How the HTC Exodus Blockchain Phone Plans to Secure Your Cryptocurrency

Blockchain phones are coming, that much is certain. The Sirin Labs Finney and the HTC Exodus are both expected by the end of the year, each with its own, sometimes vaguely defined sense of what exactly that term means. HTC’s Phil Chen, who spearheaded Exodus development, has at least started to fill in the blanks of how the Exodus will pull off its most important trick: keeping your cryptocurrency safe.

The Exodus has loftier ambitions than mere storage, of course. “A few years down the road, we see a world where people own their own identities and data, where everyone understands the concept and economics of digital property,” says Chen, HTC’s decentralized chief officer. For the moment, though, the primary concern for the Exodus’s intended audience is how well it works as a hardware wallet.

That had, until now, been a bit of a question mark. After all, a smartphone seems like an inopportune place to stash digital currency. Android phones, in particular, present inherent security risks, subject to a wide assortment of malware and other targeted threats. Smartphones also, as you may be personally and painfully aware, tend to get lost or stolen, at least more than is ideal for what aspires to be a digital bank vault.

In fact, even the mere act of connecting to the internet goes too far for protective cryptocurrency investors, who prefer to keep their assets in so-called cold storage wallets, which remain entirely offline. If anything, cryptocurrency storage has trended toward that extreme, with some deep-pocketed enthusiasts opting for physical vaults with Faraday cage surrounds.

By contrast, putting your cryptocurrency—more specifically, the private keys required to access it—in an Android phone might seem the equivalent to stashing your money not under the mattress but neatly on top of it, and then placing that mattress on a fairly busy street corner.

“Phones are very promiscuous in the sense that they transfer a lot of data, they connect to a lot of networks, we install third-party apps on them. They can be made relatively secure, but they’re not the safest thing to carry around a lot of money,” says Matthew Green, a cryptographer at Johns Hopkins University who is affiliated with a privacy-focused cryptocurrency called Zcash. “And if you’re not carrying a lot of money, you don’t need a special phone.”

And yet tens of millions of people already use software wallets, Chen says, tied to centralized exchanges like Coinbase. “What’s obvious in the old internet model, is centralized cloud systems are very hackable,” says Chen. “Centralized honeypots are continually hacked. The concentration of data in walled gardens increases the cost of security.”

The HTC Exodus aims instead for something of a compromise. It isn’t quite cold storage, but at least it empowers users by allowing them to hold their own keys. It does so by placing them in a so-called trusted execution environment, a part of an ARM chip called TrustZone. The secure enclave sits apart from the operating system, designed to inoculate precious cargo even in the event of a broader breach. Think of it as a smartphone’s panic room.

The concept of a secure enclave isn’t new; Intel has offered one for PCs for some time, and Apple uses one to protect the biometric data—your fingerprint and face—that it uses to unlock the iPhone. Even TrustZone has been around for years, commonly used by studios and such to lock down DRM-protected content.

It’s as good an answer as any right now, and preferable to HTC attempting to built its own solution from the ground up. But TrustZone isn’t a security panacea. “If somebody claims something is secure, a lot of people try to poke into it,” says Simha Sethumadhavan, a computer scientist at Columbia University. “Over the years there have been several attacks on TrustZone.”

That includes one from Sethumadhavan, who along with coauthors Adrian Tang and Salvatore Stolfo published research last year detailing how to not just break TrustZone security but alter the code that’s running in the secure environment.

To be absolutely clear: These attacks are difficult to pull off, and TrustZone generally works as advertised. “It does significantly raise the bar for the attacker,” says Sethumadhavan. “It’s better than putting it in the insecure world, for sure,” he adds, referring to the broader Android operating system.

Even Chen, refreshingly, recognizes the trade-offs involved. “There’s no such thing as 100 percent security. It’s always a balance between security and usability,” he says. “We’re still at the very early stages of educating users that this is not a 100 percent secure solution, but as of right now it’s the best so far. It’s our attempt to do something that’s best from the market.”

Until and unless the industry open sources everything, Chen says, HTC has to take as an article of faith that ARM and chipmaker Qualcomm will deliver the security they promise. He acknowledges that hardening the HTC Exodus will also require input from cryptographers and the broader cryptocurrency community. “It’s really a beta,” he says. “We’re still targeting the 30-35 million people that have software wallets, and this is a much better solution than that.”

And while Chen wouldn’t argue that the Exodus is more secure than cold storage, he does stress that it offers much better usability. There’s no dusting off a hard drive and connecting it with USB to your laptop and struggling through a clumsy interface.

The HTC Exodus will also offer a novel way to recover your keys, which are often a series of words that need to be entered in the event that you lose access to your wallet. If you lose both your wallet and your recovery keys, you’ve officially lost everything.

That dynamic comes into especially sharp relief with smartphones, which, when you aren’t losing or breaking them periodically, you’re actively replacing every two or three years.

HTC’s proposed failsafe: You can split your key among three to five people you trust, all of whom will need to download an app for this to work. You won’t need their help to assign transactions, but you will if you lose your phone. “It revolves around this fundamental principle of users owning their keys. I do want to stress that this is a very, very difficult problem. People aren’t used to owning their keys. People are used to calling up Apple or Google,” says Chen.

Putting that power in the hands of users and their friends is certainly in line with the HTC Exodus philosophy. But it also raises several immediate flags: What if you have a falling out with one of those friends, or they get a new phone, or delete the app, or die? Does the backup have a backup?

Not yet. “This is the 1.0 version,” Chen says. “There are other backup plans that we’ve thought of, but they’re not part of the solution yet.”

That sounds dire, but it’s at least something. If you find yourself in a comparable situation with a cold storage wallet—or the Sirin Labs Finney blockchain phone—you generally have no options at all.

Plenty of questions remain about the HTC Exodus, especially regarding the company’s long-term vision of revolutionizing how people relate not just to their cryptocurrencies, but their data and identity. HTC may still be figuring out how the blockchain smartphone will change the world. But at least it has some answers as to how to make it safe.

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Australian regulator cracks down on misleading digital coin offerings

SYDNEY (Reuters) – Australia’s corporate watchdog said on Thursday it was stepping up scrutiny on “misleading” initial coin offerings (ICOs)targeted at retail investors while adding it has already acted against several such proposals.

Bitcoin (virtual currency) coins are seen in an illustration picture taken at La Maison du Bitcoin in Paris, France, May 27, 2015. REUTERS/Benoit Tessier

The Australian Securities & Investments Commission (ASIC) said consistent problems with proposed ICOs included the use of “misleading or deceptive” statements in sales and marketing materials and not holding Australian financial services licenses.

ICOs, or the selling of digital coins or tokens, are increasingly popular with start-ups as a way to finance projects. The ICO market is relatively small in Australia but ASIC is concerned poor conduct could have a negative impact on investor confidence.

“If you raise money from the public, you have important legal obligations,” ASIC Commissioner John Price said in a statement.

“It is the legal substance of your offer – not what it is called – that matters,” Price said, adding some proposed ICOs operated illegal, unregistered investment schemes.

Since April 2018, ASIC has prevented five ICOs from raising capital. These ICOs have been put on hold and some will be restructured to comply with legal requirements, ASIC said.

The regulator is taking action against one completed ICO, it said without identifying the company.

“ICOs are highly speculative investments that are mostly unregulated, and while there are genuine businesses using this structure many have turned out to be scams,” ASIC noted.

Earlier this year, Moscow-based cyber security firm Group IB found projects which raise funds through ICOs were attacked by cyber criminals 100 times a month on average, underscoring the risks of investment in cryptocurrency ventures online.

Globally, start-up firms have raised millions of dollars online to fund projects, with often little more than a handful of employees and an outline business plan attracting regulatory attention.

Reporting by Swati Pandey; Edtiting by Sam Holmes

With a Few Tweets, This Tiny Coffee Shop Got Ryan Gosling to Walk Through the Door. Here's How They Did It

Toronto coffee shop Grinder Coffee landed a heap of social media attention yesterday when its campaign to attract actor Ryan Gosling  went viral, generating more than 10,000 likes and retweets in a matter of hours.

The social media campaign–which included a cardboard cutout of Gosling–asked the star to stop by while he was in town promoting his latest movie, a Neil Armstrong biopic called First Man, at the Toronto International Film Festival. The shop promised Gosling free coffee, and even offered to pay for his Uber ride from the red carpet to the front door.

While Gosling opted not take the Uber fare, he did arrive at 3:30 on Tuesday afternoon to enjoy a cup of coffee. According to CBC, the campaign cost owner Joelle Murray $50 (not including the cardboard cutout).

Small businesses like coffee shops have neither huge margins nor ad budgets. Most can rarely afford promotions, let alone advertising, so any opportunity to grab 15 minutes in the spotlight needs to be taken–or in this case, created strategically. 

So how can you follow Murray’s example and create a social media campaign that gets celebrity attention? Here are a few tips:

  1. Dream big. This isn’t Starbucks. This isn’t a million-dollar endorsement deal. This is one woman with a big dream and a small budget–and she succeeded.
  2. Be personal. Grinder Coffee’s Twitter account is anything but grand: before this campaign it had fewer than 300 followers and 100 tweets​. But going viral isn’t about getting your content in front of people. It’s about getting your content in front of the right people–in this case, Gosling. To get his attention, Murray used a photo-rich, meme-worthy series of tweets.
  3. Make your ask easy. Murray determined based on the festival schedule when Gosling would be in Toronto. If the actor hadn’t already been in town, it would have been exponentially more difficult to pull off this campaign. So look to your city’s or town’s upcoming events. Look at the bands playing locally, and the movies being shot. Find a star who is already in your area.
  4. Be relentless. This was a well-planned and well-executed 10-day plan. Murray was relentless. She acquired a full-sized cardboard cutout of Gosling and took photos with it multiple times a day.
  5. Empower others to share. People can be lazy. Make it easy for them to help you. Include sharing links to a variety of social media platforms and encourage people to share far and wide. Murray encouraged customers and others (including the mayor of Toronto) to take pictures with the cardboard cutout of Gosling and tweet them.
  6. Engage others as allies. Murray engaged with media outlets that were already promoting the film festival. You can do the same. No venue or festival will say no to free press. By engaging with others already in the same orbit, you help those allies further their own goals. 
  7. Be genuine. Over the entire campaign, Murray balanced her desire and dream with humility and understanding. It was apparent that this was a small business owner trying to make it big and have some fun. She never took herself, or the campaign, too seriously.

The film festival will be over in a few days. Gosling will likely leave the city before then. But while Gosling may have only stayed for a few moment at Murray’s coffee shop, the impact is likely to reverberate for weeks, if not months.

Published on: Sep 15, 2018

Internet group backs 'national' data privacy approach

WASHINGTON (Reuters) – A group representing major internet companies including Facebook Inc (FB.O), Inc (AMZN.O) and Alphabet Inc (GOOGL.O) said on Tuesday it backed modernizing U.S. data privacy rules but wants a national approach that would preempt California’s new regulations that take effect in 2020.

People look at data on their mobiles as background with internet wire cables on switch hub is projected in this picture illustration taken May 30, 2018. REUTERS/Kacper Pempel/Illustration

The Internet Association, a group representing more than 40 major internet and technology firms including Netflix Inc (NFLX.O), Microsoft Corp (MSFT.O) and Twitter Inc (TWTR.N), said “internet companies support an economy-wide, national approach to regulation that protects the privacy of all Americans.”

The group said it backed principles that would ensure consumers should have “meaningful controls over how personal information they provide” is used and should be able to know who it is being shared with.

Consumers should also be able to seek deletion of data or request corrections or take personal information to another company that provides similar services and have reasonable access to the personal information they provide, it said.

The group also told policymakers they should give companies flexibility in notifying individuals, set a “performance standard” on privacy and data security protections that avoids a prescriptive approach and set national data breach notification rules.

Michael Beckerman, president and chief executive officer of the Internet Association, said in an interview the proposals were “very forward looking and very aggressive” and would push to ensure the new rules apply “economy wide.”

He said the group “would be very active working with both the administration and Congress on putting pen to paper.”

The Internet Association wants new rules to be technology and sector neutral, which would mean any new privacy protections would cover anything from how grocery stores or other physical retailers use consumer data to car rental, airlines or credit card firms as well as internet service providers.

The White House said in July it was working to develop consumer data privacy policies and officials had been meeting major firms as it looked to eventually seeing the policies enshrined in legislation.

Data privacy has become an increasingly important issue, fueled by massive breaches that have compromised the personal information of millions of U.S. internet and social media users.

California Governor Jerry Brown signed data privacy legislation in June aimed at giving consumers more control over how companies collect and manage their personal information, although it was not as stringent as Europe’s new rules.

Beckerman said “we definitely want to get this in place prior to California because California got it wrong.”

The U.S. Chamber of Commerce also unveiled privacy principles last week that aim to reverse California’s new rules.

Under the law, large companies would be required from 2020 to let consumers view the data they have collected on them, request deletion of data, and opt out of having the data sold to third parties.

Many privacy advocates have called for robust new U.S. data protections.

Laura Moy, deputy director at Georgetown Law’s

Center on Privacy & Technology, told Congress in July that lawmakers should not overturn new state privacy rules and federal agencies “must be given more powerful regulatory tools and stronger enforcement authority” and more resources.

The European Union General Data Protection Regulation took effect in May, replacing the bloc’s patchwork of rules dating back to 1995.

Reporting by David Shepardson; Editing by Paul Tait

Elon Musk’s Weed-Toking Goodwill Tour Isn't Enough to Save Tesla

The thing to remember about Elon Musk smoking a blunt with Joe Rogan is not that he took just one hit, or that he didn’t seem to know what a blunt was, or that he whiffed on an opportunity to show off just how useful his “not a flamethrower” can be. It’s that it came 130 minutes into his two-and-a-half-hour interview with Rogan, for the former Fear Factor host’s podcast, livestreamed on YouTube.

Two hours in which Musk got to play the most popular version of himself: the far-out thinking engineer who doesn’t conform to the status quo. Two hours in which he whoa’d Rogan with cogent breakdowns of the threat and promise of artificial intelligence, his plan to obliterate traffic with underground tunnels, and his enlightened fear of chimpanzees. Musk talked about his idea for an electric, supersonic airplane, complete with a physics lesson on how it would accomplish vertical takeoff and landing. He used math to argue that we’re all living in a simulation. He did it while remaining relatable, likeable, and interesting. And while the interview had its boring moments, it was, overall, a lot of fun.

That’s because it starred Musk at his best. As the guy who appeared on The Simpsons, turning Homer’s silly musings into world-bettering inventions. The Elon who met Stephen Colbert’s accusation of being a supervillain with a sheepish chuckle. The one who earned a cameo in Iron Man 2.

Cool Elon. Not the version who claimed that the British man involved in the rescue of the Thai cave boys is a pedophile. Not the Musk who sparked shareholder lawsuits and a reported SEC investigation by announcing he might take Tesla private, then recanted a few weeks later. Not the Musk who called a reporter a “fucking asshole” while doubling down on the pedophile claim. That’s the Musk who has seen Tesla’s stock price drop 17 percent since the beginning of the year. So for everyone who doesn’t freak out when someone takes a puff or two, the Rogan interview promised to be a reassuring appearance.

Except that Friday morning, Tesla shares dropped 10 percent in response to news that that human relations chief Gabrielle Toledano, who has been on a leave of absence, won’t rejoin the company, and chief accounting officer Dave Morton had resigned September 4—from a job he started August 6. (CNBC reports Morton was frustrated that Tesla’s leadership was ignoring his advice on the question of going private.) He was the third high-ranking finance executive to leave the company this year.

Tesla finally hit its target of making 5,000 Model 3 sedans a week in June, and Musk, true to form, immediately said they’d hit 6,000 a week this quarter. He has also said this is the quarter Tesla starts—at long last—to turn a profit. We won’t have a better idea of how Tesla is doing on production until early October, or of its financial state until early November, but these departures are just the latest evidence that the automaker is struggling.

Musk’s behavior of late hasn’t helped, of course. But a return to Fun Elon (and the emergence of Blunt Smokin’ Elon) isn’t enough to keep Tesla’s future from going up in smoke.

More Great WIRED Stories

Gadget Lab Podcast: Can Facebook and Twitter Be ‘Fixed?’

Facebook and Twitter went to Washington. Almost immediately afterwards, controversial Internet troll Alex Jones was kicked off Twitter. Now what? WIRED senior writer Issie Laposwky joins the Gadget Lab podcast this week to break down the Senate Intelligence Committee hearings, tell us what it means for Facebook and Twitter (and Google – which didn’t send its CEO to the hearings), and to help us answer the question that’s become one of the more pressing questions in modern times: Is social media to blame, or are the humans who do terrible things on social media to blame?

Show notes: Issie wrote all about the hearings, as well as Alex Jones getting booted off Twitter, this week.

Recommendations this week: Issie recommends the Dr. Death podcast, about murderous surgeon and the health care system that failed to protect his patients. Mike recommends a podcast, too: The Bob Lefsetz podcast. Lefsetz is a music industry insider and “gadfly,” as Mike describes him; his guests are fascinating. Arielle recommends checking out the @Sweden Twitter account, the “last good thing on Twitter,” before it shuts down at the end of the month. For several years now, the account has been curated by a rotating cast of Swedes who were tasked with representing life in Sweden. Lauren recommends “Glow,” on Netflix. It’s a show about a show about women’s wrestling in the 1980’s. You won’t regret it.

Send the Gadget Lab hosts feedback on their personal Twitter feeds. Arielle Pardes is @pardesoteric. Lauren Goode is @laurengoode. Michael Calore can be found at @snackfight. Bling the main hotline at @GadgetLab. Our theme song is by Solar Keys.

How to Listen

You can always listen to this week’s podcast through the audio player on this page, but if you want to subscribe for free to get every episode, here’s how:

If you’re on an iPhone or iPad, open the app called Podcasts, or just tap this link. You can also download an app like Overcast or Pocket Casts, and search for Gadget Lab. And in case you really need it, here’s the RSS feed.

If you use Android, you can find us in the Google Play Music app just by tapping here. You can also download an app like Pocket Casts or Radio Public, and search for Gadget Lab. And in case you really need it, here’s the RSS feed.

We’re also on Soundcloud, and every episode gets posted to as soon as it’s released. If you still can’t figure it out, or there’s another platform you use that we’re not on, let us know.

In India, Google races to parry the rise of Facebook

SAN FRANCISCO/MUMBAI (Reuters) – Google retains only a slight lead over Facebook in the competition for digital ad dollars in the crucial India market, sources familiar with the figures say, even though the search giant has been in the country far longer and has avoided the controversies that have dogged its rival.

A woman walks past the logo of Google during an event in New Delhi, India, August 28, 2018. REUTERS/Adnan Abidi

Facebook’s success has shaken Alphabet Inc’s Google, led by an Indian-born CEO, Sundar Pichai, who has made developing markets a priority.

Google officials in India earlier this year were alarmed to learn that Facebook Inc was likely to generate about $980 million in revenue in the country in 2018, according to one of the sources. Google’s India revenues reached $1 billion only last year.

Facebook and Google declined to comment on Indian revenue figures or the competition between the two companies.

Google is now pushing back, attempting to lure customers with better ad-buying tools and more localized services. The revamped strategy mirrors initiatives that have succeeded in boosting the time Indian consumers spend with Google services.

The battle in India reflects an epic challenge for Google in developing markets around the world that are crucial to the company’s long-term growth – many consumers in those country’s are gravitating to Facebook and it’s siblings, Instagram and WhatsApp, at the expense of Google search and YouTube, and advertising dollars are quick to follow.

“Facebook is a far more user-friendly platform even though they haven’t created features specifically for Indian advertisers,” said Vikas Chawla, who runs a small ad-buying agency in India.

Facebook ads, compared with those on Google search or YouTube, tend to transcend language barriers more easily because they rely more on visual elements, said Narayan Murthy Ivaturi, vice president at FreakOut Pte Ltd, a Singapore-headquartered digital marketing firm. Pinpointing younger consumers and rural populations is easier with Facebook and its Instagram app, he and other ad buyers said.

And Facebook is succeeding in India, which boasts the fastest-growing digital ad market of any major economy, despite internal turmoil and political controversy. It has been without a country head for the last year, and has faced a series of incidents in which rumors circulating on Facebook and WhatsApp have prompted mob violence.

Facebook and Google between them took 68 percent of India’s digital ad market last year, according to advertising buyer Magna. Media agency GroupM estimates digital advertising spending will grow 30 percent in India this year.

The Facebook phenomenon is evident close to home for Google. During a recent lunch period, six out of 10 people who walked out of Google’s Bangalore offices while looking at their phones told Reuters they were checking WhatsApp. All 10 said they regularly used Whatsapp.

Eight Indian ad buyers interviewed by Reuters were divided on whether Facebook would overtake Google in Indian ad revenue. That such a question would even be debated explains why Pichai, Google’s chief executive, has pressed to flip the company’s approach to emerging markets.

“India is the most important market for the ‘Next Billion Users’ initiative,” Caesar Sengupta, the head of the effort, told Reuters on the sidelines of the annual “Google for India” event in New Delhi last week.

A man walks past a Google hashtag during an event in New Delhi, India, August 28, 2018. REUTERS/Adnan Abidi


For many years Google designed its services for early adopters of new technology, who tended to be in Silicon Valley, said Nelson Mattos, who oversaw Google’s Europe and Africa operations for several years. Great products would then find a broad global audience.

“Over time, as you saw the growth of Facebook, the importance of WhatsApp and other tools in these new markets, and not the same adoption of Google, the company started to realize that maybe they had to change that approach,” Mattos said.

Shortly after taking the helm three years ago, Pichai mapped a new strategy for places such as India: More services tailored to locals; more marketing on radio, billboards and TV; more local staff and start-up investment.

Google’s India workforce has more than doubled since to more than 4,000 employees, or about eight times Facebook’s presence, according to a tally of LinkedIn profiles and company statements.

Its products evolved too, becoming easier to use with low data plans. Smartphone apps such as Files Go and Tez – rebranded last week as Google Pay – were aimed at Indians.

“There’s definitely a sea change,” said Asif Baki, a user researcher at Google who oversees two-week “immersion trips” in developing markets for senior executives and staff.

The efforts are bearing fruit. Indian users during the first half of this year spent more time on Google services than on Facebook services, according to estimates from audience measurement firm Comscore. Over a similar period a year ago, Facebook came out on top.

Extending those gains to the ad business is a work in progress. A handful of Google executives, including leaders for display ads and small business advertisers, traveled to India earlier this year in a previously unreported trip to better understand the needs of Indian clients.

The visit spurred them to consider ideas such as enabling advertisers to reach users only in a particular Indian state, since language and literacy vary greatly around the country, according to a person familiar with the discussions.

At the New Delhi event, Google unveiled a plan to bring Indian newspaper content online, to increase the supply of search results – and ads – available in regional languages. 

Google still has to reckon with other issues. Small businesses in emerging markets are less likely to have websites, a foundation for Google ad campaigns but unnecessary for Facebook.

Executives met with one Indian merchant who recorded product videos on YouTube then messaged the links to potential customers on WhatsApp, said Kim Spalding, the company’s general manager and product lead for small business ads. 

    Facebook, meanwhile, is already on to commercializing such behavior. Just weeks ago, it began charging for text-based marketing features on WhatsApp, with video ads expected to launch next year.

Reporting by Paresh Dave and Sankalp Phartiyal; Additional reporting by Arjun Panchadar in Bangalore; Editing by Jonathan Weber and Alex Richardson

17 Great Motivational Quotes About Organized Labor

Not everybody realizes Labor Day was originally create to honor organized labor (i.e. labor unions). Few people also realize that labor unions were responsible for many of the workplace rights that created the American middle class.

Over the past fifty years, though, most of those hard-won rights have been under attack from billionaires and their political pawns. With that in mind, here are 17 of those hard-won rights and an “motivational” quote. (I’ll tell you at the end why the quotes are motivational)

  1. Unions won us weekends.  “Approximately 70% [of Americans] worked at least one weekend a month, with 63% saying that their employer expected them to put in time on an average Saturday and Sunday.” – Forbes.
  2. Unions won us paid time off. “A total of more than 30 days of vacation time allotted to workers in France, Germany, Spain and the United Kingdom stands in stark contrast to the 10 public holidays in the U.S., which are not guaranteed to come with pay.” — CNBC
  3. Unions won us sick leave. “While the majority of large US corporations offer paid sick leave, data from the US Bureau of Labor Statistics show that 36% of workers don’t have such protections.” – Fortune
  4. Unions won us social security. “The tax cuts enacted by Republicans and signed into law by Trump in December also will have a negative effect on Social Security in the near term, chiefly by reducing the program’s income from the taxation of benefits.” – Los Angeles Times
  5. Unions won us a minimum Wage. “Adjusted for inflation, the federal minimum wage peaked in 1968 at $8.68 (in 2016 dollars). Since it was last raised in 2009, to the current $7.25 per hour, the federal minimum has lost about 9.6% of its purchasing power to inflation.” Pew Research
  6. Unions won us (theoretically) equal pay. “U.S. women working full-time earned just $0.80 for every dollar earned by a man in 2016. The wage gap widens even more when broken down by race. Black women make $0.63 for every dollar, while Latina women earn $0.54 cents.” — CNBC 
  7. Unions won us anti-discrimination laws. “Companies are more than twice as likely to call minority applicants for interviews if they submit whitened resumes than candidates who reveal their race–and this discriminatory practice is just as strong for businesses that claim to value diversity as those that don’t.” — Harvard Business School
  8. Unions won us the eight hour workday. “A survey, which was conducted via Slack over a span of roughly three minutes on Monday afternoon, found that 97 out of 97 respondents have at some point in the recent past checked their work email addresses on their cellphones or non-work-related computers.” — The Atlantic 
  9. Unions won us overtime pay. “A paltry 7% of salaried workers received overtime pay.” — US Department of Labor 
  10. Unions won us child labor laws. “Republican governors and state lawmakers, who succeeded this year in curbing union powers, are pushing to revise their child-labor laws to help companies such as groceries get workers. Wisconsin will let employers treat teenagers as adults in pay and hours, and Maine lawmakers want to let companies keep teens working longer hours.” — San Francisco Chronicle
  11. Unions won us the 40 hour work week. “In a Gallup survey of 1,200 adults, 21% work between 50 and 59 hours a week, 18% work more than 60 hours, and 11% work between 41 and 49 hours. That means that 50% of the adults surveyed work more than 40 hours a week.” — Gallup
  12. Unions won us employee pensions. — “The Pension Benefit Guaranty Corporation, the agency set up 40 years ago to guarantee those pensions, made clear in its annual report released last month that one group of pension funds would most likely run out of money within a few years. Absent new legislation, the already modest pensions of some retired workers will be eliminated.” — New York Times
  13. Unions won us collective bargaining rights. “The lack of collective worker power helps explain why workers’ wages have been stagnant for the past 40 years, and why working people are so frustrated — as they have not reaped any of the gains of an improving economy.” — Economic Policy Institute
  14. Unions won us age discrimination laws. “Tech workers of all ages think older engineers are highly qualified, have good experience, and can share wisdom. But many older engineers are worried about losing their jobs as the tech workforce skews heavily towards Millennials.” — IEEE
  15. Unions won us whistleblower protection. “22 percent of corporate employees who reported misconduct faced retaliation, up from 12 percent in 2007. Most alarming, increases in the incidence of retaliation are outpacing the overall rate of increases in whistleblowing disclosures.” — Ethics Resource Center
  16. Unions won us privacy rights. “The battle for workplace privacy is over; privacy lost. Despite repeated language in judicial opinions regarding the need to balance the competing rights of employers and employees, no balancing occurs.” — American Bar Association
  17. Unions won us parental leave. “The United States remains the only country in the developed world that does not mandate employers offer paid leave for new mothers, according to the Organization for Economic Cooperation and Development.” — The Washington Post

Maybe you found those quotes alarming rather motivational? Well, I think they should motivate you to VOTE

Published on: Sep 2, 2018

Pressures on Didi intensify after latest passenger slaying

SHANGHAI/BEIJING (Reuters) – China’s largest ride-hailing company Didi Chuxing has suspended its carpooling service after a passenger was killed, and is likely to face tighter oversight that will squeeze driver numbers and extend customer waiting times.

Logo of Didi Chuxing is seen at its headquarters building in Beijing, China August 28, 2018. REUTERS/Jason Lee

The incident, which follows a similar grisly killing by a Didi driver in May, triggered public and government backlash – and created an opening for rival services to chip away at Didi’s dominance in China, industry analysts say.

“There is certainly room for others to serve the market, and such incidents expose an apparent weakness in Didi’s business model: aggressive expansion without adequate control of the integrity of the drivers on their platform,” said Bill Russo, head of Shanghai-based consultancy Automobility Ltd.

Didi founder Cheng Wei and President Jean Liu issued a lengthy and deeply apologetic letter late on Tuesday – a humbling move for a Chinese company celebrated as a homegrown “unicorn” in state media.

The company controls 90 percent of the Chinese ride share market, according to a Bain report in May. Didi says it makes 10 billion trips a year.

Valued at $56 billion in a fundraising round last year, Didi is trying to expand globally and is considering a giant initial public offering as early as next year. It bought rival Uber’s China business in 2016.

But now it may need to tap the brakes. This week, regulators in major cities, including Beijing, Chongqing, Dongguan, Guangzhou and Shanghai, ordered company officials to suspend drivers without proper operating licenses and stop new registrations for unqualified drivers, government statements and local media said.

Tougher safety measures and driver screenings are likely, analysts said. Already, Didi says it rejects tens of thousands of unqualified driver applications every day.

Didi had already faced mounting public frustration over waiting times and concerns that it had not done enough after the May killing. Drivers complained that working for the company had become less lucrative.

In a statement sent to Reuters on Wednesday, the company said it would “do everything we can technologically and institutionally to prevent crime,” adding that it uses technology to improve efficiency.

It added that based on an eight-hour day, its drivers made 6,000 to 7,000 yuan ($873-$1,018) per month, roughly three times the 2,120 yuan minimum wage in Beijing.

In 2016, the official Beijing Youth Daily newspaper reported that drivers earned more than 10,000 yuan per month at the height of the subsidy war between Didi and Uber, which made them popular employers at the time.

There are more than 80 businesses with licenses to operate in what the Bain report said is a $30 billion Chinese ride-hailing sector, which includes Tencent-backed (0700.HK) Meituan Dianping, CAR Inc and Geely Holding Group’s CaoCao Car.

Meituan and five other companies either declined to comment or did not respond. CaoCao Car said in a statement it only hired full-time drivers and used no privately owned cars.

Signs were already emerging last year that hailing a ride with Didi was getting harder. In June 2017, average driver response rates fell 13 to 40 percent in some densely populated areas across China’s largest cities compared with a year earlier, according to data Didi sent to Reuters in January.

Didi declined to provide updated numbers, or data on wait times. However, domestic media reports this year include complaints over long wait times.

Li Qiangzhi of the state-backed China Academy of Information and Communications Technology told the China News Service this month that between March and July the number of ride calls accepted by all Beijing ride-hailing service drivers fell 22 percent, while the time to respond to a call was 3.4 times longer on average.


Didi’s popularity in China has amplified the outcry and passenger frustrations.

In China, the number of rides per day on Didi’s platform rose to 20 million from 14 million after its deal with Uber in 2016.

That year, the government imposed stricter regulations, such as a rule in some places requiring drivers to have a permit to work and live in the city where they drive, which excludes the large pool of migrant workers.

Didi said Wednesday it supports 30 million drivers, and rides have surged to over 30 million a day.

The sudden regulatory scrutiny in the five days since the killing could signal a shift for Didi and the industry.

“Chinese technology companies have a culture of moving fast and breaking things, and while Didi got a free pass from the regulator for the first incident … it is unlikely to get off scot-free the second time,” Richard Windsor, a technology analyst, wrote on his Radio Free Mobile blog.

Transport officials in Dongguan, in southern China, told Didi that it had far more drivers operating in the city than the total number of ride-hailing drivers registered there, The Paper, an online news site, reported.

“There are still a large number of drivers and vehicles that do not have the regulatory qualification to operate,” it cited Dongguan transport officials as saying.


Didi is also contending with dissatisfaction among drivers, with at least eight strikes in different cities across China in the past year, local media have reported.

Some of the strikes protested how much Didi collects from drivers, while others were over fines drivers had to pay after regulatory changes, the reports said.

Like passengers, drivers have other companies to choose from.

Four Didi drivers in Beijing told Reuters the company had in recent months persuaded them to obtain a certificate to register their cars as vehicles used for ride-hailing, an unpopular step.

“If we register our car, the car is forced to be scrapped after eight years. No one actually wants to get a certificate,” said one, surnamed Zhang.

Those four, as well as three other current or former Didi drivers, said they were frustrated with Didi’s cancellation of subsidies after the deal with Uber.

Even changes such as stricter dress standards for drivers in its premier service made life harder, they said.

“Last week, some people complained that my car is smelly. Didi then lowered my rate and cut 600 yuan ($87) out of my earnings. That means I did one week for nothing,” said one Beijing driver, surnamed Yang.

Additional Reporting by Yilei Sun in BEIJING and Beijing and Shanghai Newsrooms; Editing by Tony Munroe and Gerry Doyle

Labor Board Backs Engineers Who Were Fired for Unionizing

The National Labor Relations Board is joining the fight by a group of engineers who want to form a union at a small San Francisco software company. The NLRB Tuesday issued a complaint against Lanetix, alleging the company violated federal labor laws when it fired 14 engineers in January after they filed papers to unionize. The complaint seeks an injunction to reinstate the fired engineers with back pay.

The dispute marks a rare case of Silicon Valley engineers trying to organize a union, and an even rarer example of the government coming to their aid. White-collar tech workers have won attention in recent months for coordinated campaigns against their employers’ business practices, but engineers in Silicon Valley almost never unionize.

Contractors and service workers for tech companies, who often are employed by outsourcing firms, have fought for years to unionize. Shuttle-bus drivers and food-service workers have made some progress. Earlier this month, after five years of organizing, security officers for companies including Facebook, Google, and Genentech, many of whom were making between $12 and $14 an hour, ratified their first union contract. They won wage increases of up to $1.20 per hour, better healthcare, and, for the first time, paid holidays. Bug testers who worked as contractors for Microsoft filed an NLRB charge for union-busting when they were fired in 2016. But this spring, workers agreed to settle with the contracting company in exchange for dropping the charge after the case seemed to sputter out.

The tension at Lanetix began in mid-November, when the company fired a highly respected female engineer who had been advocating for better pay and leave policies on behalf of her coworkers, according to interviews with two fired engineers and a copy of the complaint obtained by WIRED. The same day, the complaint says that managers held meetings at their offices in San Francisco and Arlington, Virginia, trying to dissuade employees from discussing work conditions in an independent messaging group that employees started on Slack, a popular chat app. The complaint says that Lanetix told workers that any attempts to unionize would be futile, but a group of about 14 non-supervisory engineers persisted.

In mid-January, after most of the unit signed authorization cards to be represented by the union, Lanetix was informed and the union filed papers with the NLRB. Ten days later, the engineers were fired.

Lanetix develops cloud-based software for transportation and logistics and has raised at least $18 million in funding from Salesforce Ventures and others. Lanetix and Salesforce declined to comment.

Bjorn Westergard, one of the fired Lanetix engineers leading the charge to unionze, says that small concessions by management would have easily deflated their efforts. The tipping point came late last year, when management offered additional stock to a handful of high-level male engineers, including Westergard. Employees suspected Lanetix planned to fire lower-level female engineers, many of whom graduated from Hackbright, an all women’s coding bootcamp, as did the female engineer fired in November.

“It became increasingly clear that their strategy was divide and conquer—flatter a handful of us in the hopes that we would go along with their plans and not put up a fight when they fired half of our co-workers,” Westergard says.

The NLRB’s complaint affirms allegations that the union filed in January. Lanetix employees worked with the Washington-Baltimore News Guild because most of the engineers were in the Virginia office. Cet Parks, the guild’s executive director, says the complaint is a rare victory. “It is hard to get the NLRB to pursue a court injunction for reinstatement and recognition,” he says. Parks says Lanetix’s timing was brazen. Even if an employer wants to fire workers involved in an organizing campaign, “usually their lawyers are going to inform them that there’s a problem,” he says.

“Unions are in retreat everywhere,” says William Gould, former chairman of the NLRB who teaches law at Stanford. He says recent Supreme Court decisions have been hostile to workers and employers are fighting hard to restrict worker rights. Still, Gould says the NLRB’s request for an injunction to reinstate the Lanetix employees signals the agency’s desire to “put this case to the top of the pile.”

The tech industry has been inhospitable to labor unions since before the microchip was invented. In order to ward off efforts from labor unions in San Francisco in 1939, Eitel McCullough, which made vacuum tubes for radar and broadcast, added an on-site cafeteria and medical clinic, and launched a profit-sharing program. Tech companies used the same strategy in the 1970s, offering employees high salaries and sweet perks to make collective action less appetizing.

The Lanetix engineer who was fired in November, who requested anonymity, says she was stunned by the termination because Lanetix’s CEO had solicited her opinions on referral bonuses and paid leave, including asking her to announce the improved policy at a company all-hands. Roughly five months before she was fired, the CEO said he appreciated her candid conversation and offered her a bonus or a raise. When board members came to the office, she says the CEO would often bring them by her desk as a way of showing that Lanetix believes in women.

Labor groups hoping to make inroads in the tech industry have tried to draw attention to the Lanetix engineers. In February, Tech Workers Coalition and Tech Action Working Group, part of the New York City Democratic Socialists of America, issued a statement of solidarity with the fired engineers. In March, 30 supporters joined a protest outside Lanetix’s San Francisco office.

Will Luckman, cofounder of Tech Action, said he hoped the statement would pressure the NLRB and increase awareness of nascent attempts to unionize within the tech industry. Despite their futuristic sheen, tech companies, “actually operate like traditional industrialists and will go through old fashioned methods of suppressing workers,” he says.

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Exclusive: Iran-based political influence operation – bigger, persistent, global

LONDON/WASHINGTON (Reuters) – An apparent Iranian influence operation targeting internet users worldwide is significantly bigger than previously identified, Reuters has found, encompassing a sprawling network of anonymous websites and social media accounts in 11 different languages.

FILE PHOTO: Silhouettes of laptop users are seen next to a screen projection of Facebook logo in this picture illustration taken March 28, 2018. REUTERS/Dado Ruvic/Illustration

Facebook and other companies said last week that multiple social media accounts and websites were part of an Iranian project to covertly influence public opinion in other countries. A Reuters analysis has identified 10 more sites and dozens of social media accounts across Facebook, Instagram, Twitter and YouTube.

U.S.-based cyber security firm FireEye Inc and Israeli firm ClearSky reviewed Reuters’ findings and said technical indicators showed the web of newly-identified sites and social media accounts – called the International Union of Virtual Media, or IUVM – was a piece of the same campaign, parts of which were taken down last week by Facebook Inc, Twitter Inc and Alphabet Inc.

IUVM pushes content from Iranian state media and other outlets aligned with the government in Tehran across the internet, often obscuring the original source of the information such as Iran’s PressTV, FARS news agency and al-Manar TV run by the Iran-backed Shi’ite Muslim group Hezbollah.

PressTV, FARS, al-Manar TV and representatives for the Iranian government did not respond to requests for comment. The Iranian mission to the United Nations last week dismissed accusations of an Iranian influence campaign as “ridiculous.”

The extended network of disinformation highlights how multiple state-affiliated groups are exploiting social media to manipulate users and further their geopolitical agendas, and how difficult it is for tech companies to guard against political interference on their platforms.

In July, a U.S. grand jury indicted 12 Russians whom prosecutors said were intelligence officers, on charges of hacking political groups in the 2016 U.S. presidential election. U.S. officials have said Russia, which has denied the allegations, could also attempt to disrupt congressional elections in November.

FILE PHOTO: Silhouettes of mobile users are seen next to a screen projection of Instagram logo in this picture illustration taken March 28, 2018. REUTERS/Dado Ruvic/Illustration

Ben Nimmo, a senior fellow at the Atlantic Council’s Digital Forensic Research Lab who has previously analyzed disinformation campaigns for Facebook, said the IUVM network displayed the extent and scale of the Iranian operation.

“It’s a large-scale amplifier for Iranian state messaging,” Nimmo said. “This shows how easy it is to run an influence operation online, even when the level of skill is low. The Iranian operation relied on quantity, not quality, but it stayed undetected for years.”


Facebook spokesman Jay Nancarrow said the company is still investigating accounts and pages linked to Iran and had taken more down on Tuesday.

“This is an ongoing investigation and we will continue to find out more,” he said. “We’re also glad to see that the information we and others shared last week has prompted additional attention on this kind of inauthentic behavior.”

Twitter referred to a statement it tweeted on Monday shortly after receiving a request for comment from Reuters. The statement said the company had removed a further 486 accounts for violating its terms of use since last week, bringing the total number of suspended accounts to 770.

“Fewer than 100 of the 770 suspended accounts claimed to be located in the U.S. and many of these were sharing divisive social commentary,” Twitter said.

Google declined to comment but took down the IUVM TV YouTube account after Reuters contacted the company with questions about it. A message on the page on Tuesday said the account had been “terminated for a violation of YouTube’s Terms of Service.”

Slideshow (2 Images)

IUVM did not respond to multiple emails or social media messages requesting comment.

The organization does not conceal its aims, however. Documents on the main IUVM website said its headquarters are in Tehran and its objectives include “confronting with remarkable arrogance, western governments and Zionism front activities.”


IUVM uses its network of websites – including a YouTube channel, breaking news service, mobile phone app store, and a hub for satirical cartoons mocking Israel and Iran’s regional rival Saudi Arabia – to distribute content taken from Iranian state media and other outlets which support Tehran’s position on geopolitical issues.

Reuters recorded the IUVM network operating in English, French, Arabic, Farsi, Urdu, Pashto, Russian, Hindi, Azerbaijani, Turkish and Spanish.

Much of the content is then reproduced by a range of alternative media sites, including some of those identified by FireEye last week as being run by Iran while purporting to be domestic American or British news outlets.

For example, an article run by in January by Liberty Front Press – one of the pseudo-U.S. news sites exposed by FireEye – reported on the battlefield gains made by the army of Iranian ally Syrian President Bashar al-Assad. That article was sourced to IUVM but actually lifted from two FARS news agency stories.

FireEye analyst Lee Foster said, one of the biggest IUVM websites, was registered in January 2015 with the same email address used to register two sites already identified as being run by Iran. ClearSky said multiple IUVM sites were hosted on the same server as another website used in the Iranian operation.

Reporting by Jack Stubbs in LONDON, Christopher Bing in WASHINGTON; Additional reporting by Bozorgmehr Sharafedin in LONDON; Editing by Damon Darlin and Grant McCool

Airbnb Sues New York Over Law That Demands Host Information

Airbnb has sued New York City, claiming a law that requires the online home-sharing arranger to disclose detailed information about its participating hosts each month is unconstitutional and exposes private information to unfettered government and public scrutiny.

The New York City council passed the legislation in contention in July, and the mayor signed it into law August 6. It requires that online, for-fee, short-term rental platforms like Airbnb pass a list every month of every host, location, kind of rental (an entire or partial unit), how many days it was rented, and money collected by the host and paid to the booking platform.

Airbnb’s lawsuit asks the court to declare that these provisions violate portions of the U.S. Constitution and the New York State Constitution, and the federal Stored Communications Act. The suit maintains that information disclosed to the city’s Office of Special Enforcement could be used across city agencies and become part of the public record that could be requested by any citizen.

Thus, Airbnb argues, the intent is “intimidating New Yorkers into abandoning homesharing.” The company pins the blame in its suit on the hotel industry, which it says has engaged in a multi-million-dollar lobbying operation, and which has close ties to government via a former NYC city employee.

Airbnb declined to comment beyond what appears in its suit.

Part of the current debate is whether the number of units that fall outside NYC’s rental laws is significant and reduces the housing stock available to residents, thus forcing up prices and increasing the risk of homelessness. Airbnb says in its suit that only 28,000 homes or 0.8% of its listings in New York City are for entire homes, while there are about 3.1 million households (including homeowners and renters).

However, the lawsuit doesn’t include a number that would help scale that 28,000 figure. For instance, there are just 116,000 hotel rooms across the five boroughs, according to a 2017 market report by the city, and based on Airbnb’s figure, 350,000 total Airbnb listings.

This battle is another melee in a three-way war between Airbnb, city regulators, and hotel operators which has occurred in cities around the world. Like Uber, Airbnb entered markets originally largely without consulting with regulators, and allowed hosts—its members offering rentals—to create listings that could be at odds with local rules.

Many towns and cities, including New York City, allow whole-home rentals (whether an apartment, condo, house, or miscellaneous) for 30 days or longer if the owner or property renter isn’t living on site. Renting a room may require safety upgrades, and some localities had a rental tax in place long before Airbnb came around, even if it was hard to enforce.

As Airbnb grew in listings, hotel operators have apparently felt the pressure, and have tried to hit back. A 2016 report funded by a hotel trade group said 30% of Airbnb’s revenue came from “illegal” hotels, or hosts renting every unit in a building.

Many major cities have too few commercial hotel rooms and other rental properties relative to the crush of business travel and tourism. Airbnb relieves some pressure, potentially reducing the maximum rates hospitality operations can charge. In other places, Airbnb provides affordable or even cheap alternatives to hotel and motel rooms.

Mr. Dorsey Goes to Washington: Twitter CEO to Testify Before House Panel on Sept. 5

Twitter has been ground zero in the culture wars that have been raging on social media. Now its CEO Jack Dorsey will testify before the House Energy and Commerce Committee on Sept. 5, the panel said.

The Energy and Commerce Committee made the announcement—where else?—on Twitter Friday.

“Twitter is on incredibly powerful platform that can change the national conversation in the time it takes a tweet to go viral,” committee chair Greg Walden said in a statement on Twitter. “When decisions about data and content are made using opaque processes the American people are right to raise concerns.”

Walton said that the Energy and Commerce Committee “intends to ask tough questions about how Twitter monitors and polices content, and we look forward to Mr. Dorsey being forthright and transparent regarding the complex processes behind the company’s algorithms and content judgment calls.”

Dorsey has found himself facing the brunt of criticism from the political left and the political right because of Twitter’s evolving, and sometimes vague, policies regarding what content is and is not allowed on the social network.

Last week, Twitter suspended the accounts of far-right conspiracy theorist Alex Jones and his media site Infowars after Jones posted a tweet that violated the company’s rules against inciting violence. That followed a controversial decision by Dorsey not to fully ban Jones from Twitter, even though Apple, YouTube, Facebook, and Spotify had done so on their platforms.

Dorsey also said in an interview with CNN last weekend that, while the company’s employees may have a “left-leaning” bias, “we do not look at content with regards to political viewpoint or ideology.” But many right-wing media companies focused on his remark about a left-leaning bias.

Also on Friday, President Trump went on Twitter to call out social media companies like Twitter for silencing “millions of people.”

September’s hearing will not be the first time that Dorsey has been invited to testify before Congress. The Twitter co-founder was previously invited to share information with lawmakers in 2017, but declined to participate, according to Recode.

Facial Recognition Technology Catches Imposter at Airport, Officials Say

Using newly installed facial-recognition technology, a man entering the U.S. from Brazil with a French passport at Washington, D.C.’s Dulles airport was identified as an impostor, the U.S. Customs and Border Patrol said on Thursday.

The identification came three days into the use of a new cutting-edge facial comparison system that matches a person’s face and the picture in a passport, visa, and other travel documents.

The person entering was sent to secondary screening, at which point the CBP said he became “visibly nervous” and was subject to a search, which revealed a Republic of Congo I.D. card beneath an insert in his shoe. That photo matched.

Attempted entry into the U.S. using false documents is a crime.

The CBP provided information about the incident with an image of the ID in the man’s shoes with some redactions. But the agency didn’t provide any independent verification about the use of the facial-recognition technology to flag the traveler.

The facial-comparison system has been installed as a technology demonstration in 14 airports and put into use on August 20. It’s intended to provide better accuracy and speed the processing of arriving passengers from international destinations. American citizens are currently allowed to decline the comparison scan.

The CBP’s privacy policy states it doesn’t store the “biographic data” captured for any travelers, and that the photos are transmitted only for identity verification. Photos of U.S. citizens are deleted within 12 hours of verification and non-U.S. citizens within 14 days.

Facial-recognition systems used in public places, like airports, and public accommodations, like malls and football stadiums, have come under criticism since the introduction of systems that had any chance of matching faces in video against a database, as well as recording faces for future matching or other purposes.

The American Civil Liberties Union, for instance, notes that governments can use the technology for continuous surveillance without any suspicion of wrongdoing, and use motor-vehicle agency photographic databases to identify and track people without their knowledge.

At the same time, the reliability of such systems in providing false positives—inaccurate matches that are presented as correct—could put innocent people in the path of law enforcement. The ACLU recently demonstrated that principle with a version of Amazon’s Rekognition facial-recognition technology marketed to various organizations, including police departments.

The ACLU scanned the official photo for every member of Congress, and the system matched 28 of them to criminal mugshots. Amazon said the system was designed to help filter matches for humans for further review, and that the ACLU could have used its best practices to set a “confidence threshold” for matching that reduces false positives.

This facial-comparison system, as described by the CBP, only matches people against photos the CBP already has of them, providing a different set of potential risks for false negatives, or errors in matching correctly, which the CBP says it mitigates through manual screening.

Top 6 Career Myths That Make People Miserable

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And of course you needed a reservation.

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

Here he is in this Haute McDonald’s.

Please believe me, he really is snooty.

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

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

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

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

That would, indeed, be a very strange day.

Elon Musk's Tesla Tweets Could Spark a Fight With the SEC

Elon Musk is, if nothing else, a warrior. He has battled short sellers. He was waged war against the auto industry and the National Transportation Safety Board. He has scrapped with the media and Los Angeles traffic and, because 2018, Azealia Banks. Now, Musk may be in yet another battle, with the US Securities and Exchange Commissions.

This all started a week ago, when the Tesla CEO tweeted, “Am considering taking Tesla private at $420. Funding secured.” But as Musk revealed in a Monday blog post, that funding may not, in fact, have been all that secured. And for the agency that regulates the securities industry, that may be a problem. One that could hurt Tesla where it counts: its checkbook.

The problem is that securities law requires that public companies make certain sorts of information public to all their shareholders at the same time. And that said information be true. Anything less could be construed by courts (and juries) as fraud or market manipulation. That makes Elon’s tweet problematic. Investigators have reportedly opened a probe into the tweet, and could choose—after collecting facts—to either sue the company in a district court or bring a sanction before an administrative law judge. Tesla declined to comment.

For the SEC, Elon’s tweets have two potentially concerning elements. One is the medium. Sure, anyone investing in Tesla should know Musk says all the juicy stuff on Twitter. And the Commission has allowed companies to disclose information on social media in the past, provided other shareholders are alerted in some other way. In the eight days since Musk tweeted about taking Tesla private, the automaker has not filed paperwork to disclose a material event or disclosure, the kind of big deal happening that all shareholders need to know about.

The second concerning element of Elon’s tweet is the message, especially the “funding secured” part. From the SEC’s perspective, that should be a factual statement: Musk definitely has the $70 billion or so lined up to take Tesla private.

But the CEO’s Monday blog post wasn’t so straightforward. He writes of a July 31 meeting with Saudi Arabia’s sovereign investment fund, which recently took a 5 percent stake in Tesla. He says that the fund’s managing director “expressed regret that I had not moved forward previously on a going private transaction with him,” and that the director “expressed his support for funding a going private transaction with Tesla at this time.” Then Musk hedges: “I understood from him that no other decision makers were needed and that they were eager to proceed.”

Securing take-private funding is not that easy, says John Coffee, Jr., the director of the Center on Corporate Governance at Columbia Law School. It is an intensive process that requires a lot of financial wrangling before anything’s a done deal. “There are enough concessions in the blog post about this being subject to financial and due diligence review and final approvals to determine that Musk didn’t have funding secure,” Coffee says. “He had at best, a hope for it.”

For the SEC—which, like many enforcement agencies, enjoys making headlines with shows of force—this might be an easy win against Tesla. Its investigators don’t even have to prove that Musk meant to lie or mislead investors. “The SEC can just say there was a materially false statement,” says Coffee. “It doesn’t have to prove an intent to defraud.”

If Tesla were smart, Coffee says, it would strike a deal with the feds, and quickly. In rule violations and breaches, federal regulators generally appreciate a touch of diplomacy, or contrition. An easy settlement might only cost the electric carmaker tens or hundreds of thousands—while a loss at court could cost it millions. (Back in 2003, the SEC fined one company $25,000 for a take-private transaction gone foul.)

Fighting the SEC, on the other hand, might get the electric carmaker in to deeper trouble, for more legal headaches lurk. By Tuesday, three Tesla shareholders had filed proposed class action lawsuits against Musk and Tesla, alleging the CEO tweeted to squeeze Tesla short sellers and goose its stock price. (If that was the plot, it worked for a spell—the stock spiked, then settled back to its previous price.) To win their cases (which may be combined), the plaintiffs will have to prove Musk meant to screw with the stock price. That means they’ll have to find a paper trail, or be able to string together enough compelling evidence to convince a jury or judge of what Musk was thinking when he tweeted. But if Tesla loses a case to the SEC, Coffee says, elements of that judgement could be used during a civil case. Bad begets bad.

Musk, and Tesla by extension, have always been scrappers, and unafraid of a fight. For years, the CEO has expressed intense frustration with short sellers, and with the requirements that come with being a public company. (Recall that he called analysts’ questions “bonehead” and “dry” during a May earnings call.) But when it comes to the SEC, some contrition might be wiser. Indeed, Musk seems to have temporarily gone the more conventional CEO route, announcing Monday night that he’s working with serious financial institutions like Goldman Sachs and Silver Lake, and serious law firms, like Wachtell, Lipton, Rosen & Katz, and Munger, Tolles & Olson, on the take private transactions. Now that federal investigators are involved, the well-paid lawyers are here, too.

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How to Master the Art of Giving a Great Virtual Presentation

For online presentations, the first step is to get everyone on video (sometimes you have to insist). No more audio-only calls where all your audience members are just secretly multi-tasking. You can’t make an engaging presentation with slides and their disembodied voice. Get your face on video so people can see you and ideally you can see your audience too. This allows you to really connect with your audience, and see how they are reacting to you.

Also for online presentations, consider your environment. Spotty wifi with an unprofessional background and a poorly-lit face kills your presentation. I literally interviewed a candidate who had pile of dirty laundry behind him – not the best first impression. Zoom works great on wifi right down to 3G, but if you’re giving a big presentation, your best bet is hardwiring in. Then, make sure you are in a quiet space with no distractions. Clean up your background – just use a plain wall, or a nice plant – or try Zoom’s virtual backgrounds (sorry, shameless plug). Consider your lighting. Get there a couple minutes early to make sure it’s not too much or too little lighting. And check that you are lit from the front, not from behind you (i.e. don’t sit with your back to a window). It is distracting when cameras are too high or low or are angled so we’re only seeing part of someone’s face. Check that you are looking straight at the camera and your video feed is framing the upper part of your torso and your head – you want it to look as if you were sitting across the table from your audience.

And for both online and in-person presentations, you have to engage your audience. Don’t droning on for a long time, doing too many text-rich slides, and not matching your abstract to your presentation (this is actually a big one – people want to know what they’re getting in to). Instead, stop regularly to tell a (quick!) story, ask a question, take a straw poll, tell a joke, give your audience a small task, and so forth. Just keep them awake and interested! Also, you need adjust your presentation to your audience’s response. I have multiple large screens in my office so I can see all the participants in my meeting or presentation all at once and read their body language and facial expressions. If I see attention waning or some disagreement, I will switch things up.

Finally, a quick technical recommendation for online presentations. If you’re using Zoom, when setting up your meeting, select the “Mute upon entry” option. This makes sure that your participants join with their sound off, so you don’t get background noise that can disrupt the flow of your presentation.

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While Elon Musk Pushes to Take Tesla Private, China’s Nio Files for a $1.8 Billion IPO

At a time when Tesla CEO Elon Musk struggles to take his company private, Nio, a Chinese manufacturer of premium elected vehicles, filed to go public in a stock offering that could raise as much as $1.8 billion.

Nio, whose Chinese name translates as “Blue Sky Coming,” began making deliveries in June of its first electric car, the ES8. The company is planning to introduce a lower-cost SUV next year and more models in subsequent years.

In the first half of 2018, Nio reported less than $7 million in revenue and net loss of $503 million. The automaker said that it had delivered 481 ES8 vehicles through July and had “unfulfilled reservations” for more than 17,000 electric vehicles.

Musk, meanwhile, has been expressing his interest in delisting Tesla from the U.S. stock market, after chafing under the pressures of increasing production in a public market. On Monday, Musk wrote on Tesla’s blog that a Saudi sovereign wealth fund approached him about helping to take Tesla private.

Nio’s filing listed Tesla as one of its key competitors. Tesla is investing $5 billion in a new production facility in China, which will be its first outside the U.S.

China is the world’s largest passenger vehicle market. According to Frost & Sullivan, battery-powered electric vehicle sales are expected to increase by more than 40% a year in the country through 2022.

How SendGrid Uses AI To Deliver 1.5B Emails Every Single Day (And Kill The Spammers)

Email is 20 years old and everyone claims to hate it … but it still tops the charts as a leading marketing channel. Today’s email, however, is not your grandma’s “You’ve Got Mail.”

For one thing, there’s a lot of AI behind the message.

The reason: to protect the future viability of the medium.

“We have had to invest an incredible amount of time and people and process in protecting email as a channel,” SendGrid chief executive officer Sameer Dholakia told me today at Traction Conference in Vancouver, Canada. “We have numerous AI systems in place to determine are companies a good customer at sign-up, and 100 different variables that tell us if this mail is actually wanted.”

SendGrid has 74,000 paying customers — including Spotify, AirBnB, and and Uber — and sends 1.5 billion messages on an average day. That means the company touches more than three billion unique email recipients every quarter, Dholakia says.

At that scale, eliminating spam and improving email quality is beyond manual processes.

So the company has turned to artificial intelligence.

“It’s a business imperative to us to vet those users before they sign up,” Dholakia says, and the reason is obvious.

If too much spam gets sent from SendGrid servers, the big email conveyors of the world will start treating all email from SendGrid as spam. And that would impact all of its legitimate customers.

So the company uses AI at point of customer sign-up to vet new customers, using data the customers provided as well multiple other data sources. Bad actors tend to attempt multiple sign-ups, and letting even a few in could degrade the experience for other customers.

“Last quarter we signed up 5K new paying customers,” Dholakia says. “You can’t have a human being checking each new customer.”

Sendgrid mostly appeals to SMBs, although it clearly has enterprise-scale clients. 

The interesting thing the company has found is that many medium-sized to larger clients use between two and six email tools to do their marketing and support campaigns.

“Corporate marketing will be using one of the big marketing clouds,” he told me. “But the regional office in Detroit can’t get on the corporate promotion calendar … so they go online and find a small simple tool to help them get their campaigns out quickly.”

Sendgrid’s goal, Dholakia says, is to “to build the worlds most trusted customer communications platform.”

That’s going to move beyond email soon, with the company looking at expansions into other messaging methodologies like in-app, push, SMS, and likely others.

Each of them will likely require some expertise in AI to weed out the spammers.

A Passenger Catches a Delta Air Lines Baggage Handler At His Worst (At Least, You Hope It's His Worst)

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

You work hard. You fly hard.

Sometimes, you even have to check a bag because, oh, it’s going to be a long trip. 

Or, perhaps, you’re flying with kids.

There’s a certain level of trust involved. You can’t expect airlines to treat your bags with complete reverence.

Your one true hope is that the bags arrive, they’ve not been tampered with and they’re not damaged.

Yet when Delta passenger Joshua Swain Firth looked out of a window on Wednesday at the airline’s JFK baggage handlers performing their tasks, it wasn’t a joyous sight.

A suitcase was tossed with its handle still up. 

And then there was the stroller. 

I know it’s hard enough for families when they fly with kids, with all the equipment they need just to function.

Here, though, the stroller misses the slide and goes flying over the railing and crashes hard on the tarmac.

I currently have no news of the stroller’s condition. I know it wasn’t treated with intensive care.

I asked Delta for its view of this part of the airline’s service. A spokeswoman told me: 

We apologize for the lack of care demonstrated while handling the stroller in this video and are following up directly with the employee to ensure better handling in the future. This is in no way representative of the great work Delta people do each day as they help thousands of customers and their bags safely reach their destination.

When your bag does arrive damaged, what can you do anyway?

You want to get away. You have things to do. You simply hope your suitcase is still closed and your stroller will open.

Indeed, one commenter on Firth’s video, Monique McCaw-Haskett, offered her own Delta tale: 

Got off a Delta Flight once and my stroller had three wheels…didn’t realize one wheel was missing until I got to baggage claim. Not sure what was worst: my stroller being damaged or me strolling my kid all the way to baggage claim and not realizing I was pushing a stroller with a missing wheel?!?!

Of course, this incident does underline one of the difficulties for airline employees, too.

Because of the nature of modern air travel, they have many customers sitting around observing their every move.

Those customers have phones. Or, rather, cameras with phones attached.

I’m not sure I’d like it if too many parts of my day were not merely under scrutiny, but in danger of being made public at every moment.

New York Freezes Ride-Sharing Vehicles, Orders Minimum Wage for Uber, Lyft Drivers

Uber, Lyft, Via, and others won’t be able to add new vehicles to the roads of the five boroughs of New York City following a 39-6 vote by the city council to freeze registrations for one year.

About 80,000 vehicles are currently used for so-called “ride sharing,” in which drivers get a hail through an app. They complete 17 million rides a month. The city licenses for street hailing just under 14,000 yellow cabs and fewer than 4,000 “green” taxis, which can’t pick up fares in the lower two-thirds of Manhattan. The council said it will use the next year to study congestion and other factors.

The council separately voted to require a minimum wage for drivers that work with high-volume ride-sharing services—those that dispatch 10,000 or more rides per day. The regulation didn’t specify a dollar amount, but a report presented to the city’s Taxi and Limousine Commission last month by the Center on Wage and Employment Dynamics suggested $17.22 an hour, which would be $15 plus the overhead costs of operating a vehicle. Right now, only 15% of drivers make at least that much.

The freeze may result in fewer vehicles on the road, as the city won’t allow easy licensing in most cases, and about 25% of drivers exit the services each year. An Uber spokesperson noted, however, that 35,000 for-hire vehicles are licensed and not currently driven, and that many licensed vehicles aren’t driven every day or time of day. That may allow companies to offer incentives for vehicle owners to start driving or lease their vehicles to others.

In a statement, Lyft’s Vice President of Public Policy Joseph Okpaku said the council’s rules translate to “sweeping cuts” that will disproportionately affect “communities of color and in the outer boroughs.” An Uber spokesperson said that the move offers no improvement for congestion or to the subways; the company supports comprehensive congestion pricing.

The rise of Uber and others has caused a complicated set of new alliances and charges of racism and economic servitude from all sides. Rallies were held by proponents and opponents of the new for-hire vehicle rules earlier in the day.

Yellow taxi drivers, subject to regulated pricing, have found themselves working harder for less return, while the value of a required taxi vehicle license, a medallion, has dropped precipitously. Six drivers have committed suicide in recent months. People of color and immigrants predominate among yellow cab drivers. Green taxis, designed to encourage pick ups in underserved areas outside of Manhattan, never took off as the city wanted, and their numbers declined sharply as app-hailed vehicles hit the road.

Meanwhile, drivers for the app-based services have grown dramatically, increasing congestion in dense areas of Manhattan—according to the city council and other government bodies—without providing their drivers with a viable or consistent living wage, either.

Anti-discrimination proponents have backed vehicles dispatched by app as providing a way for people of color to obtain a ride reliably, rather than be illegally ignored by street-hailed cabs, and offering far better access to get picked up or dropped off outside of limited core areas of the city.

Dun & Bradstreet to go private for $5.38 billion

(Reuters) – Data and analytics company Dun & Bradstreet Corp said on Wednesday it would be acquired by a group of investors led by CC Capital, Cannae Holdings and funds affiliated with Thomas H. Lee Partners LP, for $5.38 billion in cash.

Dun & Bradstreet shareholders will receive $145 in cash for each common share, the company said.

The price represents a premium of 18 percent to the stock’s Wednesday close. The deal value is based on 37.1 million shares outstanding, according to Thomson Reuters data.

Including debt of $1.5 billion, the deal is valued at $6.9 billion.

The deal will be financed through a combination of committed equity financing provided by the investor group, as well as debt financing, the company said.

J.P. Morgan is serving as financial adviser to Dun & Bradstreet, and Cleary Gottlieb Steen & Hamilton LLP is serving as its legal counsel.

Reporting by Shubham Kalia in Bengaluru; Editing by Gopakumar Warrier

Google Leak Reveals Massive, Expensive Pixel 3 Problem

Much like Samsung leaking the Galaxy Note 9, Google has done a similarly impressive job ‘accidentally’ revealing its Pixel 3 and Pixel 3 XL details on multiple occasions. Those leaks primarily delivered good news, until now… 

Picked up both on Reddit and by the consistently reliable WinFuture, GeekBench scores have been uncovered for the Pixel 3XL (codename ‘Crosshatch’). The breakdown reveals predictable aspects such as the phone running Android P and using a Qualcomm 845 chipset at its heart. But it also shows Google is going to deliver the new Pixel range with just 4GB of RAM, and this problematic for several reasons.

Pixel 3 XL ConceptConcept Creator

The obvious point to make is rivals have moved on. OnePlus leads the way with the excellent (midrange-priced) OnePlus 6 coming in 6GB and 8GB variants, while even 4GB-holdout Samsung moved up to 6GB back in 2017 with the Galaxy Note 8. For Google’s flagship device, this simply isn’t at the races from a specifications perspective – especially at the high asking price,

But more importantly, 4GB of RAM also isn’t at the races from a real-world performance perspective, as it coincides with multiple reports of Pixel 2 and Pixel 2 XL performance problems as they age.

Triggered by a series of tweets from Android Police founder Artem Russakovskii, and expanded upon by popular YouTuber MKBHD (video below), the issues are very real and I’ve seen it on both my Pixel 2 running Android O and my Pixel 2 XL running Android P beta. Memory management has begun to struggle – particularly on devices 8-10 months old – and this hasn’t happened to similarly aged rivals like the OnePlus 5T carrying more RAM.

As such 4GB makes the Pixel 3 and Pixel 3 XL a tough sell in late 2018. Especially when we already know both phones won’t have dual cameras which, while arguably unnecessary, are a major selling point with consumers.

The Pixel 3 and Pixel 3 XL represent Google’s third generation of premium smartphones and it was the third generation for Apple (iPhone 3GS) and Samsung (Galaxy S3) which saw their ranges take-off. Consequently, as brilliant as Google’s Pixel software optimisation might be, from a hardware perspective the company risks blowing it just as iPhones become cheaper and Samsung gets its groove back


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Microsoft Windows 10 Has A New Monthly Charge

Ever since its creation, Microsoft has described Windows 10 “as a service”. The fear has always been that this meant Microsoft would start charging users a monthly fee to maintain the operating system, and now a new leak has confirmed this is exactly what will happen… 

In a new report, CNet’s well connected Microsoft specialist Mary Jo Foley reports the company will soon launch ‘Microsoft Managed Desktop’ which will charge a monthly fee to configure computers running Windows 10 and keep them running smoothly as new updates are released.

Windows 10 might not be free forever…Microsoft

Foley also notes “Microsoft already has a number of the pieces in place to make this happen” such as a Windows Autopilot automatic device provisioning service, device financing programs like Surface Plus and a ‘Surface as a Service’ leasing program. Microsoft also has a subscription bundle including Windows 10 and Office 365 called Microsoft 365 and Windows 10 Enterprise subscription plans.  

Furthermore, Foley states “One of my contacts said that Bill Karagounis – former Director of the Windows Insider Program & OS Fundamentals team, who last year joined the Enterprise Mobility and Management part of Windows and Devices – is in charge of the coming Microsoft Managed Desktop.”

With Microsoft also publicly hiring for this new division, managed subscriptions for Windows 10 appear to have the green light.

Windows 7 and Windows 8 who did not upgrade are likely to feel vindicatedGordon Kelly

So what’s the good news? At this time, Foley believes Microsoft Managed Desktop will be targeted at businesses. But the obvious question, given the clear direction Microsoft is moving becomes: for how long?

Foley did ask Microsoft to go on the record about Microsoft Managed Desktop, but the company declined to comment.

All of which means those users who chose to stay on Windows 7 and Windows 8 are probably feeling pretty smug right now. As for everyone who upgraded for ‘free’ to Windows 10, the nagging question must be: will it prove too good to be true?


Follow Gordon on Twitter, Facebook and Google+

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Three Reasons Microsoft Stopped Free Windows 10 Upgrades

Microsoft Warns Windows 7 Has A Serious Problem

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iPhone Exclusive: Apple’s Radical Design ‘Confirmed’

Why 2018 Is the Year of the Agile Marketer

Agile Marketers reach consumers faster. They hit their ideal consumer with a message that’s exactly what that person needs to hear. They cut through the noise and delight customers with a solution.

In 2018, Agile Marketers are going to catch fire for a number of reasons. Everything these marketers do is a necessary component of successfully marketing and selling a product today.

And more businesses are realizing that they need Agile Marketers to connect with consumers and get their message through. In Version One’s 11th Annual State of Agile Report, 98 precent of respondents said their organization found success with Agile projects. That’s an astounding number. Yet only 11 percent of those respondents said that they had a high level of competency with Agile projects across the organization.

This gives business strong incentives for pursuing an Agile approach in 2018, and allows plenty of room for growth. It’s the perfect environment for an Agile Marketer to thrive.

The Competition Is Stiff

Businesses are faced with an incredible amount of competition for consumers’ attention. Consumers get hit with ads everywhere they look. And it’s not just billboards and neon signs anymore.

We see ads on Facebook newsfeeds, on television, in-between songs when we stream music. We get hundreds of emails every week from companies that use automated mailing lists. We flip on the TV to watch a football game and see sponsors for each part of the game. The pre-game show, the post-game show, the halftime entertainment. It’s all sponsored.

Everywhere we go we see brands, ads, or sponsorships. Companies need to do something different to stand out. They have to truly connect with their customers in a way that was not as necessary before. There are so many messages being directed at consumers that they’ve become experts in tuning them out. The messages that stick are the ones that connect with the ideal customers.

Agile Marketers can accurately identify their ideal customer’s needs, and supply the message that cuts through the noise and connects. They constantly test and adapt their methods to make sure that their message is resonating. They don’t worry as much about the competition because they’re focused on serving their customers.

You Have to Be Relevant

Companies have randomly contacted me before to offer me their service, and my first reaction was to wonder how they got my email or number. But some of them were so on point with their understanding of who I was and what I needed, that I was actually kind of thankful they reached out. Because I needed what they offered and it was a perfect match.

When someone can accurately peg you, and they provide a sincere solution that can help you, they’re going to make sales. And according to a CMG Partners study, 80 percent of CMOs surveyed said that adopting Agile helped them deliver a product that was both better (and more relevant) to their customer.

We Have New Technology at Our Disposal

Technology gives us tremendous opportunities to reach people in new ways. As Agile Marketers, we can find people that have a true need or problem we can solve, and we can reach them faster.

Our ability to target the ideal customer is better than ever. We have accurate, real-time information at our disposal. We can easily place an ad online, use Facebook Manager on the backend, and select a target audience.

Where do they hang out? What are their interests? What books do they read? What shows do they watch? If you’re targeting entrepreneurs, you look for people who watch Shark Tank and The Profit, or buy books on starting their own business.

Every time someone hits a ‘like’ button, they make an action that is trackable online. Agile Marketers can advertise more accurately than ever before with that information. 

You Have to Shift Gears Quickly

Agile is about being flexible and productive with your operations. It’s about reacting quickly to changes in the market. It’s about making decisions that are fast, but data-driven.

In that same CMG Partners study, 93 percent of CMOs said that adopting Agile had helped them switch gears more quickly and effectively than before. That ability to adjust and pivot is critical in an age where decisions are driven by testing and data collection. 

When we do split testing, for example, we ask, “Who truly needs this product?” What are the problems they need solved? How can we add value with our solution and get them to connect with that?

We can’t just turn on a campaign, let it run for months, and expect it to be effective. We have to test, be iterative, and work to find the right message.

An Agile Marketer thrives in that environment, and that’s exactly what we’re going to see happen in 2018.

​Dell XPS 13 now ships with Ubuntu 18.04 Linux

One of the eternal complaints about Linux is that it’s hard to install. Really, Linux isn’t difficult to install at all, but I hear you. Most people never install an operating system in their life. Fortunately for you, there are great companies, such as System76 and ZaReason, eager to sell you a great laptop or PC with Linux ready to run. And, there’s one big-time computer company whose name you know, which also offers ready-to-run Linux computers: Dell.

Dell is now offering its latest and greatest laptop, the Dell XPS 13 Developer Edition 9370 with Canonical‘s newest Ubuntu Linux 18.04 Long Term Support (LTS) edition. That’s not the only Linux desktop Dell has for sale. The Austin, TX-based computer giant also offers many of its Precision line of laptops and desktops with either Ubuntu or Red Hat Enterprise Linux (RHEL) 7.3.

The newest XPS 13, though, is the crème de la crème of Dell’s laptops. Designed for high-end users, the Ubuntu XPS 13 is built by software developers for software developers as part of Project Sputnik, with 13 configurations.

All the models include dual Thunderbolt ports, a USB 3.1 port, an SD card reader, a headset jack, and a 52-watt battery. The top-of-the-line developer edition comes with 16GB RAM, a 1TB SSD, and a UHD (3,840 x 2,160) 13.1″ display. To run your programs it uses an 8th Generation Intel Core i7-8550U Processor. The pricing for this model hasn’t been released yet. It would appear that it will be approximately $2,000.

If that’s too rich for your blood, you can also get the low-end Dell XPS Developer Edition, which is $1,050. This model comes with an Intel Core i5-8250U processor, 8GB of RAM, 128GB SSD, and a full HD display.

I’ve used earlier models of the Dell XPS 13 with Ubuntu. While I loved my high-end ones, you can still get a lot of work done with even the low-end systems.

You see, Dell has been working with Canonical to make great Ubuntu laptops since November 2012. Barton George, Project Sputnik and Linux lead at Dell, said, “When Project Sputnik debuted over five years ago we launched with one config of our XPS 13 developer edition on Ubuntu 12.04. Fast forward to today and thanks to the interest and support of the community, we are able to announce that our seventh generation XPS 13 developer edition now comes with Ubuntu 18.04 LTS. 18.04 represents Project Sputnik’s fourth preloaded LTS. We’re already looking forward to Sputnik’s fifth LTS in 2020.”

Will Cooke, Canonical’s Desktop engineering director, added, “Dell’s superior hardware combined with Ubuntu 18.04 LTS provides an excellent, reliable experience straight out of the box. Building on our longstanding relationship with Dell over the last six years, we look forward to seeing 18.04 LTS roll out on further [Dell] models in the coming months.”

The new Dell XPS 13 Developer Edition 9370 is available today in the United States. Dell’s site, however, is still having trouble displaying the new editions. If you can’t get through on the website, you may need to call Dell at 888-346-2289. The laptops will be available in Canada and Europe in September.

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Table-Pounding Buy For This 15.4% Yielder, Midstream Exposure With No K1s, Strong Sector Recovery Underway

This report has been produced with High Dividend Opportunities author Julian Lin.

Master Limited Partnerships (‘MLPs’) are an asset class which we frequently write about and for good reason: their enticing combination of predictably high distributions and steady cash flows make them important income generators for any dividend portfolio. We believe that valuations for MLPs are very attractive and this coupled with a strong outlook may lead to strong returns moving forward. We are recommending shares of ETRACS 2xMonthly Leveraged Alerian MLP Infrastructure Index ETN Series B (MLPQ) which is an exchange traded note (‘ETN’) tracking the return of 2 times the Alerian MLP Infrastructure Index (AMLP) – or tracking AMLP at 200%. We believe that shares have the potential to provide strong capital appreciation in addition to a high level of income.


Introduction To MLPs

MLPs historically have fulfilled an important niche in investment portfolios. Because their businesses act essentially like a “toll road,” charging customers such as oil producers a fee for using their pipeline infrastructure for transportation of their refined products, MLPs had their earnings see less correlation risk with the price of oil than typical oil stocks. The idea is that the demand for oil will still be there regardless of the price – and thus will see much less volatility than the price of oil. At the same time, because they typically pay a high proportion of cash flow as distributions to common shareholders, they have earned the love of investors seeking dividend, especially those looking for a steady and growing dividend income stream.

Ridiculously Low Valuations – Same as when the Oil Price was at $30/Barrel

That said, MLPs prices can have some correlation to the price of oil: For example when oil prices rise producers increase production to maximize profits, and when oil prices drop producers are less motivated to produce oil.

Today the oil price has reached over $73/barrel, and the vast majority of the new oil production is coming from the United States.

(CNBC WTI Crude)

It is very surprising to see that while both oil price and oil production have risen dramatically the past year, Midstream MLPs have not only failed to follow through, but have also seen their multiples compress.

(Yahoo Finance)

Very Attractive Sector Valuations

This has led to MLPs becoming attractive based on several historical valuation comparisons.

At 7.9%, the average MLP distribution yield is much higher than the average since 2010:

(Pieces in Place for MLP Rebound in 2018)

AMLP currently trades at a spread of 5.0% versus 10 year U.S. Treasuries.

(Alerian MLP Index)

This is much higher than the historical spread of 4.34%:

(Alerian MLP Index)

We can see that MLPs at 10.2 times EBITDA are also greatly undervalued based on historical EV/EBITDA multiples:

(Pieces in Place for MLP Rebound in 2018)

The tale of the tape says it all – MLPs now see their shares priced near the lows when the price of oil dropped below $30 per barrel in early 2016:

But Outlook Is Strong

As we saw above, valuations for MLPs reflect extreme pessimism. That said, the fundamentals suggest exactly the opposite.

While there have been some distribution cuts in recent quarters, for the most part distributions for the sector have continued to trend higher:

(Alerian MLP Index)

Production for crude oil and natural gas (the two biggest industries for MLPs) are projected to continue to soar higher due to increased demand:

(Goldman Sachs Opportunities Income Fund)

Increased production must lead to increased utilization of pipelines as these products must be transported to their final destinations. This in turn is expected to lead to strong EBITDA growth – 12% compound annual growth rate :

(Goldman Sachs Opportunities Income Fund)

The is a very high growth rate compared to any other sector!

The high expectations stem from anticipation that oil prices can not only sustain current prices but may even have the ability to roar higher. For one, Washington has recently proposed sanctions on Iran which are slated to begin in November. Iran is one of the largest exporters of oil in the world with about 2.2 million barrels per day in the past month, so such sanctions would do more than just move the needle.

This leaves the shortfall in oil production to both OPEC and the United States to make up for the drop in production, but here we are very optimistic given that OPEC only agreed to modest production increases recently. So most of the production increases will continue to be sourced in the United States. Oil production continues to grow at a phenomenal rate especially at Eagle Ford, the Permian, and Bakken:

The problem here is that there is so much production that the demand for additional MLP infrastructure has skyrocketed, especially in the Permian basin.

In fact, in the Permian alone, we are seeing record production in its entire 100 years of production:

This is more than what the current infrastructure can handle. This has also affected the natural gas market, as there aren’t enough pipelines to transport natural gas away from the Permian, prices there have dropped significantly. While there are indeed projects to help transport roughly 8 Bcf/d of natural gas from the area, more demand for pipelines is likely to be seen as Permian natural gas production is projected to reach up to 20 Bcf/d in a few years.

While this “bottleneck” may prove stressful for producers, this has created the perfect environment for MLPs. All this increased demand means that midstream pipelines will be running near capacity, and this of course opens the door for very profitable growth projects moving forward.

Case in point: when Enterprise Product Partners’ (EPD) pipeline from Midland to Sealy came online they were able to charge 25% premiums to market tariffs:


According to Oppenheimer Funds, there were a number of additional growth projects announced in May by MLPs:

Reasons For The Valuation Disconnect

The most important development in recent months may have been the policy change back in March 2018 that the Federal Energy Regulatory Commission (‘FERC’) would no longer allow interstate pipelines organized as MLPs to recover income tax allowances in cost of service rates. The issue raised by the FERC was whether income taxes paid somewhere in the system can be taken into account in calculating rate of return for rate regulated pipelines. For MLPs the taxes are paid by unit holders and so the argument of the FERC was at the time that the MLP itself shouldn’t be able to deduct the cost of the taxes.

This announcement alone sent the MLP sector falling as much as 10% that very same day before closing down almost 5%. After MLPs began to give statements as to the impact to projected 2018 EBITDA, it was clear that the fears were overblown. In fact, according to the latest monthly report of the Goldman Sachs Opportunities Income Fund (GMZ), the impact of the FERC decision will only reduce EBITDA by 2.4% for the sector in 2018 (using a weighted average method).

There may also be fears that due to the depressed equity valuations, many MLPs may see a higher cost of capital. To this effort, many MLPs have made commitments towards an end goal of being able to self-fund growth projects without equity issuance. This is reflected in a lower amount of projected capital expenditure expense in relation to EBITDA moving forward:

(Pieces in Place for MLP Rebound in 2018)

Therefore going forward, debt levels will be significantly reduced for the sector.

Furthermore, instead of secondary offerings many MLPs have also been utilizing preferred shares as an alternative source of capital which still provide competitive costs of capital:

(Pieces in Place for MLP Rebound in 2018)

Investors with a long term horizon know to never sell equities in panic of what “may happen” and should instead make decisions based on what “will happen.” We view all of the above as short-term headwinds because management teams at MLPs in general have shown the ability to adapt to this changing environment resulting in a degree of resiliency for their companies.

MLPs continue to see strong demand for their pipelines and this combined with historically attractive valuations lead us to pound the table and call a bottom on MLPs.

Great News for the Midstream Sector!

As a result, the midstream sector took a big hit in March 2018 due to the uncertainty and potential loss of revenues resulting from this ruling. It also contributed to a continued weakness in the sector, despite oil price rallying significantly since March 2018 from $59/barrel to over $70/barrel.

Update on the Ruling

The FERC issued its final ruling last week saying that it will simply reduce the rate used in calculating taxes from 35% to 22% rather than disallow any deduction altogether. This is a big change and a big positive for MLPs.

The new rule limits the effect of the limitation on deductions and will boost income for some midstream MLPs. What is also important to note is that the provision that pipelines operating under negotiated rates (almost all of them do – very few rate filings actually lead to hearings and rulings) do not have to change anything at this time. It is also important that pipelines earning 12% return on equity or less do not have to take action and will not have a new rate case filed by FERC.

As a result, for all pipelines the net effect of the change in the FERC ruling will be much less than previously expected, and for most pipelines, there will be no short-term effect whatsoever. So we expect that the weakness seen since March 2018 to start reversing. This is very bullish for the Midstream Sector!

How We Prefer To Invest In The MLP Recovery

When we have such high conviction on a sector, we find it appropriate to “up the ante” by investing with a bit of leverage. MLPQ is an ETN which allows us to do just that, as it seeks to track the performance of 2 times that of AMLP. This means that it is also passively managed.

Below we can see the full portfolio holdings of MLPQ:

The Top Five

  1. Energy Transfer Partners (ETP) is a name which we have been bullish on for a very long time since June of last year. We wrote about this name just last month and believe that it is just dirt cheap in spite of the fact that many of its growth projects are just now coming online.
  2. Enterprise Product Partners (EPD) is a blue chip MLP which we have also been and continue to recommend. EPD focuses on natural gas and is well capitalized with one of the best balance sheets in the industry with a BBB+ investment grade rating.
  3. Magellan Midstream Partners (MMP) is the other main blue chip MLP in the space which mainly transports refined products and crude oil. MMP also has a very strong balance sheet with a BBB+ investment grade rating.
  4. Williams Partners (WPZ) currently is being pursued by its general partner Williams Companies (WMB). It is worth to note that WPZ’s profitability was projected to be negatively impacted by the FERC initial ruling in March 2018 to the tune of around $150 million per year in “distributable cash flow”. WPZ is set to see a strong recovery after the FERC’s final ruling last week.
  5. Plains All American (PAA) is a former industry darling which after seeing its stock plummet due to excessive leverage, has committed to a disciplined deleveraging program. Furthermore, PAA has a very strong position in the aforementioned Permian Basin.

The 15.4% Yield

MLPQ’s pays distributions on a quarterly basis, but investors should note that they can be lumpy and vary from quarter to quarter. This is because the ETN pays its distributions “as they are received” from the underlying index. UBS lists the distribution yield on their website based on the last quarter paid and annualizing it. However, to have a more accurate figure on the yield, let us look at the distributions paid during 2018.

Source: UBS Website

Therefore using a distribution of $3.7930 for the past 9 months results in a yield of 15.4% annualized.

More About MLPQ

  1. MLPQ has a 0.8% expense ratio, and according to its prospectus supplement, its financing rate is 0.8% plus 3-month LIBOR, which currently is about 2.33%. The low financing costs are a big advantage as this is much lower than what the typical retail investor would be able to attain through most brokers.
  2. Investors should be aware of the nature of exchange traded notes (ETNs). ETNs are simply notes issued by banks. In the case of MLPQ, investors are taking the credit risk of UBS Bank which is one of the most solid global banks with a very high credit rating.
  3. MLPQ is twice leveraged and invests in a sector which has historically been volatile. Therefore, MLPQ is not for everyone. Low-risk investors are better off getting exposure to the non-leveraged ETF AMLP which gives the same exposure.
  4. Although MLPQ seems to be risky because it is twice leveraged, the risks are mitigated by the fact that the ETN is highly diversified into 29 different companies. The risks are further reduced because the sector is trading at attractive valuations.
  5. MLPQ seems to have a low daily volume, but like the vast majority of UBS products, there are always market makers with a bid and ask price which reflect the product’s book value. MLPQ almost always trades at book value which is the value of its underlying securities.
  6. Most of the leveraged products (ETNs and ETFs) that are available in the markets are reset on a daily basis and are meant for daily or short-term trading. These ETNs can carry an extensive level of risk if held over an extended period of time because the gains and losses are magnified due to the daily reset mechanism and leverage slippage. Unlike these leveraged products, MLPQ is reset on a monthly basis, and therefore there is little or no “magnification effect” (including leverage slippage) over the longer term. MLPQ was designed by UBS to be held as a long-term investment rather than a short-term trading vehicle.

Advantages of investing in MLPQ

  • Unlike its MLP constituents, MLPQ does not distribute any K-1 forms, which is a clear advantage come tax season. US investors get the distribution payments taxed as ordinary income and totally avoiding K-1 taxes.
  • A good point to note is that MLPQ does not pay any “Return of Capital” (‘ROC’). It only pays investors what it receives from its underlying index components, and therefore there are never any destructive returns.
  • MLPQ also gives the investor a diversified exposure to the entire sector. There is a tendency for asset managers to experience ups and downs in performance and this may lead large investors to shift funds to “hot” asset managers. By investing in the entire sector, the danger of “betting on the wrong horse” is eliminated. The 2X leverage amplifies the upside (but can also amplify the downside).

30% Upside Potential – Not Counting Growth

As noted above, the sector is currently trading at very attractive valuations, with a spread of 5.0% versus 10 year U.S. Treasuries, versus a historical spread of 4.34%. This is despite a strong growth and a very solid outlook. We believe it will not be long before the sector starts trading at around its historical valuations which would give MLPQ an upside potential of 30% without factoring in any growth, which is estimated at 12% compound annual growth rate. This is also without taking into account the generous 15.4% yield.

Bottom Line

The bull case for MLPs is as strong as it has been in several years as valuations remain near cycle lows. After 4 years of deleveraging, de-risking of operations and moving toward self-funding of capital expenditures, the sector is in its best financial shape since the boom times. It is also a great place to be invested with growth picking up in the US shale business. This is a table pounding recommendation to load up. MLPQ is an attractive way to gain exposure to the sector, for which investors are paid 15.4% to wait for prices to reflect the true underlying value of their earnings. Both final ruling from the FERC and strong earnings results that we are set to see in Q2 2018 should provide the tailwind for a strong sector recovery. At High Dividend Opportunities, we extensively cover the midstream sector, and continuously provide our investors with a list of the best buys in this space.

If you enjoyed this article and wish to receive updates on our latest research, click “Follow” next to my name at the top of this article.

Note: All images/tables above were extracted from the Company’s website, unless otherwise stated.

Disclosure: I am/we are long MLPQ, EPD, ETP.

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

AT&T: Dropping To New Lows

Article Thesis

AT&T’s (T) second quarter results showed that the company has serious operational problems. Due to weak sentiment, shares dropped to a new multi-year-low following the earnings release.

AT&T has to focus on stabilizing its legacy businesses, while integrating Time Warner and while also investing for the future. That will not be an easy task, but if AT&T succeeds, its total returns over the coming years could be quite strong.

AT&T’s Legacy Businesses Perform Weaker Than Expected, But The Outlook For Warner Media Is Strong

AT&T announced its second quarter results on July 24. The company reported revenues of $39 billion, a decline of two percent versus Q2 2017. Revenues had been declining for a couple of quarters, but since the acquisition of Time Warner closed during Q2 (which boosted results during the quarter) the market was expecting a better performance.

The takeover of Time Warner, which closed on June 14, has positively impacted AT&T’s revenues by roughly $1.1 billion during the second quarter. Without the takeover, AT&T’s revenues therefore would have declined to about $37.8 billion, which would have represented a revenue decrease of about 5%. This would have been the worst revenue performance in a long time, as revenue declines were limited to low-single digits in the past:


T Revenue (Quarterly YoY Growth) data by YCharts

This relatively weak performance of AT&T’s legacy businesses is not surprising when we take a closer look at the factors that play a role:

Source: Earnings presentation

AT&T’s Mobility business has shown the best performance, despite a very small revenue decline, the segment produced higher profits. This was based on an increase in the segment’s EBITDA margin. AT&T Mobility profits from strong customer count growth, AT&T was able to add 450,000 new prepaid phones during Q2 alone.

Unfortunately, revenues per customer have shrunken slightly, which can be blamed on pricing pressure due to telecoms fighting over market share. It looks like this infighting in the telecom industry could be stopped at least momentarily, though: Cellphone bills in the US started to grow again this summer, for the first time in two years.

If this remains the case AT&T and other telecoms will see their revenues per user increase over time, which would be a major positive for AT&T. With increasing revenues per user, customer count growth thanks to net adds, and tight cost controls AT&T’s mobility segment would be able to generate solid earnings growth.

The outlook for AT&T’s Entertainment group is less promising. The segment saw its sales decline by $1 billion over the last year, margin declines pressured profits further. This comes despite a strong pace of net additions for AT&T’s DTV NOW (340,000 during Q2). At the same time, as DTV NOW continues to grow, AT&T loses customers in its traditional TV business. Revenues per user for traditional TV services are substantially higher than the revenues AT&T can generate via DTV NOW. This is the reason why revenues continue to drop at a substantial pace (8% during Q2) despite the fact that the total customer count is rising.

Going forward things will, in all likelihood, not get better. The declining customer count for AT&T’s traditional TV services is the main problem for the segment, and this trend will, most likely, persist.


cg42, a consulting firm, forecasts that 5.4 million Americans will cut the cord during 2018. Especially Millennials and Gen X consumers are increasingly avoiding traditional paid-TV. As younger generations are avoiding paid-TV, the business environment will not get better for paid-TV offerors such as AT&T.

Main points of criticism of those that cut the cord are high prices and having to pay for channels that are not desired. At least the second point of criticism could be avoided if a-la-carte offerings came into play. If consumers don’t have to pay for a bundle, which includes many channels that consumers are not interested in, but if they can instead choose which channels they want and are willing to pay for, cord-cutting could most likely be slowed down. Even in such a scenario, it seems unlikely that traditional TV will ever become a growth industry again, though.

AT&T’s best-performing segment is Warner Media, former Time Warner. Especially HBO continues to perform very well, both in terms of revenue generation as well as in terms of producing high-quality content. Warner Media received 166 Emmy nominations during 2018, 6 more than during 2017, with two thirds of those Emmy nominations being achieved through HBO. HBO’s revenues during the second quarter totaled $1.53 billion, a 13% increase over the prior year’s second quarter.

HBO’s most famous and most successful series is Game of Thrones. There hasn’t been a new season of GoT this year. The next season of the show will come out during 2019. The fact that HBO was able to grow its subscription revenues by double digits even without a new release of GoT during 2018 is a major positive. It is likely that HBO’s growth will accelerate during the next year when GoT returns with its final season during H1 2019.

AT&T Will Have To Invest To Keep Its Legacy Businesses From Shrinking Further

The outlook for Warner Media is strong, but AT&T will have to invest into its other businesses to stabilize them, as Warner Media will not be enough to generate attractive growth rates for AT&T.

A key point for investment is 5G. AT&T’s 5G Evolution technology, which is an intermediate step between 4G and 5G, with speeds of up to 400 Mbps, is already available in 140 markets. AT&T plans to launch true mobile 5G in a dozen markets towards the end of 2018. If this plan succeeds, and if AT&T keeps investing heavily to build out its 5G network over the coming years, this could provide a much-needed competitive edge.

Smaller telecom players will not have the means to build out a functioning 5G network at scale in the foreseeable future. AT&T and Verizon (VZ) will therefore be able to create a technological edge, which should result in rising market shares for these two players. The competitive advantage of providing faster connections would also justify higher prices, which would drive revenues per user.

In order to be able to focus on the most important tasks, and to free up cash to pay down debt, AT&T should try to sell non-core businesses that are not beneficial for the company. The company’s Latin America business, for example, is not doing much for AT&T’s top or bottom line:

Source: AT&T Earnings

The bottom line contribution is miniscule, and revenues as well as earnings have declined over the last year. AT&T could probably fetch a couple of billions by selling this unit. AT&T would be better off if it sells the Latin American business and uses the cash proceeds to pay down some of its debt. If AT&T does not want to get rid of all of its Latin American businesses, it should at least sell its paid-TV businesses, as the subscriber count stagnates. The Mexican wireless business is not overly profitable either, but generates strong subscriber growth, and could therefore become more profitable in the future.

AT&T’s Guidance Increase Is Nothing To Cheer On, Earnings Growth Is Primarily Based On Lower Taxes

Usually the market reacts positively to guidance increases, but in AT&T’s case, the market sent shares lower despite management’s positive comments: The company now sees profits per share of at least $3.50, which represents an increase of 15% year over year. In the most recent 10-K filing, we see that AT&T paid tax rates of 33%-34% in the past, the tax rate has dropped to 22% during H1 of 2018.

All else equal, the tax rate decline from 33% to 22% would have driven net income up by 16% [0.78 divided by 0.67]. The fact that AT&T is only forecasting a 15% increase in its earnings per share despite the tax rate tailwind is thus not a reason to cheer.


At just above $30, AT&T’s shares are trading at a multi-year low right now, the last time shares were valued at $30 was in 2012. Relative to the forecasted profits, AT&T looks quite inexpensive here, as shares are valued at less than 9 times this year’s earnings.

Shares offer a very compelling dividend yield of 6.6% right here, and due to strong free cash flows, the dividend looks very safe. Due to the dividend yield being so high not much else is needed for 10%+ total returns. If share prices would rise by just above 3% annually investors would see double-digit total returns.

If AT&T can successfully integrate Warner Media, and if its 5G investments start to pay off and its legacy wireless business is stabilized, earnings growth and multiple expansion are not unlikely at all.

Analysts are forecasting a 5% earnings per share growth rate over the coming five years, which seems achievable if AT&T executes well. In this case, no multiple expansion would be required for the company to deliver 11%-12% annual returns, a rising valuation would boost returns further.

Bottom Line

The market reacted negatively to the weak performance of AT&T’s legacy businesses. The outlook for the Entertainment group remains weak due to cord-cutting pressures, but thanks to 5G and ending price wars the wireless business could perform in a solid way going forward.

Despite the fact that earnings growth during 2018 will only be generated via tax rate cuts and the takeover of Time Warner, the outlook over the next couple of years is not bad.

Investors get a high and safe dividend, and share price gains over the next couple of years are relatively likely as well. Shares could remain under pressure in the short term, though.

Author’s note: If you enjoyed this article and would like to read more from me, you can hit the “Follow” button to get informed about new articles. I am always glad to see new followers!

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in T over the next 72 hours.

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

Green Energy With 9.4% Yield, Pullback Creates Unique Buying Opportunity

This report has been produced together with High Dividend Opportunities authors Philip Mause and Julian Lin.

Pattern Energy Group (PEGI) is an owner/operator of wind and solar power generation facilities. It traded recently at $17.80 and pays a dividend of 42.2 cents per quarter for an annual yield of 9.4%. PEGI is not an MLP and issues 1099 tax forms, so that investors do not have to cope with K-1 hassles.

Because of the nature of its generating units, changes in the world oil price have no effect on its financial performance. This suggests that this is a good stock for income investors seeking to diversify and reduce correlations to oil prices. PEGI’s share price has pulled back recently for reasons we will explain below, and now trading at a very attractive price. PEGI is also in the middle of an active growth program. Shares are a great buy for a high dividend yield and further potential for dividend growth.

The Green Opportunity

The mounting evidence concerning the impact of carbon emissions on the environment has steadily forced governments all around the world to make a shift towards renewable energy sources a priority.

Global renewable power capacity has compounded at around 8.3% annually since 2011:

(International Renewable Energy Agency)

This doesn’t look like a trend that will end anytime soon, especially considering that the US Department of Energyʼs National Renewable Energy Lab has estimated that by 2050, 80% of all power in the U.S. can come from renewable sources.

Still investing in green energy has been a tricky task. Those investing in solar companies discovered quickly the lack of pricing power and some dependence on government tax credits. Furthermore, many of these green energy companies tend to trade at sky-high valuations and limited earnings. One needs to look no further than at the chart of First Solar (FSLR) to understand how hard investing in this trend has been:

(Yahoo Finance)

The good news is that there is an investable sector which finds itself squarely benefiting from the green energy trend. YieldCos are companies which invest in power generators of renewable energy. As a sort of green energy utility company, they tend to boast extremely consistent revenue streams and in combination with the consistent growth from new projects, are able to pay out a large and growing dividend yield. This sector is very interesting because in many cases companies trade at reasonable valuations despite being in a fast growth macro environment benefiting from the green energy trend.

About PEGI

PEGI’s primary business is the operation of wind and solar electricity generating facilities in the United States and, increasingly, globally. PEGI typically acquires a completed project with a power sales agreement and then operates the project and services project debt.


Many of the projects are partnerships or joint ventures in which PEGI does not have 100% ownership. The power sales agreements are typically long-term contracts with strong counterparties such as electric utilities. These contracts have a long 14-year average remaining term and an A average credit rating:

PEGI has diversified its capacity well among projects:

PEGI is also well-diversified among offtakers (the buyers of the energy production):

The major variable is the amount of electricity generated which varies depending on wind performance. PEGI has mitigated this risk through diversification via geography:

PEGI now has facilities with nameplate capacity of some 4 gigawatts and is targeting much higher levels of capacity and output. Each project is, to a degree, a separate entity with its own debt and ownership structure. The debt is generally non-recourse which limits the danger of one disastrous project impacting the entire company.

PEGI has also recently entered the development side of the business. PEGI now owns some 29% of Pattern Development 2.0 – an entity which organizes, funds and completes new projects for sale to entities like PEGI. Depending on the success of the development process, the profits can be considerable. PEGI has a right of first refusal on Pattern Development 2.0 projects and – because of the relationship – a fairness opinion is obtained at the time of sale.

The Japan Expansion And Long-Term Plan

PEGI made a major step into the international market in Q1 2018 by acquiring a group of Japanese projects. Because the acquisition was made in March, the projects did not significantly contribute to Q1 financial results. Three of the projects are already on line and producing revenue and the other two are in late development. The entry into the Japanese market is a very promising development for several reasons.

First of all, Japan has a strong commitment to renewable energy due in part by its lack of fossil fuels and its caution with respect to nuclear reactors after recent troubles in connection with a tsunami. As per Japan’s Ministry of Economy, Trade and Industry, it has set forth an energy plan for 2030 in which it will generate about 22-24% of energy from renewable sources (excluding hydro-power):

It is likely that there will be a steady stream of projects coming on line in Japan and PEGI will be well-positioned to participate in this growth.

Secondly, the economics of operations in Japan are very attractive. The Japanese electric rates paid to power generators are roughly three times the equivalent rates paid in the United States. The current power purchase agreements (‘PPAs’) are $220-360/MWh with 20-year terms. For roughly the same equipment and maintenance costs, an operator can generate 300% of the equivalent U.S. revenue.

Finally, interest rates are extremely low in Japan and these projects are significantly leveraged. To give an idea, on one of the Japanese projects PEGI has obtained an interest rate of 0.72% and on another of these projects, this came with a loan which matures in 2033 and has an interest rate of 1.07%.

The entry in Japan promises to offer very attractive opportunities to generate cash flow at the operating level and substantial profits at the development level.

Japan is one of its key growth drivers via identifying “Right of First Offer” (‘ROFO’) opportunities. It has already identified via ROFO more than half of the needed capacity to reach its 2020 target of 5,000 MW. This also does not take into account its potential 10,000 MW from its development pipeline:

The path to growth is clear and the growth runway is long – continued ROFO acquisitions will help support future CAFD/share growth.

Recent Financials

PEGI’s first quarter results were solid. PEGI had “Cash Available for Distribution” (‘CAFD’) – a metric somewhat similar to the “Distributable Cash Flow” (‘DCF’) metric used by MLPs – of $43.1 million (or 43.8 cents a share) in Q1. Revenue was up 10% on a year-over-year basis and adjusted EBITDA was up 6% on a year-over-year basis to $104.2 million. Q1 GWH sold attributable to PEGI’s share of projects was up 4% year over year.

PEGI is guiding to CAFD of between $151 million and $181 million for full-year 2018, which would be a 14% increase year over year which is enormous. The mid-point of that range ($166 million) would imply a valuation of Price/CAFD ratio of 10 times.

The Dividends

PEGI has paid a dividend of 42.2 cents for the past three quarters. Prior to that, PEGI had increased its dividend 15 consecutive quarters.

The cessation of the dividend increases may have attributed to some weakness in PEGI’s share. That said, the attractive growth pipeline and ROFO opportunities suggest that more growth may be in store for this 9.4% yielder.

The Big Pullback last week has created a Buying Opportunity

The stock significantly pulled back last week (by 10.5%) based on some negative news coming from Canada.

Ontario Vowed to Nix Clean-Power Projects: The piece of news that significantly affected the price of PEGI last week was related to Ontario’s Premier Doug Ford vowing to cancel and wind down more than 750 contracts for renewable power projects, making good on a campaign pledge to revamp the province’s energy policies. Terminating the early-stage projects, which the government didn’t identify, would save electricity customers in the Canadian province C$790 million ($600 million). How would this affect PEGI?

  • PEGI has 4 operating projects in Ontario with total owned MW capacity of 382 (out of a PEGI total of 2942). Three of these projects have “power purchase agreements” (or ‘PPAs’) running through 2034; the fourth runs through 2035. PPAs are generally firm and binding – otherwise financing could not be obtained. These projects are not likely to be affected. At the end of the PPA in 2034, there will be a different government in Ontario and while it is possible that the purchases will not be continued or will be at a lower price, by that time PEGI will have recovered its costs and results that far off are speculative and do not materially affect valuation.
  • Pattern Development which is now partially owned by PEGI has 3 projects in Ontario (these projects are not owned by PEGI but they are described as projects PEGI is likely to acquire). Two are operating and one is under construction. None could be described as “early stage.” All three have PPAs but we do not have any details on the number of years that these PPAs run. It is likely that they are 20-year deals which commenced in 2017 or so, and thus will run to even later dates than the PEGI-owned projects described in the first bullet point above. It is unlikely that the Ontario government will want to pay the costs of terminating these PPAs.
  • While the Ontario developments are troubling and remove one attractive venue for future development, they also underline the importance of PEGI’s decision to enter the Japanese market.

Therefore, we do not view that the Ontario situation will have any significant impact on the profitability of PEGI and has created a buying opportunity. In fact, we believe that the pullback has also resulted in great buying opportunity which was also shared by Goldman Sachs (NYSE:GS) which issued a statement saying that “PEGI is unharmed by Ontario cancellations” and that PEGI’s risk-reward as one of the more attractive setups in its coverage.


  • Risks include lower wind flows, public policy changes to the disadvantage of renewable energy, and site-specific operational problems. In this regard, the public policy that is most critical to projects in the United States is not federal government policy but the policy of many states to require higher and higher percentages of electric generation by renewable each year. There is no sign that these policies are being abandoned.
  • Increasing size and geographical diversity will limit the risks of decreased wind flow and site-specific operational issues going forward. The attractive aspect of PEGI from the point of view of a yield-oriented energy investor is that it has no exposure to the impact of the world oil price.

Bottom Line

PEGI’s price decline in the past months is most likely due to the cessation of quarterly dividend increases. PEGI is in the middle of an aggressive growth program and, as we have pointed out in other articles, this can create short-term pressures on cash flow because the expenses of growth show up in financial statements well before the cash flow materializes.

As for the pullback in price by 10.5% last week, it has opened the door for a unique buying opportunity.

PEGI’s full-year CAFD projection is consistent with Q1 numbers and may even be somewhat conservative given the growth projects underway. Trading at a valuation of 10 times current CAFD, PEGI is very cheap given its growth prospects. The growth track record and credible plans for more growth, likely future increases in CAFD and dividends, and no exposure to the world oil prices make PEGI very attractive to yield-oriented investors with its 9.4% yield.

We recommend to use the recent price decline to buy more stock. There may soon be a reassuring press release and/or 8-K about the Ontario situation which would lead the stock to pop. Investors who get in today are also buying before the market “bakes in” the effect of the potentially high profit from the Japan investments which are likely to result in higher share prices.

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All images/tables above were extracted from the company’s website, unless otherwise stated.

Disclosure: I am/we are long PEGI.

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.