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

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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

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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

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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:

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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

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Depending Precariously on Tesla

The transition to EVs is increasingly dependent on the success of Tesla—with Tesla likely to account for 60% of all EVs sold in the United States by the end of this year.

A Tesla vehicle is parked at a charging station inside a mall in Shanghai on October 23, 2017. – Tesla has reached an agreement with Shanghai authorities that would make it the first foreign automaker to build its own plant in China, putting it in the driver’s seat in the world’s biggest electric-vehicle market, the Wall Street Journal reported. (Photo by CHANDAN KHANNA / AFP) (Photo credit should read CHANDAN KHANNA/AFP/Getty Images)

When I visited Tesla’s tiny factory in Silicon Valley in March 2008—months after Elon Musk took over as CEO—I was floored by their ambition and skeptical they could survive, much less thrive. Tesla’s journey from upstart visionary to household name has been a wild ride, filled with remarkable highs and lows. 2010 saw Tesla become the first auto manufacturer to launch an IPO in more than 60 years. The company’s stock and profile soared, eventually reaching a market capitalization of more than $50 billion, similar to Ford and General Motors.

At the same time, Tesla has struggled to maintain adequate cash flow, meet targets, and overcome manufacturing issues. Recent challenges meeting expectations and demand for the Tesla’s Model 3 mass-market sedan— challenges compounded by co-founder and CEO Elon Musk’s erratic and distracted behavior—are fueling predictions that the company is on the verge of collapse.

Tesla’s volatile past makes it difficult to predict its future. I don’t have any personal, professional, or financial interests in the success of the company. But as someone who has dedicated a career to studying electric vehicle (EV) technology and policy, I am confident that we need a strong private-sector leader like Tesla pulling EV technologies and markets forward in the United States. Such leadership has profound implications for climate change, pollution, and U.S. competitiveness in the global economy.

The status of EVs is fragile, especially in the United States. EV market share has crept up to 1.4% nationwide. The Trump administration is threatening to freeze national fuel-efficiency and CO2 standards, which would undermine automaker investments in EVs. It is also threatening to block the zero-emission vehicle mandates in place in California and nine other states, further undermining investments.

While domestic progress on EVs stalls, other countries are pulling away. China sold almost half a million EVs the first half of 2018, comprising 3% of that country’s domestic auto market (double the equivalent U.S. figure). China now accounts for half of all EVs sold worldwide. China is also leading on electrifying larger vehicles. The Chinese city of Shenzhen, home to 13 million people, has converted every one of its 16,000 buses to electricity. The story is similar in Europe. Cities across the continent are agitating for cleaner air and threatening to ban diesel cars. EVs sales are emerging as an important substitute for diesel, with EV sales now approaching 2% of all light-duty vehicles sold in Europe.

If not for Tesla, the gap between the United States and other global powers would be even wider. Tesla is the only company other than BYD, the Chinese company Warren Buffet invested in, making a massive and unequivocal commitment to EVs. Though Tesla is admittedly falling short of its ambitious production goals, it is continuing to churn out and sell its Model X SUV and Model S sedan, and is ramping up its less-expensive Model 3. It is likely that by the end of this year, Tesla will account for over 60% of all EV sales in the United States (up from 43% in May–June).

Tesla also plays an essential role as a visionary. Tesla consistently pushes the envelope on EV technology, forcing a rethinking of what EVs are and can be. Tesla pioneered over-the-air software updates, long driving ranges, and a network of fast chargers that enable Tesla owners to drive anywhere in the United States without running out of juice. And by designing their vehicles to be sleek and sexy, Tesla has helped take EVs from objects of ridicule to objects of desire.

If Tesla falls, who can we count on to carry the torch on EVs? Unfortunately, potential successors lag far behind. GM’s Chevrolet Bolt can travel more than 200 miles on a single charge, making it range-competitive with Tesla. But GM’s resolve is suspect. EVs account for just 0.5% of GM’s total U.S. car sales. Nissan does slightly better, with EVs accounting for nearly 1% of total U.S. sales, though Nissan’s sole EV (the Leaf) has a range half that of a Bolt or Tesla. BMW’s EV sales rate in the United States is best (at 8%), but at a much smaller overall sales volume. These low figures are not surprising given that EV production is at present a money-losing proposition.

Certainly the fact that all major automakers are even producing EVs represents major progress. But active innovation and sustained commitment is needed for progress to continue to the point where EV manufacturing becomes profitable and hence self-sustaining. Indeed, a new industry study suggests that smart technology and manufacturing designs, as embedded in the Tesla Model 3, might generate 30% profits, more than triple the industry average.

The success of EVs is crucial in so many ways—to the success of the U.S. auto industry, cleaning up our cities, and slowing climate change. So far, Tesla is the only company leading that charge.

Dan Sperling is the Distinguished Blue Planet Prize Professor of Engineering and Environmental Science and Policy at the University of California, Davis, and lead author of Three Revolutions: Steering Automated, Shared, and Electric Vehicles to a Better Future. Opinions expressed in this piece are the personal viewpoint of the author. Follow on Twitter: @DanSperling_ITS, @ITS_UCDavis, @3Rev_ITSDavis 

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Fiat Chrysler kicks off Magneti Marelli spin-off

MILAN (Reuters) – Fiat Chrysler (FCA) (FCHA.MI) has kicked off its planned spin-off of parts maker Magneti Marelli which will be registered in the Netherlands and listed on the Milan stock exchange, a document outlining initial plans and seen by Reuters showed.

Fiat Chrysler Automobiles (FCA) U.S. headquarters is seen in Auburn Hills, Michigan, U.S. May 25, 2018. REUTERS/Rebecca Cook

The spin-off is part of a plan by FCA Chief Executive Sergio Marchionne to “purify” the Italian-American carmaker’s portfolio and to unlock value at Magneti Marelli.

Analysts say Magneti Marelli could be worth between 3.6 billion and 5 billion euros ($4.2 bln-5.8 bln). It sits within FCA’s components unit alongside robotics specialist Comau and castings firm Teksid.

FCA has created a separate entity called MM Srl, the document showed, into which it will fold Magneti Marelli’s electronics and electro-mechanical operations related to racing motorbikes and racing cars, as well as 14 other holdings in various companies around the world, including Germany, Slovakia, Mexico and South Africa.

MM will be incorporated into a Dutch holding company via a cross-border merger, it added.

FCA declined to comment.

The move follows a similar procedure adopted by FCA for the spin-off and listing of trucks and tractor maker CNH Industrial (CNHI.MI) and supercar brand Ferrari (RACE.MI), which are both registered in the Netherlands and listed in Milan.

The Dutch holding company would allow Marchionne, known for his success in extracting shareholder value through spin-offs, to introduce a loyalty share scheme to reward long-term investors through multiple voting rights, as was the case with CNH and Ferrari. That would tighten the grip of FCA’s controlling shareholder Exor, the Agnelli family’s investment holding company, on the parts maker.

Magneti Marelli, which employs around 43,000 people and operates in 19 countries, is a diversified components supplier specialized in lighting, powertrain and electronics.

The Magneti Marelli separation is expected to be completed by the end of this year or early 2019, FCA has said.

FCA’s advisers initially looked at a possible initial public offering for the business to raise cash to cut FCA’s debt, but the Agnelli family – FCA’s main shareholder – was put off by low industry valuations and did not want its stake in Magneti Marelli to be diluted, three sources close to the matter told Reuters in March.

Magneti Marelli has often been touted as a takeover target and FCA has fielded interest from various rivals and private equity firms over the years.

South Korea’s Samsung Electronics (005930.KS) made a bid approach in 2016 but negotiations fell through as it was only interested in parts of the business, other sources have said.

($1 = 0.8595 euros)

Reporting by Agnieszka Flak and Paola Arosio; Editing by Susan Fenton

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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


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;


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;


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.


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.

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Facebook’s Pursuit of AI Smarts Leads It to Opening New Research Labs in Pittsburgh and Beyond

Facebook’s artificial intelligence smarts is spreading to Pittsburgh.

The social networking giant said Tuesday it’s opening a new AI research lab in Pittsburgh and has hired several academics specializing in AI who will join the company’s existing offices in Seattle, London, and Menlo Park, CA.

The new hires are part of Facebook’s existing AI research group, which now has about 170 people, said Facebook’s chief scientist of AI Yann LeCun during a press briefing. Facebook, like other tech giants including Google (goog) and Microsoft (msft), is continuing to incorporate AI technologies like deep learning into its core services and has hired several notable computer science professors over the years in the process.

According to LeCun, Facebook has been setting up its AI research labs near the universities where it has been recruiting, in order to accommodate professors who may not want to move to the company’s home campus in Menlo Park or other remote offices.

“Basically you have to get the talent where it is,” said LeCun. “Not everyone wants to live wherever we have our labs.”

One of Facebook’s new hires, for instance, is Jessica Hodgins, a professor in Carnegie Mellon University’s robotics institute and computer science department. Hodgins, who also previously ran Disney’s research lab out of Pittsburgh, will lead Facebook’s new Pittsburgh AI lab while working at Carnegie Mellon part time.

Although the notion of “dual affiliation” (in which professors split their time between companies and universities) is relatively new to the field of computer science, it is not new to the legal and medical industries, LeCun said. Professors are interested in dual affiliations because they get to retain their academic positions while getting resources like engineering support from companies they wouldn’t get otherwise have access to, he explained.

Dual affiliation also helps downplay the notion that giant tech companies are increasingly poaching the world’s leading AI researchers from universities, thus depriving higher education of experts. Three years ago, for instance, Uber hired about 40 researchers from the National Robotics Engineering Center at Carnegie Mellon, which “was seen as kind of a takeover,” said LeCun.

LeCun said that when recruiting from universities, Facebook works with the school’s administration to ensure that the new hires do not “impede or kill the research” that occurs at the schools. He also explained that Facebook needs these universities to continue teaching students, because those students could eventually become new hires.

“That would be stupid if by establishing ourselves there, we kill the pipeline,” LeCun said. “What’s the point?”

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As for why Facebook is hiring a robotics expert from Carnegie Mellon, LeCun said that researchers perceive robotics as being one of the most challenging areas for AI.

“There’s pressure in robotics to get machines to learn quickly,” LeCun said. “We don’t have robots that are as agile as a cat or can grab objects. We don’t have robots that can fill and empty your dishwasher.”

The hope is that if researchers are able to create AI that can power more capable robots than today’s versions, Facebook can take the underlying concepts and apply them to other areas of its business or products in unspecified ways. For example, LeCun said that Facebook uses robots to help with data center maintenance.

Additionally, Facebook needs to hire robotics experts because many of the top AI researchers are involved with robots in some way.

“If we don’t work on robotics, we’re basically shutting ourselves off from talented researchers,” LeCun said.

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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.

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Traveling This Summer? Get a Lot More From Your Trip Without Spending a Dime

I knew I was destined to travel on business to India, even though I have turned down numerous offers over the years, mainly because I was afraid of getting sick. My fears finally abated when friends in their 70s and 80s returned from India without any health problems, so when a global tech company invited me to deliver a workshop at their leadership summit in Bangalore last month, I accepted. The trip was a great experience and thankfully my fears never materialized. I attribute this to creative resilience and a little ingenuity:

Check government websites for visa information, and traveler’s alerts. (I don’t travel anywhere that has a red-letter warning.) Give yourself and your client ample time to get all the paperwork completed if you are getting a business visa. It can be quite complicated and time-consuming.

In addition to getting the appropriate vaccinations, my best defense against gut problems is to take a high potency probiotic every day starting two weeks before departure and about one week after I return. I also diligently avoided unpeeled produce.

Use a travel agent to book your ticket because if anything goes wrong, they can fix your problem more easily than if you booked online through a third party.

2. Learn about local culture (corporate and societal)

Check with your clients about local customs and dress codes so you don’t make any faux pas. Learn a few words of greeting in your host’s language to create a connection. Whenever I said namaste or namaskar, people would light up. Even security.

I reached out to my network in Bangalore via Linkedin to let them know I would be in town, and as a result, I received several invitations for lunch and dinner, including being a guest speaker at the Bangalore chapter of the Institution of Engineering and Technology. These were wonderful opportunities to connect with local business leaders and innovators and to gain new perspectives about creativity and innovation from their point of view. 

Reconnecting with my contacts from India before I went to Bangalore also helped me prepare psychologically. Several people gave me tips on what to expect and offered help if I needed it, and that helped me feel safer.

While staying at my gloriously opulent hotel, I met other business executives who were in town to check on their Bangalore teams, and it was illuminating to compare notes about doing business in India. My client for example put on an impressive first-class summit at a luxury hotel for their Indian contingent to benefit from in terms of engagement and professional development. In contrast, an executive from another global company told me they never host conferences or summits for their Indian employees. No surprisingly, they have a hard time keeping their employees, even when given raises, because the company is not cultivating connection and employee engagement.

4. Be curious and be present

Nothing makes me feel more present than being immersed in the unknown. As much as I loved being in the lush tropical gardens at my hotel, I also wondered on my own down busy commercial streets (where you take your life in your hands because there are no lights for pedestrians) and quiet residential neighborhoods, inhabited by stray dogs and cows.

I relied on advice from the hotel concierge, trip advisor and chance encounters with locals about what to see and where to go within my limited timeframe to make the most of my visit. I place a lot of value on chance encounters. As my friend Synne Kune Loh says, “Your destiny lies with the next person you might.” That is especially true when traveling, and I strike up conversations with anyone I think might be interesting, including people in lineups, at museums, and in restaurants. Sometimes I’ll invite them to join me at my table, or vice versa. The best conversations happen when you are genuinely curious and honoring of other cultures. 

Enhance your travel experience by keenly observing the world around you. Take in the big picture as well as the details that make a place special. Easily done with your camera but take note: if you always have your nose in your devices you are not being present to your environment. 

5. Step out of your comfort zone

Traveling to foreign lands is a great way to step out of your comfort zone, discover different world-views, break out of outmoded mental models, and gain new cultural experiences; all of which will lead you to new creative ideas and business insights. Enjoy your adventure.

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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.”

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Space Photos of the Week: Mars Has Spiders in the Springtime

Did you know Mars has spiders? Well, sort of. This region is part of the Martian southern polar ice cap, and during the springtime, frozen carbon dioxide sublimates from a solid to a gas and gets trapped beneath the surface—creating these dark spider-like features, technically called “araneiform terrain.”

Our moon looks lovely in this photo taken from the International Space Station. Seen from Earth, a full moon looks nice and big in the night sky, but when you are that much closer it really looms large. Oh, and that blue to the right of the photo? That’s an Earth glow photobomb.

The European Southern Observatory captured this image of a stellar cluster 5,500 light years from Earth. Among the astral objects in the cluster, known as RCW 38, are many massive stars due to end their lives in the great death of a supernova. Fortunately we’re somewhat far removed from that otherworldly collapse.

But wait, don’t write RCW 38’s obituary yet! The European Southern Observatory’s Very Large Telescope zoomed in to snap this stunning photo of the stellar cluster. Much closer up, the bright clouds of dust are more detailed, and we can properly assess all the activity in this region.

A photographer in Europe captured the moon passing behind Earth in this time lapse of the January 2018 lunar eclipse. The result is a sort of lunar yoga—our moon streeetching in this groovy image. The reddish hue is created when light from the Sun passes through Earth’s atmosphere and is reflected, giving it the nickname “blood moon.”

Based on analyses of the clays that remain in this area, scientists who’ve studied the Eridania basin on Mars theorize it to be an ancient lake bed that was once filled with water. This lake would have existed some 2 billion years ago, eventually draining to the north.

If you need some cosmic perspective on our small world, images from Hubble are the way to go. Behold a galaxy cluster, one of the largest features humankind has ever discovered in the universe. Some of these clusters are 1 million billion times the mass of our Sun! In this image, stars from our own Milky Way sparkle in the foreground while whole spiral galaxies are peppered across the entire photo.

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The Strange and Curious Case of the Deadly Superbug Yeast

A pathogen that resists almost all of the drugs developed to treat or kill it is moving rapidly across the world, and public health experts are stymied how to stop it.

By now, that’s a familiar scenario, the central narrative in the emergence of antibiotic-resistant bacteria. But this particular pathogen isn’t a bacterium. It’s a yeast, a new variety of an organism so common that it’s used as one of the basic tools of lab science, transformed into an infection so disturbing that one lead researcher called it “more infectious than Ebola” at an international conference last week.

The name of the yeast is Candida auris. It’s been on the radar of epidemiologists only since 2009, but it’s grown into a potent microbial threat, found in 27 countries thus far. Science can’t yet say where it came from or how to control its spread, and hospitals are being forced back into old hygiene practices—putting patients into isolation, swabbing rooms with bleach—to try to control it.

To a medical system that’s been dealing with worsening antibiotic resistance for decades, this chronology feels somewhat familiar: just another, potentially tougher battle to face. But the struggle to keep this resistant yeast from surging is a warning sign that relying on standard responses won’t work. As the foes continue to evolve, medicine needs both new tech, and surprisingly old techniques, to fight its microbial wars.

“This bug is the most difficult we’ve ever seen,” says Dr. Tom Chiller, the chief of mycotic diseases at the CDC, who made the Ebola remark at the 20th Congress of the International Society for Human and Animal Mycology in Amsterdam. “It’s much harder to kill.”

The center of the emerging problem is that this yeast isn’t behaving like a yeast. Normally, yeast hangs out in warm, damp spaces in the body, and surges out of that niche only when its local ecosystem veers out of balance. That’s what happens in vaginal yeast infections, for instance, and also in infections that bloom in the mouth and throat or bloodstream when the immune system breaks down.

But in that standard scenario, the yeast that has gone rogue only infects the person it was residing in. C. auris breaks that pattern. It has developed the ability to survive on cool external skin and cold inorganic surfaces, which allows it to linger on the hands of healthcare workers and on the doorknobs and counters and computer keys of a hospital room. With that assist, it can travel from its original host to new victims, passing from person to person in outbreaks that last for weeks or months.

Yeast is a fungus, but C. auris is behaving like a bacterium — in fact, like a bacterial superbug. It’s a cross-species shift as inexplicable as if a grass-munching cow hopped a fence and began bloodily chomping on the sheep in the pasture next door.

The accepted narrative of new diseases is that they always take us by surprise: Science recognizes it after it has begun to move, with the second patient or the tenth or the hundredth, and works its way back to find Patient Zero. But C. auris was flagged as troublesome from its first discovery, though its identifiers didn’t understand at the time what it might be able to do.

The story begins in 2009, when a 70-year-old woman already in a hospital in Tokyo developed a stubborn, oozing ear infection. The infection didn’t respond when doctors administered antibiotics, which made them think the problem might be a fungus instead. A swab of her ear yielded a yeast that appeared to be a new species. Microbiologists Kazuo Satoh and Koichi Makimura named it for the Latin word for “ear.”

That story also would have ended in 2009—new species, new nomenclature, another entry in a textboook—except for an unnerving fact. Fungal infections have never been a high priority in medical research, and as a result, there are very few drugs approved for treating them—only three classes of several drugs each, compared to a dozen classes and hundreds of antibiotics for bacteria. This novel yeast was already showing some resistance to the first-choice antifungals that would have been used against it, a family of compounds called azoles that can be given by mouth.

The back-up choice, a drug called amphotericin, is IV-only, and also so toxic—its severe fever-and-chills reactions have been dubbed “shake and bake”—that doctors try to avoid it whenever possible. That left only one set of drugs available, a new IV-only class called echinocandins. C. auris entered medical awareness accompanied by the knowledge that, if it blew up into a problem, it would be difficult to treat.

Still, at that point it had only caused an ear infection. That might have been a random occurrence; there was no reason to assume worse to come. Except, at about the same time, physicians in South Korea were called on to treat two hospital patients, a 1-year-old boy with a blood-cell disorder and a 74-year-old man with throat cancer. They both had developed bloodstream infections caused by the newly discovered yeast. And in both their cases, the organism was partially resistant to the azole class and also to amphotericin. Both died.

The same novel bug, occurring in unrelated patients, in different body systems, simultaneously in two countries, made epidemiologists wonder whether there might be more to come. There was. In just a few years, C. auris infections were recognized in India, South Africa, Kenya, Brazil, Israel, Kuwait and Spain. As with the Korean and Japanese cases, there was no connection between the different countries’ patients. In fact, the strains were genetically different on different continents—suggesting that C. auris had not begun in one place and then spread by transmission, but had arisen simultaneously everywhere, for reasons no one could discern.

But the minutely different strains had the same impact on patients: They were deadly. Depending on the country and the location of their illness in their bodies, up to 60 percent of infected patients died.

The situation looked so alarming that the public health authorities of England and the European Union rushed out urgent bulletins, warning hospitals to look for the arrival of the bug. The CDC, whose main responsibility is monitoring and preventing diseases within US borders, took the unusual step of publishing a warning before the resistant yeast even arrived in this country. “We wanted to get out ahead of the curve, to try to inform our healthcare community,” Chiller told me at the time.

Now there have been 340 cases recorded in the US, in 11 states—and the behavior of the bug in this country is teaching microbiologists more about how the new yeast behaves. It seems that not every continent develops its own strain. Instead, the U.S. is playing host to several micro-epidemics, each of which was sparked by one or several travelers from somewhere else. Cases found in New York, New Jersey, Oklahoma, Connecticut, and Maryland bear the genetic pattern of South Asia. Illinois, Massachusetts, and Florida’s cases show South America’s genetic pattern. And randomly, the few cases recorded in Indiana seem to be linked to a South African strain.

Wherever they come from, the subtle variants of C. auris share an important characteristic: They are highly drug resistant. Last year, the CDC disclosed an analysis of isolates from the US and the 26 other countries where C. auris has surfaced. More than 90 percent were resistant to azoles; 30 percent were resistant to the class that contains amphotericin; and globally, up to 20 percent were resistant to the last-ditch echinocandins. In the United States, 3 percent have been.

They also pose another challenge: long-lasting hospital outbreaks. One London hospital, the Royal Brompton, began finding the resistant yeast in early 2015. To try to stop its spread, the hospital put patients into isolation; regularly swabbed any other patient who had been in the same room as the infected persons, and all of the staff who had any contact with them; required every healthcare worker, janitor, or visitor to wear gowns, gloves, and aprons; bathed the patients twice a day with disinfectant, administered disinfectant mouthwash and dental gel, and washed the rooms three times per day with diluted bleach. When the patients moved out, the rooms they had stayed in and any equipment that had been used on them were bombed with hydrogen peroxide vapor.

Despite all those precautions, the yeast caused a 50-person outbreak that lasted more than a year. It survived the disinfectant baths and found places to hide from the bleach. And it stubbornly persisted on bodies. One patient tested negative for the bug three times, and then, on a fourth screen, tested positive again.

The London hospital published a description of its battle in late 2016. Other hospitals have learned from it—but an account published by the CDC shows how much effort preventing an outbreak can take.

In April a year ago, a hospital in Oklahoma perceived that a single patient was carrying C. auris. To keep it from spreading, the hospital slammed the patient into isolation and enforced strict infection control. It also called in a CDC team, which took 73 samples from the patient, his room, other rooms where he had stayed, and other patients he might have been in contact with, and hauled them all back to Atlanta for genomic analysis. Their quick action kept the deadly yeast from spreading elsewhere in the hospital—but it represented an emergency expenditure of resources and time that no hospital could make routine.

There aren’t many bright spots in the looming battle against C. auris. One may be this: Most of the patients so far, and all of those who have died, have been people who were hospitalized because they were already somehow ill—with diabetes, cardiovascular disease, cancers, and other illnesses. They were on ventilators, threaded with IVs and catheters, and receiving multiple drugs that undermined their immune systems’ competence.

That means there’s a limited population who may be at risk, which also means there’s a limited group for whom the most costly protections should be necessary. But patients that ill are often cared for, not in hospitals, but in nursing homes and skilled nursing facilities—and those institutions tend not to hire or empower the sharp-eyed infection-prevention practitioners that hospitals do. So that raises the question of how to detect the yeast in a patient before that person enters an institution. Must every patient be interrogated for a recent history of foreign travel? Should every new arrival be checked, with skin and gut swabs and lab tests, as part of hospital admission?

Screening won’t be a perfect defense, because clinical microbiology is struggling with this bug. Multiple accounts written over the past few years reveal that most of the patients who carried C. auris—more than 80 percent in one paper—were misidentified at first, judged on laboratory assays to have other, less risky forms of yeast. Recently the CDC published a lengthy guidance for laboratories, explaining in detail the mistakes that seven separate testing methods make in identifying it, and urging labs to contact the agency whenever it is suspected or diagnosed.

It’s critical that medicine develop better tests and routine practices, and that sluggish development of new antifungal drugs be speeded up. In the absence of new tech, what seems to be helping is one of the oldest practices in medicine—but even that requires scrutiny to be sure it is done well.

Where outbreaks have been stopped, it has been due to hard efforts in hospital cleanliness: not sharing equipment between sick people; not taking rolling computers into patients’ rooms; scrubbing the walls and floors and bedrails, and checking afterward to make sure that cleaning solutions actually kill the bug. (There is some early evidence that quarternary ammonium cleansers, the most commonly used hospital disinfectants, don’t kill C. auris; but everyday chlorine bleach can.)

The most important steps may be the low-tech ones that are hardest to enforce routinely: wearing gloves, wearing gowns, washing hands. Ignaz Semmelweis, who was born 100 years ago last week, spent his life insisting that hygiene is the most essential act in medicine. The most resistant superbugs remind us that it may be the last protection that we have.

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Home From the Honeymoon, the Self-Driving Car Industry Faces Reality

At the blockbuster plenary sessions, the chairs stretched so far back that even the most youthful Silicon Valley college dropouts-turned VC hoovers had to squint to see the action up in front. A handful of large projection screens hung between the ballroom’s chandeliers, displaying loop-de-looping flow charts on vehicle safety systems, sensor alignments, liability law.

But despite the best efforts of the downtown San Francisco Hilton’s air conditioners, the air shared by the attendees of this year’s Automated Vehicles Symposium was thick with secrets and doubt. Eight years after Google first showed its self-driving car to The New York Times, the autonomous vehicle industry is still trying to figure out how to talk about itself.

Over the three-day conference, engineers, business buffs, urban planners, government officials, and transportation researchers grappled with how to tell the public that its wonder drug of a transportation solution will have its limitations. For at least a few decades to come.

In a market that could be worth $7 trillion by 2050, the players have a powerful incentive to stay mum. And if anyone forgot that, Tuesday’s news that FBI agents had arrested an ex-Apple engineer en route to China, charging him with stealing blueprints of the company’s autonomous vehicle circuit board, reminded them. If any player talks too much, who knows what snatches of information might slip out? There are plenty of competitors waiting to profit.

And yet, the reasons for speaking more loudly and clearly about the goals and realities of self-driving have snapped into focus. In March, an autonomous Uber testing in Tempe, Arizona, struck and killed a woman crossing the street. A AAA survey taken after the incident found American unwillingness to ride in an autonomous vehicle jumped by 16 percent. The crash hung over the symposium as both a lesson in what’s at stake and in what can happen if the autonomous vehicle industry gets things wrong.

In years past, this conference has been all about big pronouncements. Last year, Lyft’s policy chief told the audience that most of the service’s rides would be automated in five years. This year, attendees heard less about commercial launches and more about the minutiae of safety procedures. Lyft’s 2018 presentation, by self-driving car president Nadeem Sheikh, dodged firm deadlines all together.

In an industry built on eliminating human error, insiders have started to admit that building a flawless vehicle will be almost impossible. In fact, they are starting to admit that they need to start admitting it publicly.

“Safety should be foundational to everything you do in this area,” said Mark Rosekind, a former National Highway Traffic Safety Administration and National Transportation Safety Board official who now heads up safety and innovation at the secretive autonomous vehicle startup Zoox. “But understand that on that path, crashes will continue to happen.” How do you go about telling the public this sort of truth, that zero road fatalities is, for the time being, a fantasy?

During her keynote address on Tuesday, Department of Transportation Secretary Elaine Chao suggested one avenue. “Let me challenge you to step up, and help educate the public about this new technology,” she said. “That is so important, because without public acceptance automated technology will never reach its full potential.”

Chao appears to be onto something there. The public is primed to expect autonomous vehicles to be perfect. When the tech isn’t, people are surprised—and scared. Earlier that morning, Kristin Kolodge of the market research firm JD Power presented her findings on what consumers expect from AVs. “The car is meant for accidents not to happen,” one respondent told the firm. “[Accidents] Should never happen,” said another. For self-driving vehicle developers, that’s an unfortunate expectation. A person who expects infallible technology will be disappointed.

And when Americans are disappointed, they sue. JD Power’s survey found that more than half of respondents would be willing to pursue litigation if they were involved in an incident with a driverless car. The firm also surveyed liability lawyers across the nation, who predicted lawsuits involving self-driving vehicles would be way pricier than the average, in part because of the sheer breadth of sensitive data through which lawyers would have to sift during discovery.

So there is worry, and some soul-searching. Yet the deals continue. Down in the Hilton’s lobby, business hummed along, startup founders shaking hands with tech lobbyists and transportation researchers. The state of the autonomous vehicle industry is strong, and no one’s putting away the checkbook just yet. Since the first symposium kicked off in 2014—just four years ago!—attendance has ballooned by 200 percent. It’s up 12 percent since just last year. But the real action happens outside the San Francisco Union Square Hilton. Learning how to speak to the people out there will be an existential skill.

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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.

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Israel's Elbit speeds up race to fly military drones in civil airspace

REHOVOT, Israel (Reuters) – Israeli defense firm Elbit Systems on Thursday unveiled a 1.6 ton unmanned aircraft vehicle (UAV) designed to fly in airspace currently reserved for piloted civilian planes as a race heats up to deploy military drones outside combat zones.

Employees check an Elbit Systems Ltd. Hermes 900 unmanned aerial vehicle (UAV) at the company’s drone factory in Rehovot, Israel, June 28, 2018. Picture taken June 28, 2018. REUTERS/Orel Cohen

The move came hours after a U.S. rival staged a landmark transatlantic demonstration flight, as arms firms vie to develop drones with flexibility to be used in civilian-controlled airspace – a drive that could spawn future technology for unmanned airliners.

Changing security concerns following the dismantling of Islamic State and rising geopolitical tensions have caused European countries to shift defense efforts from far-away conflicts to homeland security, resulting in demand for drones that can be safely integrated into civilian airspace to, for example, monitor border crossings, Elbit officials said.

A version of Elbit’s Hermes 900 StarLiner is being assembled for the Swiss armed forces and is scheduled to be delivered in 2019 in a deal worth $200 million.

“We are getting a lot of interest from other customers for the same configuration … from all over the world,” Elad Aharonson, general manager of Elbit’s ISTAR division, told Reuters.

The StarLiner, being launched ahead of next week’s Farnborough Airshow, is derived from the Hermes 900 operated by Brazil for surveillance during the 2014 World Cup. That operation required closing off airspace to civilian aircraft, something the StarLiner, with technology to detect aircraft and avoid collisions, will not require, Elbit said.

Elad Aharonson, general manager of the Elbit Systems Ltd. ISTAR division, stands among unmanned aerial vehicles (UAVs) at the company’s drone factory in Rehovot, Israel, June 28, 2018. Picture taken June 28, 2018. REUTERS/Orel Cohen

The drone is compliant with NATO criteria, qualifying it to be integrated into civilian airspace, Elbit said. It will still need approval of the various civil aviation authorities.

The StarLiner has been flying in civilian airspace in Israel over the past year.

California-based General Atomics’ MQ-9B SkyGuardian – a version of the widely used Predator family – completed its Atlantic crossing on Wednesday ahead of the world’s largest military airshow at RAF Fairford in western England.

Elbit expects to receive approval from the European Aviation Safety Agency (EASA) for its own product in the coming months.

EASA was not available for comment.

Israel’s drone exports in 2005-2012 totaled $4.6 billion, according to consultancy Frost & Sullivan. They reached $525 million in 2016, accounting for 7 percent of Israel’s defense exports, defense ministry data show.

Drones are a major source of revenue for Elbit and state-owned Israel Aerospace Industries. The United States and Israel dominate the industry but face growing competition from cheaper Chinese drones.

Slideshow (8 Images)

U.S. military drone makers are vying for a larger share of the global market, which market researcher the Teal Group forecasts will rise from $2.8 billion in 2016 to $9.4 billion in 2025.


Flying alongside airliners would expand the horizons of drones originally developed for military surveillance. But it would also call for advanced sensors and software that could eventually filter back into commercial use as developers look at single-pilot and ultimately pilotless cargo or passenger jets.

The StarLiner can reach 30,000 feet – the altitude of some commercial jets – and photograph an 80 square kilometer (31 square mile) area, Elbit said.

“Some customers would like to use the system to gather intelligence,” Elbit CEO Bezhalel Machlis said. “Another example can be for homeland security applications, to fly above an area and make sure it is monitored against terrorist activities.”

The drone can be equipped with radar, cameras to take video and still pictures, and signals intelligence to analyze electronic signals.

“This is a major step towards unmanned civilian planes,” Aharonson said, adding the main barrier to such aircraft would be psychological rather than technical.

Editing by Jonathan Weber, Tim Hepher and Mark Potter

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Blockchain Smart Contracts: More Trouble Than They Are Worth?

A visual representation of the digital Cryptocurrency, Bitcoin, on June 11, 2018 in Hong Kong, Hong Kong. (Photo by S3studio/Getty Images)

We’ve all heard about the benefits of smart contract technology – a trustless tool to boot out the middleman when exchanging money, assets, or anything of value. As revolutionary as blockchain’s latest buzzword may be, smart contract bugs are causing untold chaos.

Looking at the numbers, one might take Ethereum’s 3% smart contract failure rate as a tolerable loss, a proverbial drop in the ocean. Yet, when a safeguard fails to protect billions of dollars worth of currency, bad things can happen.

Take ICON’s June 2018 bug, which allowed any user—apart from the smart contract creator—to freely enable and disable transactions. The notion of immobilizing an $800+ million blockchain would worry most, but let’s not forget this blunder pales in comparison to past failures.

There have been countless colossal botches, but the king of them very well may be the Distributed Autonomous Organization (DAO) smart contract bug back in 2016. Seeing 3.6 million Ether drained via smart contract hacks, the DAO forced Ethereum’s founders to take radical measures and create a hard fork – the only possibility of salvaging the lost funds (15% of all Ether in circulation at the time).

It takes time to iron out the kinks in any brand-new technology, and smart contracts are no exception.

Can smart contracts be fixed?

Given that such flaws are compromising funds, sensitive data, and digitized assets of all description, one wouldn’t be wrong to ask if the technology was simply more trouble than it’s worth.

A fair question, but the fact remains that smart contract bugs are not unfixable. A number of projects have emerged to tackle the problem, and any one of them may well be the breath of fresh air needed to restore faith in the technology.


Solidified and Security have surfaced alongside a number of companies offering smart contract verification and auditing. Such labor-powered efforts currently dominate the market, costing thousands, even tens of thousands of dollars per audit. These solutions may be impactful on a case-by-case basis, but it’s obvious that a more cost and time-effective solution will be needed to meet the world’s growing appetite for blockchain. It would seem then, that decentralization may have the keys to the kingdom.

For one, Quantstamp—worth nearly half a billion dollars by market capitalization in January 2018—has devised a security-auditing protocol for smart contracts written in Solidity, the programming language championed by Ethereum. Through Quantstamp, clients have their smart contracts scrutinized by peer-submitted verification software and “Bug Finders.” While an effective solution, Quantstamp’s process is still overly labor-intensive – source code must be reviewed, and specifications written manually by humans.

Many of these projects have leapt towards solving the smart contract crisis, yet they all face the issue of scalability, not mentioning their inability to address the issues plaguing blockchain ecosystems as a whole – let’s not forget that decentralized applications (DApps) and blockchain code are equally vulnerable to bugs.

One company proposing an engineered solution is CertiK – an upcoming verification platform for all the components of a blockchain ecosystem, including smart contracts and DApps. Where its competitors rely on manual verification and the classic testing-based approach, CertiK would point to the fact that testing can only identify when bugs are present, and never certify their absence. Instead, CertiK’s platform will mathematically prove that any items are free of bugs and hacker-resistant.

How CertiK automatically finds issues in smart-contract code.CertiK

According to CertiK, the answer to truly scalable verification is a layer-based system. Instead of testing—what the team describes as a “prohibitive” task reliant on human labor—CertiK uses modular verification to break tasks down into smaller ones, allowing them to be solved in a decentralized fashion. This style of work incentives and rewards the community to construct and validate proofs, improve solving algorithms, and maintain a resilient, cost-effective solution – all music to the ears to advocates of decentralization.

Having previously built one of the world’s first hacker-resistant operating systems, the CertiK team is a blend of academic and corporate verification experience – led by Yale and Columbia University professors, and backed by software engineers from Facebook, Google, and FreeWheel.

Blockchain itself may be trustless, immutable and incorruptible, but if we ignore the bugs present in them, they are as good as multi-billion dollar safes with faulty locks. As the technology pushes the globe towards new economic models, we will only demand more from smart contracts, DApps, and the verification solutions that uphold their integrity.

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

HONG KONG (Reuters) – 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 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, China’s second-largest e-commerce firm, in mid-2017.

A man riding an Ofo shared bicycle takes pictures of a 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 which already have stable user traffic. itself is backed by U.S. retail giant Walmart Inc and Chinese gaming behemoth Tencent.

FILE PHOTO: A logo of 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, 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. 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

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The Economics Of Artificial Intelligence – How Cheaper Predictions Will Change The World

, Opinions expressed by Forbes Contributors are their own.
Adobe Stock

Adobe Stock

</div> </div> <p>To start with, it’s worth defining what we mean when we talk about AI. In recent years the leaps in technology which have been generating the biggest buzz are around <span><a href="" target="_blank" data-ga-track="ExternalLink:" rel="nofollow">machine learning</a></span> and <span><a href="" target="_blank" data-ga-track="ExternalLink:" rel="nofollow">deep learning</a></span>. These are specific implementations of technology which can be used to give machines the ability to learn, without human input, by merely being fed data.</p> <p> </p> <p>This means they can become increasingly better at routine tasks – such as examining image data from cameras and working out what is shown, or reading through thousands of pages of documents and understanding the relevant pieces of information for the task at hand.</p> <p>How this will affect the role of humans is a hot topic and the question is very much up in the air. Some predict that the near-future will see us becoming used to working alongside “smart” machines, hugely boosting our productivity. Others say the arrival of these machines will make us redundant when it comes to many forms of labor, leading to widespread unemployment and eventually civil unrest.</p>

<p>In their latest book: Prediction Machines – The Simple Economics of Artificial Intelligence, authors Ajay Agrawal, Joshua Gans and Avi Goldfarb seek to demonstrate how that prediction is fundamental to the changes that AI makes possible. In their book they explain that understanding this concept – and preparing our reaction to it – could determine which of those two possible futures is likely to come about.</p> <p>Key to this, they argue, will be whether human AI “managers” can learn to differentiate between tasks involving prediction, and those where a more human touch is still essential.</p>” readability=”48.3451612903″>

Artificial Intelligence (AI) is a lot of things. It’s a game changer for business, it can enable humans to work smarter and faster than ever before, and it could potentially have a significant impact on economies and the labor market.

But at the root of it all – the function which gives AI value – is the ability to make predictions. Calculating – more quickly and accurately than has ever been possible – what the likelihood is of a particular outcome, is the fundamental advance which AI brings to the table.

Adobe Stock

Adobe Stock

To start with, it’s worth defining what we mean when we talk about AI. In recent years the leaps in technology which have been generating the biggest buzz are around machine learning and deep learning. These are specific implementations of technology which can be used to give machines the ability to learn, without human input, by merely being fed data.

This means they can become increasingly better at routine tasks – such as examining image data from cameras and working out what is shown, or reading through thousands of pages of documents and understanding the relevant pieces of information for the task at hand.

How this will affect the role of humans is a hot topic and the question is very much up in the air. Some predict that the near-future will see us becoming used to working alongside “smart” machines, hugely boosting our productivity. Others say the arrival of these machines will make us redundant when it comes to many forms of labor, leading to widespread unemployment and eventually civil unrest.

In their latest book: Prediction Machines – The Simple Economics of Artificial Intelligence, authors Ajay Agrawal, Joshua Gans and Avi Goldfarb seek to demonstrate how that prediction is fundamental to the changes that AI makes possible. In their book they explain that understanding this concept – and preparing our reaction to it – could determine which of those two possible futures is likely to come about.

Key to this, they argue, will be whether human AI “managers” can learn to differentiate between tasks involving prediction, and those where a more human touch is still essential.

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SoftBank tightens grip on Yahoo Japan via $2 billion deal with Altaba

TOKYO (Reuters) – SoftBank Group is increasing its stake in Yahoo Japan through a $2 billion, three-way deal with U.S. firm Altaba to deepen ties with the internet heavyweight ahead of an IPO of its telecoms unit.

FILE PHOTO: A website of Yahoo Japan Corp is seen on a computer screen in Tokyo August 19, 2009. REUTERS/Stringer/File Photo

Under the deal, SoftBank will buy 221 billion yen ($2 billion) of Yahoo Japan shares from Altaba, formerly internet giant Yahoo Inc. Yahoo Japan will then buy back 220 billion of stock from SoftBank.

As a result of the transaction SoftBank’s stake in Yahoo Japan will rise to 48.17 percent from 42.95 percent with just a $9 million net investment. Altaba, Yahoo Japan’s second largest shareholder, will have about 27 percent and end a joint venture partnership.

SoftBank said in a statement on Tuesday the deal will strengthen cooperation between the company, one of Japan’s big three telecoms firms, and Yahoo Japan, an internet heavyweight in areas such as news and shopping.

The synergies between SoftBank and Yahoo Japan are “consistent with SoftBank Group’s broader strategic synergy group initiative,” SoftBank Chief Executive Masayoshi Son said in the statement.

FILE PHOTO: An employee works behind a logo of Softbank Corp at its branch in Tokyo March 2, 2011. REUTERS/Toru Hanai/File Photo

SoftBank and its Vision Fund, the world’s largest private equity fund standing at over $93 billion as of May last year, have been taking minority stakes in technology companies around the world that Son believes will come to dominate their respective fields.

The news of the Yahoo Japan deal comes as SoftBank prepares to list its domestic telecoms unit in what could be the largest Japanese IPO in nearly two decades.

Yahoo Japan could use SoftBank’s telecom services to boost demand for online shopping and mobile payments among Japan’s increasingly net-savvy shoppers. SoftBank, through Yahoo Japan and others, is offering its mobile users an increasingly wide range of top-up services in addition to a basic phone subscription.

Yahoo Japan’s shares were up nearly 12 percent in early afternoon Tokyo trading. Despite that jump, its shares are down more than 22 percent this year.

“It’s clear that using excess funds for share buybacks is the only way Yahoo Japan has to hold up its share price,” said Yasuo Sakuma, chief investment officer at Libra Investments. The firm does not hold positions in Yahoo Japan or SoftBank.

Altaba has been selling down its Yahoo Japan stake. Two Altaba appointments to the Yahoo Japan board will step down as a result of the transaction announced on Tuesday.

SoftBank shares were up 2 percent, with the benchmark Nikkei 225 index up 1 percent.

Reporting by Sam Nussey and Chris Gallagher; Additional reporting by Tomo Uetake; Editing by Stephen Coates and Muralikumar Anantharaman

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Google, Quantum Media Storage And Symply Acquisition

, Opinions expressed by Forbes Contributors are their own.
Image from Google blog

VFX simulation and virtual workstation in GCP using Google Cloud Filestore

</div> </div> <p>Quantum announced that Visual Data Media Services (one of the largest media processing, distribution and localization service companies in the world) choose Quantum StorNext-Powered Xcellis Scale-out NAS to manage its 4K transcoding workflows, high bit-depth film scanning and to support the heavy data rate requirements for high dynamic range (HDR) video mastering. The Quantum solution supports multiple simultaneous 4K and UHD scanning and mastering operations. The announcement says that the advanced data management features in StorNext have enabled the Visual Data team to increase their projection capacity by six times, without an increase in staff.</p>

<p>The VDMS team particularly wanted a storage system to help remastering film content. The release says that remastering older programs in HD and 4K posed a challenge: often with no cut negative to scan, the only way to get old features and TV shows to HD or 4K is to perform a match-back—scanning the original dailies, manually eye matching the images used in the final cut and then conforming the original in the new format. The team wanted a solution that could double capacity and deliver the performance to support multiple 4K and UHD operations at the same time.</p>

Quantum Product Photo

Quantum Xcellis Scale-out NAS

</div> </div>” readability=”49″>

This blog will look at some recent announcements in digital storage related services for the media and entertainment industry from Google and Quantum, as well as the recent acquisition of storage start-up Symply by Global Distribution. Media and entertainment storage is one of the areas I particularly cover.

Google has opened up a Los Angeles cloud region. This region joins four other Google Cloud Platform regions in Oregon, Iowa, South Carolina and Northern Virginia. The LA region targets media and entertainment customers requiring low latency availability to scalable cloud-based computing resources. Media organizations use cloud-based resources to respond to incoming projects with short time lines that exceed their in-house capabilities (often called cloud bursting).

As stated by Tom Taylor, Head of Engineering at The Mill, a global visual effects studio working on short form content like commercials and music videos in addition to larger projects, “A lot of our short form projects pop up unexpectedly, so having extra capacity in region can help us quickly capitalize on these opportunities.” Visual effects rendering using cloud-resources is a particularly popular use of cloud-based services.

Google also announced Google Cloud Filestore, a managed Network Attached Storage (NAS) service. This service works with applications that require a file system interface and a shared file system for data. For projects like video rendering running across many machines with a shared file system, the Google Cloud Filestore allows easier collaboration for these production projects. A VFX simulation and virtual workstation in GCP using Cloud Filestore for sharing is shown below.

Image from Google blog

VFX simulation and virtual workstation in GCP using Google Cloud Filestore

Quantum announced that Visual Data Media Services (one of the largest media processing, distribution and localization service companies in the world) choose Quantum StorNext-Powered Xcellis Scale-out NAS to manage its 4K transcoding workflows, high bit-depth film scanning and to support the heavy data rate requirements for high dynamic range (HDR) video mastering. The Quantum solution supports multiple simultaneous 4K and UHD scanning and mastering operations. The announcement says that the advanced data management features in StorNext have enabled the Visual Data team to increase their projection capacity by six times, without an increase in staff.

The VDMS team particularly wanted a storage system to help remastering film content. The release says that remastering older programs in HD and 4K posed a challenge: often with no cut negative to scan, the only way to get old features and TV shows to HD or 4K is to perform a match-back—scanning the original dailies, manually eye matching the images used in the final cut and then conforming the original in the new format. The team wanted a solution that could double capacity and deliver the performance to support multiple 4K and UHD operations at the same time.

Quantum Product Photo

Quantum Xcellis Scale-out NAS

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3 YouTube Daredevils Dead in Waterfall Accident

Three popular YouTubers died on Tues., July 3, after accidentally falling over a waterfall more than 1,000 feet in height. Two of the deceased were founders of the High on Life YouTube channel, which featured exotic travel and dangerous outdoor stunts.

The three victims were reportedly part of a group of seven swimming near Shannon Falls outside Squamish, British Columbia. According to eyewitness reports, Megan Scraper slipped and fell 30 meters into fast-moving water just above the falls. Alexey Lyakh and Ryker Gamble are believed to have jumped into the water to try and save her, but all three were swept over the falls. Their bodies were recovered the next day.

According to the CBC, Gamble and Lyakh started High on Life with two other childhood friends. Previous videos posted by the deceased and the High on Life channel show lots of exotic travel as well as some high-risk outdoor activities, including cliff jumping and crossing decrepit rail bridges. Some of the group’s YouTube videos emphasize the danger of certain activities. One video, featuring Gamble descending a harrowing natural water chute, is accompanied by a disclaimer stating that “Our team has been trained and involved in gymnastics, diving, stunts, and the extreme sports community for over a decade,” and warning others against trying to replicate what they see.

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The accident has nonetheless added new fuel to long-running debates about the potential danger of social media featuring risky activities. That’s in large part because the High on Life group has previously been accused of violating safety and natural preservation rules. In 2016, Gamble and Lyakh posted video showing themselves leaving designated trails in Yellowstone National Park and walking near the Grand Prismatic Spring, an ecologically delicate and potentially dangerous hot spring. They were ultimately sentenced to seven days in jail and apologized for their behavior.

Members of the group, including Gamble and Lyakh, were also accused of violating rules elsewhere. Those incidents included using bicycles in prohibited areas in Death Valley National Park; swinging from the Corona Arch rock formation in Utah; and wakeboarding on the sensitive Bonneville Salt Flats in the same state. At least some of those incidents were filmed, according to citations.

High on Life currently has more than 500,000 subscribers, no doubt partly thanks to such high-risk stunts. Some have argued that the quest for thrilling footage led the team to take more extreme risks, without the safeguards or oversight that might have been imposed by a more conventional media organization. That dynamic mirrors the documented tendency of algorithm-driven media platforms to encourage ideological extremism among users.

In a video message posted after the tragic deaths, other members of the High on Life team praised the trio’s legacy. “They lived every single day to its fullest,” the memorial stated in part. “They stood for positivity, courage, and living the best life that you can, and they shared and taught their values to millions of people worldwide.”

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No Joke: The Onion Faces Layoffs by Univision, Says Report

It sounds like a headline from The Onion, the satirical newspaper that seems to have the perfect riposte to every political and cultural event: Its parent company plans significant layoffs in perhaps the richest era of satire known to humanity.

But in this case, the news is real.. Univision, which owns a controlling interest in Onion Inc. may lay off or buy out as many as 15% of the relatively small staff, according to the Daily Beast. This follows a significant number of buyouts of staff at other websites owned by Univision. A spokesperson from the company declined to comment to Fortune on the report. The Onion’s union hasn’t replied to a request for a comment.

The impact on the publication is unclear, though the Daily Beast notes that The Onion has a relatively small staff, many of whom are currently on vacation during a regular summer hiatus.

The publication turns out fast, sharp headlines about contemporary events, often as quickly as news breaks. It made its name by writing in a straight news style that mimics mainstream media. For instance, in the recent disclosure of the Trump administration’s family separation policy, the headline, “Stephen Miller Furious At ProPublica For Only Releasing 7-Minute Recording Of Immigrant Children Sobbing,” appeared shortly after that investigative news outlet released the audio.

Meanwhile, the phrase “not the Onion” has become commonplace in an era in which political and social norms are in upheaval.

The Onion was founded in 1988 in Madison, Wisc., by two university students and distributed as a print weekly, which grew into multiple markets, reaching a circulation as high as 500,000 copies, and then gradually shrunk until the print edition was canceled in 2013.

The Onion has been sold twice and moved from Madison to New York City in 2000 and then to Chicago in 2012. Univision reportedly purchased 40% of Onion Inc. in 2016 along with a controlling interest and the right to purchase the remaining stock. Univision reportedly wants to sell its stake in the company and other digital properties.

Univision co-created, founded, or purchased several popular tech, culture, and humor websites starting in 2012 with Fusion. This included the family of Gawker publications after its publisher went into bankruptcy after losing a lawsuit brought by wrestler and celebrity Terry Bollea, better known as Hulk Hogan. was shut down, but Jezebel, Gizmodo, Deadspin, and several others remain highly active, along with the Clickhole and A.V. Club sites run by The Onion staff. Before Univision’s purchase, Gawker’s staff had unionized, and the staff publications at Fusion, The Onion, and other sites voted in favor of union representation in Nov. 2016.

Univision gave up in March 2018 on a plan to go public that had begun in with filing paperwork in July 2015. Executives have been forced out or left since then, including some key to its digital operations.

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Check Out The Rocket League 'Year Three' Infographic

, I write about gaming and technology, giving news, insights, and more. Opinions expressed by Forbes Contributors are their own.
Psyonix/Rocket League

Rocket League Year 3 Infographic

</div> </div> <p>July 7th, 2018 is Rocket League’s third birthday, and Psyonix has released their yearly infographic to celebrate. This year’s graphic provides statistics like player base, community involvement, and item popularity- statistics that would be unknown to us if Psyonix wasn’t the community-involved team that it is.</p> <p>I was hoping we’d be treated to another infographic this year, since they&nbsp;provide not only a great snapshot of the game’s current state, but also allow us the chance to compare to previous years’ statistics to see how the community has changed.</p> <p>I’ve collected some of more interesting statistics from the graphic with some comments below, but feel free to check out the entire infographic (without my interruptions!) <a href="" target="_blank" data-ga-track="ExternalLink:" rel="nofollow">on the Rocket League site</a>.</p> <p> </p>

Psyonix/Rocket League

Match statistics since Rocket League’s release

</div> </div> <p>2.5&nbsp;<em>Billion&nbsp;</em>matches played is a staggering figure. If each match takes 5 minutes, that’s about 24,000 years of Rocket League played in just 3 real-life years. Time flies when you’re having fun!</p>

<p>Interestingly, across the 46 million players that number averages to only 55 matches each. I’d love to see the&nbsp;distribution of average matches played, if only to see where my obsession places me among others.</p>

Psyonix/Rocket League

Rocket League’s "Big Numbers"

</div> </div>” readability=”34.3465272591″>

Psyonix/Rocket League

Rocket League Year 3 Infographic

July 7th, 2018 is Rocket League’s third birthday, and Psyonix has released their yearly infographic to celebrate. This year’s graphic provides statistics like player base, community involvement, and item popularity- statistics that would be unknown to us if Psyonix wasn’t the community-involved team that it is.

I was hoping we’d be treated to another infographic this year, since they provide not only a great snapshot of the game’s current state, but also allow us the chance to compare to previous years’ statistics to see how the community has changed.

I’ve collected some of more interesting statistics from the graphic with some comments below, but feel free to check out the entire infographic (without my interruptions!) on the Rocket League site.

Psyonix/Rocket League

Match statistics since Rocket League’s release

2.5 Billion matches played is a staggering figure. If each match takes 5 minutes, that’s about 24,000 years of Rocket League played in just 3 real-life years. Time flies when you’re having fun!

Interestingly, across the 46 million players that number averages to only 55 matches each. I’d love to see the distribution of average matches played, if only to see where my obsession places me among others.

Psyonix/Rocket League

Rocket League’s “Big Numbers”

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NVIDIAVoice: Creating New Realities for Patient Outcomes: Virtual Reality in Healthcare Part I

When most people think of Virtual Reality (VR), the image that comes to mind is interactive gaming experiences and awe-inspiring, immersive entertainment. And, while the media and entertainment industry is a critical driver of advancing extended reality (xR) technologies (which encompasses virtual, augmented and mixed reality), a deeper examination makes it clear these technologies are poised to have a profound impact across an array of industries.  One such industry is healthcare, where healthcare professionals are finding a growing set of applications where advanced technologies enhance their ability to improve patient outcomes. These xR technologies are finding a home within the healthcare industry particularly because they can be used as a non-invasive, engaging means for patient treatment. Whether used for mental health therapy, for comforting patients, or as a tool for rehabilitation and exercise, VR technologies are providing an effective, elegant solution for a host of individuals needing innovative medical care.


An exciting area VR is impacting is the field of mental health therapy.  With the continued rise in the number of individuals who will experience mental health disorders over their lifetime, the need for risk-free and scalable treatments as alternatives to traditional remedies and pharmaceuticals is becoming increasingly important. In the media, entertainment and gaming industries, VR is used to produce emotional, psychological and physiological responses; exactly the responses needed in using exposure therapy as a treatment for a variety of mental health disorders. Commonly used to address phobias and post-traumatic stress disorder (PTSD), exposure therapy is characterized by the controlled introduction of individuals to the experiences that trigger their psychosomatic responses. Appropriately regulated exposure triggers a manageable response without challenging the patient enough to cause adverse effects; the patient can then learn to become more accustomed to the sensations and practice cognitive-behavioral techniques that will help them manage deleterious responses.  VR is especially useful in this situation, as finding the appropriate level of exposure can be challenging in the real world (especially when a patient’s triggers are rare). The use of virtual worlds allows construction of the experiences in a manner similar to levels in a game enabling patients to work through stressful situations comfortably in a controlled environment.

Patient comfort is an increasingly important part of the health care process. There are millions of patients who deal with chronic and acute pain on a daily basis. Pain management is extremely challenging to deal with in both inpatient and outpatient situations. Compounding the challenges of managing pain is the opioid epidemic that is sweeping through the United States. Fortunately, extended reality technologies are being put to the test and showing some promising results in helping patients manage pain.  Burn victims for instance, who need to go through the painful process of regular bandage changings, often report that they are in significantly less pain when they are able to refocus on interactive and engaging virtual worlds. Virtual reality is also effective in treating the particularly interesting phenomenon known as phantom limb pain, where a patient’s brain experiences pain or discomfort in a limb that has been amputated.  Current methods for treating phantom limb pain rely on tricking the brain into imagining that the limb still exists, such as using a mirror box to create the illusion of a symmetrical body. VR is so promising for this complication because interactive virtual experiences that incorporate the latest in haptics technology only help to solidify the illusion and help to reduce patient discomfort.

Additionally, xR technologies are becoming more prevalent as a tool for improving patient comfort by reducing anxiety levels.  For example, the CHARIOT Program at the Lucile Packard Children’s hospital Stanford, part of Stanford’s Children’s Health Network, is finding that VR and AR technologies are an entertaining way to explain procedures. Understanding their upcoming procedures helps children stay calm before their operations and can even serve as a distraction during the procedure.  In another example, Surgical Theater, LLC, builds 3D models based on a patient’s 2D MRI scans. Patients can use these models for extended reality exploration with a full 360 degree experience, enabling them to gain a better understanding of, and comfort with, their specific procedure.

VR is also starting to make a real impact in exercise and rehabilitation. One of the main issues in the fitness industry is that of providing people with fitness programs that they love and that keep them work out at a consistent pace. There are a growing number of companies like VirZoom, Black Box VR and others that believe that immersive VR gaming experiences that are paired with stationary bikes and resistance exercises can provide individuals with the fun they need to build healthy exercise habits that stick. Try pedaling a pegasus for a workout! As important as exercise is, VR is also showing a life-changing impact as an assistive technology for individuals who have physical disabilities; enabling people to learn new skills, such as navigating a wheelchair in a new environment, or modified daily activities to establish more independence. For those patients that have had a traumatic accident or stroke and lose some of their motor function, VR has been effectively used to improve motor skills and muscle recovery. The Walk Again Project, led by researchers at Duke University, has found success in being able to stimulate once dormant nerves by incorporating brain-machine interfacing technology, VR and a robotic exoskeleton. This approach has helped restore some motor control for their once fully paraplegic patients. Take a look at the video to see the amazing story.

These powerful examples of VR bringing real improvements to the people who need it most only scratch the surface of the potential that these technologies bring. In a follow up article I’ll address how healthcare practitioners can use VR for everything from learning about and training for complex medical scenarios, to performing real operations in virtual and augmented reality for robotic surgery.

In the meantime, for more interesting stories and resources check out the following links:

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Samsung Suddenly 'Confirms' Galaxy Note 9 In Europe

Most read

, I write about technology’s biggest companies Opinions expressed by Forbes Contributors are their own.

Galaxy Note 9 concept proved too ambitious

</div> </div> <p><span style="font-weight: 400"></span><span style="font-weight: 400">Ever the tease, Samsung’s support pages only list the Galaxy Note 9 by its model number (SM-N960F) but that matters little given we already know ever major detail about the phone including its </span><a href="" target="_self"><span style="font-weight: 400">incrementally larger display</span></a><span style="font-weight: 400">, </span><a href="" target="_self"><span style="font-weight: 400">additional storage and RAM</span></a><span style="font-weight: 400"> and a&nbsp;</span><a href="" target="_self"><span style="font-weight: 400">massive battery</span></a><span style="font-weight: 400">. </span></p> <p> </p> <p><span style="font-weight: 400">The bad news is these increases will make the Galaxy Note 9 </span><a href="" target="_self"><span style="font-weight: 400">heavier and thicker</span></a><span style="font-weight: 400"> than the Galaxy Note 8, the in-display fingerprint sensor has been postponed until the </span><a href="" target="_self"><span style="font-weight: 400">more exciting Galaxy S10</span></a><span style="font-weight: 400"> and the core design has barely changed. The latter is a real disappointment given claims about </span><a href="" target="_self"><span style="font-weight: 400">the technology Samsung has</span></a><span style="font-weight: 400"> to do better, but at least there’s no notch.</span></p>

Ice Universe

Galaxy Note 9 – the claimed potential and the reality

</div> </div>

<p><span style="font-weight: 400">Interestingly, for my money, the most exciting thing about the Galaxy Note 9 isn’t the phone itself but the potentially game-changing way its </span><a href="" target="_self"><span style="font-weight: 400">new S Pen will work</span></a><span style="font-weight: 400">. This alone may well be enough for may users to upgrade, especially in combination with a long-overdue big battery upgrade. </span></p> <p><span style="font-weight: 400">Then again, it’s noticeable Samsung has been far less sloppy about Galaxy </span><a href="" target="_self"><span style="font-weight: 400">S10 redesign</span></a><span style="font-weight: 400"> and </span><a href="" target="_self"><span style="font-weight: 400">wallet-busting</span></a><span style="font-weight: 400"> folding Galaxy X. Those devices will do more than enough to sell themselves…</span></p> <p><span style="font-weight: 400">___</span></p> <p><i><span style="font-weight: 400">Follow Gordon on </span></i><a href="" target="_blank" data-ga-track="ExternalLink:" rel="nofollow"><i data-ga-track="ExternalLink:"><span style="font-weight: 400" data-ga-track="ExternalLink:">Twitter</span></i></a><i><span style="font-weight: 400">, </span></i><a href="" target="_blank" data-ga-track="ExternalLink:" rel="nofollow"><i data-ga-track="ExternalLink:"><span style="font-weight: 400" data-ga-track="ExternalLink:">Facebook</span></i></a><i><span style="font-weight: 400"> and </span></i><a href="" target="_blank" data-ga-track="ExternalLink:" rel="nofollow"><i data-ga-track="ExternalLink:"><span style="font-weight: 400" data-ga-track="ExternalLink:">Google+</span></i></a></p> <p><b>More On Forbes</b></p> <p><a href="" target="_self"><span style="font-weight: 400">Massive Galaxy Note 9 Leak Details All-New Features</span></a></p> <p><a href="" target="_self"><span style="font-weight: 400">FCC Reveals Galaxy Note 9 Has Exciting New S Pen</span></a></p> <p><a href="" target="_self"><span style="font-weight: 400">Galaxy Note 9’s Big Battery Has A Serious Shortcoming</span></a></p> <p><a href="" target="_self"><span style="font-weight: 400">Samsung’s Radical Galaxy Smartphone Costs $2,000</span></a></p> <p><a href="" target="_self"><span style="font-weight: 400">Samsung’s Galaxy X And Galaxy S10 Plans Revealed</span></a></p> <p>&nbsp;</p>” readability=”39.7298649325″>

Samsung Electronics is at it again. The company has repeatedly ‘accidentally’ leaked the Galaxy Note 9 via China, Columbia, the FCC (twice) and ‘lost’ a unit which resulted in the first hands-on review. But now Samsung has gone one step further and put the phone on its website… 

Picked up by the eagled-eyed SamMobile, Samsung has listed the Galaxy Note 9 on its support sites in France, Norway, Denmark and Finland.

Galaxy Note 9 concept proved too ambitious

Ever the tease, Samsung’s support pages only list the Galaxy Note 9 by its model number (SM-N960F) but that matters little given we already know ever major detail about the phone including its incrementally larger display, additional storage and RAM and a massive battery.

The bad news is these increases will make the Galaxy Note 9 heavier and thicker than the Galaxy Note 8, the in-display fingerprint sensor has been postponed until the more exciting Galaxy S10 and the core design has barely changed. The latter is a real disappointment given claims about the technology Samsung has to do better, but at least there’s no notch.

Ice Universe

Galaxy Note 9 – the claimed potential and the reality

Interestingly, for my money, the most exciting thing about the Galaxy Note 9 isn’t the phone itself but the potentially game-changing way its new S Pen will work. This alone may well be enough for may users to upgrade, especially in combination with a long-overdue big battery upgrade.

Then again, it’s noticeable Samsung has been far less sloppy about Galaxy S10 redesign and wallet-busting folding Galaxy X. Those devices will do more than enough to sell themselves…


Follow Gordon on Twitter, Facebook and Google+

More On Forbes

Massive Galaxy Note 9 Leak Details All-New Features

FCC Reveals Galaxy Note 9 Has Exciting New S Pen

Galaxy Note 9’s Big Battery Has A Serious Shortcoming

Samsung’s Radical Galaxy Smartphone Costs $2,000

Samsung’s Galaxy X And Galaxy S10 Plans Revealed

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New Galaxy Benchmarks Uncover Samsung's 'Good' and 'Bad' Note 9 Phablets

, Opinions expressed by Forbes Contributors are their own.

Samsung president of mobile communications business DJ Koh presents the new Samsung Galaxy S9  (Photo: Lluis Gene/AFP/Getty Images)

</div> </div> <p> </p> <p>The international (Exynos) benchmark shows a lower single-core score and a higher multi-core score compared to the US (Snapdragon) model. These will not be the final scores as the tests will be with pre-release software which is unlikely to be optimized for the final hardware. I would expect both versions to see improvements in their respective scores as the launch arrives, and there’s every chance that software updates through the life of the device will show continual improvement.</p> <p>Because the choice of models will be network dependant, users in a specific region will have no choice which model to pick up. You get ‘good’ or ‘bad’, but I would expect Samsung to follow a similar pattern to previous years and maintain the ‘experience; over the models. That means for Note 9 users the limiting factor will be the Snapdragon architecture. The ultimate power of the Note 9 (at least those using the Exynos chips) will remain a mystery to the average consumer.</p>

<p><a href="" target="_self"><em>Now read more about Samsung’s plans to launch the Note 9, and the effect it has on the S10…</em></a></p>” readability=”29.5410176532″>

As has been the case in previous years, the Galaxy Note 9 will ship in two major chip variants – the Qualcomm Snapdragon model will be available in the USA (notably to accommodate the different LTE frequencies) while the Samsung Exynos variant will head out to the rest of the world.

Both models have now shown up via online benchmarking tools, and once more it looks like some users will have to accept a ‘bad’ Note 9.  Sammobile reports:

The Exynos 9810-powered Galaxy Note 9 model number SM-N960N posted a single-core and multi-core score of 2737 and 9064 respectively. The unlocked Galaxy Note 9 model number SM-N960F with the same chip has posted a single-core and multi-core score of 3716 and 8984 respectively.

Samsung president of mobile communications business DJ Koh presents the new Samsung Galaxy S9  (Photo: Lluis Gene/AFP/Getty Images)

The international (Exynos) benchmark shows a lower single-core score and a higher multi-core score compared to the US (Snapdragon) model. These will not be the final scores as the tests will be with pre-release software which is unlikely to be optimized for the final hardware. I would expect both versions to see improvements in their respective scores as the launch arrives, and there’s every chance that software updates through the life of the device will show continual improvement.

Because the choice of models will be network dependant, users in a specific region will have no choice which model to pick up. You get ‘good’ or ‘bad’, but I would expect Samsung to follow a similar pattern to previous years and maintain the ‘experience; over the models. That means for Note 9 users the limiting factor will be the Snapdragon architecture. The ultimate power of the Note 9 (at least those using the Exynos chips) will remain a mystery to the average consumer.

Now read more about Samsung’s plans to launch the Note 9, and the effect it has on the S10…

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Samsung's second-quarter profit seen flagging as smartphone innovation dries up

SEOUL (Reuters) – Samsung Electronics Co Ltd (005930.KS) is expected to post its smallest profit growth in more than a year in the second quarter, as lacklustre sales of its premium Galaxy smartphones overshadow its highly profitable chip business.

FILE PHOTO: A close-up view of a Samsung washing machine is seen in a store in Singapore January 26, 2018. REUTERS/Thomas White/File Photo

Analysts expect Samsung’s smartphone sales to drop in the April-June quarter, following a more than 2 percent drop in the previous quarter as consumers flock to cheaper models from Chinese rivals such as Xiaomi Corp (1810.HK).

Samsung’s lead over Apple Inc (AAPL.O) in the global smartphone market is under pressure after the U.S. firm’s iPhone X exceeded market expectations while a lack of technological innovation dogs Samsung offerings.

“Functions (that) Samsung’s mobile phones have are not attractive enough for customers to spend more money on,” said Song Myung-sup, analyst at HI Investment & Securities.

Samsung’s latest Galaxy S9 flagship phone, launched in mid-March, boasts lots of software but little in the way of technological wizardry. It is on track to sell less in its launch year than its predecessor Galaxy S8 series sold in 2017 after its debut, analysts said.

This is expected to drag on profit growth when the Korean conglomerate posts second-quarter earnings on Friday.

Analysts expect an operating profit of 14.9 trillion won ($13.3 billion) for the quarter, up 5.7 percent from a year earlier but less than the record 15.6 trillion won it posted in the March quarter, according to a Thomson Reuters poll.

Samsung, whose shares are down 9 percent so far this year, is also expected to issue guidance for the April-June quarter on Friday, giving estimates for revenue and operating profit. It will disclose detailed results in late July.


Samsung relies on traditional distribution to sell phones, whereas competitors have pulled ahead by leveraging online sales to provide high-end smartphones at competitive prices, Counterpoint analyst Shobhit Srivastava said.

Some investors are skeptical whether Samsung’s upcoming line-up of foldable phones with sleek OLED screens will be innovative enough to gain traction with customers. The new Galaxy Note will debut on August 9 in New York.

“Samsung has to show something that will change the paradigm,” said Park Jung-hoon, a fund manager at HDC Asset Management that owns Samsung Electronics shares.

“Market watchers don’t have high expectations for its smartphone business at the moment, when Chinese players have already caught up in technology and ideas.”

In China, the world’s biggest smartphone market, Samsung’s market share was just 1.3 percent in the first quarter, according to data from research firm Strategy Analytics, compared with Huwawei’s [HWT.UL], 22.5 percent.

Chinese smartphone makers – Huawei, Oppo, Vivo and Xiaomi – held the top spots in China, while Apple was the only foreign firm in the top five.

In India, Xiaomi displaced Samsung as market leader last year and continued to lead in the world’s second-biggest smartphone market in the first quarter, according to a report from research firm Counterpoint.

To be sure, Samsung remains the world’s largest smartphone maker, selling about 80 million gadgets a quarter and holding more than a fifth of the global market.

Its troubles in the mobile segment are overshadowing the success of its chips business, which generates about three quarters of Samsung’s operating profit and about a third of its revenue.

Operating profit in the chips business is expected to grow about 50 percent to a record 12.5 trillion won in the second quarter versus a year ago, according to analysts, as servers, gaming PCs and cryptocurrency mining devices demand more firepower to process streaming data.

Reporting by Ju-min Park and Heekyong Yang; Writing by Sayantani Ghosh; Editing by Stephen Coates

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