UberEATS Driver Fatally Shoots Customer in Atlanta, Police Say

Atlanta police say a driver for UberEATS, the ride-hailing company’s food delivery service, shot and killed a customer in the city’s posh Buckhead neighborhood late Saturday night.

The victim was identified by a local NBC affiliate as 30-year-old Ryan Thornton, a recent Morehouse College graduate. According to NBC’s report, Thornton and the UberEATS driver exchanged words after the delivery was made. The driver then allegedly shot Thornton several times and fled in a white Volkswagen vehicle.

Thornton was taken to a local hospital, where he later died from his wounds. The alleged shooter was still on the run from police early this morning.

An Uber spokesperson said the company was “shocked and saddened” by the event, and are cooperating with Atlanta police in the investigation.

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One Buckhead resident told the television station that he would be more cautious about using Uber services after the shooting. Uber drivers have been implicated in violence in the past, and the company’s approach to screening its drivers has been criticized for some of its legal and public relations problems.

The most damaging case was likely that of an Indian passenger who was raped by an Uber driver in 2014. In court documents, the passenger alleged that Uber executives wrongfully obtained her medical records with apparent plans to discredit her. The driver was sentenced to life in prison, and Uber settled the civil suit brought by the victim late last year.

Last November, two women filed a class-action lawsuit against the company in the U.S., alleging that its failure to screen drivers has led to thousands of incidents of sexual harassment and even rape of female passengers. In one example, an Uber driver was arrested for the rape of a passenger last December, also in Atlanta. Just days later, an Uber driver in Lebanon confessed to murdering a British Embassy staffer there.

Under former CEO Travis Kalanick, Uber fought hard against certain driver-screening rules. In one case, Uber shut down its operations in Austin, Texas in 2016 after spending millions of dollars to defeat a background-check rule there, and failing. It returned to the city after state legislators overturned the local ordinance. Safety concerns were also among the reasons London has barred Uber from operating there.

Beware of Pranksters Crashing Apple iPhones Using Twitter

If you’re an Apple iPhone user who also enjoys Twitter, listen up.

Pranksters on the social media service have been sharing a character from the Indian Telugu language that causes iPhones to crash, according to Mashable. The offending users have been putting the character into their Twitter usernames and tweets and encouraging people to share them with their friends. If the character lands in a user’s Twitter feed, it will cause the social app to crash. The app will continue to crash after users try to boot it back up, ultimately stopping victims from accessing the service on their iPhones.

Last week, reports surfaced saying that a single Telugu character was enough to wreak havoc on iPhones. When the character is sent via any messaging or social networking app, the affected user’s app will crash. While it’s an obscure bug that only affects Apple’s iOS 11, it’s one that pranksters and those trying to cause harm are exploiting across the Internet. Worst of all, there’s no fix at the moment and unsuspecting victims needn’t do anything to be affected.

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Apple acknowledged the Telugu bug last week and has promised a fix. The company hasn’t yet delivered, though, and it’s impossible to say when it’ll be released.

According to Mashable, which tested the bug on Twitter, the only way for affected users to regain access to the app is to log in via Safari and block the person that shared the character. At that point, the character won’t show up in their feeds and Twitter will be accessible.

Business Debt – Yes or No?

Oh boy.  Debt.  That nasty four-letter word nobody likes.  I’ll go out on a limb and say there are a couple of very good reasons to go into debt as an entrepreneur and, if you are ever going to grow and scale your company, then debt is often the easiest way to do it.

First things first, though – we have to get our vocabulary right.  When you’re dealing with “good” debt – the sort of stuff that can build your business and make you money, its often more comforting to call it “leverage” and smile as you say it.  What’s more important, that leverage can be critical to taking your small company and making it into a big company … the kind we like to call a Great, Growing Company.

Here’s four scenarios where having some leverage might be just the ticket to success…

·         Increasing and developing product lines.  Everyone loves how Daymond John started FUBU with $40, a sewing machine, and a desire to build something great, but $40 isn’t going to get you very far.  If you could bump that into $40,000, how many more products can you create?  How many more relationships can you foster?  How much more can you ship?  The leverage from loans and capital can give you the tools you need when the business plan is solid and you simply need to get bigger.  Don’t be afraid of leverage if it’s helping you move ideas into income-producing production.

·         Increased marketing.  Imagine you have a great product sitting on the shelves and you just need to get the word out about it.  Again, here’s an example of a perfect time to take on some debt to buy the advertising that will, inevitably pay for the debt.  The key is this – the money from the debt is being used to generate the income to repay the debt and generate more income.  As in our previous example, leverage is being used simply to “kick-start” the sales process.  This is a good place for that leverage.

·         Credit line management.  At a certain point, you’ll have grown your company large enough to develop lines of credit – essentially a revolving source of funding based on the total value set by the company and the institution.  The good news is that this is debt that is only as large as what you need.  A million-dollar line of credit might only need to provide $30,000, but you’ll have the option of another $970,000.  Pay off the $30K and you’re back to a million in potential leverage.

·         Hiring.  It’s no surprise that if you can’t pay folks, you won’t have folks (or at least not a team worth having), so taking on some debt to ensure you can train your team and pay them while you ramp up production and distribution may be a critical step in company growth.  

There’s something else, though, when it comes to leverage, and that’s the psychological aspect of debt.   Sun Tzu, in The Art of War, discussed the idea of how a general should proceed if he was caught on “deadly ground” – where the likelihood of defeat was high and the options for retreat were low – and his advice was simple – order the soldiers to smash their cooking pots and engage in the battle.  The idea?  Simple – they know they must win or they will die.  Taking on debt in your business to actively grow your business could be a catalytic event in your business’ growth.  You’ll find yourself working harder, looking for the advantages for growth and expansion that you might never have looked at if you were comfortable and simply resting on your … shall we say … assets.

Do You Freelance? This App May Be Able to Save You Thousands (Every Year) 

Being a full-time freelancer is difficult for many reasons – providing for your benefits being one of them. Many self-employed workers struggle with expenses that companies usually offer – sick days, vacation, retirement, health insurance, and so on. Additionally, you incur all of the work-related costs: computers, software, clothing, travel, and more. Given, there are deductions for some, but coping with finance-related stress causes corporate workers to lose 12.4 days of productivity due to presenteeism (present, but too stressed to work) and 3.5 days to absence each year.

One can only imagine how much freelancers need to fret over finances.

Show me the money

Companies such as Everlance hope to ease this burden by making it easier for freelancers to deduct travel expenses from taxes. The company’s app uses your phone’s GPS to determine when you’re driving and calculate car trip mileage. You can label which trips are business-related to generate tax-ready reports. Plenty of side gig apps such as Uber, Lyft, TaskRabbit, Wag, GrubHub, and Postmates all require a lot of driving.  

CEO Alex Marlantes got the idea after receiving a 1099 tax form for a summer-long Uber gig. Marlantes and co-founder Gabriel Garza were surprised that they couldn’t find any suitable solutions to help freelancers with money problems. 

“We were extremely confident that we were on to something here,” said Garza. “It was evident that there was a clear problem without any solutions available [for freelancers].” 

Freelancers can save $540 in taxes for every 1,000 miles they travel. According to the their site, the average user deducts $6,500 each year. That’s a ton of moula. 

Everlance already has over 300,00 million registered users and records over one million miles & expenses every day — it’s available for both iOS and Android (free version tracks up to 20 trips per month and premium has a $5 monthly cost). 

With one-third of Americans doing freelance work and 67% of millennials saying that money affects their productivity at work, this was certainly a problem just asking for a solution. I’ll be pretty curious to see how the roadmap continues to evolve especially with commanding a user base of that scale.

Kind of makes you look forward to driving, doesn’t it?*

*sorry for all you public transportation folks. Maybe the next app will be EverTransit…

December 2017 TIC Points To Renewed U.S. Dollar Weakness

The purpose of this article is to assess the impact of the latest TIC result on the US$ and how government and trade policies influence the dollar supply and its relative value to other currencies.

Most people would ask: What is TIC?

TIC is Treasury International Capital. According to Investopedia:

TIC is a select group of capital monitored with regard to its international movement. Treasury International Capital is a useful economic indicator that tracks the flow of Treasury and agency securities as well as corporate bonds and equities into and out of the United States. TIC data is important to investors, especially with the increasing amount of foreign participation in the U.S. financial markets.

So what does it mean when TIC moves up or down?

As demand for U.S. financial instruments increases, the value of the dollar is held up.

The chart below shows the monthly movement of TIC with the addition of the latest figures:

Overseas investors sold USD 119.3 billion of US assets, including short-dated instruments in December of 2017. This creates short-term downward pressure on the dollar.

So why is this important now?

I find that large changes ($100B+) in TIC give a one month’s advanced warning of a movement in the dollar. The latest move signals weakness in what is now an established bear market for the dollar.

The dollar has risen through September 2017, and the corresponding TIC results have been positive in the same period. When one compares the TIC movement bars on the bar chart above in the previous section, with the USD line chart, one can see how the dollar rises and falls with positive and negative TIC movements. Blue bars up = dollar up; yellow bars down = dollar down.

While monthly TIC movements cause minor upward and downward movements that might be traded, the macro direction is now down due to the “twin deficits” phenomena I identified in this recent article on the dollar.

Long-Term Picture

The very long-term TIC picture is not as decisive as it once was as the chart below shows:

Since the 2007-09 GFC, capital flows are not as one-sided as they once were.

America is a net exporter of dollars as the chart below shows:

America imports goods and services and exports dollars. The exported dollars add to the stocks of foreign reserves held by other countries. This stock of overseas dollars allows the dollar to be used as the world reserve currency.

One can see from the chart below that while America’s foreign currency reserves have been flat, China’s have been rising. China is our biggest trading partner by far. China’s stock of foreign currency reserves is fully on order of magnitude larger than America’s. $3.15T v $120B.

What would one rather have?

  1. Imports of real goods and services for dollar credits, meaning lower inflation, lower taxes, and lower unemployment; or
  2. exports of real goods and services, meaning higher inflation, higher taxes, and higher unemployment.

The former is the wiser choice and the one we have. The dollar cannot be the world reserve currency if there is not a large stock of dollars overseas for others to use. As the issuer of the world reserve currency, America enjoys qualitative benefits in foreign policy that other countries do not have.

The chart below shows the longer-term dollar trend:

The graph shows that from 1970 to the present the macro trend is downwards as ever more dollars are created and added to the stock of dollar holdings.

Money is destroyed in the following ways:

1. When commercial bank loans are repaid, the loan balance falls to zero and those credit money dollars cease to exist.

2. When the government runs a surplus budget and taxes dollars out of the economy, they cease to exist and appear in no measure of any money stock such as M1, M2 or M3. This then leads to the logical conclusion that taxes do not pay for anything.

The charts below show long-term dollar creation in action:

The chart above shows credit money creation by commercial banks. Over $20T added to the stock of dollars since 1950.

The chart above shows the government budget. The chart shows a net creation of dollars from deficit budgets and Fed monetary rate targeting operations. When the government runs a deficit budget, it is required by law to match the spending by accepting Treasury deposits, and the chart below shows how this stock of national savings has built up. This process is discussed in this article.

The chart above shows that the government deficit has been matched by over $20T of Treasury deposits and Fed monetary operations.

The chart below shows the current account over the same time period.

The chart above shows that there has been a net outflow of dollars into the external sector. These dollars are held as a stock in other countries and would flow back to America if we were to export more goods and services than we imported.

The table below from the IMF shows the stock of dollars held overseas.

The table shows that over $5T is parked overseas.

When one looks at the dollar supply, it is clear that it is large and growing.

1. $20T from private credit creation held as private debt.

2. $20T held as Treasury deposits that matched government deficit spending and Fed monetary operations.

3. $5T exported overseas on the current account.

All three sources still growing, especially given the recent expansionary government budgets discussed in this article.

Since 1970, the dollar appears to move between a value of 80 to 160 on its multi-decade journey downwards. At present, we are moving into the phase of the “twin deficits” which sees the supply of dollars accelerate overall and its relative value fall. When the twin deficits reverse through government surplus budgets, credit contraction or a current account surplus, or a combination of all three, the dollar will peak again as it did in the mid-1980s and the turn of the century dot-com boom-bust. This is discussed in this article.

What other countries are doing also affects the dollar

The largest component of the dollar-weighted index is the euro. The supply of the euro is decelerating at present due to government austerity policies and net exports removing euros from international currency holdings in return for European goods and services. This is discussed in this article.

These foreign government and trade policies accelerate the downward dollar trend in a relative sense.

Recommendation Summary and Conclusion

The very long-term prospect for the dollar is downwards as more dollars are added to the supply. This has been going on since at least 1970 and reinforces the role of the dollar as the world reserve currency.

In the medium term, the dollar will continue to fall in line with the “twin deficits” whereby dollar creation is accelerated while this phenomenon takes place.

For the moment, rallies in the dollar should be sold, so when TIC spikes and the dollar rallies a little, like last month, the rally can be sold given the net outflow overall.

In the longer medium term, once government and trade policies have reversed, falls in the dollar can be bought in the knowledge that the dollar is appreciating overall given the supply of dollars is decreasing or at least decelerating. The actions of other governments, such as in the EU, can accelerate this process, as they are doing now, with policies that work in the other direction. I would estimate the dollar will fall for the next few years and reverse direction at the end of the decade in line with government spending and trade balances.

Investors wishing to trade movements in the dollar can do using the following ETF stocks.

UUP PowerShares DB US Dollar Bullish Fund
USDU WisdomTree Bloomberg U.S. Dollar Bullish
UDN PowerShares DB US Dollar Bearish Fund

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a short position in UUP 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.

Public Service Enterprise Group: Once The Plant Closures Are Done, An Attractive Utility

Out of 29 diversified utilities, Public Service Enterprise Group (NYSE:PEG) is the 3rd largest. It has a very high PE – 47.47 (which I’ll explain below). This makes it the 6th most expensive in the diversified utility sector. The forward PE of 15.69 is far more reasonable (this makes it the 8th cheapest). The company has the 10th highest dividend in the sector.

Like most other utilities, the stock has had a difficult quarter and month; it’s down 6.01% and 3.30%, respectively. This is part and parcel of the rest of this industry.

PEG is divided into two segments.

1.) PSE&G is responsible for power transmission and distribution. It has 2.2 million customers across NJ.

2.) Power holds the generating facilities (obviously), most of which are located in NJ:

The company uses nuclear, coal and natural gas for power generation.

The company has a weighted average cost of capital of 2.56%; FERC has allowed the company to use an ROE return assumption of between 10.3% and 11.1%.

Let’s turn to the financials, starting with the relevant information from the income statement (data from Morningstar; author’s calculations):

This is a decidedly mixed statement. On the plus side, we have a very positive interest and debt picture. EBITDA/gross margin has returned to 2012 levels and interest/EBITDA has declined. But the company has taken two hits to revenue. There were losses related to Superstorm Sandy and an overall decline in demand. Some of the loss, however, is related to a one-time event: closing two plants with 1,838 MW of generating capacity. These were coal plants which are now uncompetitive compared to natural gas generation (Pennsylvania which is right next door produces a large amount). The company wrote this in its latest 10-Q regarding the accounting impact:

As of June 1, 2017, Power recognized total D&A of $964 million for the Hudson and Mercer units to reflect the end of their economic useful lives in 2017. In the three and nine months ended September 30, 2017, Power recognized pre-tax charges in Energy Costs of $1 million and $10 million, respectively, primarily for coal inventory lower of cost or market adjustments. For the three and nine months ended September 30, 2017, Power also recognized pre-tax charges in O&M of $8 million and $12 million, respectively, of shut down costs and an increase in the Asset Retirement Obligation due to settlements and changes in cash flow estimates, partially offset by changes in employee-related severance costs.

The low FPE shows that the write-down is almost over. The company has several other plants that use natural gas instead of coal under various stages of construction which will help to control costs going forward.

Finally, we have the relevant numbers from the cash flow statement:

Dividend investors will like that, even when the company took a major loss, it still paid its dividend from existing earnings. And while it’s issued debt, it has done so conservatively (refer back to the balance sheet discussion with the low debt/asset ratio).

Finally, the stock has recently rebounded from its 200-day moving average and is moving higher.

The accounting issues related to plant closures should be over soon. Once done, PEG’s earnings will return to more normal levels. Despite the high current PE, the forward valuation is attractive as is the dividend. This is a stock to consider.

This post is not an offer to buy or sell this security. It is also not specific investment advice for a recommendation for any specific person. Please see our disclaimer for additional information.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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

Swiss watchdog to treat some coin offerings as securities

ZURICH (Reuters) – Switzerland’s financial watchdog will regulate some digital currency fundraisers, known as initial coin offerings (ICOs), either under anti-money laundering laws or as securities, it said on Friday.

The guidelines provide more clarity on the country’s stance toward the hot fundraising method in which Switzerland has become a global leader but whose regulators had not yet weighed in significantly.

ICOs skyrocketed in 2017, reaching nearly $3 billion through September, with Switzerland attracting around a quarter of the money, according to data compiled by cryptocurrency research firm Smith + Crown.

Groups based in Switzerland have launched many of the world’s biggest ICOs.

Regulation has become a hot button issue since the U.S. Securities and Exchange Commission deemed last year that some ICOs could count as securities. Many other global authorities followed suit.

“Blockchain-based projects conducted analogously to regulated activities cannot simply circumvent the tried and tested regulatory framework,” Financial Market Supervisory Authority (FINMA) chief Mark Branson said in a statement.

“Our balanced approach to handling ICO projects and enquiries allows legitimate innovators to navigate the regulatory landscape and so launch their projects in a way consistent with our laws protecting investors and the integrity of the financial system.”

FINMA said regulation would be based both on the purpose digital tokens served as well as whether the tokens were already tradeable or transferable when the ICO took place.

Fundraisers launching digital currencies intended to function as a means of payment, and which could already be transferred, would be subject to anti-money laundering regulations but would not be treated as securities, FINMA said.

Fundraisers launching digital tokens intended to provide access to an application or service would be treated as securities if they functioned as an economic investment.

Access — or “utility” — tokens that didn’t function as an investment and could already be used to access the application at the time they were issued wouldn’t be considered securities.

Fundraisers launching digital tokens that represented assets — like a share in a company, earnings or underlying physical goods — would also be regarded as securities, subject to trading laws and prospectus requirements.

Editing by Michael Shields

The Business World Is Full of Fakers–Watch Out For These 3 Red Flags to Avoid a Scam

“My company did four million in revenue last year,” the man at a networking event boasted as he sipped his cocktail. “Cool,” I replied and turned to roll my eyes. While the man could have been telling the truth, I’ve learned over time how to tell when someone’s success is legitimate or a figment of their own imagination.

During the course of running my business, I’ve been scammed, deceived, and played enough to now know every red flag in the book. Here are three warning signs you can look out for that can save you from the unnecessary headache of a business “player” who’s all talk and no action.

1. They’re talking numbers five minutes after meeting you.

Whether it’s at a party or business event, anytime I’ve encountered someone throwing around grandiose numbers about how much they pay for rent, how much they make, or how much their business is doing in revenue, I’ve often learned afterward that they are are only full of shi– shiny invented numbers.

It can be important to talk figures, but in due time. Anyone who runs out of the gate screaming, “My apartment costs five thousand per month!” or “My business did seven figures last year,” is not someone you should trust or want to do business with.

When someone starts talking numbers five minutes into a conversation, you can be certain that you’re dealing with inflated numbers and likely an inflated ego. In my experience, it’s often the most humble entrepreneurs who are the most successful.

As you’re doing business, learn to trust your gut. If a deal seems to good to be true, it almost always is.

2. They constantly build themselves up and won’t stop bragging.

Anyone who constantly compliments themselves during the conversation and brags about their accomplishments is likely embellishing–or has very low self-esteem. In both cases, this type of person is probably not someone you’re going to want to work with.

With technology at your fingertips, it can be easy to detect a fraud simply by looking them up online. By perusing LinkedIn, doing a quick Google search, and scrolling a bit through their social media profiles, you can often see if someone’s accomplishments match what they are saying.

Name dropping is a big red flag. Sometimes, I’ll meet someone new and within the first 20 minutes of conversation they are already dropping names about the famous people they know and the “huge companies” they’ve worked with. I’ve learned not to take these people seriously as they are usually lying or tend to have an ego the size of Texas. Anyone who is trying to hard to prove they are a success usually is overcompensating for the fact that they aren’t.

3. They go from zero to one hundred too fast.

“We should start a business together or partner on a project,” is something I’ve heard dozen of times, only to quickly learn that this person has zero follow-through. It’s important to take all business talk with a grain of salt until you can be certain that a person will actually act on their words.

Similar to an overzealous lover who confesses his love to you after one date, a business prospect who wants to partner up and take over the world together too fast is probably someone you shouldn’t take seriously.

When you’re evaluating a potential business partner, it’s important to take time to get to know them, how they work, and learn more about their background. Though their “talk” might sound good – it’s important to also learn if they can also walk the walk.

In the business world, you’ll encounter many individuals who resemble a cubic zirconia. Hold out for the diamonds, and you’ll be glad you did.

Google's app network quietly becomes huge growth engine

SAN FRANCISCO (Reuters) – Google makes ads show up in more smartphone apps than any other technology company. That is the core of a resurgent business for parent Alphabet Inc.

Google’s ad network unit has posted three straight quarters of year-over-year double-digit sales increases. The business is nearing $20 billion in annual revenue, making it as important to Google’s top-line as its hardware, cloud computing and app store groups combined.

For years, the star of the network was Google’s AdSense, which delivers ads to websites in exchange for a cut of ad revenue. But as consumers migrate from desktop computing to mobile, momentum has shifted to AdMob, Google’s mass-market tool for third-party apps, and DoubleClick for Publishers, its higher-end mobile software.

Google has lured app developers from competitors by lowering commissions and simplifying software. And it is increasingly satisfying advertisers with hot new formats such as video.

Advertisers are taking notice. Alex Hewson, managing partner at M&C Saatchi Mobile, said the London-based ad buying agency has used AdMob for years, but only recently has it become the “top supplier.”

“They’ve engaged big developers and done that well,” Hewson said.

But it has come at a cost. Google is growing by giving app and website creators a bigger chunk of ad sales. In last year’s final quarter, Google’s portion fell by $33 million compared to the year-earlier period even though overall network revenue rose $559 million.

The company is feeling the heat. Alphabet shares dipped 5 percent after missing profit estimates this month.

“They are chasing top-line growth and beating the competition by losing margins,” said Brian Wieser, a senior analyst with Pivotal Research, a New York City firm that provides stock guidance.

(For a graphic on Google’s network revenue, see tmsnrt.rs/2Ejk1e2)

TOP PLAYER

Still, Google’s strategy is winning customers. Google gives developers about 70 cents of every $1 it collects from ad buyers, compared to 50 cents to 60 cents at some competitors.

The high payouts, coupled with Google’s entrenched relationship with millions of advertisers, has turned Google into the main revenue source for many apps. Purchases of in-app ads nearly tripled last year compared to 2016 on Google’s DoubleClick Bid Manager, used by advertisers with the biggest budgets.

Over 1.1 million Android apps include Google’s ad software, double from a year ago, making it by far the fastest-growing and most widely used ad service, according to research firm MightySignal. Google’s iPhone market share is only slightly behind.

The biggest choice for many app creators is between Google’s AdMob and DoubleClick. It is not clear which is growing faster because Google does not provide that data.

AdMob, which was designed specifically for mobile, tends to attract ads promoting apps and smartphone services. Google bought AdMob for $750 million in 2010, beating a bid from Apple Inc.

Google needed technology fresher than AdSense to deliver in-app ads, according to Sissie Hsiao, who leads the company’s apps business.

“Just taking our web stuff and slapping it on wasn’t going to be a sufficient strategy,” she said.

Chinese app maker Cheetah Mobile Inc turned to AdMob last year, shifting focus from Facebook Inc’s Audience Network. Google paid better and offered more ads, said Vincent Jiang, chief financial officer for Cheetah, which has 589 million monthly users for its games and a popular memory-clearing app known as Clean Master.

Google’s DoubleClick ad tool, meanwhile, requires customization to maximize revenue. Companies with many websites and apps use it to integrate ads that they sell on their terms.

Argentine developer Etermax SA moved its well-known Trivia Crack game and another app to DoubleClick from AdMob last year and plans to shift three more this year, according to Tomás Cavanagh, business planner for Etermax.

“They grow fast all the time and their user interface is easy to use,” Cavanagh said of Google.

Simplicity has attracted advertisers, too. They now can eliminate a manual task and instead rely on Google to automatically resize video ads to a fit any phone.

Competitors can do little but grumble. Google overcame U.S. antitrust scrutiny to buy AdMob, and calls for breaking up the company’s ad machine have not gained traction in Washington.

Abhay Singhal, chief revenue officer at InMobi, an AdMob competitor, said Google is not necessarily “the best game in town, but put any product into Google’s huge ad pool with that muscle and it will drive huge penetration.”

NEXT STEPS

Financial analysts expect Google’s profit to keep eroding as ad buyers gravitate to apps, where Google says developer deals remain costly. Cowen & Co analysts estimate Google to give developers nearly 80 cents on the dollar by 2023.

Staffing up in Asia and Latin America, the next big growth markets for mobile advertising, could cost Google as well.

Advertisers also want Google to make technology upgrades so they can better monitor where their mobile ads appear.

Hewson of M&C Saatchi Mobile said he has told Google, “It can’t just be, ‘We’re Google. Trust us.’”

Reporting by Paresh Dave; Editing by Marla Dickerson

Why the Online Gaming Industry is Ripe for Disruption

We live in a disruptive time. New startups are constantly rising and falling and reputations are staked, made and lost every time a new technology comes along with the potential to change the way we live, entertain ourselves and do business.

The online gaming industry itself is somewhat disruptive. After all, it didn’t exist twenty years ago and its growth rate over the last couple of years has been phenomenal. Nowadays, the online gaming market is huge and all-encompassing, covering everything from PUBG and Call of Duty to World of Warcraft and Farmville (which is somehow still going strong).

At the same time, new technologies are constantly reinventing the way that online gaming works. VR is gaining in popularity and even spawning its own controversial memes, and technologies like blockchain are changing the way that we store, access and update records. Blockchain also forms the backbone to cryptocurrencies like Bitcoin, which could be used to power in-game transactions.

Device fragmentation

One of the big trends that games developers are being forced to deal with is the increasing fragmentation of the devices that we use to access the internet and thus to play games online with. The days of people only accessing the internet from a desktop computer are long gone, although PC gaming is still an attractive alternative to using a console.

Nowadays, every new console is hooked up to the internet by default, and so are our smart TVs and our tablets and smartphones. This opens up huge opportunities for developers to specialize in specific types of projects, whether that’s based upon the platform itself or whether it’s based upon the mechanic. In the same way that Farmville owners Zynga rolled out the concept across a number of different properties, we’re overdue a wave of new specialists who focus on making games that use a premium model or which rely on downloadable mods and addons.

This leads us nicely into another area of online gaming that’s already seeing some disruption, and that’s the way in which developers monetize their products. We’ve seen all sorts of different approaches to monetization throughout the years, and online gaming developers are still experimenting with everything from micropayments to crowdfunding and more.

New routes to market

Crowdfunding is a game-changer because it can reduce the risk that developers take by making sure that the costs are covered by fans of the project who want to see the game come to fruition. At the same time, platforms like Steam are making it easier for developers to release their games (and to make a little money while they’re at it), and this is leading to a resurgence in indie games and indie developers.

Indie developers already have a reputation for innovation because they can iterate faster and create whatever they want instead of being responsible to shareholders and creative directors. Of course, there’s no guarantee of quality, but more established players would be wise to keep their eyes on the indie market for emerging trends. In some instances, they might even be able to hire talent or acquire intellectual property, but there’ll also be no shortage of founders and entrepreneurs who’d prefer to go it alone.

All of this creates an unpredictable industry in which anything could happen, and it’s those who are able to react the fastest who’ll be the biggest disruptors. The biggest companies tend to have longer lead times on their new releases, which means there’s plenty of room for more agile disruptors to enter the industry and to shake things up a bit.

Ageing Consumers

While all of this is happening, the demographics of end users are starting to change. A generation of kids who grew up on Sega Megadrives and Super Nintendos are now heading into their early thirties with the spending power to match. This time, though, they’re buying games, consoles and computers for themselves, and not for their children.

In fact, the average gamer is 31 years old, and there are more gamers over the age of 36 than between the ages of 18 to 35 or under the age of 18. There are also more female gamers than ever before, which means that gaming is becoming more democratic. It’s not just fourteen-year-old boys in their bedrooms anymore. Online gaming is for all of the family now.

This in itself opens up a new opportunity, because different demographics are interested in different types of gaming experience, and with the average American house including at least two gamers, developers can now afford to cater to niche audiences. And by focusing on specific target markets, disruptors can easily take over entire segments of the online gaming market, building up a reputation for themselves and then augmenting their portfolio by buying up competitors.

Conclusion

When it comes to the online gaming industry, disruption isn’t just inevitable – it’s the new norm. Developers and manufacturers are playing the cat and mouse game between software and hardware, and at the same time, faster and better internet connections are becoming more commonplace. This means that developers have more resources than ever at their disposal, allowing them to tap into capabilities that were previously unheard of.

As a result of that, we’re at a pivotal moment in the history of online gaming in which the access to tools has been democratized and where anyone can be a disruptor. Sure, the big multinational companies might have bigger budgets, but the next big MMORPG could end up coming out of a teenager’s bedroom.

Believe it or not, this is actually good news for the established players. After all, the industry has always moved quickly, and the only way to stay on top of it is to constantly innovate. This extra competition will hopefully push the bigger companies to disrupt the status quo before someone else comes along and does it for them. And of course, all of this disruption ultimately benefits one group of people the most: the gamers. It’s an exciting time to be into online gaming.

Baidu earnings beat forecasts, eyes U.S. listing for video unit iQiyi

SHANGHAI/BEIJING (Reuters) – Chinese internet search firm Baidu Inc posted a forecast-beating quarterly revenue increase and unveiled a U.S. listing plan for its Netflix-like video platform iQiyi as it looks to rev up new drivers for growth.

Baidu posted on Tuesday fourth quarter revenue of 23.6 billion yuan ($3.72 billion), up 29 percent against the same period a year ago and topping analysts’ forecasts of 23.05 billion yuan and the company’s own guidance.

The strong results are a major fillip for Baidu as it looks to ramp up spending on riskier gambles in autonomous driving and fend off cashed-up rivals such as Tencent Holdings Ltd and Alibaba Group Holding Ltd in online video content.

A U.S. listing would bring extra financial muscle for its popular iQiyi platform as it ramps up spending. Baidu said the size of any IPO was not yet set, but that it would likely remain iQiyi’s controlling shareholder. iQiyi could be worth $8 billion or more, according to Reuters Breakingviews.

“An IPO will bolster iQiyi’s position in the market and give it more cash to buy content or make content on their own,” said Ni Shuang, Beijing-based Pacific Securities analyst, adding it would help Baidu keep pace with rivals in the space.

The strong quarterly showing – driven by the core search and news feed businesses – is also key to generating cash flow “to fund our new AI businesses”, Baidu chief executive Robin Li told a post-earnings conference call.

The company’s shares rose nearly 5 percent in extended trading after the results, overturning a nearly 4 percent fall since the start of the year.

Herman Yu, the firm’s chief financial officer, said content costs rose 70 percent last year to 13.4 bln yuan as iQiyi acquired content. These costs would rise at a similar pace this year.

The firm will also raise R&D spending in areas like its Apollo open-source software platform for autonomous driving, which executives said would eventually become a “very material and significant revenue source for the company”.

“Having said that, a key caveat is that this market will take time to build,” chief operating officer Qi Lu told the conference call.

Strong results in its more traditional businesses were central to Baidu’s success, with revenue from its core online marketing – including its search platform and news feed – jumping 26.3 percent to 20.4 billion yuan.

The results will help soothe Baidu investors as the company looks to turn around its fortunes after a series of missteps sparked steep losses in 2016 and hit its advertising revenue from internet searches.

Baidu, part of China’s trinity of tech giants along with Alibaba and Tencent, posted net income of 4.16 billion yuan in the quarter ended Dec. 31, up from 4.13 billion yuan a year earlier.

Excluding one-time items, the company earned 14.9 yuan per ADS, above forecasts.

Baidu pegged its guidance for first-quarter revenue growth, between 19.86 billion yuan and 20.97 billion yuan, a 25-32 percent increase against the same period of 2017. That compared with analysts’ average estimate of 21.18 billion yuan.

Reporting by Adam Jourdan in SHANGHAI, Pei Li in BEIJING and Arjun Panchadar in BENGALURU; Editing by Eric Meijer and Muralikumar Anantharaman

?The most popular Linux desktop programs are…

Video: Barcelona: Bye Microsoft, hola Linux

LinuxQuestions, one of the largest internet Linux groups with 550,000 members, has just posted the results from its latest survey of desktop Linux users. With approximately 10,000 voters in the survey, the desktop Linux distribution pick was: Ubuntu.

While Ubuntu has long a been popular Linux distro, it hasn’t been flying as high as it once was. Now it seems to be gathering more fans again. For years, people never warmed up to Ubuntu’s default Unity desktop. Then, in April 2017, Ubuntu returned to GNOME for its default desktop. It appears this move has brought back some old friends and added some new ones.

An experienced Linux user who voted for it said, “I had to pick Ubuntu over my oldest favorite, Fedora. [That’s] Simply based on how quick and easy I can get Ubuntu set up after a clean install, so easy with the way they have it set up these days.”

Right behind Ubuntu was Linux Mint. Mint is a favorite for users who want an easy-to-use Linux desktop — or for users who want to switch over from Windows.

http://www.zdnet.com/article/the-most-popular-linux-desktop-programs-are/, followed closely by antiX. With either of these, you can run a high-quality Linux on PCs powered by processors as old as 1999’s Pentium III.

In the always hotly-contested Linux desktop environment survey, the winner was the KDE Plasma Desktop. It was followed by the popular lightweight Xfce, Cinnamon, and GNOME.

If you want to buy a computer with pre-installed Linux, the Linux Questions crew’s favorite vendor by far was System76. Numerous other computer companies offer Linux on their PCs. These include both big names like Dell and dedicated small Linux shops such as ZaReason, Penguin Computing, and Emperor Linux.

Many first choices weren’t too surprising. For example, Linux users have long stayed loyal to the Firefox web browser, and they’re still big fans. Firefox beat out Google Chrome by a five-to-one margin. And, as always, the VLC media player is far more popular than any other Linux media player.

For email clients, Mozilla Thunderbird remains on top. That’s a bit surprising given how Thunderbird’s development has been stuck in neutral for some time now.

When it comes to text editors, I was pleased to see vim — my personal favorite — win out over its perpetual rival, Emacs. In fact, nano and Kate both came ahead of Emacs.

There was, however, one big surprise. For the best video messaging application the winner was… Microsoft Skype. Now, Skype’s been available on Linux for almost a decade, and recently, Canonical made it easier than ever to install Skype on Linux. But, still, Skype on Linux?

Jeremy Garcia, founder of LinuxQuestions, thought the result might have come about because: “Video Messaging Application was a new category this year and participation was extremely low. Additionally, Secure Messaging Application was broken out into a separate category that had higher participation and resulted in a tie between Signal and Telegram.”

Of course, it’s also possible that even passionate Linux people can like a Microsoft product. After all, Microsoft now supports multiple Linux distributions on its Azure cloud.

Related stories

BitGrail Cryptocurrency Exchange Claims $195 Million Lost to Hackers

An obsure Italian cryptocurrency exchange called BitGrail claims that it was hacked late last week and lost roughly $195 million worth of customers’ cryptocurrency. But others — including the developers who created the stolen cryptocurrency — have suggested not all may be as it appears.

BitGrail, based in Italy, is one of many exchanges globally which allow the trading of Bitcoin and other cryptocurrencies. BitGrail was until recently one of the main portals for the trading of Nano, a cryptocurrency formerly known as RaiBlocks. Last Thursday, BitGrail founder Francesco Firano claims to have discovered that 17 million Nano tokens, then worth roughly $195 million, had been stolen by hackers.

But that claim has been greeted with widespread skepticism, fueled in part by recent suspicious moves by BitGrail. In early January, the exchange halted all withdrawals and deposits of Nano, as well as the Lisk and CryptoForecast tokens. That was followed by the announcement that BitGrail would enforce identity verification and anti-money laundering protocols for its users, and potentially block non-European users, despite the fact that it did not deal with government currencies or banks. According to cryptocurrency news site The Merkle, at least some users at that time were already suspicious that the site was maneuvering towards a so-called “exit scam,” and the price of Nano dropped by 20% on the news.

Then, in the wake of the alleged hack, Firano asked the developers of the Nano currency to “fork” their records to restore the funds supposedly stolen from the exchange. This is an eyebrow-raising request, since the immutability of transaction records is one of the core features of cryptocurrency, and held as sacrosanct by many supporters of the technology.

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The Nano team responded by publicly rejecting the request, sharing a copy of their communication with Firano, and furthermore alleging that “we now have sufficient reason to believe that Firano has been misleading the Nano Core Team and the community regarding the solvency of the BitGrail exchange for a significant period of time.” The strong implication is that Firano had mismanaged customer assets and was claiming a “hack” as cover.

The Nano team did not provide further specific evidence of this claim, however, and would have obvious motives for drawing attention away from any security flaws in their own technology. Firano, 31, told the Italian news site Sole24ORE that he has received multiple death threats since announcing the hack and filing a police report, which he said is now being investigated. Users on Twitter and Reddit are circulating photos of Firano, accompanied by implicit and explicit threats.

The $195 million loss is still smaller than several previous cryptocurrency exchange collapses. In 2014, at least $387 million worth of Bitcoin was reportedly stolen from Japan’s Mt. Gox exchange — coins that would be worth billions of dollars at current prices. And just last month, $534 million worth of a cryptocurrency called NEM was stolen from Coincheck, another Japan-based exchange.

Many international exchanges are essentially unregulated, and even U.S.-based cryptocurrency exchanges are not protected by any sort of consumer insurance along the lines of FDIC coverage for bank deposits. Because of this heightened risk environment, cryptocurrency experts strongly discourage leaving tokens in the custodianship of exchanges, and instead using a local wallet.

Nano may be a relatively little-known cryptocurrency, but even after news of the BitGrail loss pushed its price down, the total value of outstanding tokens exceeds $1 billion.

Used Cars Are Cheap, And That's Good For O'Reilly

In mid-January, when markets were still relatively calm, we published an article about O’Reilly and how it could benefit from the widening price gap between used and new cars that would lead to consumers keeping their cars a bit longer. We bought the stock, as we had mentioned, when it broke through a $260 resistance level. Since then, the stock has come back down to levels we think are once again a good buying opportunity. Below is the article in its entirety with an updated price chart below the original.

It’s a never ending battle of making your cars better and also trying to be better yourself. – Dale Earnhardt

Late last year, the lease on my car was expiring and I needed to make a decision on whether to lease another car, or exercise the option to buy my current car at the contractual residual value. At the time my car only had 27,000 miles, which, for a 2013 was quite low. Based on a back of the envelope valuation with the help of Kelley Blue Book, I decided to buy it.

Based on the surprisingly high value indicated by the Kelley Blue Book estimate, I wondered how the price/value of a used car compared to a new car and whether there might be periods when it was better to buy or lease new versus periods when it was better to buy a used car. It turns out there is.

The chart below shows the CPI Index for both new vehicles and used cars and trucks. As the two lines indicate, prices declined significantly during the recession, particularly for used vehicles. As we approached the end of the recession and jobs were being created, the price of both new and used vehicles started recovering. But used car pricing increased dramatically during this period. Partly because of a lack of financing options for new cars and partly because consumers were probably treading lightly after the worst recession since the early 1930s. From 2010 to mid-2014, price inflation for used cars remained above those of new cars – at least using 2008 as a base.

But the index for used car prices started trending downward and accelerated its downward trajectory in 2016, while new car pricing continued to creep higher. The result is that the cost of a new car today relative to a used car is at its widest spread in at least 10 years. Translation: used cars are cheap relative to new cars – and I’m assuming that leasing and buying is the same thing – after all, a lease is based on the sales price of the car.

So I started to think about investment ideas that would benefit from what I predict will be a slowdown in the purchases of new cars in favor of either keeping current cars longer or deciding to buy a used car instead. As I cross referenced our several equity screeners (Growth at Reasonable Price, Asymmetrical Return/Risk, and Dividend Growth), I came across O’Reilly Automotive Inc (ORLY)

Profile

O’Reilly Automotive, Inc. is a specialty retailer of automotive aftermarket parts, tools, supplies, equipment, and accessories. It primarily operates in the United States, with Texas and California as its largest markets with 670 and 530 stores in each. It operates a single business segment which involves supplying new and remanufactured automotive hard parts, maintenance items, and a complete line of automotive tools and professional service equipment. It offers its products to do-it-yourself (DIY) customers and Do-It-For-Me (DIFM) customers including professional mechanics, and service technicians.

Business Segment

O’Reilly operates in a single business segment supplying automotive aftermarket parts, tools, supplies, equipment and accessories to DIY and DIFM market segments in the United States. DIY customers are consumers who repair and work on their own cars. DIFM customers include commercial installers including auto repair shops, gas stations, fleet operators, parts resellers who provide installation and repair services, and car dealer service departments. In FY 2016, O’Reilly derived approximately 58% of its sales from DIY customers and 42% from the DIFM customer segment. The DIFM segment is expected to contribute a greater share of future growth because it is the least price-sensitive market.

When prices for parts rise, professional mechanics and service providers are less likely to change their demand and will pass along the added cost to the consumer. In the case of the DIY market, new cars are now too complicated for most owners to fix or maintain by themselves so they are more likely to take their car to the shop for needed repairs. Nonetheless, households and individuals remain the major market segment, contributing 61.5% of the industry’s revenue.

Source: IBISWorld

Strategy

O’Reilly operates through a “dual market strategy” which means that it serves both the DIY market and the DIFM market. Much of the company’s competitive edge is attributed to the successful execution of this dual market strategy. This strategy enables the company to target a larger customer base for automotive aftermarket parts, capitalize on existing retail and distribution infrastructure, and operate profitably in large markets and even in less dense areas that attract fewer competitors. Such a strategy also enhances the service levels offered to DIY customers because of its broad inventory and extensive product knowledge required by professional service providers whom O’Reilly also caters too.

Other sources of its competitive advantage include a strong distribution network and broad portfolio of widely known brands. It operates 27 regional distribution centers – 19 owned with a total of 10.6 million square feet. It also has five-night-a-week delivery via a company-owned fleet. As of June 30, 2017, the company had 4,934 stores in 47 states and over 75,000 employees. Its merchandise generally consists of nationally recognized, premium brands like AC Delco, Bosch, Armor All, Castrol, and many other high-quality brands.

In the coming years, O’Reilly intends to implement the following growth strategies: aggressively open new stores, grow sales in existing stores, pursue strategic acquisitions, enhance store design and location, and enhance its e-commerce website. The company is expanding its nationwide presence by opening new stores at a rapid rate. In 2017 alone, it opened 190 stores. The figure below illustrates O’Reilly’s aggressive nationwide expansion. As of December 2016, the company has also acquired 48 stores from Bond Auto Parts and plans to open 200 new stores in 2018.

Source: O’Reilly’s Investor Presentation

The company has also been investing heavily on technology. It is implementing a voice-picking technology in its distribution centers, rolling out routing software to improve logistic efficiencies, and making proven return-on-investment-based capital enhancement in material handling equipment such as conveyor systems, picking modules, and lift equipment.

In terms of marketing and sales, O’Reilly leverages television, radio, direct mail and newspaper advertisements, in-store and online promotions, and sporting event sponsorships. It also participates in cooperative advertising with its vendors. It sponsors nationally-televised races and more than 1,600 grassroots, local, and regional motorsport events in 47 states.

Recent Results

O’Reilly reported revenues of $8,5 billion in revenues for FY2016, an increase of 7.9% from FY2015. For the third quarter ended September 30, 2017, the company reported sales of $2.3 billion, operating income of $461M, and net income of $284M.

In nine months ended September 30, 2017, the company reported sales of $6,7 billion, operating income of $1,3 billion, and net income of $831K. It expects total revenue of $8.9 billion to $9.0 billion for FY2017.

For the past three years, O’Reilly has shown strong financial growth and the trend is expected to continue considering its aggressive expansion through additional stores and Bond Auto Parts stores acquisitions.

Source: Mergent Online

Analysis

O’Reilly doesn’t pay a dividend so it is probably not attractive for income-seeking investors. However, looking at the company’s financial progress over the years reveals some very attractive trends:

  • Margins across the board have increased. For example, gross margins increased from 44.5% to 52.6% over the last 10 years, while operating margins increased from 9% to 19.5%.
  • Return on equity has increased from 15% to over 83% on a trailing 12 month basis. The biggest driver of this increase was due to an increase in leverage, but asset turnover has also increased as has net profit margin.
  • Using supply chain financing, cash conversion cycle has been reduced to 5 days, better than all of its closest peers.

And some not so attractive trends:

  • Debt to Equity has increased from less than 1.5 in early 2017 to 4.7 as of September 30th, 2017. Times interest earned also decreased but is still at a very healthy 21x
  • Current ratio has steadily decreased from 1.25x to less than 1x
  • Cash from operations declined slightly from the year ago period.

Business Drivers

The key drivers of current and future demand of its products are number of miles driven, number of registered light vehicles, and unemployment rates. The primary business driver for the industry is total miles driven. With the lack of comprehensive mass transit in the U.S., the company expects modest improvements in total number of miles driven in the U.S. as supported by increasing number of registered vehicles and sustained employment levels. Moreover, declining gas prices since 2015 has contributed to the steep increase in the number of miles driven resulting in more vehicle wear and tear and rising demand for replacement and maintenance parts and tools. Likewise, the average age of vehicles increases due to constant scrappage rates (a rate of new car sales under the ten-year trend) and overall quality of vehicles. As the average age of vehicles increases, a larger percentage of the miles driven are outside of the manufacturer’s warranty period. These out-of-warrant older vehicles generate a stronger demand for aftermarket products especially in case of routine maintenance cycles and more frequent mechanical failures.

Given these demand drivers, the U.S. automotive aftermarket industry is expected to have strong growth in the coming years. According to industry estimates, the market is forecast to grow at a CAGR of 3% from 2016 to 2018, to reach a total value of $284 billion in 2018. O’Reilly should leverage this high growth in the market to generate revenues and profits.

Industry Analysis

The U.S. automobile parts retail industry has about 37,000 establishments (single-location and multiple-location companies) with combined annual revenue of $53 billion. With a CAGR of 3.4%, it is expected to grow at an estimated $273.4 billion according to Automotive Aftermarket Suppliers Association (AASA). O’Reilly claims that in this industry landscape, its addressable market amounts to $161 billion.

Source: IBISWorld

The U.S. industry is largely concentrated, with the ten largest companies accounting for about 50% of the market size. The 50 largest companies generate about 60% of the total industry revenue; four largest companies contributing about 45%.

Source: O’Reilly’s Investor Presentation

Outlook

Overall, O’Reilly is in a favorable position in light of the demand for used cars vs. new cars. The external key drivers (increased miles driven, favorable economic conditions, decreased price of gas, etc.) combined with its key strategies (dual market, aggressive expansion, selective acquisition) put the company in a strongly competitive position that will continue to boost its profitability.

Valuation

From a valuation perspective using a multiple analysis, ORLY looks attractive on a relative basis compared to peers as well as its own five-year average. As the chart below indicates, the current PE ratio of 22 is considerably lower than the high reached in late 2015 of 31.25, despite a steady increase in earnings per share.

We believe the stock is poised for additional earnings growth and multiple expansion and is well-positioned to benefit in the event of an economic downturn – one in which consumers may postpone their purchases of new vehicles.

Income Enhancement

There isn’t a very attractive option to use for enhancing income. However, for investors looking to generate some income from a position in ORLY who are willing to give up some upside, you may want to consider selling a call option expiring in January 2019, with a current bid of $22.70 and strike price of 280. Assuming a 100 share purchase to coincide with the sale of 1 contract (representing 100 shares), this would result in an estimated income yield from the option premium of around 1% – and if the stock is called, would result in an additional return of 10.6%.

There is also the possibility of the company buying back more shares, which has been the primary driver of a shareholder yield of 12% over the last 12 months.

Our Take

Despite our bullishness on the used car parts industry and ORLY’s improving financial performance, on a technical basis, the stock looks indecisive flirting with the $261 level and supported by $240. We would like to see some conviction to the upside before dipping a toe in and we are conscious of a possible pullback to the $240 level. We would be buyers on a breakthrough to the upside or a pullback to the $240 level. We bought when the price broke to the upside.

Today, the price of the stock is back down to $252 after once again testing the $240 level. We believe its another good entry point and this time, we expect the price to surpass the recent high of $280.

See, when you drive home today, you’ve got a big windshield on the front of your car. And you’ve got a little bitty rearview mirror. And the reason the windshield is so large and the rearview mirror so small is because what’s happened in your past is not near as important as what’s in your future. – Joel Osteen

End of Article

Disclaimer: Please note, this article is meant to identify an idea for further research and analysis and should not be taken as a recommendation to invest. It is intended only to provide information to interested parties. Readers should carefully consider their own investment objectives, risk tolerance, time horizon, tax situation, liquidity needs, and concentration levels, or contact their advisor to determine if any ideas presented here are appropriate for their unique circumstances.

  • Past performance is not an indicator of future performance.
  • Investing in any security has risks and readers should ensure they understand these risks before investing.
  • Real Estate Investment Trusts are subject to decreases in value, adverse economic conditions, overbuilding, competition, fluctuations in rental income, and fluctuations in property taxes and operating expenses.
  • This post is illustrative and educational and is not a specific offer of products or services.
  • Information on this blog is not an offer to buy or sell, or a solicitation of any offer to buy or sell the securities mentioned herein, nor is the author compensated by any of the products mentioned.
  • Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the topics or subjects discussed.
  • Information presented is not believed to be exhaustive nor are all the risks associated with the topic of each article explicitly mentioned. Readers are cautioned to perform their own analysis or seek the advice of their financial advisor before making any investment decisions based on this information.
  • Investment decisions should be based on an individual’s own goals, time horizon, and tolerance for risk. Nothing in this content should be considered to be legal or tax advice and you are encouraged to consult your own lawyer, accountant, or other advisor before making any financial decision.
  • All expressions of opinion reflect the judgment of the author, which does not assume any duty to update any of the information
  • Any positive comments made by others should not be construed as an endorsement of the author’s abilities to act as an investment advisor.

Disclosure: I am/we are long ORLY.

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.

Exclusive: BMC Software explores IPO: sources

(Reuters) – U.S. business software company BMC Software Inc [BSII.UL] is holding conversations with investment banks about an initial public offering (IPO) that could value it at more than $10 billion, including debt, people familiar with the matter said on Friday.

The move comes as the private equity firms that control BMC – Bain Capital and Golden Gate Capital – consider ways to start cashing out on their investment after taking the company private in 2013 in a $6.9 billion leveraged buyout.

BMC has held discussions with banks in recent weeks about appointing underwriters for an IPO, the sources said. The timing of the IPO has not been decided, and the deliberations have not been affected by this week’s stock market volatility, the sources added.

The sources asked not to be identified because the matter is confidential. BMC did not immediately respond to a request for comment, while Bain and Golden Gate declined to comment.

Based in Houston, BMC provides software that helps corporations organize their information technology management functions. It generated revenue of $1.8 billion for the 12 months that ended Sept. 30, according to Moody‘s.

BMC has been facing increasing competition from so-called software-as-a-service technology rivals, and last year explored a merger with peer CA Inc (CA.O). That deal fell through over challenges in agreeing upon debt financing terms, sources said at the time.

BMC’s mainframe software business is estimated to generate approximately half of the company’s operating profit and cash flow, yet it is a flat to modestly declining business, Moody’s said in a research note in November.

January was the strongest month for IPOs on record in terms of proceeds, however IPO activity was blunted this week by wild swings in the U.S. stock market. The receptivity of the IPO market will hinge on such volatility subsiding.

Reporting by Greg Roumeliotis in New YorkEditing by Matthew Lewis

Amazon Studios Taps NBC Entertainment’s Jennifer Salke to Succeed Roy Price

Amazon has named a new head for its television and film production unit nearly four months after the departure of former studio head Roy Price amid sexual harassment allegations.

To fill that role, Amazon has tapped NBC Entertainment president Jennifer Salke, who will now report to Jeff Blackburn, Amazon’s senior vice president of business development and digital entertainment. Salke, who joined Comcast-owned NBC in 2011, helped the network revamp its TV lineup in recent years with popular series such as the critically-acclaimed drama This Is Us and the singing competition The Voice. In a statement on Friday, Amazon’s Blackburn said that Salke has “built an impeccable reputation as a big leader who emphasizes creativity, collaboration, and teamwork.”

Amazon did not say exactly when Salke would start her new position, but she will be taking over for Amazon Studios COO Albert Cheng, who has served as interim head of the studio since Price was forced out in October over accusations that he sexually harassed producer Isa Hackett. Price had overseen Amazon’s entry into the streaming entertainment market, helping to build it’s Hollywood arm into a competitor of traditional film studios as well as rival streamers like Netflix, with Amazon Studios spending roughly $4.5 billion annually on original programming. Price oversaw Amazon’s acquisition of award-winning TV series such as Transparent as well as independent films like Manchester by the Sea, which won the studio its first-ever Academy Awards last year.

Price resigned in October, the same month that several allegations against Harvey Weinstein led to the Hollywood mogul’s ouster from The Weinstein Company. Those allegations against Weinstein kicked off a wave of backlash against sexual misconduct by powerful men in Hollywood and helped lead to the “Me Too” movement and the Time’s Up campaign against harassment in the entertainment industry.

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Immediately after Price’s departure, Amazon had already been rumored to be dead-set on hiring a female replacement, with potential candidates reportedly including Salke as well as Paramount TV president Amy Powell, Fox TV Group chairman Dana Walden, and A+E Networks CEO Nancy Dubuc, among others.

In her own statement, Salke said that she is “incredibly excited” about heading up Amazon Studios. “In the studio’s relatively short existence they have innovated, disrupted, and created characters that are already an indelible part of pop-culture,” she said. “I am both honored and emboldened by the opportunity to lead this extraordinary business.”

In addition to Price’s departure last fall, a handful of other TV and film executives have left Amazon in recent months, including former original TV series head Joe Lewis. The studio had faced criticism over the past year for failing to deliver a breakout hit TV series, with Price and his fellow executives even reportedly passing on popular and critically-acclaimed series like The Handmaid’s Tale and Big Little Lies, which went on to rack up awards for rivals Hulu and HBO, respectively.

None other than Amazon CEO Jeff Bezos reportedly said last year that he wants Amazon’s studio to develop a global TV hit on the scale of HBO’s Game of Thrones. As such, Amazon reportedly agreed to pay a whopping $250 million to land the global television rights to the classic The Lord of the Rings fantasy novel series, with plans to produce a “multi-season” TV series based on the books for Prime subscribers and the potential for additional spin-off series. Meanwhile, just this week, Amazon was reported to be developing a new TV series featuring the Conan the Barbarian character once portrayed by Arnold Schwarzenegger on the big screen.

Nvidia's upbeat forecast powered by data center, cryptocurrency demand

(Reuters) – Nvidia Corp’s (NVDA.O) upbeat current-quarter revenue forecast on Thursday underscored surging demand for its graphics chips used in data centers, gaming devices and cryptocurrency mining, sending its shares up as much as 12 percent in extended trading.

The company, which also reported better-than-expected quarterly results, is reaping the benefits from the launch of its Volta chip architecture last year. Volta help build processors that power a range of technologies such as artificial intelligence and driverless cars.

“Virtually every internet and cloud service provider has embraced our Volta GPUs,” Nvidia’s Chief Executive Officer Jensen Huang said in a statement. (bit.ly/2iJPeNN)

Revenue from Nvidia’s widely watched data center business, which counts Amazon.com Inc’s (AMZN.O) Amazon Web Services and Microsoft Corp’s (MSFT.O) Azure cloud business among its customers, more than doubled to $606 million.

That trounced analysts’ average estimate of $541.1 million.

Data center should continue to grow pretty nicely into calendar 2018 and beyond, Morningstar analyst Abhinav Davuluri said.

The boom in cryptocurrencies is also powering demand for chips from Nvidia and rival AMD (AMD.O) as they provide the high computing ability required for cryptocurrency “mining.”

“Strong demand in the cryptocurrency market exceeded our expectations,” Chief Financial Officer Colette Kress said on a conference call.

“While the overall contribution of cryptocurrency to our business remains difficult to quantify, we believe it was a higher percentage of revenue than the prior quarter.”

The company said inventory levels of its gaming GPUs throughout the quarter was lower than historical channel inventory levels due to surging demand from cryptocurrency miners.

The price of Bitcoin, the most popular cryptocurrency, rose more than 1,300 percent in 2017. Prices have, however, dropped about 40 percent this year.

Nvidia’s revenue from gaming, for which it is best known, rose 29 percent to $1.74 billion, accounting for a more than half of its total revenue in the fourth quarter, and also beating analysts’ estimate of $1.59 billion.

The company forecast current-quarter revenue of $2.90 billion, plus or minus 2 percent, well above the analysts’ average estimate of $2.47 billion, according to Thomson Reuters I/B/E/S.

Net income rose to $1.12 billion, or $1.78 per share, in the fourth quarter ended Jan. 28 from $655 million, or 99 cents per share, a year earlier.

Results include a $133 million gain related to the new U.S. tax law.

Total revenue rose 34 percent to $2.91 billion, topping estimate of $2.69 billion.

Excluding items, the company said it earned $1.72 per share.

Nvidia earned $1.57 per share, excluding the tax benefit, according to Thomson Reuters I/B/E/S, beating estimate of $1.17.

The company’s shares were trading at $233 in extended trading. They have surged about 83 percent in the past 12 months.

Reporting by Arjun Panchadar and Supantha Mukherjee in Bengaluru; Editing by Anil D’Silva and Sriraj Kalluvila

Before lawsuit, Uber fell out with 'big brother' Google, Kalanick testifies

SAN FRANCISCO (Reuters) – Just a few years ago, Uber Technologies Inc saw itself as the little brother to Alphabet Inc, but that cozy bond quickly dissolved into a turf war and ultimately a high-stakes legal battle, a jury heard on Wednesday.

Former Uber Chief Executive Travis Kalanick described how his own relationship with Alphabet Chief Executive Larry Page deteriorated as their companies competed in ride-hailing and autonomous car development, producing a tense rivalry that eventually led to a lawsuit and trial in San Francisco federal court.

Alphabet’s self-driving car unit Waymo sued Uber [UBER.UL], a year ago saying that former Waymo engineer Anthony Levandowski downloaded more than 14,000 confidential documents in 2015 before leaving to found a self-driving startup that Uber snapped up in 2016.

Waymo has estimated damages in the case at about $1.9 billion, which Uber rejects. Levandowski is not a defendant in the case.

Kalanick’s testimony on Tuesday and Wednesday is a crucial part of the trial, which promises to influence one of the most important and potentially lucrative races in Silicon Valley – to create fleets of self-driving cars.

Kalanick’s testimony showed the personal nature of the lawsuit, which is as much about big personalities at wealthy technology companies as it is about the technology itself. Uber was once a prized investment for Alphabet, whose venture capital arm made a $258 million bet on Uber in 2013.

In Uber’s early days, its relationship with Google was “like a little brother to a big brother,” Kalanick said under questioning in court, and Page and Alphabet executive David Drummond were like mentors to the less-seasoned Kalanick.

After Uber heard Alphabet was dabbling in ride-hailing services, Uber’s business, Uber moved into self-driving cars, a project Alphabet had been working on since 2009. Uber hired away 40 experts from Carnegie Mellon University to set up a self-driving car lab in Pennsylvania, a move that upset Page.

“He sort of was a little angsty and said ‘Why are you doing my thing?’ and was just upset,” Kalanick testified.

Uber’s acquisition of Levandowski’s startup, Otto, only added to the animosity, and days after the deal was announced, Drummond resigned his seat on Uber’s board of directors. Recalling Page’s raw feelings that surfaced with the Carnegie hires, Kalanick feared a lawsuit was coming.

‘SECOND PLACE IS FIRST LOSER’

Although famous for his hot-headed temperament, Kalanick kept his cool on Wednesday and offered short, subdued responses to Waymo’s attorneys, whose questions focused on Kalanick’s competitive nature.

Former Uber Chief Executive Officer Travis Kalanick (R) leaves the San Francisco federal court during a Waymo-Uber autonomous car secrets trial in San Francisco, California, U.S., February 7, 2018. REUTERS/Jane Lee

Kalanick was ousted from Uber in June after a tumultuous period of scandals and investigations. The Otto acquisition and Uber’s self-driving car development happened under Kalanick’s direction.

Kalanick has said self-driving cars are existential to Uber, and was rankled that Uber was trailing Waymo. In court, Waymo attorney Charles Verhoeven showed Kalanick a text message in which Levandowski told Kalanick: “I just see this as a race and we need to win. Second place is first loser.”

When asked if he agreed with that sentiment, Kalanick said: “Well, I first heard it from my high school football coach, but yes.”

Waymo sought to portray Kalanick as so eager to improve Uber’s autonomous car business that he quickly acquired Otto and hired Levandowski without properly assessing the risks. He was frustrated by the slow pace of Uber’s self-driving program, which trailed Waymo, and thought Levandowski could turn it around, the 10-person jury heard on Tuesday.

Slideshow (4 Images)

Kalanick said Wednesday that he never read a due diligence report prepared by an outside firm that determined Levandowski did posses Google data.

But in a deposition last year, Benchmark venture capitalist Bill Gurley, an early Uber investor and former board member, said Kalanick told the board the diligence report was “clean.” Kalanick denied having said that. Gurley also said Kalanick “crossed a line of violating fraud and fiduciary duty” with the Otto acquisition.

As part of the Otto deal, Uber agreed to indemnify Levandowski against any legal action, Kalanick said. He conceded that the legal battle makes hiring Levandowski “not as great as what we thought it was at the beginning.”

‘X FACTOR’

Uber was not the only company interested in Levandowski – rival Lyft Inc also made an offer to buy Levandowski’s self-driving startup, Lior Ron, Otto co-founder and an Uber executive, testified on Wednesday. Levandowski turned down the offer.

Kalanick was shown in court an email from another executive, which said the “X factor” of acquiring Levandowski’s company was the “IP in their heads.”

Kalanick said he did not remember the email but did not deny reading it. When questioned by Uber’s lawyer, Kalanick said that “to no extent at all” did he hire Levandowski to get trade secrets and Levandowski never told him he would bring Waymo’s secrets to Uber.

The trial is expected to continue through next week. The jury will have to decide whether the documents downloaded by Levandowski were indeed trade secrets and not common knowledge, and whether Uber improperly acquired them, used them and benefited from them.

Reporting by Dan Levine; Writing by Heather Somerville; Editing by Susan Thomas and Grant McCool

Feds Take Down Infraud, a $530M Cybercrime Forum That Lasted 7 Years

With the rise and fall of dark web black markets like Alphabay and the Silk Road, law enforcement officials have repeatedly warned that even anonymity tools like Tor and cryptocurrencies won’t hide criminals from the law’s long reach. But the most recent takedown of another massive cybercrime forum carries a different lesson: It’s still possible to create an online black market even outside of the dark web’s cover, grow it to a half-billion dollar operation, and get away with it for the better part of a decade.

On Wednesday, the Department of Justice unsealed an indictment against no fewer than 36 people, accused of acting variously as administrators, moderators, and sellers of illegal hacking and fraud services on a black market forum known as Infraud. A coordinated action by Homeland Security Investigations and cops in Australia, Britain, France, Italy, Kosovo and Serbia arrested 13 of those named, and took down the website itself, replacing it with a seizure notice.

The indictment accuses those dozens of defendants, located from Moldova to the Ivory Coast to Bangladesh, of trading in stolen credit card numbers, Social Security numbers, compromised accounts, and materials to create counterfeit cards. They were also allegedly involved in malware, money laundering, and so-called “bulletproof” hosting services designed to host other illegal online operations. In total, the forum’s members are accused of causing $530 million dollars in damage to companies and individuals.

“Infraud was truly the premier one-stop shop for cybercriminals worldwide,” the Justice Department’s Deputy Assistant Attorney General David Rybicki told reporters in a press conference.

But just as noteworthy as the staggering scale of that busted operation—one of the largest in history—is its relative impunity. The majority of the defendants, according to the Justice Department’s statements, seemingly remain at large. That includes Infraud’s creator, the Ukrainian Svyatoslav Bondarenko. And after seven years online, Infraud also achieved longevity that’s far greater than most online black markets. The Silk Road, for instance, despite running as a carefully anonymized Tor Hidden Service and only using the cryptocurrency Bitcoin, persisted on the dark web for two and a half years before it was seized and its administrator arrested. The more recent go-to bazaar for dark web contraband, AlphaBay, lasted just three years.

Infraud remained online well over twice as long as those fellow black markets, while at times hiding in plain sight. The forum was initially hosted as a traditional website, reachable at the URLs infraud.cc and infraud.ws, though it may have later moved to Tor or other better hidden addresses.

The administrators’ most effective tactic to evade law enforcement for so long may have been an old-fashioned one: They ran the site from a server in a country beyond US law enforcement’s reach, likely Russia, says former FBI cybercrime agent EJ Hilbert, who’s now a vice president of cybersecurity at security firm Gavin DeBecker and Associates. Hilbert speculates that the site used the same sort of “bulletproof” hosting that site’s vendors offered for sale, which keeps servers far from American and Western European cops, anonymizes their operators, and frequently moves them to stay a step ahead of investigators. “They were sitting in countries outside the jurisdiction of Western law enforcement,” says Hilbert. “That’s why something like this can remain live for an extended period of time.”

In fact, since March of 2011, less than a year after allegedly founding Infraud, Bondarenko declared that all buying and selling of contraband with Russian victims would be banned from the forum. That tactic, frequently used by Russia-based crime sites, effectively dissuades Russian law enforcement from pursuing most domestically hosted cybercrime. Berkeley computer security researcher Nick Weaver argues that form of “arbitrage”—running a crime scheme with profitable victims in one locale, while hosting in another that’s safer from prosecution—can provide more effective shielding for criminals than Tor. “You find a place where the local laws are happy and host there,” Weaver says. “A cybercrime forum that is ‘no damage to Russia’ is generally allowed in Russia, no need to use Tor.”

That geographic strategy is a well-worn one for cybercriminals, and it long predates both the dark web and Infraud. But given the scale and long life of Infraud’s criminal activity, the site shows just how effective it remains even now. And Hilbert argues that the recent decline in Russian-American relations—particularly around Russia’s own state-sponsored hacking operations—won’t help. “With our government’s animosity to the Russians, and their animosity to us, there’s no reason for them to assist on crimes that don’t impact their people,” says Hilbert.

Just how US, Australian, and European authorities did eventually shut down Infraud remains unclear, and the Justice Department declined to make any officials available to answer WIRED’s questions. As part of the indictment, the Justice Department described a complex organizational chart of Infraud’s alleged staff—from members to VIP members to moderators to super moderators to administrators—which Hilbert suggests could mean they spent years slowly flipping members to identify others in the organization, or gain more information about the site’s hosting.

Despite many of Infraud’s defendants remaining free, the Justice Department’s Rybicki emphasized that the takedown represents a win for the global fight against cybercrime. “The charges and arrests announced today are a victory for the rule of law,” he said. “Law enforcement across the globe acted swiftly to take Infraud’s cybercriminals off the Internet.”

The Infraud bust will no doubt put a serious dent in the cybercriminal underground. But if seven years counts as a “swift” operation, the next Russian black market administrators may be taking comfort in the prospect of a long career ahead of them.

The Cyber Underworld

Uber says hackers behind 2016 data breach were in Canada, Florida

WASHINGTON (Reuters) – The two people who hacked ride-hailing firm Uber’s data in 2016 were in Canada and Florida at the time, a company security executive told a U.S. congressional committee on Tuesday.

About 25 million people whose data was compromised in the breach live in the United States, Uber Technologies Inc [UBER.UL] chief information security officer John Flynn said in written testimony to a Senate Commerce Committee panel.

Of those, 4.1 million were drivers, said Flynn, whose testimony described new details about the hack, the handling of which prompted newly appointed Uber Chief Executive Officer Dara Khosrowshahi to fire two top security officials.

Uber disclosed the breach of 57 million worldwide users in November, about a year after it occurred.

Reuters reported in December that a 20-year-old man was primarily behind the breach, and that he was paid by Uber to destroy the data through a so-called “bug bounty” program, which is designed to reward researchers for uncovering security vulnerabilities.

Flynn confirmed the man who obtained data from Uber was in Florida and revealed that his partner, who first contacted the company on Nov. 14, 2016, to demand a six-figure payment, was in Canada.

Uber’s security team made contact with both people and received “assurances” the pilfered data had been destroyed before paying them $100,000, Flynn said. Sources familiar with the breach told Reuters in December the company did a forensic analysis of the Florida hacker’s computer to verify the deletions.

Marten Mickos, CEO of HackerOne, Inc., testifies to the Senate Commerce Consumer Protection, Product Safety, Insurance and Data Security Subcommittee on Capitol Hill in Washington, U.S., February 6, 2018. REUTERS/Joshua Roberts

A Canadian Royal Canadian Mounted Police representative said she had no immediate comment on the case.

Flynn said Uber had made mistakes, including paying the hackers through its “bug bounty” program.

Slideshow (2 Images)

“We made a misstep in not reporting to consumers, and we made a misstep in not reporting to law enforcement,” Flynn said.

Republican and Democratic lawmakers admonished Uber for its delay in disclosing the breach.

”The fact that the company took approximately a year to notify impacted users raises red flags within this committee as to what systemic issues prevented such time-sensitive information from being made available to those left vulnerable,” Republican Jerry Moran said.

Democratic Senator Richard Blumenthal said Uber’s management of the hack was “morally wrong and legally reprehensible,” and that the company appeared to violate state rules for data breach disclosure.

Compromised data includes names, phone numbers and email addresses but not Social Security numbers or credit card information of Uber users. Driver’s license numbers of 600,000 drivers were also compromised.

Reporting by Dustin Volz and Jim Finkle; Editing by Alistair Bell and Grant McCool

Akamai revenue, profit top estimates on robust cloud demand

(Reuters) – Akamai Technologies Inc’s (AKAM.O) profit and revenue topped analysts’ estimates on Tuesday, and the company said it had cut about 400 positions, or 5 percent of its global workforce.

The company’s shares were up 8.2 percent at $68.87 in extended trading.

Activist investor Elliott Management, which has disclosed a 6.5 percent stake, would push Akamai to curtail what the hedge fund sees as wasteful spending, among other measures, sources told Reuters in December.

“As part of our effort to improve operational efficiency, we reduced headcounts in targeted areas of business, most notably in areas tied to our media business,” Chief Executive Tom Leighton said on a post-earnings call with analysts.

Akamai’s media business, which helps in faster delivery of content through the web, has been under pressure from large customers, such as Apple Inc (AAPL.O) and Amazon.com (AMZN.O), developing in-house capabilities to handle their web traffic.

Revenue in the unit declined 3 percent to $284 million in the fourth quarter ended Dec. 31, the ninth straight quarterly drop.

To offset the weakness, the company is bolstering its cloud security solutions.

Revenue in the company’s cloud unit surged over 32 percent to $135.2 million. Quarterly sales growth in the unit has averaged about 30 percent in 2017.

The company, which recorded a $52 million charge related to the restructuring in the fourth quarter, said it would take another charge of about $15 million in the current quarter.

Total revenue rose 7.7 percent to $663.5 million, beating analysts’ average estimate of $649.1 million, according to Thomson Reuters I/B/E/S.

The company’s net income plunged to $19.1 million, or 11 cents per share, from $91.6 million, or 52 cents per share, a year earlier, due to the charges.

Akamai also recorded a $26 million provisional charge associated with the recent U.S. tax law changes.

Excluding items, the company earned 69 cents per share, 6 cents above analysts’ average estimate.

The company forecast first-quarter revenue in the range of $647 million to $659 million, above analysts’ average estimate of $647.61 million.

Profit is expected to be about 67 cents to 70 cents per share, compared with expectations of 61 cents.

Reporting by Sonam Rai and Arjun Panchadar in Bengaluru; Editing by Sriraj Kalluvila

What You and Your Business Can Do to Avoid Identity Theft This Tax Season

Identify theft is a topic and headline that has attracted many headlines over the past few years, with individuals, large corporations, and government organizations falling victim to identify theft and data breaches. Identity theft and data breaches are always a risk, but can be even more prevalent during tax season, when information is at a premium, and business owners are already under extra pressure.

A study conducted by IBM identifies the average cost of a data breach at $3.62 million, and while this figure will obviously vary from organization to organization, the implication is clear. Data breaches and identify theft can have a large negative effect on your business, and lead you to spend large amounts of time and energy repairing the damage caused. Drilling specifically to smaller business, a study by Verizon identifies the following statistics for small businesses and data breaches:

  • Average cost is between $84,000 and $148,000
  • 60 percent of small business go out of business within six months of an attack
  • 61 percent of all data breaches impacted small to medium size business in 2017

This is a topic that definitely should be taken seriously, but it shouldn’t result in paralysis by analysis — there are things you can do today to protect yourself and your business from identify theft.

1. Set up a virtual private network for your business. 

Wi-fi can be convenient, but using an unsecured wi-fi connection is one of the easiest ways for hackers and other criminals to obtain your personal and business information. A VPN network is not a guarantee of securing your personal and business information, but it is more secure than wi-fi, and relatively simple to set up.

Setting up your business VPN, if you feel comfortable setting up a business email account and profile, is something you can do over a weekend, and is well within your budget.

2. Review your business credit report.

Setting up and improving your business credit is a process that many entrepreneurs overlook, but in addition to giving your business the financing it needs, is also something you need to monitor on a continuous basis.

You are entitled to a free credit report from each of the three major credit bureaus, and can request them either from the credit bureaus or from annualcreditreport.com. Even better, you can configure you account to send you automatic alerts and messages to keep you current on changes to your business credit file.

3. Consider identify theft insurance.

Insurance is a thing that you hope to never use, but it’s something you should certainly give serious thought to getting. This is even more true when it comes to protecting the identify and credit of your business — imagine only finding out that someone has taken out loans in the name of your business when you are looking to expand or grow your business?

There are lots of different options out there, so be sure to work with your CPA or financial professional to find a policy that is a good fit for your budget, and your business.

4. Remember that the IRS will never initiate contact except by mail.

As a CPA one of the most common questions I get, especially around tax time, is whether or not a small business owner should respond to a phone call or email from the IRS. Getting an email, or listening to a voicemail that sounds like it is from the IRS can be intimidating, stressful, and even a little scary, but the answer is a definite no — the IRS will never begin correspondence in any way but via mail.

In other words, never provide personal or business information over the phone, via email, or to an online portal without receiving official confirmation that the request is legitimate.

5. Secure your mobile devices.

It’s easier than ever before to conduct business and engage with customers via your phone, tablet, or other mobile device, but that doesn’t mean your security procedures should be any less vigorous than on your desktop computers.

Passwords are a great first step, but some other suggestions including the following, and can be set up for free.

  • Log out completely from any banking or payment app when you are done using it
  • Avoid downloading any unnecessary apps, or apps that request permissions that seem out of the ordinary, such as access to password/confidential information
  • Watch for shoulder surfers, i.e. be aware of your surroundings and anyone who appears especially interested in your phones content.

Identity theft is a real issue, and can cost you time, damage your reputation, and impact your bottom line. That said, taking a few simple steps today can help you secure you and your businesses information, and won’t break the bank.

Major Banks Ban Buying Bitcoin With Your Credit Card

Most major U.S. credit card issuers have now banned the use of their cards to buy Bitcoin or other digital currencies, in a move intended to decrease both financial and legal risk.

Bank of America began blocking cryptocurrency purchases on Friday, according to Bloomberg. JPMorgan did the same on Saturday.

Citigroup also says it is halting cryptocurrency purchases on credit, and Capital One and Discover had already enacted their own bans. That means all of the top five credit card issuers have announced or implemented bans.

The moves are above all in the banks’ self-interest. As Fortune previously reported, the mania surrounding cryptocurrency late last year appears to have motivated many retail investors to use credit cards as leveraging tools, buying more cryptocurrency than they could afford. With Bitcoin down roughly 50% from December highs, many of those investors are likely underwater right now, and may not be able to pay off their initial Bitcoin purchases soon, if ever.

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Further, as Bloomberg points out, banks may be responsible for monitoring customers’ behavior to prevent money laundering after they make a credit-backed Bitcoin purchase, a tough standard for them to comply with.

The bans — or more to the point, the news of the bans — may exacerbate ongoing declines in cryptocurrency prices. After a hefty bounce Saturday morning, crypto markets broadly retreated on Sunday. Bitcoin is now trading at around $8,500 from a December high near $20,000.

In the longer term, however, tighter cryptocurrency investment controls, whether from regulators or lenders, seem likely to help mitigate the consequences of both hype and scams. For much of 2017, those threatened to overshadow the underlying promise of blockchain technology, which is still in the very early stages of evolution.

Lomography Lomo'Instant Square Review: Great For Square Photo Lovers

One of my favorite cameras ever is the original Polaroid SX-70. This marvel of engineering, chemistry, and industrial design introduced the world to fully integral instant photography—before the SX, instant photography wasn’t quite instant, requiring a peel-apart film that relied on some pretty gnarly chemicals.

The SX-70 was like the iPod of its time. With a sleek metallic and leather exterior, the device popped up, transforming a jacket-pocketable slab into a sophisticated SLR camera. It was an expensive, high-tech imaging solution the likes of which the world had never seen in the early ’70s.

Perhaps most importantly, the SX-70 was the first Polaroid camera with the iconic, instantly-recognizable square photos that define that photo format. Until recently, the only way to get that iconic square instant photo was by shooting imperfect, Dutch-made Polaroid Originals film in a compatible (vintage or modern) camera. But you Huey Lewis-types now have another photographic option: last year, Fujifilm developed a square version of its awesome Instax film. Unfortunately, Fuji then proceeded to hamper it with an expensive hybrid digital/analog camera.

Enter the Lomography Lomo’Instant Square. It’s the first analog camera to shoot square Instax film. Like the SX-70, this camera is compact, and folds up when not in use. So far, so good…

The design and build quality of this camera is impressive. Lomo didn’t always make great-feeling, tightly-assembled cameras but since the Automat series began, it’s clear that these areas have been vastly improved. My review unit was a creamy white hue with color-matched faux leather on it.

Opening the camera takes a bit of force, which means it’s unlikely it’ll spring open in your bag. That’s reassuring to me, since the camera uses rubber for a bellows assembly behind the lens, a potential point of failure if debris falls inside the camera’s body. When closed, it vaguely resembles a pair of electrobinoculars from Star Wars.

The camera also protects its own front lens, opening and closing shutters that cover the glass as it unfolds. I was annoyed by how the camera’s lens mechanism resets its focus every time the camera is closed, so you’ll need to remember to check it each time you take the camera out.

Speaking of focus, the Lomo’Instant Square has a fairly forgiving range of zones to choose from. That said, I recommend you splurge and get the combo version of this camera, since it includes a much-needed portrait attachment. Though the Lomo’Instant Square features a tiny selfie mirror, at arms’ length, you’d be hard-pressed to take a portrait that’s not out of focus. Screw the 0.5m attachment onto the camera and your selfies will look so, so, so much better.

Photo modes are plentiful since this shares its exposure system with Lomo’s other recent instant cameras. Multiple exposures, 1 stop +/- compensation, and even a bulb mode are all standard features. I’d say that’s just enough control to help steer the otherwise-automatic exposure system into giving you the results you want, and certainly enough to let you experiment.

One pain point for me was the viewfinder. Unlike the magical, complicated SLR setup inside the SX-70, the Lomo’Instant Square has an off-center viewfinder that’s far, far away from the long lens. It’s tricky to frame shots up just right, and you’ll need to mentally compensate for parallax to make sure your subject is where you want it.

There are a few things you should know before you take the plunge and pick the Square. First, it’s expensive at more than $200. For the sake of comparison, the newest Polaroid Originals-branded model, the OneStep 2 sells for about half that, and gives you true Polaroid-sized pictures.

If that doesn’t dissuade you, grab the combo option that includes the Splitzer, a must-have portrait lens attachment, and an adapter back that’ll let you use Instax Mini film. That last piece is super cool—Instax Square film isn’t cheap at around $1.30 per shot, so you’ll probably get more use out of your camera if you can also shoot the cheaper, easier-to-find Mini-sized film.

Taken on its own, I’m impressed with what Lomo’s done here. Do I love it as much as my SX-70? No. But the square prints, fabulous design, and reliable Instax chemistry make this a far more approachable experience.

The Sound of a Cyber Bubble Popping

The cryptocurrency market is in a meltdown. Bitcoin prices are down nearly 60% from their December highs, and major banks are cutting off credit card access to crypto exchanges—no surprise in the wake of a mania that saw everyone and their dog sharing hot crypto tips.

Meanwhile, the cyber-security industry is experiencing its own bubble bursting, albeit in much less dramatic fashion. As Reuters reported last month, investors are at last acknowledging the obvious: There are too many VC-bloated start-ups chasing too few clients, while unicorns are morphing into zombies struggling to find an IPO or other exit.

This situation may explain a recent flurry of press releases from cyber firms like Tenable, Cylance and Duo. The releases tout revenue growth and appear intended to assure anyone who will listen that “hey, we’re surviving the cyber shake-out just fine thank you very much.”

It’s hard to say for now which firms will be left standing at the end of 2018 but, for now, it’s clear the peak of the cyber-boom, when VCs would shower money on any company with blinky lights, is over. The investor uncertainty, though, is just one part of the cyber story. There’s also the more important question of whether all these companies have helped harden the country against hacking, and the answer appears to be yes.

Based on recent conversations with ordinary executives, I’ve found cyber-literary has shot up. While hackers are still getting through (they always will), managers and general counsels are finally attuned to the threat and doing something about it.

This change is also trickling down to more humble enterprises. I met a company this week called CyberSight, which offers free and low-cost ransomware protection to the likes of small businesses and county governments, and many of them are actually implementing it. This is a welcome change from a year ago when too many companies blew off cyber defense as an exotic affair they didn’t need.

So let’s celebrate cyber victories where we can find them. Finally, returning to crypto, don’t forget it’s tax time—if you bought or sold, here’s a plain English Q&A to get you through. Have a great weekend.

Jeff John Roberts

@jeffjohnroberts

[email protected]

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

THREATS

Bye-bye little bots: Twitter users are losing tens of thousands of followers in the wake of a searing report about a “follower factory” that let people inflate their social media popularity with the help of bots, many of which were crafted by means of identity theft. A Twitter board member was among those who lost followers in the purge.

Apple and the FBI, it’s complicated: In the wake of a 2016 terrorist attack, media outlets (including Fortune) reported on bad blood between Apple and law enforcement over the iPhone maker’s encryption polices. Today, the two sides still don’t see eye-to-eye but are in many ways more friendly than you think.

Looming specter of Spectre: Sure enough, those scary Spectre and Meltdown viruses may be coming to a chip near you. Researchers have already found 130 malware samples that appear to have been built in order to exploit the worldwide chip vulnerabilities disclosed in January.

Netflix and Phish: When you have 118 million subscribers, many of them addicted to binge-watching, your service will be a popular target for scammers. A fake Netflix subscription email is making the rounds (again), threatening to cancel Netflix customers’ accounts if they don’t supply their credit card number. One guess what happens if you click.

Hey Hawaii, good call on canning that button pusher who kept confusing drills with real life. 

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ACCESS GRANTED

The robbery caper began in a Ruby Tuesday’s restaurant in Times Square, where Meza met his victim, who had earlier disclosed he was an early investor in Ethereum. The cryptocurrency was once worth pennies but last year soared to over $1,000.

— If you’re going to rob someone at gunpoint for their crypto-currency, for heaven’s sake, don’t transfer the funds to a popular exchange in your own name. Fortune obtained exclusive details about a crazy crypto heist in New York.

ONE MORE THING

Obligatory SuperBowl tidbit: Jeopardy host Alex Trebek chided his contestants over their complete and utter ignorance of football, a topic that regularly pops up in the weeks before the gig game. The show then trolled the players with a tweet, saying “Our contestants answered as many clues in this category as the @Browns had wins this season.”

Don't Waste Your Time Trying to Hire a 'Tom Brady.' Here's a Better Way to Build a Winning Team

By Mattson Newell (@MattsonNewell), Client Relationship Partner at Partners In Leadership and expert and author on Breakthrough Communications, Global Human Resources, and Talent Development.

It’s easy to look at the dynasty that the New England Patriots have built and fall into the trap of trying to hire a Tom Brady. That surely, once you have that superstar in place, it will lead to championships, glory, and bonuses for everyone.

Not everyone remembers that before Brady was the superstar he is today, the sixth-round draft pick who was in a battle to even make the team. From there he was coached and developed. He learned to seize opportunities as they presented themselves. As they say, leaders are made, not born. The same can be said for superstars, too.

Instead of throwing your resources into hiring a superstar for your business, here’s a better way to build a winning team.

1. Develop the right people

The development trap that many leaders fall into is looking for whoever has the best results in the company and then plugging them into a leadership position or development track.

When a very successful SVP of Sales left a Fortune 500 organization, who do you think they tabbed to replace him? That’s right, the person with the highest sales numbers the year before.

You can guess what happened next. The former sales superstar who was excellent at selling and working with clients, struggled in his new SVP role working internally and overseeing the sales team. Within six months he was out the door and the leader was again looking for a new SVP.

Top producers do not always translate into our top leaders. When deciding who the right person is to develop as a leader in your organization, consider the whole person instead of just focusing on numbers and results.

2.  Develop the right plan

Many organizations only put a plan in place to develop their people when they find out a leader is headed out the door. Unfortunately, that is too late.

Succession planning and leadership development should be a constant, thriving, evolving part of your organization at all times, not just when a leader is leaving. It is important to put systems and processes in place to identify, develop, and build bench strength.

Jim Skinner, former CEO of McDonald’s, was known to tell managers: “Give me the names of two people who could succeed you.” This was one way he worked to manage succession planning.

3. Develop the right skills

In a survey conducted by Partners In Leadership, which involved more than 40,000 people from small start-ups to Fortune 50 organizations, over half of those surveyed said that their stated 2020 goal was either an aggressive stretch or a crazy stretch.

But stretch goals are attainable: the Seattle Seahawks won the Super Bowl in 2014 even though they were only two years removed from going 7-9.

What is key is that your team has the skills necessary to achieve a stretch goal. If your current players don’t have what it takes to win, set them up for success by identifying what skills they need. Then provide the right learning opportunities to develop their talent for sustainable results.

By instilling an empowered, continuous learning culture, you’ll be able to maintain a motivated, performance-oriented workforce that isn’t afraid to stretch outside their comfort zone.

Creating Results and Shaping Change

True, it is much less expensive to develop your good people than to go out and try to hire the already-established superstars. But there are more benefits to developing employees than upfront cost-savings.

Employee research consistently shows that career development opportunities are a leading indicator of employee engagement. In a recent study on employee retention, the most important aspect of a company’s reward and recognition program was employee development opportunities.

Having worked with thousands of employees in high-potential programs over the years, we have seen the impact engaged employees have on their companies–both immediately and long after their development, as they move on to significant leadership roles in their organizations.

Don’t fall into the trap of thinking that you need to hire the next ‘Tom Brady.’ Instead, look for the current ‘Tom Brady(s)’ on your team and develop them. Who knows, they might turn out to be your next superstars!

The Risk Of The Roth IRA Revolution

Source: Google from Retirement Planning website

Bulls Make Money, Bears Make Money, Pigs Get Slaughtered”

Nothing is truer than the above when people start to believe they gain an advantage by converting their IRA losers into Roth winners. If you read my previous article on the Myths of Roth IRAs, which you can find here, you may already know the answer. In the light of the new tax laws that have done away with the Roth recharacterization there may be a new emphasis on trying to gain more spendable money in retirement by being concerned with tax-free growth in the Roth. Once again I will show, through demonstration why it doesn’t matter where the growth occurs. What matters is the tax rate you pay on the front end versus the tax rate you pay in retirement when you spend the money.

My wish is not to try and make you an IRS or tax expert but to at least give you enough information for you to understand some of the challenges in trying to navigate the environment of what are called tax-advantaged retirement accounts. In doing so I hope to dispel some myths or at least provoke you to investigate on your own some of the math surrounding these tax-advantaged accounts.

Ground rules

First, some definitions and abbreviations are in order:

I will use the term Roth to indicate any number of what are typically tax-advantaged retirement accounts funded with after-tax dollars for which you can withdraw all contributions and earnings tax-free later. These come in many different forms such as the Roth IRA, Roth 401k, Roth 403b, and others. I will use the term IRA to indicate any number of tax-advantaged retirement accounts funded with pre-tax dollars for which you withdraw all contributions and earnings paying ordinary income tax on them at the time of withdrawal. You could find many types of these such as Traditional IRA, Traditional 401k, 403b, SEP-IRA, 457b, SIMPLE IRA, and others. It should be noted that it is possible to have a mix of after-tax and pre-tax dollars in most of these accounts, but when I use the term IRA from now on, I will only be considering these accounts will all pre-tax dollars in them.

Let’s review what I call the 3 most common levels of tax advantage that you can receive when investing. With the new tax code, it is slightly different now so I will restate it here.

Level one-half: This typically comes out of what is called a taxable account from the generation of long-term capital gains or qualified dividends. Our current progressive tax code gives these gains a reduced tax rate that results in a reduction in the taxes paid. For instance, if your income is otherwise in the 10-12% tax bracket, dividends and long-term capital gains will fall to the 0% tax bracket, until they fill up that bracket. If your qualified dividends and other income are high enough to move you into the 22-35% bracket, the dividends and capital gains will be taxed at 15% for those brackets. I call it level one-half because there is no reduction on taxes for the deposits put in the account to start. The reductions for even the qualified earnings, while some can be essentially tax-free, this only occurs if you keep your total income and earnings below the 22% bracket point.

Level one: This level is occupied by both the IRA and Roth accounts which get either a tax break when you put the money in the account or a tax break when you take the money out. As I explained in my previous article these accounts are on equal footing for equal tax rates in and out.

Level two: This is occupied by the Health Savings Account which is known as the HSA. This account when used properly for medical expenses and accompanied by a high deductible health insurance plan will result in two levels of tax savings, one on the money contributed and a second on the tax-free withdrawals when the money is used for IRS approved medical expenses.

This article is only concerned with the level one retirement accounts and how the IRA and Roth can be thought of in most cases as equals. It is true that the Roth and IRA each have unique characteristics that may be appropriate or at least appealing to different investors. The short list of some of these is described below.

Roth:

Tax deferral on all earnings inside the Roth if you follow IRS guidelines. Tax-free withdrawal of all contributions and earnings (subject to 5-year holding period plus age restriction of 59½). Tax-free withdrawal of your contributions at any time or age from a Roth IRA. A note on this as it applies to employer sponsored plans is that you should check with your plan administrator as each plan has their own set of rules as to when withdrawals are allowed. Tax planning flexibility – Since there are no forced withdrawals by age 70½, you have more tax-planning flexibility during retirement. If a Roth IRA owner dies, certain of the minimum distribution rules that apply to traditional IRAs will apply to the Roth.

IRA:

Tax deferral on contributions during working years will lower your taxable income while working and can increase some tax credits. Increasing some tax credits could actually allow you to save more. The required minimum withdrawals must begin prior to April 1st of the year after you turn 70½. The RMD for any year after the year you turn 70½ must be made by December 31st of that later year. If these are not made you can incur a 50% penalty on any amount not taken that was due. Inherited IRAs have a complete set of RMD tables and rules which will not be discussed here.

There are many other nuances to the above two types of accounts and even within different types of Roth or IRA accounts, most of which can be found in the IRS publication 590, which has now been split into two parts – pub 590-A (contributions) and pub 590-B (distributions).

Assumptions for Roth Conversion

In order to make what is commonly called an apples-to-apples comparison of these Roth and IRA accounts we must use the following assumptions:

Because we can never know what future tax rates will be, each evaluation must be done at the same tax rate for each account, both at the start of the test period and the end of the test period. Each evaluation must be done from the aspect of how much money did the investor need to earn to fill the account to begin with. For all evaluations I will assume that the investor earned an extra $10,000 to put towards retirement savings. The tax rate was always 22% now and in the future. That the taxpayer is greater than 59.5 years old so that a penalty-free conversion is possible. See my previous article for how to do this conversion if you are less than 59.5, but why it is exactly equal to what I am illustrating here in an apples-to-apples comparison.

Let’s now continue on to see if we can bust up the notion of why it doesn’t matter how much tax you pay on the conversion, other than the obvious fact that it limits the size of conversion you do.

I lost 40% on my Netflix (NFLX) why not convert it to a Roth and then hope for the best in my Roth.”

Let’s compare some Netflix stock, which lost almost 40% a few years ago and was converted from an IRA to a Roth at that point in time, to what might have happened if no conversion was done. Below are the results.

While you might think that paying lower taxes is an advantage, the math shows that the tax rate in and tax rate out are what is important. Even though by doing the Roth conversion the investor paid $1320 less in lifetime taxes from this investment there was no more spendable income in retirement because of it.

The Roth Revolution

Why do I say Roth conversions are good for the national debt?”

This is easy, according to the Investment Company Institute; there is over $15 trillion in IRAs [including Roths] and other Defined Contribution Plans at this point in time. I don’t know the exact Roth / IRA split of this number, but I am pretty sure it will be leaning towards the IRA side of the equation. With the new lower tax brackets most people can do a Roth conversion for less so they may be considering it, without realizing that how much tax they pay now is not the whole story. However, as in my opening bullet point, this is very good for the national debt. In fact the faster millionaires buy into this strategy the better I believe it will be for all of us. With less debt there is less reason to raise taxes in the future. A Roth conversion is a great way to instantly increase government income. If you have read my many articles and comments on this subject you may know that I am not sure it is best for the average investor. It does have its place and I certainly have always maintained that everyone should have some Roth money to diversify their tax situation in retirement. I just don’t think it should be overdone.

Finally, I will explore what I have seen in some publications as a Fear Of Missing Out of tax-free income in retirement. This FOMO of tax-free income has blinded the investing public to what I have recently called in a comment stream the upside and downside risk of getting your future tax rate wrong. In other words, when we make any investing decision based on future events or tax rates that are unknown it is important to know both your possibility for gains to your spendable retirement income or the losses to your spendable income.

I will illustrate this with a few simple examples that a retiree may see during their lifetime. Let’s start out with case number 1, which is for the high-income earner who wishes to convert a large portion of her sizable IRA into a Roth to pass down to her children. Let’s consider she is doing Roth conversions in the 35% bracket because that is where she has been for most of recent history. Let’s shoot for a tax-free Roth benefit to each child of $1M and compare that to the options of a taxable IRA distribution. The equivalent size of the IRA at a 35% taxable income level is just $1M divided by the decimal created from the subtraction of 1 minus the tax-rate. This math results in $1M / .65 or $1.538 million.

Below is a table indicating the results from case 1 showing both upside and downside risk to their spendable income at different withdrawal tax rates. Assumption is that the beneficiary is married and spouse is not working and there are no investment returns in the life of the inherited account. Positive investment returns would certainly make the dollars larger in the examples but not on a relative or percentage basis. Also there are no state taxes.

As can be seen from the above, the upside risk if you stay with the IRA is about $400,000 (40%) more spending money for someone without a job inheriting the IRA. There is relatively no downside risk at all to staying with the IRA since the original owner converted the Roth in almost the highest marginal bracket. Even if the beneficiary draws the total IRA amount out in one year, the extra $1.538 million only caused the child to pay an effective tax rate of 32.8%.

The above highlights one of the reasons that make the Roth conversion or Roth contribution in higher tax brackets so problematic. Conversion taxes are paid on the marginal income in your highest tax bracket at the time. While the money is also spent in your marginal brackets as well, the starting point of this marginal bracket is usually much lower and can actually start out at zero if your other income is less than the standard deduction. Let’s look at another case in a lower tax bracket while working.

In case #2 the worker wants to end up with the same $1 million in the Roth account but through most of his career his working tax rate averaged 25%. This means to convert to his desired Roth he needs to have $1.333 million in the IRA to convert. Let’s compare the child that inherits the $1 million Roth to the one with the $1.333 million IRA at various spending rates. Below is a table indicating the results from case 2 showing both upside and downside risk to their spendable income at different withdrawal tax rates.

In this case what you see is that the upside to downside risk has changed from a spread of 40% (40% upside to 0% downside) to a spread of 21% upside [gain] to almost 10% downside [loss]. This is still a two to one advantage to the upside.

I will do one final example in which the worker keeps all Roth contributions or conversions in the 15% tax bracket. This case 3 is shown below.

In this final case the upside risk [gain] in staying with the IRA is about 7% for the inherited IRA owner that keeps her AGI within the $101,000 income limit. In the worst case, if the whole IRA is withdrawn in one year while working with an addition $100k taxable income the downside risk [loss] is almost 20% extra in taxes. However, it is highly unlikely that the taxpayer would need to withdraw the whole amount in one year. If the taxpayer keeps her total AGI at the $190k level there is no downside or upside risk and she can draw down the IRA over a number of years.

Summary

While RMDs can raise your taxable income and your tax rate in retirement they should not be something that is feared to extremes. In an article I wrote entitled Surviving the Tax Bite of Retirement, I pointed out that over the previous number of years the personal exemption, standard deduction, and the top of each of the tax rate bracket have grown by around 2% per year. With completely revised lower tax brackets for 2018 and the foreseeable future this has only improved the odds of you having a lower tax bracket in retirement, compared to while you were working. Hopefully, you have learned that this favors the IRA owner and the results are not insignificant. Who would not want 10-20% extra money in retirement or for their beneficiaries? I do understand that on the other end you do not want to be seen as the one who increased someone’s taxes with an inheritance. I personally think it is up to you to educate your heirs and make them see that a little bit of tax on a larger sum of many can in many cases be better than no tax on a smaller pool of money.

In my volunteer work helping people with their taxes each season there are always cases where having some of their retirement in a tax-deferred IRA could have resulted in some tax-free withdrawals from that IRA, due to their low income level. The converse is also often true – that with a Roth account it would have been possible to lower how much of their retirement savings goes to the taxman. It is never a bad idea, in my opinion, to have both Roth and IRA funds going into retirement.

Conclusion

For more detailed information on these subjects covered I suggest reading at least a couple of times the two IRS publications mentioned at the outset. Understanding the rules can avoid costly mistakes on the road to retirement as well as later when you are in retirement. I have also written an Instablog article titled Roth Vs. Non Roth (401k, 403b, 457, Etc) & The Time Value Of Money which adds a casino example to the mix that you may find interesting.

I also want to shout out a special thanks to Bruce Miller, who made my job much easier by providing a tax calculator for the new tax law going forward in 2018. He also wrote a good article on the subject which you can find here.

All tax calculations were done using the new 2018 law as best we know at this time.

This study is only as good as the data presented from the sources mentioned in the article, my own calculations, and my ability to apply them. While I have checked results multiple times, I make no further claims and apologize to all if I have misrepresented any of the facts or made any calculation errors.

The information provided here is for educational purposes only. It is not intended to replace your own due diligence or professional financial or tax advice.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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

Apple's Earnings: What I See Looming On The Horizon

Apple’s (AAPL) long awaited fiscal 1Q18 is now just around the corner.

The company will report the results of the quarter on February 1st, after the closing bell. The Street is anticipating revenues of $86.75 billion, a YOY increase of about 11% that would nearly match last quarter’s top line growth rate. EPS estimates of $3.81 would represent Apple’s largest earnings number on record, although it is unclear to me if any of the estimated $38 billion in tax payments from cash repatriation would impact the bottom line already this quarter (Apple reports earnings results in GAAP terms only).

Credit: Digital Trends

Phones, phones, phones

As I have argued recently, “performance of the iPhone X may help to set the course for the rest of the year in terms of financial results expectations and stock sentiment.” This being the first full quarter following the model’s introduction in early November 2017, I believe all eyes will be on smartphone sales this week. If the iPhone X sputters, as a few sell-side analysts have been predicting, the stock could face headwinds in the near term.

The graphs below might help to support these short-term concerns. Activation of new smartphone models introduced in calendar years 2016 (iPhone 7 and 7 Plus) and 2017 (iPhone 8, 8 Plus and X) accounted for roughly 16% and 14% of all iPhones activated by the end of each respective holiday quarter.

But because the iPhone X was not released until November 2017, the adoption of newly-introduced devices, including models 8 and 8 Plus, happened much more slowly this past year. Most iPhone sales, at least in the first half of fiscal 1Q18, seem to have come from older models – understanding that activation does not equal sales, yet the data seems very telling to me.

Source: DM Martins Research, using data from Mixpanel

Exiting the quarter, the iPhone X appears to be performing well in terms of activation, surpassing the iPhone 8 and 8 Plus in popularity. So if softness in smartphone sales is confirmed in fiscal 1Q18, I find it more likely to be reflective of product launch timing than indicative of a weak super cycle.

But it’s not all about phones

Although the iPhone super-cycle is a key pillar of many Apple bulls’ investment theses, the story does not end there. I see Apple well positioned to benefit from increasing consumer sentiment (see graph below) and discretionary spending activity across its product and service portfolio.

Source: CCI historical data from OECD

Back in November, I discussed how “Apple has been one of the few winners coming out of the undergoing (laptop and desktop) consolidation.” Last quarter, Mac revenue growth shot up to about 25% YOY. Fiscal 1Q17 saw an improvement (see graph below), suggesting fiscal 1Q18 will face slightly stronger comps this time. Still, I anticipate both units sold and ASP to come in on the healthy side this quarter, particularly as Apple expands its product offering across multiple price points from the low-end Mac Mini ($499) to the recently-released iMac Pro ($5,000).

Source: DM Martins Research, using data from company reports

Elsewhere, I have no reason to believe that Apple’s Services segment will see a dip in its growth pace. The company continues to be well on track to double the division’s revenues between 2016 and 2020. Helping to support this mission is what appears to be a recovering Chinese market, which finally showed signs of having a pulse last quarter. As the installed base in the country returns to growth, the lagging effect on Services revenues is likely to follow.

Possible short-term risks, bullishness intact

All factors taken into account, I continue to believe AAPL will perform very well in the long term. The company is riding the tailwinds of an increasingly robust global economy, and a pickup in consumer discretionary purchases is likely to benefit the tech company. It does not hurt that (1) cash repatriation should further support the stock through increased investments, a potential bump in dividend payments and share repurchases, and (2) the stock still seems de-risked enough to me, trading at a forward P/E of only 14.9x and PEG of 1.7x (see graph below).

Chart

AAPL PE Ratio (Forward) data by YCharts

For now, I remain an AAPL holder, and find it unlikely that I will dispose of my shares any time soon. If short-term weakness related to iPhones in fact materializes, I believe a potential hit that the stock might take would be an opportunity for investors to accumulate shares on the dip.

Disclosure: I am/we are long AAPL.

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.

Don't Quit Your PR Program Unless You've Considered These 3 Things

Whether you are looking to gain awareness, improve SEO, or increase sales, having great exposure can help you get there. But PR is not a band-aid for an overarching business problem–nor is it a get rich fast technique.

A great PR strategy can take many years to build. Over the years, I’ve seen many companies start their efforts, only to stop before they’ve given the program enough time to develop. I’ve heard dozens of marketers and founders explain that they quit their PR efforts after their pitch didn’t get picked up by enough outlets in the first few week. Gaining great coverage takes time, pitch optimization, and persistence.

Often times, if a brand could have taken a step back after a rejected story to tweak their angle and try again, the second story they pitch could have been widely successful. Here’s why you shouldn’t throw in the towel for your PR outreach just yet:

1. Relationships take time to build.

Imagine you are at a party. You immediately start talking about you, your business, and your news. Very quickly, many people will not want to talk with you.

The same holds true when you’re building relationships with the media. It takes time to get to know a reporter and what they are writing about and then creating relevant pitches that are helpful to them. When you build trust and rapport with reporters, they’ll be more likely to open your emails, which is the first step to gaining great coverage.

You can build a better relationship with reporters by becoming well versed with their past writings and looking for opportunities to tell them stories of interest. Take a look through their Twitter accounts and personal websites to learn more about what they’re covering and the news that is important to them.

When you reach out to a reporter for the first time, show them that you are knowledgeable about their area of coverage and that your story fits their angle. When we reach out to reporters we make sure to spend time reading their past work to ensure our pitch is the right fit for their area of expertise.  It can be easy to burn a press bridge simply by not personalizing an email enough–take your time, do your research, and get to know reporters for the long term. Slow and steady wins the race.

2. SEO is a long-term game.

When you receive a press mention, you’ll likely see a spike in traffic on the day it’s published–but don’t discount the future traffic. If you are a mattress company and you get listed as “The Best Mattresses Ever Made,” you’ll benefit from both the spike and also later from people who are searching for mattresses and come across the article. Traffic from press articles should be monitored for months to come, even after publication.

An authoritative link will not only drive traffic, but will also help your website in the search engine rankings. This boost will not happen instantly. With time and relevant inbound links, you’ll see not just your referral traffic grow, but also your organic search traffic from Google.

3. Press takes commitment–and a bit of luck.

It takes a while to learn about the best way to pitch your product. Each time you pitch, you’ll learn more about what copy and message resonates with reporters.

If you’re not seeing any success, it does not mean you don’t have an interesting story. It might mean you are pitching to the wrong reporters, your email subject line needs work, or you simply didn’t follow up.

By tracking your emails with a tool like SideKick or Yesware, you’ll be better able to see who is opening your mails, what they’re clicking on, and how many times they went back to the email. You can use this data to refine your pitch the next time. With the media always changing, it also takes a bit of luck to pitch at the right time to the right reporter with the right story.

Pitching takes a strong backbone and you’ll get a lot of rejections. If you haven’t had success yet, keep trying. And if you’ve been pitching for months with still no results, it might be time to call in a PR pro to help you optimize your pitch and press kit.

If you’re looking to reap the benefits of the press, start early, optimize often, and plan your strategy for the long haul. This time next year, you’ll be glad you stuck with it.

‘Who Is Jesus?’ Google Home Couldn’t Answer and People Weren’t Happy

Anger over Google Home’s inability to answer questions about Jesus led the company to bar the device from answering questions about all religious figures, according to a statement released Friday.

Some users became angry when the smart speaker was unable to answer questions such as, “Who is Jesus?” but could respond to similar queries about Buddha, Muhammad and Satan, CNBC reports. Some unhappy social media users alleged that Google was “censoring” Jesus.

Danny Sullivan, Google’s public search liason, tweeted a statement by way of explanation on Friday. “The reason the Google Assistant didn’t respond with information about ‘Who is Jesus’ or ‘Who is Jesus Christ’ wasn’t out of disrespect but instead to ensure respect,” the statement reads. “Some of the Assistant’s spoken responses come from the web, and for certain topics, this content can be more vulnerable to vandalism and spam.”

Until the issue is fixed, according to the statement, all responses for questions about religious figures will be temporarily unavailable.

Google’s reliance on “featured snippets” — the pullout information that appears at the top of a page of search results — has gotten the company in hot water before. Inaccurate and offensive information can find its way into featured snippets, which has led Google’s smart products to repeat sometimes inflammatory comments.

Google Home is now responding to questions about religious figures with, “Religion can be complicated, and I am still learning,” users report.