June of 2018 states that 72% of Americans plan to go on vacation in the next 12 months. Vacationers are looking to skip the security checkpoint lines and excessive baggage fees with MMGY Global reporting that domestic vacations account for 85 percent of American getaways, with 39% of those being road trips. With these numbers, Americans better make sure their cars can withstand the journey.

For travelers looking for convenient and low cost vacations this season, a road trip is the perfect choice.

Recent AAA roadside data shows that vehicles over 10 years old are twice as likely to break down and four times more likely to be towed in comparison to younger vehicles. We have listed three automotive companies below that, we believe, could fuel your vehicles in addition to your investments.

The foundation of our recommendations is to identify companies that perform best and worst on the collective basis of value, growth, EPS revisions, profitability, and LT momentum. The CressCap systematic trading model gathers data daily on 6,500 companies globally and assigns academic grades (A – F) for each financial metric. These grades are scored relative to its region/sector.

CressCap uses a multi-factor model to select the best-performing stocks. Our data is updated daily and the academic grades (A – F) for each financial metric are scored and ranked on a regional/sector relative basis. The foundation of our recommendations is to identify companies that possess the collective investment style of Value, Growth, EPS Revisions, Profitability and LT Momentum. Academic grades of C or better indicate that each metric scores well compared to the peer sector.CressCap Investment Research

Advance Auto Parts, Inc. (AAP-US)

The first company on our list is Advance Auto Parts. This company is a leading automotive aftermarket parts provider that serves both professional installer and do-it-yourself customers. The Company offers a selection of brand name and private label automotive replacement parts, accessories, batteries and maintenance items for domestic and imported cars, vans, sport utility vehicles and light and heavy duty trucks. According to the its first quarter 2018 results, the company experienced first quarter net sales of $2.9 billion along with a gross profit of $1.3 billion. Additionally, its operating income increased 10.3% to $198.2 million and adjusted operating income increased 9.3% to $224.1 million. CEO Tom Greco stated in the same report that the company’s first quarter performance reinforced its commitment to driving increased value for shareholders.

During the first quarter of fiscal 2018, the sales of appearance chemicals and accessories was down for the company as a result of, “unusually cold temperatures and above average levels of precipitation in March and April”. Tom Greco continued on to say that, “spring-related demand bounced back nicely in May and we expect improved top line sales in Q2”. With Americans eager to get on the road when the weather improves, this is a perfect time to invest in the company.

This stock is one to watch for with an A- CressCap sector grade along with impressive financial metrics. This stock’s YTD performance is up 41.27%. The company’s value metrics are on par with the sector holding a Price/Sales ratio of 1.10x vs. sector 1.35x. The momentum metric stands out amongst its competitors in the consumer discretionary sector. The mid and long term price momentum outcomes are favorable compared to the sector with an A- grade. The mid-term price momentum is 25.44% vs. sector 6.06% and the long term price momentum is an impressive 48.97% compared to sector 15.90%. Profitability metrics for this stock also look favorable with a B+ grade for its gross profit margin at 44.12% vs. sector 33.93%, and a B grade for ROI with the stock at 11.30% compared to sector 8.64%.

AutoZone, Inc. (AZO-US)

AutoZone is the nation’s leading retailer and a leading distributor of automotive replacement parts and accessories with more than 6,000 stores in the US, Mexico, Brazil and Puerto Rico. Each store carries an extensive line for cars, sport utility vehicles, vans and light trucks, including new and remanufactured hard parts, maintenance items and accessories. This Tennessee based company stated in its 3rd quarter 2018 earnings that it recognized net sales of $2.7 billion, an increase of 1.6% from the third quarter of fiscal 2017.  Further, both the net income and diluted EPS for the quarter increased, with net income increasing 10.6% over the same period last year to $366.7 million and the latter increasing 17.3% to $13.42 per share.

In the company’s third quarter 2018 results, CEO William Rhodes stated he had confidence in the company’s performance moving into the summer months. He stated that, “the northern Mid-Atlantic and Midwestern geographies did not excel as expected after the harsher winter. However… [over] the last two weeks when most of the country entered a dry hot weather pattern, our sales improved materially and in the geographies and the categories that we expected”.

The outlook on this company is favorable, with profitability, EPS revisions and value metrics producing strong CressCap grades of A, B+ and B respectively. AutoZone’s profitability can be seen in the ROI, given an A+ grade at 37.73% vs. sector 8.64% and EBIT margin at 19.10% compared to sector 9.35% accompanied by an A grade. The CF/ROI ratio at 46.27x compared to sector 15.66x suggests stock is very undervalued. The stocks current P/E ratio is 15.59x vs. the sector 18.92x, given a B+ CressCap grade. Its EPS revisions continue to be adjusted higher for FY1 and FY2 showing us that this stock has good momentum. This year, it had a market cap change of 27.83% relative to a sector change of 18.06%. In our opinion, the stock looks good for quant, technical, and fundamental criteria and it should be viewed as a place to put your money during the summer season.

O’Reilly Automotive, Inc. (ORLY-US)

O’Reilly Automotive, Inc. is the last company on our list. This Missouri based company is one of the largest specialty retailers of automotive aftermarket parts, tools, supplies, equipment, and accessories in the United States, serving both professional service providers and do-it-yourself customers. The company saw sales for the first quarter of 2018 increase 6%, to $2.28 billion from $2.16 billion for the same period one year ago. Gross profit for the first quarter increased to $1.20 billion from $1.13 billion from the same 2017 period. The company has had a good 2018 thus far, with its performance up 19.26% YTD.

In addition to O’Reilly Automotive reporting both a sales and gross profit increase in the first quarter, their metrics also show tremendous upside potential. Notably, the company’s profitability stands out reflected by an A ranking. This ranking is backed by the stock’s ROE at an impressive 99.45% compared to that of the sector at 13.33%, along with the stock receiving A+ and A grades in ROI and EBIT margin respectively. The growth of this stock looks promising, with its 2 year forward EPS growth rate at 36.29% vs. a sector 25.99%. Long term momentum for the stock is strong, with an A- CressCap rank, at 45.64% compared to a sector average 15.90%. In our opinion, the stock looks good for quant, technical, and fundamental criteria and it should be viewed as a place to put your money during the summer season.

Written By: Steven Cress ([email protected]) and Alison Geary ([email protected])

For additional information, feel free to send questions to [email protected] or view our website www.cresscap.com. Please click here to view CressCap Investment Research’s full disclaimer.

17 Fascinating Ways United, Southwest and Other Airlines Are Changing Their Airplanes. Do Passengers Notice?

Here are 17 of the most interesting examples–culled from my recent interviews with the airlines and other sources. (Hat tip to the U.K. newspaper The Telegraph for a few of these.)

Almost every airline cited new, thinner seats as a weight-savings measure: Southwest and United especially. Even if nobody likes them otherwise.

“I know these have a less than stellar reputation,” United spokesperson Charles Hobart said, “but they can be just as comfortable as the previous seats once you work them in.”

2. No more plastic straws

American Airlines and Alaska Airlines have done away with plastic straws. American says their planes will drop 71,000 pounds as a result, but it’s not the initiative they wanted to highlight.

“Our fleet is more fuel efficient today because of hundreds of new aircraft we’ve taken over the past five years,” an American Airlines spokesperson told me via email. “It’s the youngest fleet among the big U.S. airlines. That’s the main point I’d make for American,”

3. Lighter in-flight magazines

Changing the card stock on in-flight magazines means United’s weigh only an ounce; previously they were several ounces. British Airways did this too.

With about 757 planes, 8,700 total seats, and one magazine per passenger, a single ounce means four tons less weight to lift off the ground with each United flight per day.

4. Less paper in the cockpit

Southwest pointed this one out: “We recently finished equipping our pilots and flight attendants with electronic flight bags, eliminating the need to carry paper charts and manuals.  Switching to these tablets removed 80 pounds from each flight and saved more than 576,000 gallons of fuel.” 

5. Smaller video screens

JetBlue gets a nod: “On our restyled A320 aircraft, our (Inflight Entertainment) IFE is lighter and there are fewer of those under seat boxes that power the IFE,” an airline spokesperson told me. “We have also recently changed out food and beverage carts to a lighter weight cart.”

JetBlue: We have lighter video screens.

United: We have no video screens!

“We’ve removed video screens as you know,” United’s Hobart told me. “Many people are bringing their own on board. We offer streaming PDE–personal device entertainment instead. That’s a considerable weight-savings.”

The Australian airline Qantas has a new line of flatware and tablewear that it says is 11 percent lighter: “The range has now rolled out across our International fleet (and Domestic business class), resulting in an annual saving of up to 535,000 kilograms in fuel,” a spokesperson said.

8. No heavy plates in first class

Similar move on Virgin Atlantic, “which has thinner glassware and got rid of its heavy, slate plates from upper class,” according to the Telegraph.

“The carrier also changed its chocolate and sweet offerings to lighter versions, redesigned its meal trays (which in turn meant planes were able to carry fewer dining carts), and altered its beverage offering for night flights, when fewer people drink.”

Those big bottles of alcohol and perfume all add up, so they’re grounded. “We removed on board duty free products,” United’s Hobart told me. “Very few people were purchasing them anyway.”

10. Restocking the galley

Southwest: “We changed the way we stock our galleys, reducing the weight carried on each flight, and saving an additional 148,000 gallons of fuel in 2014 and 2015 combined.”

British company Thomas Cook “no longer prints receipts for in-flight purchases, saving it the need to carry 420,000 till rolls across its fleets,” according to the Telegraph.

It also “reduced the number of spare pillows and blankets it carries from four down to two.”

I’ll say that one again: pillows and blankets.

Spirit Airlines gets the mention here, and for something people complain about: their comically small tray tales. Besides being slightly less expensive to manufacture, they weigh a little less, which means less fuel required to transport them.

This one seems smart, like there are probably a lot of ways to make a drink cart weigh less. Several airlines said it was a priority.

“Ours were 50 pounds, and we got them down to 27 pounds,” United’s Hobart said.

I’d never heard of this one, but the Telegraph said that in 2008, Air Canada cut life jets out of some planes, and replaced them with “lighter floatation devices.” Apparently this was allowed as long as the aircraft “didn’t venture more than 50 miles from the shore.”

Did anyone even notice? Prior to its merger with Delta Air Lines, Northwest Airlines reportedly made a point of slicing limes into 16 slices as opposed to 10. That means they nearly halved the number of limes they had to carry.

16. The straight up solution

This one goes back 30 years, but it’s so apt. In 1987, United reportedly realized that removing one olive from every salad it served could save $40,000 a year. That would be just over $89,000 today. Not significant in itself for a $37 billion a year company, but hey, everything counts.

This is the tricky one that airlines would probably love to implement, but it’s hard. In 2013, Samoa Air introduced a “fat tax,” as the Telegraph put it, “whereby passengers would be charged a fare according to their weight.”

Separately, Japan’s All Nippon Airways, in 2009 “asked passengers to visit the lavatory before boarding because empty bladders means lighter bladders.”

Electrolux Pure i9 Review: An Effective, But Expensive Robot Vacuum

Many people like to run their robovacs at night or while they’re at work. I choose to run ours while I’m awake, right after dinner and while we’re putting the kids to bed.

First off, I don’t see any reason to walk around all evening with crumbs sticking to the bottoms of my feet if I don’t have to. But I’ve also found that most robot vacuums will require rescue, which means you have to be awake or around. If you’re sufficiently pressed for time and energy that you need a robot vacuum, you’re probably not being as diligent as you could be about eliminating botvac booby traps, like tiny doll socks or stray shoelaces.

Even with navigational aids like virtual wall barriers, magnetic strips, or no-go lines, only a few robot vacuums have been reliable enough to leave completely unattended. I’m happy to report that the Electrolux Pure i9 is one of them.

Love Triangle

Right out of the box, the Electrolux Pure i9 looks markedly different from the other botvacs that I’ve tried. It’s a steel-gray, rounded triangle that measures 12.8 inches across and 3.3 inches high. It’s only 0.2 inches less in diameter than the Roomba 690, but it looks much smaller.

Electrolux

It comes with only its charging stand, a magnetic side brush, and instructions to download the Pure i9 app. Unlike other robot vacuums, it’s not compatible with Alexa, Google Home, or other voice assistants.

Out of the box, it took two hours to charge. Setting it up by connecting it to the app is an easy, familiar process, and the app itself is clean and simple to navigate. Just follow the app’s instructions to connect the Pure i9 to your Wi-Fi; you can also operate it with buttons on the botvac’s top panel. Once connected, you can select your robot’s name (I chose “Dung Beetle”) and tinker with its settings. For example, you can select a more energy-efficient eco mode, or a mute option that reduces the volume of the bot by about 5 decibels, from 65 to 60. You can schedule cleanings, or switch the app’s language. You can access online support or visit Electrolux’s online shop for replacement parts.

Power Hour

The botvac’s battery life is not overly long. In normal mode, it ran for 50 minutes—slightly longer than the advertised 40 minutes—before it had to return to the base for charging. It was able to clean 270 (very dirty) square feet in 40 minutes. But I strongly suspect that Electrolux might be able to increase that runtime if it could make the navigation software slightly more efficient.

The Pure i9 uses a 3-D vision camera set in the front to navigate. It’s exceptionally accurate. Even without navigational aids, the Pure i9 never got lost or stuck. It never dinged my furniture or bashed into any walls. It never mistook a cliff where there was none, or failed to clamber over the lip of a doorway or a carpet. When I stepped in front of it, it paused to assess the situation before moving around my feet.

After one cleaning session, I realized that my toddler had completely disassembled a flag banner and hidden it under the couch. Almost any other botvac would have found this to be a disaster—frayed string, little pieces of loose fabric—but the Pure i9 navigated smoothly around it.

However, the mechanism by which it steered clear of obstacles was maddening to watch. It’s easy to intuitively divine how the navigation mechanisms in a robot vacuum work. The cheaper ones ping-pong randomly back and forth, while powerful, methodical botvacs, like the Neato line, vacuum back and forth in orderly parallel lines.

The Pure i9 gave the impression of being an elderly butler, wandering around haphazardly with a dusting brush in a sheepish, absentminded manner. “Does that robot vacuum know where it’s going?” our babysitter asked, watching it work one morning.

Every time it went around a corner, came up against the base of a chair, or approached the edge of a rug, it stopped and re-started over and over, repeatedly reassessing the situation until it deemed it safe to go forward. “Oops, oh no, excuse me,” I imagined it saying in a British accent, every time that it started shuffling in the hallway for one, two, or five minutes. “How perfectly buffle-brained of me. Please, you go first.”

I could chart its progress in real-time on a map of my house in the app. Electrolux doesn’t display the amount of square feet cleaned or time spent cleaning graphically over time, as do iRobot and Neato. But the map is a fairly close approximation of what my house looks like, and made it easy to check if I’d had the bathroom or bedroom doors closed on any given day.

Let Me Clear My Throat

With mute on, I measured the Pure i9’s sound at a fairly quiet 60 decibels. In normal mode, the vacuum ran at about 65 dB, which kicked up to a turbo 70 dB whenever it encountered a particularly filthy patch of carpet.

After each cleaning, the high traffic areas by the door and under the kitchen table were clear. The triangular shape with the side brush may have helped with digging into the corners.

The Pure i9 didn’t provide nearly as deep a carpet clean as the Roomba 980, mainly because it wasn’t able to thoroughly agitate the fibers. But the anti-tangle brush wasn’t constantly snarling and stopping the vacuum, in the way that the Neato Botvac D7 Connected did. I also didn’t have to clean out the bin nearly as much. Even with its diminutive size, it has an impressive dustbin capacity of 0.7 liters. In comparison, the dustbin of the Samsung Powerbot holds only 0.3 liters.

The Pure i9 has AutoPower, which automatically detects the floor surface that the vacuum is on and calibrates the level of cleaning power. When battery runs down, it returns automatically to the base, recharges, and restarts, which occasionally scared me awake when I forgot that it hadn’t finished and it automatically restarted in the dead of the night.

My one real gripe is that the Pure i9 is only so-so at returning home to the charging station. If a cleaning cycle had finished, it went back no problem. But if I stopped it and pushed the home button halfway through, the app informed me that the the Pure i9 was returning home even when it clearly wasn’t. Some mornings, I would awake to find it sitting sadly, alone in a corner.

Not Afraid to Trade(off)

It’s hard for me to recommend products that I wouldn’t purchase myself. Spending $899 is a lot, especially for a robot vacuum that lacks many basic functions. I don’t use a voice assistant to control my robot vacuum, but many people do, and much cheaper robot vacuums work with Google Home and Alexa. It also has spot cleaning but no directional control and no remote, which has bothered me in the past.

Still, its very simplicity won me over. I have spent so much time fussing with navigational aids to help my robot vacuums, that it never occurred to me that I might not even need them. And while its navigational quirks can be maddening, I have spent more evenings than I would like, cowering in bedrooms, listening to Neato Connecteds trying to break the door down. I appreciated a shy, sheepish robot vacuum that gave my house a thorough clean without breaking anything, or itself, in the process.

In the end, this isn’t my top recommendation for a high-end robot vacuum. But if you’re looking for a slightly smaller, reliable, and good-looking robot vacuum, the Electrolux Pure i9 makes a very decent contender.

A Long-Term Look At Inflation

By Jill Mislinski

The Consumer Price Index for Urban Consumers (CPI-U) released yesterday morning puts the year-over-year inflation rate at 2.87%. It is substantially below the 3.76% average since the end of the Second World War and above its 10-year moving average, now at 1.631%.

  • For a comparison of headline inflation with core inflation, which is based on the CPI excluding food and energy, see this monthly update.
  • For a better understanding of how CPI is measured and how it impacts your household, see our Inside Look at CPI components.
  • For an even closer look at how the components are behaving, see this X-Ray View of the data for the past six months.

The Bureau of Labor Statistics (BLS) has compiled CPI data since 1913, and numbers are conveniently available from the FRED repository (here). Our long-term inflation charts reach back to 1872 by adding Warren and Pearson’s price index for the earlier years. The spliced series is available at Yale Professor (and Nobel laureate) Robert Shiller’s website. This look further back into the past dramatically illustrates the extreme oscillation between inflation and deflation during the first 70 years of our timeline.

For a long-term look at the impact of inflation on the purchasing power of the dollar, check out this log-scale snapshot of fourteen-plus decades and how the value of the dollar has declined.

Original post

Facebook says Indonesian user data not misused

JAKARTA (Reuters) – Social media giant Facebook has assured the Indonesian government that personal data of about one million of its citizens had not been improperly accessed by political consultancy Cambridge Analytica.

FILE PHOTO: A 3D plastic representation of the Facebook logo is seen in this illustration in Zenica, Bosnia and Herzegovina, May 13, 2015. REUTERS/Dado Ruvic/File Photo

Facebook has faced intense scrutiny, including multiple official investigations in the United States, Europe and Australia, over allegations of improper use of data for 87 million Facebook users by Cambridge Analytica.

Indonesia, where more than 115 million people use Facebook, has also been pressing the firm to explain how its citizens’ personal data was harvested by Cambridge Analytica via a personality quiz. 

“Facebook has reported to the Communications Ministry that no data from any Indonesian users was collected,” Deputy Communications Minister Semuel Pangerapan said on Friday.

A Facebook official had told members of parliament in April that 1,096,666 people in Indonesia may have had their data shared, or 1.26 percent of the global total.

This led Communications Minister Rudiantara, who goes by one name, to briefly threaten to shut down Facebook in Indonesia if personal data was found to have been breached.

But Facebook told Reuters on Thursday it had only indicated the number of Indonesian users “who could potentially have had their data accessed, not necessarily misused”.

“Both public records and existing evidence strongly indicate Aleksandr Kogan did not provide Cambridge Analytica or (its parent) SCL with data on people who use Facebook in Indonesia,” it added, referring to the researcher linked to the scandal.

Facebook says Kogan harvested data by creating an app on the platform that was downloaded by 270,000 people, providing access not only to their own but also their friends’ personal data.

Pangerapan said he believed Facebook had improved options for users to limit access to data, but did not say whether authorities would continue their inquiry.

The Indonesian communications ministry had sent a letter to the company in April seeking confirmation on technical measures to limit access to data in Facebook and more information on an audit the social media company was doing.

Britain’s information regulator on Wednesday slapped a small but symbolic fine of 500,000 pounds on Facebook for breaches of data protection law, in the first move by a regulator to punish the social media giant for the controversy.

Reporting by Fanny Potkin & Cindy Silviana; Editing by Himani Sarkar

Galaxy Note 9 Leak Shows Samsung Will Never Go With A Notch

A render of the upcoming Samsung Galaxy S9, according to Android Headline’s sources.Android Headlines

What you see above is a rendering of what the upcoming Samsung Galaxy S9 will likely look like, according to Android Headlines, citing “reliable sources.” This render is in-line with previously leaked images of Note 9 screen protectors that hinted at the phone’s face.

If you’re thinking “That’s it?”, know that you’re not alone.

This is arguably the most boring leak in the history of smartphone leaks. The Galaxy Note 9’s face looks identical to the Galaxy Note 8’s face. The only notable thing about it is that, unlike almost all other phonemakers, Samsung will not jump on the notch bandwagon.

That’s to be expected. As I–and many others–have assumed, Samsung is too direct a rival to Apple, and has painted itself too much into a corner with its series of public disses of the notch, to follow down that same route now. If Samsung had gone with a notch, it would (rightfully) be laughed at by everyone from Apple fans to tech writers.

A still from a Samsung commercial that poked fun at the iPhone X’s notch.Samsung

But back to the Note 9. Anyone who’s watched Samsung’s releases through the years knew not to expect any big changes. The Galaxy S9 this year was an iterative upgrade, so it’s natural that the Note 9 follows the same path. There will be a new Snapdragon 845 processor, the shifting aperture from the S9 will almost certainly make the jump over, and new tricks with the S-Pen, as teased by Samsung’s recent press invite to the Note 9 launch. I’m certain the Note 9 will be an excellent phone, as is the case with Samsung’s last few releases, it will just feel very familiar.

It appears that Samsung, like Apple did with the iPhone 7, is holding back major design overhauls or innovations for its “tenth edition” phone. The Galaxy S10, set for release in spring of 2019, is rumored to pack five cameras–two front-facing lens, with three cameras on the back like Huawei’s P20 Pro.

The Samsung Galaxy Note 8. Expect the Note 9 to look just like this.Ben Sin

I’d bet good money Samsung will skip the notch there too. For the S10, Samsung will either have to come up with some quirky and ingenious way of dealing with the front-facing camera problem–a pop-up mechanism like the Vivo Nex, perhaps–or stick with a traditional top bezel.

The Galaxy Note 9 is set to be unveiled on August 9 in Brooklyn, New York.

Catalyzing Innovation via Centers, Labs, and Foundries

Industry, government and academia working togetherDepositphotos enhanced by CogWorld

The cornerstone of collaboration is based on knowledge transfer; sharing of research tools, methodologies and findings; and sometimes combining mutual funding resources to meet shortfalls necessary to build prototypes and commercialize technologies.

Collaborations often involve combinations of government, industry and academia who work together to meet difficult challenges and cultivate new ideas. A growing trend for many leading companies is creating technology specific innovation centers, labs, and foundries to accelerate collaboration and invention.

As the development of new technologies continues to grow exponentially and globally, collaboration has more value as a resource for adapting to the rapidly emerging technologies landscape by establishing pivotal connections between companies, technologies and stakeholders.

In the US Federal government, the National Labs (including: Lawrence Livermore, Oak Ridge, Argonne, Sandia, Idaho National Laboratory, Battelle, and Brookhaven, and Federally Funded Research and Development Centers (FFRDC’s), and federally funded Centers For Excellence have been outlets for innovation and public/private cooperation. The benefits of the Labs’ role include experienced capability in rapid proto-typing of new technologies ready for transitioning, showcasing and commercialization. The Labs are a reservoir of specialized skills and capabilities with the best state-of-the art facilities for testing and evaluation of technologies.

Industry has increasingly adapted the innovation centers, labs, and foundries model used by government. They are often focused on areas of specific types of technologies where companies have expertise. Their models often include participation by clients, other companies, academia and government.

The focused innovation concept is not a new one, but it’s a proven one. PARC (Palo Alto Research Center), founded in 1970 as a division of Xerox Corporation transformed in 2002 into an independent, wholly owned subsidiary company, has been dedicated to developing and maturing advances in science and business concepts with the support of commercial partners and clients.

There are a variety of promising and exciting new initiatives in the PARC mold. For example, in the growing area of artificial intelligence and deep learning, Nvidia opened up a lab in Toronto dedicated to the technology. Giants such as IBM, Microsoft, Google, Cisco and many others in the AI ecosphere have all established innovation centers to create, collaborate, and develop in a wide range of technology disciplines, including AI.

Similarly, in defense and aerospace, leading companies such as Lockheed Martin, General Dynamics, Northrup Grumman, and Raytheon all have invested in labs, centers and collaborative projects to develop better solutions for the warfighter.

Dell EMC recently announced the creation of the world-class High Performance Computing Dell EMC HPC Innovation Lab in Austin, Texas. Booz Allen’s IHub will serve as the headquarters for Booz Allen’s Dark Labs team, an elite group of security researchers, penetration testers, reverse engineers, network analysts and data scientists dedicated to stopping cyber-attacks. And, Intel Corp. is opening an Information Technology Innovation Center in Folsom, California to stimulate and attract innovation in IT research and development.

An interesting approach is the global positioning of Foundries. AT&T has established Foundry innovation centers in 6 cities around the world, and since its inception, has started more than 500 projects and has deployed dozens of new products and services. Each Foundry has a specialized research, prototype, and networking area, including IoT, Edge computing, and cybersecurity.

Image credit: AT&T; enhanced by CogWorld

The exponential arrival of new technologies in diverse areas such as genetic engineering, augmented reality, robotics, renewable energies, big data, digital security, quantum computing and artificial intelligence necessitates rapid, comprehensive approaches that innovation centers, labs and foundries can help fulfill. The result of such collaborations will both keep us apprised of new paradigms and contribute to a seismic shift in breakthrough product discoveries. Such cooperation could speed up the realization of the next industrial revolution and bring benefits beyond our expectations.

Exclusive: JD.com's finance unit raises $2 billion, doubles valuation – sources

HONG KONG (Reuters) – JD.com Inc’s finance arm has raised at least 13 billion yuan ($1.96 billion) in fresh equity from Chinese investors, doubling its valuation ahead of an expected initial public offering, people with direct knowledge of the matter said.

FILE PHOTO: A JD.com sign is seen during the fourth World Internet Conference in Wuzhen, Zhejiang province, China, December 4, 2017. REUTERS/Aly Song/File Photo

The fundraising underscores investor enthusiasm for big, privately-held Chinese technology companies even as public valuations falter. This week, smartphone maker Xiaomi completed the world’s largest tech IPO in almost four years, but saw its shares fall on debut in Hong Kong even after pricing its deal at the low end of its offered range.

JD Finance’s fundraising round, which kicked off late last year, establishes its valuation at 120 billion yuan, the sources told Reuters.

The valuation is double the roughly 60 billion yuan JD Finance was estimated to be worth after it was split from JD.com, China’s second-largest e-commerce firm, in mid-2017.

A man riding an Ofo shared bicycle takes pictures of a JD.com delivery robot on a road in Beijing, China June 18, 2018. REUTERS/Stringer

More investors could yet join the fundraising, said one of the sources, meaning that JD Finance’s final valuation may rise further.

Big investors in this round include CICC Capital, a unit of investment bank China International Capital Corp (CICC), brokerage China Securities, private equity firm Citic Capital and BOCGI, Bank of China’s investment arm, the sources said.

JD Finance said the fundraising has yet to be completed and declined to comment further. CICC and China Securities declined to comment. Citic Capital and BOC didn’t respond to requests for comment.

JD Finance’s fundraising follows that of Ant Financial, the affiliate of its arch rival Alibaba, which last month was valued at $150 billion when it raised $14 billion in the world’s largest-ever single fundraising by a private company.

The investments suggest investors remain keen to put money into online payments and lending services in China, especially those backed by large companies such as Alibaba and JD.com which already have stable user traffic. JD.com itself is backed by U.S. retail giant Walmart Inc and Chinese gaming behemoth Tencent.

FILE PHOTO: A logo of JD.com is seen on a helmet of a delivery man in Beijing, China June 16, 2014. Picture taken June 16, 2014. REUTERS/Jason Lee/File Photo

Earlier this year another tech heavyweight, Baidu Inc, raised $1.9 billion from a consortium led by U.S. private equity firms TPG and Carlyle Group in the spin-off of its finance unit.

JD Finance, whose financial offerings include consumer credit and wealth management products, is expected to seek a domestic initial public offering at some point although there is no firm time table for a listing, according to the sources.

JD Finance said it currently doesn’t have an IPO plan.

The firm plans to use proceeds from the fundraising to invest in domestic financial institutions and buy securities and banking licenses, among other areas, sources with knowledge have previously told Reuters.

In mid-2017, JD.com spun off the unit, making it a fully Chinese-owned entity, a criterion needed to obtain licenses to manage certain financial products in China.

Under that deal, it sold 28.6 percent for 14.3 billion yuan ($2.3 billion) to undisclosed investors. JD.com receives 40 percent of the restructured entity’s pre-tax profit and has an option to convert that back to a 40 percent equity stake should the regulatory environment change.

Reporting by Kane Wu and Julie Zhu; Editing by Jennifer Hughes and Muralikumar Anantharaman