Can Taking on Debt Help Your Business? It Depends When You Use it

There are few words and ideas that strike fear into entrepreneurs and small business owners, especially Millennial entrepreneurs, more than debt. Scarred by the financial crisis, and often juggling student loan and other debt burdens, debt is correctly viewed as something that can upend or even sink a business.

Interest payments by themselves, not to mention principal repayments, can eat up cash flow, prevent entrepreneurs and businesses from expanding, and limit opportunities for future growth.

Although the concept of debt most often has a negative connotation, it is important to recognize that debt is just another tool in the toolbox that entrepreneurs have access to. Obtaining financing is a necessary part of any business, especially for an enterprise seeking to bootstrap itself off the ground.

That said, getting over the apprehension of debt and debt issues, and the legitimate fear or making an incorrect decision with your business finances can be easier said than done.

As a CPA I can attest that there are certainly situations where taking a loan, obtaining a line of credit, or accessing other forms of debt can help you and your business grow. Before anything else, remember that you are in control of your finances — debt is a tool for you to use, and can help your business grow when used correctly.

Let’s take a look at some these specific situations and facts to keep in mind:

1. For developing a new product or service.

No matter how fantastic your newest innovation may be, and regardless what type of business you’re running, you need capital to bootstrap your ideas. While you may have confidence in your ideas, the reality is you may have to produce a proof of concept before investors will believe.

After a thorough analysis of the financial pros and cons, taking on debt to help your launch or finish your new ideas can be an excellent use of this tool.

2. When you want to keep control.

Every business, after cutting through all of the jargon and buzzwords, has two sources of capital available to them. You can raise capital in return for ownership interests in an organization, and this capital is yours to keep for as long as you desire.

Debt, although it has interest associated with it, doesn’t require you to give up ownership of your business. This benefit of raising debt is not often discussed, but is something that should be taken into consideration when you are thinking of obtaining external financing.

3. Taking advantage of the tax code.

This may be more or less relevant for your business, but the fact is that business interest payments are tax deductible, as opposed to payments made to equity investors. Put another way, the benefits of this tax deduction can be summarized as follows.

Assuming you and your competitor operate equivalently profitable businesses, the business that has financed itself with debt with generate higher profitability figures than the business that used equity investors.

4. When it’s cheaper than other sources of funding.

You and I can both read the agreements that are signed when you or your business borrow money — loan duration, interest rates, and any applicable fees are explicitly spelled out. This can reinforce the notion that borrowing money is always more expensive than attracting equity investors.

Drilling in deeper, however, it is apparent that equity investors require control, possibly a share of the profits, and maybe a return on their investment through an eventual sale of the business. Taking a step back to see the big picture can save you money in the long run.

Debt, both for individuals and for small businesses, is a critically important topic that can make the difference between success and failure for your business. Although this topic, and the implications of making a mistake with debt, can strike fear into the heart of entrepreneurs, remember that you are in control of your financial future. Taking a step back, objectively analyzing the situation, and using debt when necessary can help your business grow, expand, and continue providing value to the marketplace.

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Latest Apple Park Drone Footage Shows Basketball and Tennis Courts

Apple’s new campus is nearing completion.

Apple employees will be able to shoot hoops and play tennis at the company’s new Apple Park headquarters.

Aerial videographer Matthew Roberts released new drone footage Monday of Apple’s new headquarters, spanning 175 acres in Cupertino, Calif.

The drone footage shows some overhead shots of the nearly-finished campus, with several up-close shots of the massive 2.8 million spherical building serving as Apple Park’s centerpiece, where employees will be working. The video also shows new paved paths that crisscross throughout the campus, while big trucks are shown to be transporting trees to their designated planting areas.

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Apple aapl is also installing two big basketball and tennis courts for employees to use during their spare time. The courts however, appear to be unfinished as of when the video was recording, depicting a few massive empty lots for the time being.

In September, drone pilot Duncan Sinfield recorded aerial footage of Apple Park in prelude to the company’s latest iPhone launch.

Sinfield’s footage also featured Apple’s new auditorium, the Steve Jobs Theater, where Apple recently held its big media event and unveiled the iPhone 8, iPhone 8 Plus, and iPhone X, among other products.

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IBM and Stellar Are Launching Blockchain Banking Across Multiple Countries

The news also comes as an important validation of blockchain technology.

In a breakthrough for payments technology, IBM and a network of banks have begun using digital currency and blockchain software to move money across borders throughout the South Pacific.

The significance of the news, which IBM announced on Monday, is that merchants and consumers will be able to send money to another country in near real-time, accelerating a payments process that typically takes days.

The banking network includes “12 currency corridors” that encompass Australia and New Zealand, as well as smaller countries like Fiji and Tonga. It will reportedly process up to 60 percent of all cross-border payments in the South Pacific’s retail foreign exchange corridors by early next year.

The news also comes as an important validation of blockchain technology, which has long promised enormous efficiencies for the financial sector, but has been slow to move from the concept stage to the real world.

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Blockchain, which relies on a disparate network of computers to create an indelible, tamper-proof record of transactions, is most famously associated with the digital currency bitcoin. But it can be used in many other applications such as tracking shipments or, as in this case, to record a series of cross-border transactions.

As an example, IBM said a farmer in Samoa will soon be able to contract with a buyer in Indonesia, and use the blockchain to record everything from the farmer’s collateral to letters of credit to payment.

“This is the next step in the evolution of blockchain technology. It’s live money moving around a network,” Jesse Lund, IBM’s VP of Blockchain, told Fortune.

Digital Currency is Key

The new blockchain banking process is also notable because the banks will initially rely on a bitcoin-like digital currency, known as Lumens, to facilitate the cross border payments.

Currently, banks arrange such payments by maintaining foreign accounts in a local currency (so-called nostro accounts), and then debiting the accounts as required—a process that is both slow and ties up capital.

Under the new blockchain arrangement, banks will conduct the transactions using Lumens, and then rely on local market makers to convert the Lumens into local fiat currency. The Lumens are created by a non-profit company called Stellar, founded a Jed McCaleb, a well known figure in the payments and crypto-currency world.

Both Stellar and IBM are part of a project called Hyperledger Fabric, which is building open source blockchain tools to support payment infrastructures.

According to Lund, though, the banks use of Stellar’s digital currency is likely to be temporary. He predicts that, in the next year, central banks will begin issuing digital currencies of their own, and that these will become an integral part of blockchain-based money transfers.

The IBM-backed blockchain project comes at a time when other companies are creating efficient new ways to conduct global money transfers. These include BitPesa, which relies on the bitcoin network to replace traditional wire transfers between merchants in Africa, and TransferWise, which provides an inexpensive way for consumers to obtain foreign currencies.

This is part of Fortune’s new initiative, The Ledger, a trusted news source at the intersection of tech and finance. For more on The Ledger, click here.

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Elon Musk Reveals More Details About His Plan to Colonize Mars

SpaceX CEO Elon Musk revealed a trove of new details on the company’s plan to colonize Mars.

He discussed technical details about the giant rocket that he says will take passengers to the Red Planet, the road map for getting to its first launch, and insights into SpaceX’s broader strategy in an “Ask Me Anything” forum on Reddit Saturday.

Musk was his typical freewheeling self during the AMA, quoting the cartoon Bob the Builder and responding to a question about spaceship design with the highly technical insight that “tails are lame.”

He also gamely responded to questions about tangential details of settling Mars, including speculation that settlers might use a compressed version of the Internet. Musk observed that data would take between 3 and 22 minutes to travel between Earth and Mars. “So you could Snapchat, I suppose. If that’s a thing in the future,” he wrote.

More substantively, Musk clarified the scope of SpaceX’s ambitions on Mars. Though he has shared images of vast Martian cities in his presentations on Mars colonization, he said SpaceX isn’t focused on building those cities itself.

“Our goal is get you there and ensure the basic infrastructure for propellant production and survival is in place. A rough analogy is that we are trying to build the equivalent of the transcontinental railway. A vast amount of industry will need to be built on Mars by many other companies and millions of people.”

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That means SpaceX will be designing and building things like systems for creating fuel from Martian resources, work that Musk said is “pretty far along.” But they won’t be focused on issues like how colonists grow food.

Musk also reiterated previous claims that SpaceX is designing the new Mars rocketstill code-named BFR, which stands for exactly what you think it does – to be as safe and reliable as today’s commercial airliners. That will be crucial if plans to use the BFR for transportation around Earth come to fruition.

Musk also shared some details about the game plan for testing the BFR ahead of its first scheduled flight in 2022.

“[We] will be starting with a full-scale Ship doing short hops of a few hundred kilometers in altitude and lateral distance,” Musk wrote. “Those are fairly easy on the vehicle, as no heat shield is needed, we can have a large amount of reserve propellant and don’t need the high area ratio, deep space Raptor engines.

“[The] next step will be doing orbital velocity Ship flights, which will need all of the above.”

SpaceX’s progress on its Falcon 9 rocket in recent years – especially its unprecedented success in landing and reusing rockets – has fascinated observers and re-energized public dialogue about space.

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6 Rules You Must Know for Using SEO and SEM to Grow Your Business

If you’re managing a business, you know how important a web and mobile presence is. Whether you’re selling tacos, tiaras, or terabytes, customers need to be able to find you.

You’ve probably dipped your toe into the complex world of organic or “free” search, also known as Search Engine Optimization (SEO), and paid search, also known as Search Engine Marketing (SEM). But what do you really need to know about SEO and SEM?

I spoke with SEO/SEM expert Andrew Shelton, founder of the digital marketing agency Martec360, who gave me six rules that you need to pay attention to right now if you want to increase your sales through search:

1. Mobile is king

Need evidence of the importance of mobile? Some 96% of smartphone owners use their device to get things done. About 70% of smartphone owners use their phone to research a product before purchasing it in a store. Half of all web traffic comes from smartphones and tablets.

Furthermore, Google has begun to make its search index “mobile-first.” That means that Google will primarily index mobile content and use that to decide how to rank its results.

2. Paid search pays off on mobile

On mobile, paid search (SEM) is increasingly paying off. Shelton says he used to tell his clients to focus on free search (SEO) but with users putting mobile first, the continuum has changed.

“The greatest return on investment is email,” Shelton says, “because you have those customers in house. But paid search is next.” He estimates that paid search spending went up by factors of 25% to 50% in 2016.

3. Have a solid content strategy

The old adage is the new adage: “Content is king.” You need high-quality content for your website if it’s going to compete in the free search business. You can’t go about that blindly.

Consider what customer problem you’re solving. What customer questions can you be answering?

Do you have a mechanism for customers to ask questions? There could be a wealth of ideas for blog posts, FAQs, and buyers’ guides right there.

4. Social media is worth your return on investment

Social media can be vexing for many businesses. You definitely have to perform a cost-benefit analysis on it. Spending six hours a day sending out tweets that don’t lead to conversions is going to be a losing proposition.

Treat social media as “an engagement with an ongoing conversation with your customers,” Shelton recommends. “It’s not just for selling.”

In fact, if your social media channels are too hard-sell, they’ll be counter productive. You have to create value. Tools like Hootsuite, Falcon.IO, and Curalate can help.

5. Manage your online reputation

According to Shopper Approved, an app that helps its clients collect online ratings and reviews, 88% of all consumers read online reviews to determine whether a local business is a good business.

All of those reviews are part of the SEO equation. They can help you, or they can hurt you. But an app like Shopper Approved can help push more positive reviews where you need them.

6. Measure and monitor your progress

The only way you’re going see your business grow exponentially through SEO, SEM, and social media is to measure what you’re doing. You have to know where you’re starting, set some benchmarks, and monitor your progress.

Install Google Analytics. There is a plethora of other e-commerce tools you can use for analysis. Data is your friend. Get used to swimming in it.

And if you need help, find a consulting firm that understands your customer and your goals.

Just remember, effective search is process. You won’t get it right the first time. But you’ll get better at it with everything you learn.

About the author:

Kim Folsom is the Founder of LIFT Development Enterprises–a not-for-profit, community development organization with a mission to help underserved, underrepresented small-business owners – and Co-Founder and CEO of Founders First Capital Partners, LLC, a small business growth accelerator and revenue based venture fund. Learn more about Kim and her company’s mission to help grow and fund 1000 underserved and underrepresented small businesses by 2026 via their Founders Business Growth Bootcamp program at www.foundersfirstcapitalpartners.com.

 

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General Electric: Dividend Cut?

General Electric’s (GE) shares fell to fresh 52-week lows last week as investors continue to be negative about the industrial company. While negative analyst commentary and concerns over General Electric’s dividend sustainability have more heavily weighed on investor sentiment lately, I think General Electric makes for an interesting contrarian ‘Buy’ today.

General Electric is not in an enviable position, and neither are shareholders that bought into the industrial company at a much higher valuation in the past. General Electric’s shares have slumped 27.3 percent year-to-date, falling to one new low after another. Last week, General Electric hit a new 52-week low @$ 22.83, extending a multi-week streak of losses.

See for yourself.

Source: StockCharts.com

A couple of factors have weighed on investor sentiment lately, including negative analyst commentary from JPMorgan that suggested General Electric might have to cut its dividend. According to a CNBC report, analysts at JPMorgan see a GE dividend cut as “increasingly likely”.

Not only did JPMorgan fuel the fire of doubt when it comes to General Electric’s dividend sustainability but the investment bank also lowered its price target for GE’s shares from $ 22 to $ 20, maintaining its firm ‘underweight’ rating on the stock. In addition, widely-followed media and investment personality Jim Cramer last week suggested that General Electric likely will cut guidance and may slash the dividend.

Given General Electric’s core industrial business weakness – keep in mind that GE’s industrial revenues slumped 12 percent and industrial/vertical EPS dropped 45 percent year on year in the second quarter on the back of a weak performance in oil & gas as well as transportation – a guidance revision is a distinct possibility, especially as it relates to GE’s industrial operating profit and margin guidance.

Source: General Electric

The real question, however, is whether General Electric will take the rather significant step and slash its dividend.

General Electric has cut its dividend in the past. The last time General Electric slashed its dividend payout was during the Great Recession when a lot of companies cut back on shareholder payments. In 2009, General Electric cut its quarterly cash dividend from $ 0.31/share to $ 0.10/share. However, GE’s dividend rate consistently edged up over the last eight years. General Electric’s long-term dividend history is impressive.

Source: General Electric

Will General Electric Have To Cut Its Dividend?

I don’t think General Electric will have to cut its dividend, although management could decide that it is better for the company to conserve cash and invest in General Electric’s industrial businesses directly. That said, here is why I think a dividend cut is relatively unlikely.

For one thing, General Electric has affirmed investors multiple times that the dividend is a ‘top priority’ for management. This statement suggests that management will remain committed to paying shareholders a steady dividend even though it costs the company a lot of cash. Remember that General Electric plans to return $ 8 billion in dividends to shareholders this year alone.

Further, I think General Electric will be able to maintain its dividend from a cash flow perspective.

General Electric has guided for $ 16-20 billion in free cash flow, including dispositions in 2017. A large part of this cash flow is contributed by GE Capital, which is expected to produce $ 6-7 billion in dividends for GE this year. In the first six months of 2017, GE Capital has already beefed up General Electric’s cash flow by $ 4 billion, making up for a significant portion of General Electric’s dividends to shareholders.

GE Capital dividends indeed play a crucial role in propping up General Electric’s cash flow. General Electric’s industrial free cash flow excluding deal taxes and pension expenses was actually negative $ 1.6 billion year to date, and total FCF only turned positive because of GE Capital’s dividend to the parent company. Shareholder dividends therefore depend largely on GE Capital’s cash flow, while GE’s industrial business on a standalone basis does not have the cash power right now to fund those payments.

Source: General Electric

I don’t think that General Electric will have to cut its dividend, though. General Electric has guided for $ 19-21 billion in capital returns this year of which only $ 8 billion are cash (and recurring). In other words, as long as GE can fall back on GE Capital for its dividend payments and the company cuts back on share buybacks, there is no immediate need to cut the dividend.

Your Takeaway

General Electric could adjust its dividend payout. Yes, but I consider this not that likely considering past management statements that the dividend is a ‘top priority’ and considering that GE Capital produces a LOT of cash for General Electric. General Electric has an impressive long-term dividend history which signals its commitment to shareholders, and I doubt management wants to put off investors with another dividend cut. I think investors are a bit too fearful right now, which is exactly the right time to get greedy. Buy for long-term dividend income and capital appreciation.

If you like to read more of my articles, and like to be kept up to date with the companies I cover, I kindly ask you that you scroll to the top of this page and click ‘follow‘. I am largely investing in dividend paying stocks, but also venture out occasionally and cover special situations that offer appealing reward-to-risk ratios and have potential for significant capital appreciation. Above all, my immediate investment goal is to achieve financial independence.

Disclosure: I am/we are long GE.

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

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Tesla Fires Hundreds of Workers After Their Annual Performance Review

They’re not layoffs, the automaker says.

Electric automaker Tesla Motors fired hundreds of employees this week, including workers at its Fremont, Calif. factory and corporate managers, as it tries to solve production problems for its recently released Model 3.

An estimated 400 to 700 people were dismissed this week, according to a San Jose Mercury News report published Friday afternoon. That’s between 1% and 2% of the company’s more than 33,000 employees. Former and current employees told the Mercury News that little or no warning preceded the dismissals.

A Tesla spokesman would not confirm that number but told Fortune that the move follows its annual performance reviews, which typically involve both involuntary and voluntary departures.

“Like all companies, Tesla conducts an annual performance review during which a manager and employee discuss the results that were achieved, as well as how those results were achieved, during the performance period,” a Tesla spokesman said in an emailed statement. “This includes both constructive feedback and recognition of top performers with additional compensation and equity awards, as well as promotions in many cases. As with any company, especially one of over 33,000 employees, performance reviews also occasionally result in employee departures. Tesla is continuing to grow and hire new employees around the world.”

Tesla insists that the losses are not layoffs and that it plans to backfill the positions. That’s likely accurate, at least for jobs in California. State law requires companies to notify employees of layoffs through its WARN notification system. There are no records of new layoffs from Tesla. About 200 Tesla and SolarCity employees in the company’s Roseville, Calif. offices were notified Aug. 30 that they would be terminated.

The latest cuts come as the automaker tries to fix bottlenecks on the production line for its Model 3, an all-electric model designed to appeal to the masses. Earlier this month, Tesla reported that it produced 260 Model 3 cars in the third quarter, of which it has delivered 220. That figure is far less than CEO Elon Musk’s prediction that Tesla would produce more than 1,600 of the vehicles by September.

In July, Musk tweeted a production update for the Model 3, saying the car had passed all regulatory requirements ahead of schedule. After announcing that the first 30 customers would receive the Model 3s on July 28, Musk wrote, “production grows exponentially, so Aug should be 100 cars and Sept above 1,500.”

Altogether, Musk said that third quarter production numbers for the Model 3 would be around 1,630 vehicles—a prediction off by 84%.

A Wall Street Journal report published earlier this month revealed that Tesla workers were assembling Model 3 vehicles by hand until at least early September. One of the “bottlenecks” Musk alluded to was a process that involved positioning and welding body panels by hand, rather than by precision robots, according to workers interviewed by the Journal.

Musk recently delayed the unveiling of an electric semi-truck until Nov. 16 so the company can focus its attention on production problems with its new mass-market car, the Model 3.

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IRS puts Equifax contract on hold during security review

NEW YORK (Reuters) – The U.S. Internal Revenue Service has temporarily suspended a contract worth more than $ 7 million it recently awarded to Equifax Inc following a security issue with the beleaguered credit reporting agency’s website on Thursday.

Equifax, which disclosed last month that cyber criminals breached its systems between mid-May and late July and made off with sensitive data on 145.5 million people, said on Thursday it shut down one of its website pages after discovering that a third-party vendor was running malicious code on the page.

“The IRS notified us that they have issued a stop-work order under our Transaction Support for Identity Management contract,” an Equifax spokesperson said on Friday.

“We remain confident that we are the best party to perform the services required in this contract,” the spokesperson said. “We are engaging IRS officials to review the facts and clarify available options.”

The IRS is the first organization to say publicly that it is suspending a contract with Equifax since the credit reporting agency’s security problems came to light.

Atlanta-based Equifax said its systems were not compromised by the incident on Thursday, which involved bogus pop-up windows on the web page that could trick visitors into installing software that automatically displays advertising material.

Still, the IRS said it decided to temporarily suspended its short-term contract with Equifax for identity-proofing services.

“During this suspension, the IRS will continue its review of Equifax systems and security,” the agency said in a statement. There was no indication that any of the IRS data shared with Equifax under the contract had been compromised, it added.

The move means that the IRS will temporarily be unable to create new accounts for taxpayers using its Secure Access portal, which supports applications including online accounts and transcripts. Users who already had Secure Access accounts will not be affected, the IRS said.

IRS granted the $ 7.25 million contract to Equifax on Sept. 29, weeks after Equifax disclosed the massive data hack that drew scathing criticism from several lawmakers.

“From its initial announcement, the timing and nature of this IRS-Equifax contract raised some serious red flags … we are pleased to see the IRS suspend its contract with Equifax,” Republican Representatives Greg Walden and Robert Latta said in a joint statement on Friday.

“Our focus now remains on protecting consumers and getting answers for the 145 million Americans impacted by this massive breach,” they said.

Government contracts in areas such as healthcare, law enforcement, social services, and tax and revenue, are major sources of revenue for Equifax.

In 2016, government services made up 5 percent of Equifax’s overall $ 3.1 billion in revenue, accounting for 10 percent of its workforce solutions revenues, 3 percent of its U.S. information solutions revenues, and 7 percent of its international revenues, according to a regulatory financial filing.

Reporting by John McCrank in New York; additional reporting by Dustin Volz in Washington; Editing by Bill Rigby

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Samsung CEO Kwon Oh-hyun Announces Shock Resignation as Profits Surge

Kwon Oh-hyun’s resignation deepens concerns of a leadership vacuum at the tech giant.

Samsung Electronics Co Ltd ssnlf said on Friday its CEO and Vice Chairman Kwon Oh-hyun plans to step down from management, deepening concerns over a leadership vacuum at the tech giant after group scion Jay Y. Lee was jailed for bribery.

The surprise resignation of Samsung’s chip and display head came as he was expected to take a bigger role following Lee’s arrest in February and the departures of other key executives in the wake of the bribery scandal.

The move came on the same day the South Korean smartphone maker forecast record third-quarter operating profit on the back of the memory chip business which Kwon was instrumental in building into the world leader.

“The timing is nonsensical. Samsung tipped record earnings, it’s going to be better in the fourth-quarter, and all that’s been driven by Kwon’s components business,” said Park Ju-gun, head of research firm CEO Score.

Kwon, 64, is seen as Samsung Group No. 2. As well as being chairman of the board and a board director, he heads the components business – including memory chips – and the display business.

In a statement, the man known as “Mr Chip” said the time had come to “start anew with new sprit and young leadership”.

“We are fortunately making record earnings right now, but this is the fruit of past decisions and investments; we are not able to even get close to finding new growth engines by reading future trends right now,” he added.

The world’s biggest maker of memory chips, smartphones and TVs is set to smash its annual profit record this year, thanks partly to soaring demand for memory chips. Semiconductors were Samsung’s top earner in the three months through June, making a record 8 trillion won ($ 7.20 billion).

The global chip industry is undergoing a major shift with Japan’s Toshiba Corp partnering with home rival SK Hynix, and other firms consolidating in search of new growth areas like artificial intelligence and automobiles.

Shares in Samsung, worth about $ 350 billion, fell 0.6 percent on Friday after hitting an all-time high earlier in the day.

CHANGING THE OLD GUARD

The departure of 32-year Samsung veteran Kwon after five years in the top job comes at a time of leadership uncertainty at the company.

Choi Gee-sung, Jay Lee’s mentor, quit earlier this year for his alleged role in the bribery scandal, and Samsung Electronics now needs to fill several more key roles with Kwon’s exit.

Kwon would serve out his term as chairman of the board and board director until March 2018, the company said. He is also not stepping down immediately from his two other roles.

A Samsung Electronics spokeswoman declined comment on the exact timing of succession and potential successors for Kwon’s roles.

While Samsung Group is South Korea’s top conglomerate with businesses ranging from smartphones to hotels – it has had no ‘Plan B’ for taking big decisions following Lee’s arrest, people familiar with the matter have said.

“I‘m worried about a leadership vacuum at a time when Lee is absent from management,” Chung Sun-sup, chief executive of research firm Chaebul.com, said following Kwon’s announcement.

The leadership changes also could be an opportunity for a new generation to emerge, he added.

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Equifax takes down web page after report of new hack

NEW YORK (Reuters) – Equifax Inc said on Thursday it has taken one of its customer help website pages offline as its security team looks into reports of another potential cyber breach at the credit reporting company, which recently disclosed a hack that compromised the sensitive information of more than 145 million people.

The move came after an independent security analyst on Wednesday found part of Equifax’s website was under the control of attackers trying to trick visitors into installing fraudulent Adobe Flash updates that could infect computers with malware, the technology news website Ars Technica reported.

“We are aware of the situation identified on the equifax.com website in the credit report assistance link,” Equifax spokesman Wyatt Jefferies said in an email. “Our IT and security teams are looking into this matter, and out of an abundance of caution have temporarily taken this page offline.”

The Atlanta-based company, which has faced seething criticism from consumers, regulators and lawmakers over its handling of the earlier breach, said it would provide more information as it becomes available.

As of 1:15 p.m. (1715 GMT), the web page in question said: “We’re sorry… The website is currently down for maintenance. We are working diligently to better serve you, and apologize for any inconvenience this may cause. We appreciate your patience during this time and ask that you check back with us soon.”

Equifax shares were down 1.2 percent at $ 109.18 in early afternoon trading.

Randy Abrams, the independent analyst who noticed the possible hack, said he was attempting to check some information in his credit report late on Wednesday when one of the bogus pop-up ads appeared on Equifax’s website.

His first reaction was disbelief, he said in an interview with Reuters on Thursday. “You’ve got to be kidding me,” he recalled thinking. Then he successfully replicated the problem at least five times, making a video that he posted to YouTube.

Equifax’s security protocols have been under scrutiny since Sept. 7 when the company disclosed its systems had been breached between mid-May and late July.

The breach has prompted investigations by multiple federal and state agencies, including a criminal probe by the U.S. Department of Justice, and it has led to the departure of the company’s chief executive officer, chief information officer and chief security officer.

As a credit reporting agency, Equifax keeps vast amounts of consumer data for banks and other creditors to use to determine the chances of their customers’ defaulting.

Reporting by John McCrank; Editing by Bill Rigby

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Samsung scion's defense fights back as legal appeal begins

SEOUL (Reuters) – The heir to South Korea’s Samsung Group appeared in a packed court on Thursday for the first day of arguments in the appeal of his five-year jail term for corruption.

The 49-year-old Jay Y. Lee was convicted by a lower court in August of bribing former president Park Geun-hye to help strengthen his control of the crown jewel in the conglomerate, Samsung Electronics, one of the world’s biggest technology companies.

The appellate court hearing the appeal is likely to try to rule on the case by next February, legal experts said. Whichever side loses could take the case to the Supreme Court, the final court of appeal in South Korea.

Lee’s presence marked his first public appearance since the August ruling. He did not speak during the early proceedings other than giving his birth date and address.

The lower court in August had ruled that while Lee never asked for Park’s help directly, the fact that a 2015 merger of two Samsung affiliates did help cement Lee’s control over Samsung Electronics “implied” he was asking for the president’s help to strengthen his control of the firm.

The defense strongly challenged the lower court’s logic that Lee’s actions “implied” solicitation for help from Park by providing financial support for the former president’s close friend and confidante Choi Soon-sil.

The prosecution, which has lodged a cross-appeal against the lower court ruling that found Lee innocent on some charges, said the court’s decision to not acknowledge explicit solicitation for Park’s help from Samsung despite the evidence found “did not make sense”.

DEFENSE FIGHTS BACK

The defense, which spent much of its time during the initial trial refuting the prosecution’s individual charges, is expected to focus on a few key arguments in the appeal – including whether there was in fact an “ordinary type of bribery” as defined under South Korean law, which says only civil servants come under the statute.

Park’s friend Choi was not a civil servant.

The lower court found that Samsung’s financial support of 7.2 billion won ($ 6.27 million) to sponsor the equestrian career of Choi’s daughter constituted an ordinary type of bribery, as “it can be considered the same as she (Park) herself receiving it.”

The defense is expected to strongly challenge this by saying that the prosecution, on whom the burden of proof lies, has not proved collusion between Park and Choi.

Reporting by Joyce Lee; Additional reporting by Heekyong Yang; Editing by Neil Fullick

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Facebook to launch new virtual reality headset, 'Oculus Go'

SAN JOSE, Calif. (Reuters) – Facebook Inc plans to release a new virtual reality headset that does not require a separate computer to operate, unlike its Oculus Rift product, which allows for mobile uses, Chief Executive Mark Zuckerberg said on Wednesday.

Zuckerberg, speaking at a conference for virtual reality developers, said the “Oculus Go” device would cost $ 199 and ship early next year.

Reporting by David Ingram, editing by G Crosse

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Toshiba shares to be removed from special watch list: Nikkei

TOKYO (Reuters) – Shares of Toshiba Corp are to be removed from a special Tokyo Stock Exchange watch list, the Nikkei reported on Wednesday.

Toshiba has been on the “securities on alert” list since its 2015 accounting scandal.

Reporting by Chris Gallagher

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Trading Technologies acquires Chicago AI startup Neurensic

(Reuters) – Trading software provider Trading Technologies International Inc said on Tuesday it has acquired Neurensic LLC, a startup that uses artificial intelligence for market surveillance and compliance, for an undisclosed amount.

Neurensic’s team and technology, which allows market participants, exchanges and regulators to identify risks in real time from complex trading patterns, have moved over to Trading Technologies, the Chicago-based company said in a statement.

“Artificial intelligence and machine learning are rapidly altering the landscape of trading, and acquiring certain assets of Neurensic enables Trading Technologies to offer AI solutions that no other professional trading platform has offered before,” said Michael Kraines, Trading Technologies’ chief financial officer.

Reporting by John McCrank in New York; Editing by Matthew Lewis

Our Standards:The Thomson Reuters Trust Principles.

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Takeway.com to increase commission rates from Jan 1

(Reuters) – Dutch meal delivery firm Takeaway.com said it would increase its commission rates from Jan. 1 and that it expects this to have a 5 percent positive effect on its revenue growth.

Takeaway.com also plans to increase investments in Germany and other markets in the fourth quarter of 2017, it said in its third-quarter trading update on Tuesday.

Reporting by Camille Raynaud; Editing by Subhranshu Sahu

Our Standards:The Thomson Reuters Trust Principles.

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MIT Wizards Invent Tech That Sees Around Corners

Robots can pull off a lot of righteous tricks. Hopping on one leg with ease, for instance. Or teaching themselves to play children’s games. Or even rolling through one of San Francisco’s most chaotic neighborhoods to deliver you falafel. One thing they definitely can’t do, though: see around corners.

But they just might soon. Because engineers at the MIT Computer Science and Artificial Intelligence Laboratory have developed a clever and surprisingly simple way to see around corners. And it’s all thanks to the hidden wonders of light.

Let’s pretend you’re standing in an L-shaped hallway, looking where the inside corner of the hallway meets the floor. You can’t see what’s around the corner, but you can see light emitting from the other side, splashed onto the floor at that right angle. So long as what’s over there isn’t a single light source, like a flashlight, you won’t see one hard line of shadow. You’ll see a sort of gradient of not-quite-shadow—kind of a blurry shadow. This is known as the penumbra. (If you have a corner with suitable light, go take a look. It’ll be there.)

Your eyes can’t see it, but there’s a lot going on in this penumbra: It’s a reflection—a real-time, low-res view of the scene around the corner. This happens outdoors, too, thanks to light from the sun. Train a camera on this spot and magnify the color, and you can start to pick out different-colored pixels that correspond to objects otherwise obscured by the wall.

If a person walks through wearing a bright red shirt, they reflect red light into the penumbra. “But more often, they block light from sunlight, so you’ll get this dark path because they’re blocking the bright light,” says imaging engineer Katie Bouman, lead author of a study detailing the tech.

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You cannot see these movements with the naked eye, because the changes Bouman is tracking are taking place in just .1 percent of the light that’s reflected. But what her recordings capture are the movements of people out of view. She’s seeing around corners.

It’s so simple, you can capture the image with a cheap webcam. “Because of this, it’s very computationally inexpensive, since you’re basically just doing a derivative,” Bouman says. “You’re just doing pixel differences, and so it works in real time.”

The downside being: The camera has to be stationary to catch these subtle changes in light. But the technology’s promise, and what Bouman and her colleagues are doing now, is getting the system to work in motion.

That could make self-driving cars even more powerful, for one. The lasers they use are great at building detailed maps of the world, but not so hot at seeing around obstacles. Autonomous wheelchairs, too, could benefit from seeing around corners in office buildings and on city sidewalks. Same with health care robots, which are already roaming the halls of hospitals. The power to see around corners could mean everything from fewer auto accidents to fewer crushed toes.

Most importantly, though, it could help get you that falafel without incident. Doesn’t hurt to dream.

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2 Dividend Growth Stocks Trading Near 52-Week Lows Worth Buying Today

I’m a contrarian investor by nature, meaning I’m more than willing to buy what I consider to be quality companies with safe dividends and bright futures just when the market hates them most.

In fact, my EDDGE 3.0 real money portfolio is stacked to the rafters with companies I bought at 52-week lows, including:

So I’d like to point out two more beaten down companies that I consider to be great contrarian value investments, Qualcomm (QCOM) and Kroger (KR).

Let’s take a closer look at why Wall Street hates these stocks. More importantly, why those fears are likely overblown, and these companies represent potentially excellent additions to your diversified dividend growth portfolio in this extremely frothy market.

Why Wall Street Hates Qualcomm

Chart QCOM data by YCharts

It’s been a rough few years for Qualcomm, with a rash of bad news that has soured the market on the company’s growth prospects.

For one thing it faces growing competition on the low end from low-cost manufacturers such as Mediatek, and on the high end from phone makers such as Samsung (OTC:SSNLF), Apple (AAPL), Xiaomi, and Huawei going in house.

However, by far the biggest cause of Qualcomm’s recent woes is the licensing disputes it’s facing.

QTL Getting Hammered

Qualcomm’s huge number of telecom patents makes its QTL licensing division its main profit driver, thanks to 73% operating margins compared to just 14% for its chip business.

The way it works is that Qualcomm licenses its patented tech to phone makers for a fixed percentage of the phone’s wholesale price, generally 3% to 5%.

In recent years, numerous companies have cried foul, claiming that this is outrageous because it allows QCOM to benefit from all value added propositions the phone maker brings to the unit that have nothing to do with QCOM’s tech.

For example, if Apple licenses Qualcomm’s modem technology, and then releases a new phone, such as the iPhone X for a 20% higher price, then why should Qualcomm’s royalty be 20% greater for the same exact chip?

In April of 2017, Apple suspended all royalty payments to QCOM claiming its licensing model was “illegal” which resulted in a 42% decline in QTL (licensing) revenue compared to Q2 2016.

Sources: Earnings Releases, Motley Fool

Now analysts are worried that this legal challenge, in which Apple claims that the licensing fees paid to a percentage of total phone sales are too high, could be triggering other phone makers to also refuse to pay until the legal challenges are resolved.

In fact, on August 18th, Evan Chesler, chief legal counsel for QCOM, admitted that a large phone maker has stopped paying royalties (possibly Huawei) as well.

This is far from the company’s only legal issue. The Seoul High Court recently ruled against QCOM’s appeal of an earlier $ 913 million fine over its licensing practices.

China also fined the company to the tune of $ 975 million in 2015, and regulators in Europe, Taiwan, and the US have launched antitrust probes against the company.

The basis of those claims is from the likes of Intel (INTC) which claims that Qualcomm refuses to license to direct competitors, while phone makers such as Samsung have claimed that Qualcomm threatens to charge more for certain licenses if you try to go to a competitor for certain chips.

Understandably all these setbacks to the high margin QTL licensing business have Wall Street running scared, with management guiding for QTL revenue in fiscal Q4 to decline by 31% to 47%. This has caused analysts to predict the company’s full-year sales and earnings to decline by 2% and 6% respectively.

This is also why Qualcomm is attempting to buy NXP Semiconductors (NXPI) for $ 47 billion to allow it to diversify away from its troubled QTL segment.

However, here too the company has recently run into trouble.

Growth Plans Hit A Wall

Qualcomm’s management expects the NXP deal to close by the end of the year; however, there are two snags it’s currently facing.

First, EU regulators are now holding up the deal on antitrust concerns, implying that QCOM might use NXP’s market share in auto computer chips (it’s the world’s largest supplier) and NXP’s rich patent portfolio to gouge suppliers and raise prices.

In addition, Elliott Management, an activist investor in NXP, has said that the $ 110 per share tender offer QCOM is willing to pay for NXP shares is way too low.

Susquehanna, an analyst firm, has reported that “some investors believe that Qualcomm should pay up to $ 130 per share for NXP.” That would mean that QCOM might end up having to pay 18% more, or $ 55.5 billion.

In other words, there is now significant doubt about whether or not the NXP deal can close at all, which adds to the company’s numerous other problems to suppress the share price.

Here’s Why I See Value In Qualcomm

First, while true that big phone makers have been shifting to in-house SOC chip designs, Qualcomm’s QCT (chip business) continues to generate solid top line growth (5% in the most recent quarter), but more importantly shows continued strong operating earnings growth.

I’m confident that Qualcomm’s continued drive to innovate and branch out into new Snapdragon lines, including drones, cameras, wearables, and cars, should allow this business segment to drive solid double-digit bottom-line growth for years to come.

Now, as for the well founded concerns about QTL, there too we have some good news.

While the Apple litigation could drag on for years, ultimately Qualcomm is likely to win simply because Apple spent five years licensing the company’s patented tech under a contract that it voluntarily signed.

Thus, Apple now deciding years later that this contract was unfair, or even illegal, and to withhold payment isn’t likely to fly in court.

Now we may see a judge rule, such as in China in 2015, that the licensing terms were too high, but the point is that Qualcomm is likely to get some large catch payments from Apple (and Huawei) in the next year or two.

In fact, speaking of China, where a judge ruled in 2015 that Qualcomm needed to pay a large fine and reduce its royalty terms, we can’t forget that Qualcomm’s QTL segment is thriving in China, where it still enjoys 3% to 5% royalties on 65% of wholesale phone prices.

Source: Qualcomm Investor Presentation

And lest we forget Qualcomm has a rich patent portfolio that applies to pretty much all aspects of wireless telecom technology.

That number, which stands at nearly 47,000 granted patents, is steadily climbing over time and should ensure that the QTL segment is able to continue growing in the long term, monetizing the growth of smartphones for the next 10 to 20 years at least, though the royalty rate may be smaller than it is today.

Next, while it may take longer than expected, and potentially cost more than anticipated, I fully expect the NXP deal to close, and when it does, Qualcomm is going to see a nice boost to its struggling top and bottom lines.

Company TTM Sales TTM Earnings TTM FCF EPS FCF/Share
Qualcomm Today $ 22.6 billion $ 3.9 billion $ 3.78 billion $ 2.61 $ 2.54
QCOM + NXP $ 31.9 billion $ 5.9 billion $ 5.74 billion $ 3.93 $ 3.85

Source: Morningstar

In fact, thanks to the NXP deal being all cash and debt (non dilutive), the EPS and FCF/share accretion for the acquisition is 51% and 52%, respectively.

In other words, assuming the deal closes, as I and several other analysts expect, Qualcomm will immediately face a strong price recovery.

Of course, that’s in the short-term, but my concern is with the long-term growth prospects of the company, and there too the situation is far less bleak than the market currently anticipates.

In fact, I think that all of Qualcomm’s recent legal troubles have caused the market to lose the big picture, which is that the company is one of the best positioned in the world to take advantage of several major megatrends that will dominate the next century.

Specifically, QCOM isn’t just a chip maker, but a great, long-term investment into the future of computer expansion into all aspects of our lives including the internet of things, autonomous cars, 5G, data centers, and cybersecurity.

That in turn should allow Qualcomm to continue richly rewarding dividend growth investors as it has for the past 14 years.

Why Kroger Has Been Gutted…

Chart KR data by YCharts

Kroger has had a terrible few years, with shares now down over 50% from their all-time highs.

This is understandable given market concerns about increasing competition in the grocery space, not just from traditional rivals such as Wal-Mart (WMT), and Target (TGT), but also now from Amazon (AMZN), whose $ 14 billion purchase of Whole Foods is its largest single acquisition in that company’s history.

After all, recently Kroger broke an impressive 13-year streak of comps growth, and with low cost grocers such as Aldi and Lidl making a bigger play for the American market, Kroger has had to slash food prices and invest more heavily into technology in order to compete in a notoriously low margin industry.

Company Operating Margin Net Margin FCF Margin ROA ROE ROIC
Kroger 2.4% 1.3% 1.2% 4.3% 24.1% 9.8%
Industry Average 2.5% 1.7% NA 5.2% 24.6% NA

Sources: Morningstar, GuruFocus

That means worse short-term earnings performance, and management’s recent decision to stop issuing long-term forward guidance certainly adds to the market’s uncertainty about its future growth prospects.

However, here’s why I bought Kroger anyway, despite all the fears, uncertainty and doubt.

…And Why It Will Likely Thrive In The Future

Source: Business Insider

The $ 800 billion US grocery market is highly fragmented, but Kroger currently has just over 10% market share, and is the largest grocery-only national chain.

Source: 2016 Factbook

Currently Kroger operates:

  • 2,793 full grocery stores in 35 states
  • 783 convenience stores in 19 states
  • 307 premium jewelry stores under the Fred Meyer Jewelers and Littman Jewelers brands
  • 38 manufacturing facilities for its own private label (higher margin) foods
  • 1,472 fuel centers
  • 2,258 pharmacies

Thanks to well executed acquisitions over the years, Kroger is today a food empire that serves 8.5 million customers daily, but more importantly, has managed to increase its market share for 12 consecutive years (through 2016).

This has allowed the company to become the number one or two sales leader in 98 of 120 markets in the US and number one in 46 of 51 major markets.

The reason that matters is because it allows Kroger to leverage its fixed costs (distribution system) better and not just win and protect market share, but achieve better bottom line growth.

This accomplishment isn’t just done through acquisitions of other brands and grocery chains but through two main competitive advantages that few other grocers have.

The first is that Kroger is very strong at private label foods (26% of total sales vs. 18% industry average) such as its Simple Truth organic foods. And since it manufactures its 40% of the private label brands it sells, Kroger benefits from higher margins (about 10% better gross margins) on these products.

Second, few grocers have been as effective at data mining its customers, courtesy of the company’s in-house 84.51 degrees analytics firm (fed by over 25 million digital accounts), which provides Kroger with deep insights into customer preferences and regional ordering patterns.

This has helped make Kroger a leader in online ordering and curbside pickup via its Clicklist and ExpressLane locations, which it now offers at 640 locations with plans to double that. In fact, this increased focus on omni-channel sales should allow Kroger’s e-commerce sales to grow at about 20% a year through 2021.

Source: Quarterly Filings, Motley Fool

In fact, thanks to online ordering, which more than doubled year over year, Kroger’s comps growth came in at 0.7% in the last quarter, and management expects 0.5% to 1% growth in the second of the year.

And while true that about 0.75% comps growth in the second half of the year would be a pale imitation of the kind of strong comps growth enjoyed in recent years, the fact is that it’s still moving in the right direction.

This indicates that management is capable of adapting to very challenging industry conditions. In addition, analysts expect Kroger’s long-term comps to return to 2.5%, which I believe is a potentially conservative estimate.

Let’s also not forget the company’s relentless focus on cost cutting via supply chain optimization and closing underperforming stores that has allowed sales per square foot to grow steadily over time and that can make a huge difference in earnings growth in the future.

In fact, at $ 650 in revenue per square foot, Kroger is the second best retailer in this industry, behind only to Costco (NASDAQ:COST) at $ 1,100.

All these reasons are why I as a contrarian investor like Kroger. Because the essence of what I do is to look at a historical winner, one trading at beaten down valuations (and preferably at 52-week low), and determine whether or not “this time is different”.

The simple fact is that the challenges facing Kroger right now, while different in specifics, are not meaningfully different than the kind of brutal competition it’s faced for decades from the likes of dividend aristocrat Wal-Mart and dividend king Target.

Chart KR Revenue (Annual) data by YCharts

And as you can see, Kroger has done fine, growing sales, FCF/share, and EPS at 6.7%, 5.3%, and 10.0% CAGR respectively over the past 27 years.

Chart KR Total Return Price data by YCharts

In fact, Kroger has historically been a solid market beater, even after accounting for the recent 50% crash.

This tells me that this is a company that I’m more than comfortable owning for the long term, given management’s track record and its future growth plans.

Dividend Profiles Point To Market-Beating Returns

Company Yield TTM FCF Payout Ratio 10 Year Projected Dividend Growth 10 Year Expected Annual Total Return
Qualcomm 4.3% 84.4% 9% to 10% 13.3% to 14.3%
Kroger 2.4% 32.2% 7% to 8% 9.4% to 10.4%
S&P 500 1.9% 34.7% 6.1% 8.0%

Sources: GuruFocus, Morningstar, Multpl.com, CSImarketing.com

Ultimately as a dividend growth investor I’m counting on a combination of generous, secure, and growing dividends to generate market-beating total returns.

In this case both Qualcomm and Kroger offer far better yields than the market today, and despite QCOM’s temporarily elevated payout ratio (will come way down once the license dispute is resolved and or the NXP deal closes), I’m confident in the strong security of both dividends.

More importantly, I think that they will continue to grow at moderately strong rates that will allow for double-digit total return potential that should result in far superior total returns in the coming decade than what the overheated S&P 500 will generate.

Of course, those long-term dividend growth projections could end up being lumpy, meaning that short-term struggles to grow the top and bottom line might mean that payout growth might be slower in the next few years, but likely catch up later on.

Valuation Is Highly Attractive On Both

Chart QCOM Total Return Price data by YCharts

Both Qualcomm and Kroger have had a terrible year, which is exactly what I love to see, because it means the valuations are now at historically excellent levels.

Company Forward PE Historical PE Yield Historical Yield Yield Percentile
Qualcomm 12.8 19.6 4.3% 1.6% 1%
Kroger 10.3 16.0 2.4% 1.5% All Time High
S&P 500 18.5 14.7 1.9% 4.3% NA

Source: F.A.S.T. Graphs, Multpl.com, Jeff Miller, GuruFocus, Yieldchart.com

For example, on a forward PE ratio basis, both companies are way below the market’s overheated levels, as well as significantly below their historical norms.

More importantly for dividend investors, the yield for QCOM and KR is sky-high. For example, Kroger’s yield is near its all-time high while Qualcomm’s yield has only been higher 1% of the time.

Company TTM FCF/Share 10 Year FCF/Share Fair Value Estimate Growth Baked Into Current Share Price Margin Of Safety
Qualcomm $ 2.54 10.9% $ 65.65 6.6% 20%
Kroger $ 1.49 6.3% $ 24.25 3.6% 15%

Sources: Morningstar, GuruFocus, F.A.S.T. Graphs

Another thing I like to look at is the longer-term, 20-year outlook using a discounted free cash flow model, using a 9.0% discount rate (the post expense ratio historical return on an S&P 500 index ETF, i.e. the opportunity cost of money), and a conservative 4% 10-year terminal growth rate.

This allows us to get a rough estimate for the intrinsic fair value of a company, and in this case, we can see that Wall Street is being overly pessimistic about the future growth rates of both stocks, resulting in strong margins of safety.

Normally I like to buy quality DGI stocks at a 15% or higher discount to fair value, which makes both Qualcomm and Kroger some of the few undervalued names you can buy in today’s frothy market.

Bottom Line: Qualcomm and Kroger Will Likely Turn Things Around Presenting A Potentially Great Opportunity For Higher-Risk Investors

Don’t get me wrong, contrarian value investing isn’t for everyone. You need to be comfortable taking a VERY long-term, big-picture view and dealing with plenty of fear, uncertainty, and doubt in the short to medium term. It also means potentially experiencing a lot of volatility, which is something most investors would rather avoid.

Then again, it can also be an exceedingly profitable endeavor, and if you have a long enough time horizon and a high enough risk-tolerance, both Qualcomm and Kroger could prove excellent, contrarian income growth investments.

That’s because, based on the excellent track records of both companies to navigate their respective, challenging industry conditions over past decades, as well as the long-term growth potential, I’m confident that both QCOM and KR will once more rise like a Phoenix from the current short-term ashes (Amazon can’t dominate every industry).

Which is why I’m more than happy to lock in their highest yields in over a decade (or ever) and patiently wait for their likely turnarounds to play out and their share prices to recover nicely.

Disclosure: I am/we are long QCOM, KR.

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.

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5 Stereotypes Of Silicon Beach That Just Aren't True

I recently packed up my life and moved from Chicago to LA.

Before I left, I heard the same advice over and over again.

“You’re going to hate it there.”

“Everyone is so fake.”

“Watch out, Hollywood will swallow you up.”

I’ll be honest, in the past two months I’ve had the complete opposite experience.

Instead, what I’ve found is a city full of entrepreneurs who, oddly enough, understand this thing called “balance.”

The first coffee meeting I attended ended with an invitation to join a group of founders on a weekend hike.

The first networking event I went to was an exclusive backyard dinner with a home-cooked meal.

The first real social event I went to was a private mastermind dinner, invitation only, at a beautiful home in the Hills–with the best gluten free, dairy free, everything free meal I’ve ever had in my life.

People here work hard. But they know how to relax as well.

I heard a lot of stereotypes before coming here.

I’d like to dispel a few:

1. “LA is full of fake people.”

Every major city is full of fake people. I loved Chicago, and leaving that city was really hard for me. But I also had people there pretend to be my friend, steal my work, take credit for things they didn’t do, and flaunt similar-sounding titles to make it seem like they had accomplished the same sorts of things I had.

It happens everywhere–not just LA.

What’s more important than avoiding “fake people” is you refining your own radar.

Play the game enough, and you learn pretty quickly what people’s intentions are.

It’s up to you to decide how you want to handle it.

2. “Everyone in LA is an aspiring-something.”

Personally, I’ve never understood why this is seen as a bad thing.

One of the things I like the most about LA so far is how everyone I meet seems to be working on something. I’m not turned off at all by the barista who wants to be an actor, or the server who wants to be a musician.

If anything, it shows their ambition.

And as someone who once was “a copywriter, but I’m working on my first book and I hope to be a professional writer some day,” I can relate to that–a lot.

3. “LA will turn you Hollywood.”

I feel strongly about this: nobody can turn you Hollywood except you.

The “I’m a celebrity” vibe is significantly more prominent here than it is in Chicago or other major cities I’ve visited. I feel like I can’t walk three blocks without seeing someone wearing a gold chain, ripped jeans, and trendy sunglasses.

Whatever floats their boat is cool with me.

If you’re the type of person who “turns Hollywood,” you never knew who you were in the first place. It’s up to you how you spend your time, and who you spend it with. It’s up to you whether you start spending your money on sunglasses (instead of, I don’t know, reinvesting it into that startup of yours). It’s up to you whether you want your goals to change.

And if you want to turn Hollywood, by all means.

But just know there are those of us who are still doing the things we’ve always done, just closer to the beach.

4. “The traffic alone will make you hate it.”

Eh, traffic in any major city isn’t great. But being able to drive with your windows down everywhere you go while staring at palm trees is a decent trade-off.

And the fact that I can drive to the ocean in 30-60 minutes instead of hopping on a plane and taking a long weekend vacation is pretty unbeatable.

I would probably feel differently about the traffic situation if I worked the more conventional hours of 9-5. But if you travel mid day or at night, it’s no worse than Chicago.

5. “Silicon Beach is the scene for wanna-be entrepreneurs.”

First of all, I really hate to admit this because I hold Chicago very close to my heart. Leaving that city was such a challenge, and I admire the entrepreneurship scene there tremendously.

But Chicago (and many other major cities) have a lot of growing up to do. Even if Silicon Beach is Silicon Valley’s younger brother, it is still leagues ahead of most other entrepreneurial hubs.

Things here seem to move quicker, leap farther, ask tougher questions, and require more money.

One thing I prided myself on doing in Chicago was meeting with a lot of different kinds of people. I made it a point to root myself in the entrepreneurship scene and get to know the big players and the small players, the ones just coming up (starting their first company, raising their first round) and the ones who had been around the block a handful of times.

In less than two months of being in LA, I feel like the “average” out here is much higher. Founders seem sharper, investors seem less fazed (and more experienced), the whole equation exists on a heightened level.

I wish I could say I came here and it “wasn’t all it was cracked up to be.”

But it is.

There’s a reason why so many people move to the west coast.

The competition is better.

Tech

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The Simple Reason to Learn to Lead Yourself First

Inc. readers love leading. We love learning to lead better.

Usually that means learning to lead others. Leading others sounds sexier.

In my leadership courses and workshops, nearly everyone prefers the exercises that lead others over ones to build self-awareness and self-leadership.

I recommend learning to lead yourself first. Here’s why.

Learn to lead yourself first

To see what happens if you learn to lead others first, imagine learning a foreign language.

Say it’s Italian. With dedication and practice, you learn the language. The natural next step is to spend time with Italians, eat the cuisine, visit the country, learn their history, and so on.

Now say you learn that you prefer Chinese cuisine, history, philosophy, and so on.

After learning Italian is a lousy time to realize you’ve invested years in learning skills that will take you away from your interests.

Learning to lead yourself reveals your interests and values. It gives you direction. It keeps you from leading people where you don’t want to go.

Better to find out you love Chinese before learning Italian. No matter how good you are at Italian, it will always feel like work. Doing what you love will feel less like work all the time.

Learning to lead others is enticing and alluring. We feel powerful. More followers enables us to do more.

Without direction and purpose, power and action are as likely to lead us astray as where we want to go.

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Scientists Are Getting Closer to Making Edible Gelatin Robots That Can Function Inside Your Body

They could be able to heal you or provide nutrients.

In the near future, you may be able to eat a robot that will heal you or provide nutrients.

It may sound like science fiction, but researchers are closing in on the creation of an ingestible robot that can perform a variety of functions from within the human body.

At the International Conference on Intelligent Robots and Systems in Vancouver last week, researchers from Switzerland’s École Polytechnique Fédérale de Lausanne (EPFL) presented a prototype of a gelatin-based actuator, according to the Institute of Electrical and Electronics Engineers’ magazine, Spectrum.

Actuators are the components that allow a mechanism to physically move. So, while doctors can already insert machines like pacemakers into your body, those are stationary and also require invasive surgery.

It’s unlikely that the gelatin robots are very tasty, but they would have a wide variety of applications. The researchers in their paper explain that “the components of such edible robots could be mixed with nutrient or pharmaceutical components for digestion and metabolization.

“Potential applications are disposable robots for exploration, digestible robots for medical purposes in humans and animals, and food transportation where the robot does not require additional payload because the robot is the food,” they add.

And the robots wouldn’t be limited to just human use either.

“Fully edible robots would help to study how wild animals collectively behave. The robots could also take a role of animals prey to observe their hunting behaviors, or to train protected animals to do predation,” the researchers write.

“Once medical components are mixed into the edible composition, the robots could help preservation of wild animals or heal inside of the human body,” they add.

Tech

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The 6 Most Expensive Stocks In The Dow Jones Industrial Average: Part 1 Of 5

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AOL Kills Off AIM, In Many Ways a Perfect Product

Software makers would do well to emulate the simplicity, single focus of AIM.

Even people who haven’t used AOL Instant Messenger, or AIM, for years, were distressed to hear that it would be killed on Dec. 15.

I never wanted to leave AIM in the first place, but since Apple stopped supporting it three years ago, it was just too difficult to maintain on a Mac or other Apple device. Yes, there was a complicated workaround, but who had the energy?

AIM was a key go-to communications channel for me for more than five years. That AIM “buddy list” included hundreds of people—friends, colleagues, PR people, and less official sources at various companies. It was the perfect channel for getting a quick quote or confirmation, and then move on. No muss, no fuss, and no need to listen to voice mails.

Why AIM Was Beloved

One AIM buddy was Barry Appelman, one of the AIM developers who launched the service in 1997. Four years later, AIM had 36 million active users. Appelman explained at the time that AOL had debuted AIM around the same time Microsoft started pushing its rival MSN Internet portal and network. AOL’s original goal with AIM was to make its network more interesting to users and not, as some contended, to get existing members to use up more paid online minutes. In its early days, users did pay AOL by the minute, but by the time AIM came around it had gone to a flat monthly fee, Appelman said.

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This is an example of a page. Unlike posts, which are displayed on your blog’s front page in the order they’re published, pages are better suited for more timeless content that you want to be easily accessible, like your About or Contact information. Click the Edit link to make changes to this page or add another page.

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But millions of those AIM users never paid AOL a dime, which probably did not endear AIM to its corporate overlords. AIM was a quick-and-easy (and free) download.

Many of those millions probably got siphoned off to rival chat apps, and many Apple users let AIM go when Apple dropped support.

Related: AOL Instant Messenger is Going Away. Here are Your Options

And Why it Failed

AIM’s prospects weren’t helped by the arrival of me-too chat apps like Yahoo Messenger and Microsoft msft MSN Messenger either. Then there were a number of business-focused versions of chat, like Lotus Sametime (now IBM ibm Sametime.)

The ironic thing there is that many AIM devotees saw its existence outside of corporate IT as a huge benefit, not a flaw. “The day corporate can track my messages, is the day I stop sending them,” one colleague said years ago.

At the same time, Facebook adopted instant messaging by adding Facebook Messenger, another AIM wannabe, to its social network.

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The great thing about AIM, which tech news site TechCrunch referred to as the “pioneering chat app that taught us to text,” was its seeming simplicity and lack of bloat. If you had an Internet connection, it worked.

AIM showed you your Buddy List in a box, and who was available to chat. You could set a “Do Not Disturb” sign or even will yourself invisible by clicking on the little on-screen eyeball. It was a great tool for stalking a buddy.

Compare that to most of today’s desktop apps that seem to do everything except the one thing we want to them to do. Feature bloat makes many modern software products too complicated for mere mortals to use. AIM was the antithesis of that and that’s It’s so sad to hear of its passing at the ripe old age of 20.

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China approves HP's $1.1 billion buy of Samsung's printer business with curbs

BEIJING (Reuters) – China said on Thursday it has approved HP Inc’s (HPQ.N) $ 1.1 billion purchase of Samsung Electronics’ (005930.KS) printer business with certain restrictions, citing concerns about the U.S. firm’s dominance of the domestic laser printer market.

HP announced the deal in September 2016, hoping to disrupt the $ 55 billion copier market by focusing on multifunction printers and more deeply embedding mobile and cloud printing technologies to its product solutions.

It hoped at the time to close the transaction within 12 months, pending regulatory review.

In a statement issued late on Thursday, the Ministry of Commerce said sale of A4 format laser printers by HP in China should be done on “fair and reasonable” terms and the firm must report every six months on their prices and related data to the ministry.

HP must not buy any stakes in other A4 printer manufacturers in China even if they are a minority equity investment, it said.

It must not adapt its printers to restrict compatibility with third-parties or claim in advertising that its printers are not compatible with other suppliers, the ministry said.

HP expects to close the acquisition in the fourth quarter which ends on Dec. 31, a spokeswoman said in an email. She declined to comment on the regulatory process.

Samsung was not immediately available for comment.

Under the deal, HP would add an intellectual property portfolio of more than 6,500 printing patents and nearly 1,300 researchers and engineers with expertise in laser printer technology, imaging electronics and printer supplies.

Reporting by Josephine Mason and Stella Qiu; Editing by Muralikumar Anantharaman

Our Standards:The Thomson Reuters Trust Principles.

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This Tech IPO Is the Latest to Limit Rights of Small Investors

Super voting rights are a concern.

When data center operator Switch goes public on Friday it will be the latest tech firm using special shares to limit the rights of minority investors, making it ineligible for inclusion in the S&P 500 under new rules meant to deter such practices.

The Las Vegas company, run by enigmatic founder and CEO Rob Roy, plans to sell 31.3 million shares in an initial public offer late on Thursday for between $ 14 and $ 16 a piece, which would raise nearly $ 500 million and make it the largest technology listing this year after Snap.

Underwriters closed their order book late on Wednesday and the deal was oversubscribed, according to a source close to the IPO.

Roy, who describes himself as an “inventrepreneur” and “tech futurist,” will have 68% of voting power following the IPO, thanks to a special share class providing 10 votes per share.

That will keep Switch out of the S&P 500 and other related indexes under new rules instituted by S&P Dow Jones in July after Snap sold shares without any voting rights in its $ 3.4 billion IPO earlier this year.

Rule changes enacted last month for FTSE Russell indexes, also in reaction to Snap, require new constituents of its indexes to have at least 5% of their voting rights in the hands of public shareholders.

The shares being sold in Switch’s IPO will include 4.9% of the company’s voting rights, or 5.6% if underwriters exercise an option to buy additional shares.

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In its IPO filing and a profile of Roy on the company website, Switch gives no details about what he did before founding the company in 2000 or his academic qualifications. The profile describes him as “a recognized expert in advanced end-to-end solutions for mission-critical facilities.”

A company spokesman declined to provide additional information about Roy, and he does not appear in a 38-minute video marketing the IPO.

The IPO could value Switch, which operates three data centers in Michigan and Nevada, at almost $ 4 billion.

Snap co-founder Evan Spiegel was well known to Wall Street ahead of the Snapchat-owner’s February share offer, with many investors essentially betting on his talent. With Roy less known, investors may be taking a greater risk on a company in which they will have little say.

“Investors do look at voting control as well as the price you pay. If you put so much stock in the CEO, normally he’s going to part of the sales pitch for the company,” said Ken Bertsch, Executive Director of the Council of Institutional Investors, which represents top U.S. pension funds.

As many of 15% of U.S. IPOs in recent years have used dual share classes meant to give insiders outsized voting rights, according to the Council of Institutional Investors.

Inclusion in a stock index can be an important milestone for young companies, bringing their shares into many passive funds and others that closely follow indexes like the S&P 500, a guide for trillions of dollars of capital worldwide.

Other companies excluded from major indexes under their new rules include video-streaming company Roku Inc, whose IPO last week kept 97% of voting power with insiders. Software seller Mulesoft’s IPO in February included a share class with 10 votes per share, as did Blue Apron in its June debut.

Suggesting that the tide may be turning toward sharing power with minority investors, privately-held ride-hailing company Uber on Tuesday said it would abandon a dual share class system that favored insiders including former CEO Travis Kalanick.

Responding to a shareholder lawsuit, Facebook Inc in September gave up plans for a new class of stock that was meant to be a way for Mark Zuckerberg to retain control over the company he founded while fulfilling a pledge to give away his wealth.

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Indonesia's first ever IPO by a startup draws robust investor interest

JAKARTA (Reuters) – E-commerce firm PT Kioson Komersial Indonesia Tbk drew strong investor interest for Indonesia’s first ever IPO by a startup, and its shares surged on their trading debut in very thin volumes on Thursday.

The response to the IPO could potentially pave the way for more technology companies in Southeast Asia’s biggest economy to follow in Kioson’s footsteps and list in the domestic stock market.

Kioson raised 45 billion rupiah ($ 3.3 million) by selling 150 million shares, or 23.1 percent of the company’s total share base, at 300 rupiah each. The offering was more than 10 times over-subscribed.

The stock surged as much as 50 percent on its debut, but volumes were very thin with just over 10,000 shares traded.

Indonesia’s startup scene is booming as investors are lured by the youthful demographic of the country of 250 million people, who are increasingly buying anything from tickets to electronic gadgets online.

President Joko Widodo has also aimed to increase broadband access in the sprawling archipelago.

Kioson CEO Jasin Halim said the company previously received offers from venture capital and private equity funds, but decided to go for an IPO because of a difference in valuation.

“The path that startups take is normally to look for venture capital, angel investors and so on…We feel that by taking the IPO route, that’s the method that is the most fair and transparent,” he told reporters. “Let the market value our company.”

On top of showing that an IPO could be an alternative method to raise funds for startups in Indonesia, Kioson also offers retail investors a chance to take part in the capital market and benefit from the “hyper-growth” of startups, Halim said.

Kioson operates an “online to offline” business model, which allows customers to make online purchases and pick up their orders at the ubiquitous kiosks, locally known as “warungs”, across Indonesia.

The company had tied up with 19,000 kiosks as of September, and plans to raise that to 100,000 by 2019, Halim said.

Kioson plans to use the proceeds from its IPO mainly to acquire online vouchers firm PT Narindo Solusi Komunikasi.

Andi Boediman, co-founder of venture capital firm Ideosource, told Reuters he expects more startups to take the IPO route in Indonesia as they could get better valuations from local investors who are more familiar with their products.

“With products that are offered in Indonesia, it’s easier to build a positive perception in Indonesia than to introduce it in other countries,” said Boediman, whose venture capital firm had invested in online retailer PT Bhinneka Mentari Dimensi. (reut.rs/2yJnoHQ)

PT M Cash Integrasi, which distributes online vouchers through its physical kiosks, is also planning to raise up to 300 billion rupiah by offering a 25 percent stake in an IPO. M Cash is a unit of PT Kresna Graha Investama Tbk.

Reporting by Eveline Danubrata; Additional reporting by Cindy Silviana; Editing by Muralikumar Anantharaman

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Google Just Unveiled its Home Mini Internet-Connected Speaker

Google Home Updates: New Home Mini Speaker Is Unveiled | Fortune

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Wisconsin, Michigan were key targets of Russia-linked ads on Facebook: CNN

(Reuters) – Russia-linked Facebook ads during last year’s U.S. presidential election mainly focussed on the states of Michigan and Wisconsin, CNN reported on Tuesday.

The ads targeted key demographic groups and used divisive messages including promoting anti-Muslim sentiment, the report said, citing sources. cnn.it/2klAM2y

Wisconsin and Michigan were among the handful of battleground states that helped Trump win the presidency over Democratic rival Hillary Clinton. Trump carried Wisconsin by 22,748 votes and Michigan by 10,700 votes.

About 10 million people in the United States saw politically divisive ads on Facebook which were purchased in Russia in the months before and after the U.S. election, Facebook said on Monday as social media companies face calls for increased regulation and more transparency to open up the opaque world of online political ads.

Special Counsel Robert Mueller and congressional committees are investigating possible links between President Donald Trump’s campaign and Russia. Russia denies meddling in the election.

A representative from Facebook could not be reached for comment outside regular U.S. business hours.

Reporting by Kanishka Singh; Editing by Sunil Nair

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Former Equifax chief apologizes to Congress over hack

WASHINGTON (Reuters) – The former head of Equifax Inc (EFX.N) apologized repeatedly on Tuesday at a congressional hearing for the theft of millions of people’s personal data in a hacking breach, saying it took weeks for the credit bureau to understand the extent of the intrusion.

Richard Smith retired last week but the 57-year-old executive led the company over the time of the hack, which Equifax acknowledged in early September.

Late on Monday, Equifax said an independent review had increased the estimate of potentially affected U.S. consumers by 2.5 million to 145.5 million.

In March, the U.S. Department of Homeland Security alerted Equifax to an online gap in security but the company did nothing, said Smith.

“The vulnerability remained in an Equifax web application much longer than it should have,” Smith said. “I am here today to apologize to the American people myself.”

Equifax keeps a trove of consumer data for banks and other creditors who want to know whether a customer is likely to default.

Former Republican Senator Saxby Chambliss checks his watch as he and City of Pasadena Councilmember Steve Madison stand with Richard Smith, former chairman and CEO of Equifax Inc., prior to Smith’s testimony before House Energy and Commerce hearing on “Oversight of the Equifax Data Breach: Answers for Consumers” on Capitol Hill in Washington, U.S., October 3, 2017. REUTERS/Kevin Lamarque

Smith said both technology and human error opened the company’s system to the cyber hack, which has been a calamity for Equifax, costing it about a quarter of its stock market value and leading several top executives to depart.

A company employee failed to tell the information team a software vulnerability that hackers could exploit should be fixed, Smith said. Then, a later system scan did not uncover the weak point.

Slideshow (3 Images)

Smith said he was notified on July 31 that “suspicious activity had occurred,” after security personnel had already disabled the web application and shut down the hacking. He said he only learned in the middle of August the scope of the stolen data.

On Aug. 2, the company alerted the Federal Bureau of Investigation and retained a law firm and consulting firm to provide advice. Smith notified the board’s lead director on Aug. 22.

That timing could help lift suspicions that three executives who sold stock on the first two days of August illegally used insider knowledge of the hack. Smith said the three “honorable men” did not know about the breach at that time.

Smith deferred to the FBI on questions of whether the hack had been sponsored by a nation-state.

“It’s possible,” he said when asked if the hackers were from another country.

Writing by Lisa Lambert and Patrick Rucker; Editing by Clive McKeef and Bill Rigby

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Remembering Tom Petty, Unlikely Video Pioneer

Tom Petty’s four-decades-long run as America’s premier power-pop troubadour had plenty of unexpected phases: There was his late-’70s, working-class-hero years, in which he sparred with his record label, arguing that his music should be priced cheaper; his on-again, off-again stint as the youngest, most starry-eyed Wilbury; and his smash-hit solo-star era, thanks to Full Moon Fever, an album that unfussily fused ’60s guitar-pop sparkle, ’70s bad-boy bonhomie, and late-’80s weariness (and if you listen closely enough, you can even hear an early preview of the ’90s in the surf-sludge guitar riff that kicks off “Runnin’ Down a Dream”). There was a Tom Petty era for everyone, which may be why he appealed to well-heeled senator’s daughters, future punks, and sports agents alike.

But Petty, who died late Monday at the age of 66, was also an unlikely music-video star, pumping out a series of vibrant, innovative clips that helped redefine the medium just as it was getting underway. Petty, who was in his late thirties by the time MTV came around, lacked the art-school backgrounds and big-screen aspirations of many of the musicians who’d make the network famous. So he treated it as just another part of the gig, albeit one he clearly enjoyed, using the medium to play up his love of detailed storytelling and southern-weirdo charms. Consider his clip for 1982’s “You Got Lucky,” which opens with an ominous, John Carpenter-like instrumental score, and eventually finds Petty—bemused but determined—ambling around a dusty apocalypse. It’s one of the weirdest song-to-screen interpretations imaginable—who listens to a curdled eff-you like “You Got Lucky” and thinks, Hey, we should rip off Mad Max for this!?—but Petty makes it work, in large part because he never acts like he’s above being in what’s essentially a low-budget sci-fi short.

Petty’s most infamous clip arrived just a few years later, when he hijacked Alice in Wonderland for his oddball 1985 track “Don’t Come Around Here No More,” and turned it into a loopy, ominous anti-love story. Petty plays the smirking Mad Hatter, who, by the video’s end, has turned Alice into a giant cake that’s devoured by the band (an image that yielded nearly as many Reagan-era nightmares as Michael Jackson’s Thriller eye-glow). Petty may not have had Springsteen’s innate charisma, or Dylan’s alluring aloofness, but there’s a wicked drollness in Petty’s performance that made this already dark-hearted clip all the more creepy.

Then, in 1989, Petty released one of the most counter-cultural clips of his career. By the time “Runnin’ Down a Dream” arrived, music videos were emphasizing sleek effects, big-star megalomania, and future-thinking visuals; Petty responded with an animated homage to the work of Little Nemo in Slumberland creator Winsor McKay, an illustrator who’d been dead for more than a half-century. The video finds Petty in his most unlikely phase to date, his sardonic-rocker transformed, just temporarily, into a free-spirited, Saturday-morning-ready cartoon (the fact that it accompanied such an urgent, riff-riding bit of let’s-hit-the-highway spiritedness made it all the more joyful).

Still, Petty’s best-known on-screen performance would come just a few years later, when he played a stoic morgue employee in the VMA-winning video for “Mary Jane’s Last Dance” (a song that been recorded a bonus to his 1993 Greatest Hits compilation, and wound up becoming one of his highest-charting tracks ever). In the gothic, lovingly creepy clip, Petty’s attendant brings home a corpse (played by Kim Basinger), brings her home, and dresses her up for a candlelit slow-dance before slipping into the waves. By the time “Mary Jane” was released, Petty was a worldwide star, but he was still somewhat unknowable—a guy who’d managed to radiate relatability, yet never had an easy-to-pin down persona. That built-in mystery be why his turn is so effective here: We have no idea if his body-grabber’s a saint or sinner, but either way, it’s impossible not to feel for him. “Last Dance” was wry and surprising and a little bit smarter than everything else on the air—kind of like Petty himself. We got lucky.

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Break the Ice With These 6 Questions at Your Next Networking Event

Networking events are perfect opportunities to build your contact base, but you won’t get more than a few business cards if you don’t leave an impression. Making meaningful business connections requires delving beneath the surface. To pull off that critical first impression, try leading with a creative icebreaker.

These six entrepreneurs share the first question they ask when seeking a new acquaintance at an event. Remember: It’s okay to have fun with it.

How did you get started?

When seeking to learn more about a new contact and their company, sometimes the best place to start is at the beginning. Chris Gronkowski, creator of shaker bottle Ice Shaker, finds that learning more about where they started and how they got to where they are today is valuable for connecting — and even picking up a trick or two.

“This is a great question to ask, because everyone has a unique story about how they got started in business and different techniques that were successful for them, which I like to note,” he says. “It also gives me a chance to learn about this person and their company and how we can benefit from each other.”

Would you rather lose one arm or one leg?

“Asking a silly but thought-provoking question can start a memorable conversation with a stranger,” says Bryce Welker, founder and CEO of CPA review site Crush the CPA exam. This is a great way to break through the noise of the many attendees focusing strictly on business.

“I’ve found that asking off-the-wall questions to potential connections sets me apart from other professionals who ask tired questions that often encourage canned responses,” says Welker. “It’s possible that one zany conversation can lead to opportunities in the future.”

Why haven’t we worked together?

Ryan Bradley, partner at personal injury law firm Koester & Bradley, LLP, understands that making an advantageous connection starts with addressing why you’re both there. So why not cut right to the chase?

“The reason that entrepreneurs and founders attend networking events is to generate business. I never avoid this fact. After the standard pleasantries, I love to ask people why we haven’t worked together before,” he says. “It is an offbeat question, particularly if you are a little outside your direct niche, but it allows the conversation to flow in a positive direction toward a goal: business!”

What’s your favorite book?

You can tell a lot about a person by their hobbies and passions. That’s why Zac Johnson, CEO of blogging business Blogger, asks about a personal interest that many entrepreneurs have in common.

“Many people, especially entrepreneurs, are very passionate about reading. When it comes to books, people like to discuss what they’ve read recently, along with their favorite books,” Johnson says. “This is a great way to open a conversation with someone, and it helps you better understand their interests and passions in the process.”

What’s your biggest challenge right now?

Running a successful business isn’t all fun and games, and Sam Miller, founder of strength training and performance measurement technology platform Boston Biomotion, likes to confront this. Asking someone about their biggest challenge opens up an honest dialogue that could prove to be mutually beneficial.

“I prefer this question as a way of getting some depth. This often leads right to learning more about what they do and where they’re at, and also seeing if there’s any way I can be helpful,” he says. “The question is pretty disarming, so it requires quickly establishing some trust and comfort, but some of the best conversations and follow-ups I’ve had have come from this.”

What’s your dream?

“I always like to ask people what their big dream is and if they are currently doing it,” says Dalia MacPhee, CEO of clothing brand DALIA MACPHEE. This goes beyond simply learning about their current business ventures and demonstrates that you value their passions, too.

“There’s never been a time when I’ve asked that question that someone’s eyes didn’t light up and a meaningful conversation ensue,” she says. “I’d rather skip the small talk and be the person that was remembered at an event for helping to light a fire under someone.”

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