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BlackBerry Messenger will soon be the latest messaging service to die

Thu, 04/18/2019 - 8:47pm  |  Clusterstock

  • BBM, formerly known as BlackBerry Messenger, will be shut down on May 31.
  • Emtek, the company that now runs the messaging service, tried to revive it, but said that "users have moved on."
  • BBM users will need to download their photos and files from the service before it shuts down, because they won't be able to access them afterward.
  • Visit BusinessInsider.com for more stories.

First AIM. Then Yahoo Messenger. Now BBM.

The messaging service that was once was a beloved feature of BlackBerry phones is going away, becoming the lastest in a line of formerly popular chat apps to get the ax.

Emtek, the company that runs the former BlackBerry Messenger service, will shut it down on May 31, the firm announced in a blog post on Thursday. Despite investing in new features, Emtek wasn't able to jump start usage of the service, it said.

"Three years ago, we set out to reinvigorate BBM consumer service," the company said in the post.

"We poured our hearts into making this a reality, and we are proud of what we have built to date," it continued. "The technology industry however, is very fluid, and in spite of our substantial efforts, users have moved on to other platforms, while new users proved difficult to sign on."

After Emtek shuts down the service, BBM users will no longer be able to open the app to view old messages, photos, or other files, the company said on a page offering answers to frequently asked questions. Users will be able to download photos, videos, and files before May 31. But they won't be able to keep any stickers they've purchased or personalized emoji they may have created with the company's BBMoji service, it said. 

Last decade, when BlackBerry devices were among the most popular smartphones, BBM served a similar role for the devices as iMessage plays on iPhones today. It was the default messaging service for BlackBerry devices and, because it was only available on Blackberry handsets, it was one of the primary reasons customers stuck with them.

But usage of BBM started to be overtaken by iMessage and other services after the iPhone and Android-based devices took over the smartphone market. Smartphone messaging leaders now include not just iMessage, but Facebook-owned WhatsApp and Messenger, and WeChat.

Read this: Google is shutting down its Allo messaging app for good

To court users on other devices, BlackBerry later opened up BBM to owners of iPhones and Android phones. As recently as 2015, it said it had 140 million registered users on those non-BlackBerry devices. Emtek acquired the rights to BBM from BlackBerry in 2016.

BlackBerry held on to the enterprise version of BBM that it offers to corporate users. The enterprise BBM is still alive. 

Got a tip about a tech company? Contact this reporter via email at twolverton@businessinsider.com, message him on Twitter @troywolv, or send him a secure message through Signal at 415.515.5594. You can also contact Business Insider securely via SecureDrop.

SEE ALSO: One of the tech industry's leading critics says Apple and Google's new 'screen time' features will never work because they ignore the underlying problem

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Meet the ex-Facebook advisor who pitched Richard Branson while kiteboarding (FB)

Thu, 04/18/2019 - 8:25pm  |  Clusterstock

  • Karl Jacob pitched his startup LoanSnap to Richard Bransonduring a kiteboarding trip and walked away with the billionaire's backing for its $8 million Series A in 2018.
  • Jacob was an early advisor to Facebook, and says his experience working in the early days of social networking reinforced his belief in taking bigger risks and bigger failures.
  • According to Jacob, founders and investors need to be more comfortable with failure and more patient with teams trying to unseat massive entrenched industries.
  • Visit BusinessInsider.com for more stories.

Karl Jacob was riding high.

The former Facebook advisor had just started LoanSnap, an AI-powered platform for mortgage lending, and was kiteboarding in the summer of 2018 on Necker Island, one of the sport's premier locations owned by billionaire Richard Branson. Jacob was on the island for an entrepreneurs' retreat, courtesy of an invite passed along by a friend. When Jacob climbed out of the crystal clear waters for lunch, he noticed Branson off by himself.

"It's something I've learned if you see an opportunity like that you take it," Jacob tells Business Insider. "We started talking about our sessions and our tricks and jumps and he eventually asked what I did. When I told him I started a mortgage company, Richard turns to me and with a big smile and says, 'Interesting, I own four of those. We should talk.'"

Read More: Google's AI venture fund is leading a $3.85 million round into a startup that's trying to reinvent the industry for homeowners insurance

According to Jacob, kiteboarding has many parallels with starting a business. There are plenty of risks and anything can go wrong at any moment. People who succeed in both environments share many qualities: they are adventurous, open to risk, and comfortable with failure.

"It's a more natural way for people to meet," says Jacob. "My conversation with Richard started around the sport and ended around business, and our first impressions of each other were about the sport. You know this person is competitive and adventurous and overcame their fear, which is a big part of being a good entrepreneur."

Jacob explains that he is more prone to taking risks now than when he was younger. He emphasized the importance of having investors aligned with longer term goals and bigger risks, and pointed to Pinterest's public offering Thursday as evidence of those risks paying off.

"If you are going after a  big space with game changing idea, you better have patient investors that understand you will fail and you will fail a lot before you make it," Jacob says. "Pinterest is one of the best examples of that. It took [Pinterest cofounder and CEO] Ben [Silbermann] seven years to get Pinterest to work. People who have the discipline to fail and try again, they ultimately win."

In the weeks following Jacob's serendipitous kiteboarding trip, he closed LoanSnap's $8 million Series A led by True Ventures. Branson was among the company's backers.

SEE ALSO: Founders Fund made its first alcohol investment. Here’s how the 28-year old woman who founded the company is trying to change drinking culture for the better.

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$9.2 billion Zoom's second most powerful shareholder thinks CEO Eric Yuan is like Steve Jobs, but nicer (ZM)

Thu, 04/18/2019 - 7:54pm  |  Clusterstock

  • Zoom started trading publicly on Thursday after pricing its IPO at a $9.2 billion valuation.
  • The IPO was a boon for CEO Eric Yuan, who owns much of the company and holds nearly 20% of the voting power. The second most powerful investor is Emergence Capital Partners, a venture capital firm that once backed Salesforce and Box.
  • We spoke to Emergence partner Santi Subotovsky about what sparked his interest in Zoom, and why Yuan reminds him of Apple cofounder Steve Jobs — only a nicer version.
  • Visit Businessinsider.com for more stories.

When Zoom priced its IPO on Wednesday evening, the video conferencing platform garnered a valuation of $9.2 billion, and founding CEO Eric Yuan saw a huge windfall. Collectively, Yuan and his family now own 20.5% of the company's common stock, as well as 20.1% of its high-vote stock.

But another big winner was Emergence Capital Partners, a venture capital firm that invested in Salesforce, Box and Veeva before the companies went public.

Emergence's investment in Zoom's 2014 Series C was worth $1.1 billion with the IPO. Despite selling nearly 1 million shares in the IPO, Emergence still owns 12.7% of Zoom's high-vote stock.

Emergence General Partner Santi Subotovsky took a seat on Zoom's board, and he's been working closely with Yuan ever since.

In the hours after Zoom started trading, Subotovsky spoke to Business Insider about what first drew him to the company and why Yuan reminds him of Apple cofounder Steve Jobs — but nicer.

This interview was edited and condensed for clarity.

Becky Peterson: You're in New York right now? How did everything go today?

Santi Subotovsky: It was exciting. It was great to see a lot of the Zoom employees, even a lot of the early employees that were there back in 2014 when we first invested in the company. It was great to see a number of customers there celebrating with us. And it was also great to see a lot of investors celebrating.

It was like one of those big family reunions. We're just celebrating a milestone without thinking that this milestone is the ending.

Peterson: Have you taken a portfolio company public before?

Subotovsky: No, this was my first experience. Hopefully not the last one.

Peterson: You invested in Zoom back in 2014. How did you first meet Eric, and what drew you to the company?

Subotovsky: I had a pain point that other people didn't have, because I'm from Argentina and I wanted to connect with people in Argentina. So I tried every technology out there to figure out what was going to be the next communication platform.

Zoom not only worked incredibly well but it also started spreading virally, and I started getting invites from friends of friends. That's when I reached out to Eric and we started building a relationship.

I tried to understand why the technology worked so well, what his vision was, and then I got it. He was rebuilding the entire architecture for this modern cloud environment and that's what enabled him to deliver incredibly high quality to each of the participants. And that's why we decided to partner with him.

And he saw that given our experience with companies like Salesforce and Bosch, we could help with go to market, and going from the SMB business that he was targeting early on and into mid-market and enterprise.

Read more: Billion-dollar startup Zoom filed to go public — and shares of a totally unrelated company also called called Zoom shot up 1,100%

Peterson: How big was the company when you first invested?

Subotovsky: We invested when the company had about 30 people and had a few hundred thousand dollars in monthly recurring revenue.

Peterson: As an investor, were there any indications early on that Zoom would get as big as it did? It went public with a $9.2 billion valuation.

Subotovsky: We looked at the market and we saw that it was going through a major transformational change.

The way we thought about it was that in the early days people were building relationships exclusively in a face-to-face meeting setting. And then we tried to shortcut that process and started using email and phones, and those were technology crutches. It wasn't as good as face-to-face meetings.

What we saw is that people were spending a lot more time on Zoom, even though they could have had face-to-face meetings. So that's why this notion that video is the way people are going to communicate gave us the sense that this was going to be a big opportunity.

Peterson: Was there ever a point since your first investment when you thought the company might fail?

Subotovsky: It's a good question. We had hurdles along the way; it's never a straight line. But overall, the culture never failed. We never twisted the culture just to make things work or because the market wanted us to do this or the customer wanted to do that. We only stayed true to the culture.

It was a culture of care: care for employees, care for customers, care for investors, and care for partners.

Eric is an incredible leader. He's a visionary. It sounds like describing a version of Steve Jobs that is much nicer. He has that visionary focus of what people need and what's going to make people's lives better, but he actually cares about people, and that's why he's the nicer version of Steve Jobs.

Peterson: How did you and the rest of the board decide it was time for Zoom to go public this year?

Subotovsky: It was more about how can we get to more customers and how can we expand our footprint. It was a natural progression for the company.

We saw this as a milestone, a graduation. It's like a high school graduation. But now we're going to college and we're still going to work incredibly hard to graduate from college and move on.

Peterson: Recode reported on Wednesday that Zoom was previously approached by Microsoft, which wanted to buy the company. Did Zoom decide categorically not to sell or is it something the team considered?

Subotovsky: Eric wants to run a company and wants to have full control of the culture, and he wants to have full control of how employees and customers feel about the product.

Right now he he feels he's delivering happiness all around, and if that changes he might change his mind. But for now, he's obsessed with this culture of happiness, both internally facing and externally facing.

Right now I don't think that's in the cards fo Eric and the company. We just want to keep doing what we're doing.

Peterson: As an investor, what do you plan to do with your proceeds? What happens next for you?

Subotovsky: We haven't had that conversation. I personally hope to help Eric build the company as he continues working on it. For us at Emergence, it's not about taking the company public, it's helping founders build iconic companies. Even though this is a great company, we still have a lot to do and we're excited to go back to work after this week.

SEE ALSO: One of PagerDuty's earliest investors shares why he went big on the IT-management company before it reached $1.76 billion

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Atlassian stock dropped 8% a day after it reported earnings, but Wall Street has 'no fear' about its future (TEAM)

Thu, 04/18/2019 - 7:34pm  |  Clusterstock

  • On Thursday, Atlassian's stock slid 8% after reporting a lower guidance for EPS next quarter than Wall Street expected on Wednesday.
  • Analysts say the drop in stock is due to the impact of Atlassian's price increases and operational costs, such as hiring.
  • Still, analysts are not worried, and they see long-term growth for Atlassian, especially in the IT industry.

A day after Atlassian reported earnings, its stock slid 8%, and analysts say it's because Atlassian is still feeling the after-effects of its price increase.

While Atlassian beat Wall Street's expectations on revenue and saw its revenue spike 38% from last year, its guidance for earnings per share next quarter was lower than Wall Street's expectations. The company forecast EPS of  $0.16, while Wall Street was expecting $0.19.

Analysts drilled Atlassian's leadership team about the low guidance during the earnings conference call as the stock slid. However, some analysts say this is just a "blip," and that as Atlassian matures, it's natural that Atlassian's performance will vary from quarter to quarter.

"We are encouraged by the measures the company is taking to scale inside large customers and gain footholds in IT and we feel that their ability to make the right strategic choices will shine in the long-term," Joel Fishbein, Jr., managing director at BTIG, wrote in his note.

"Last quarter was perfect"

Pat Walravens, director of technology research and senior analyst at JMP Securities, which does business with Atlassian, says there are three main reasons for the stock's drop: the impact of its pricing changes, increased operating expenses, and investors' lofty growth expectations.

Atlassian announced price increases in October and many of its customers stocked up to get ahead of the price hikes. As a result, Atlassian had a strong end of the year but it will sell less in the next two quarters, analysts say.

"Last quarter was perfect," Walravens told Business Insider. "Generally, Atlassian's products are really good, and really cheap, and that's their secret sauce. That being said, they do raise prices every couple of years...If you're a savvy customer, which most of Atlassian's customers are, you stock up."

Read more: Atlassian beats Wall Street's expectations yet again with 38% revenue growth, but the stock slips down over 9%

Analysts also say the low guidance is related to operations cost, such as product investments, increased hiring, and the AgileCraft acquisition. But for the most part, they're still optimistic about Atlassian.

"No company is bulletproof"

While Atlassian might incur high costs from hiring, it's a necessary step for a company to grow, Walravens says.

"Short term, that will hurt Atlassian stock price wise," Walravens said. "Longer term, you can't grow these businesses without adding employees, so the fact that they see lots of opportunity and they want to hire to address it is a positive."

In addition, analysts point to its recent moves in the IT operations space, with its acquisition of incident management company OpsGenie, as well as investing in Jira Desk, another IT product. This would position Atlassian to compete better against companies like ServiceNow.

On top of that, customers love Atlassian's products, says Richard Davis, managing director at Canaccord Genuity.

"Last week we spent 48 hours at Atlassian's customer conference and compared to other conferences, the interest, excitement and respect for Atlassian's products was easily in the top decile in terms of positivism," Davis wrote in his note.

With a combination of its growth in IT, customer loyalty, and its low-cost sales model, Davis says Atlassian will be in a "good place for several years to come."

"We have no fear that Atlassian's fundamental outlook has, or is about to, dim," Davis wrote in his note. "While no company is bulletproof, Atlassian comes about as close as any company we track."

That being said, Davis warns that this doesn't mean buying Atlassian stock poses no risks. If Atlassian raises its prices too much, competition could sneak in. But not all analysts have the same view -- back in February, Fishbein wrote that Atlassian could raise its prices with little to no customer complaints.

SEE ALSO: INTRODUCING: The 10 people transforming the way the technology industry does business

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Video-conferencing company Zoom soared 81% in its first day of public trading — now its CEO and CFO are focusing on these 3 goals (ZM)

Thu, 04/18/2019 - 7:05pm  |  Clusterstock

  • Zoom went public on Thursday, and shares soared 81% on its first day of trading.
  • Zoom now has three goals: obtaining more enterprise customers, expanding to international markets, and promoting its new Zoom Phone product.
  • Zoom CEO Eric Yuan and Kelly Steckelberg, the company's chief financial officer, talked with Business Insider about how Zoom's viral nature and a frugal company philosophy helped the $9.2 billion company become profitable.

When the video-conferencing company Zoom went public on Thursday, shares skyrocketed 81%. But for Zoom, this is just day one of this milestone, and tomorrow, employees are back to work.

"We've got to go back to work," Zoom founder and CEO Eric Yuan told Business Insider. "I'm going to fly back to California. We have to double down on our execution and do what we were doing before. We've got to keep doing that to make sure we keep our customers happy."

Before going public, Zoom raised $517.5 million from investors, pricing its shares at $36 to achieve a $9.2 billion valuation. Zoom is entering the public markets with profitability on its side — making Zoom stand out in a landscape where tech companies often have redline-filled balance sheets as they go public.

"It's been something we've been striving for for a long time," Kelly Steckelberg, Zoom's chief financial officer, told Business Insider. "It's an amazing milestone ... Given the market conditions and our readiness, we felt now was the right time to do that."

3 post-IPO goals

Now that Zoom has reached its initial-public-offering (IPO) milestone, it has three key goals: sell to more enterprises, expand international sales, and push its new product Zoom Phone, a cloud-based phone system. In January, Zoom hired a head of international sales, and it's been hiring new enterprise sales representatives as well.

As it aggressively hires more engineers and sales reps, Yuan said a company can't succeed or grow without a healthy culture. This is reflected on the employee ratings site Glassdoor, where Zoom has 4.8 stars out of 5 and is ranked the No. 2 place to work in 2019.

When hiring, Yuan said the company cares more about whether candidates can build on the company culture and if they are willing to learn than the universities or companies the they come from. After all, if a company culture is broken, it can quickly cause a company to rot.

Read more: Video conferencing company Zoom prices IPO at $36 per share, giving it a $9.2 billion valuation — 9 times its last private valuation

Meanwhile, Zoom faces its share of competitors: Google Hangouts, Microsoft's Skype, and even Yuan's former company Cisco WebEx. But Yuan said Zoom doesn't focus on competitors.

"We really spend the time talking with our customers," Yuan said. "We try to be the first vendor to address customers' problems and try to be the vendor to come up with a better solution. If we focus on competitors, it's not sustainable."

Zoom's secret to profitability

Throughout the IPO roadshow, Yuan joined all of his meetings via Zoom. Steckelberg traveled for the meetings, while Yuan called in from his office in San Jose, California. As a joke, Yuan would change his video background to different scenes, such as a beach in Hawaii. He said shareholders were impressed.

"For the first two minutes, they were surprised," Yuan said.  "They said, 'Wow I did not realize you can do that.' It's an awesome experience."

This also showed shareholders how Zoom grew so fast. Steckelberg said it's because it's viral in nature. If a host calls someone else via Zoom, the person on the other side has the potential to become a Zoom customer. Zoom does invest in sales and marketing, but it does it with "discipline."

"It has the opportunity to be shared by millions of people without having a sales team to do that," Steckelberg said.

What's more, Zoom has this philosophy: Employees should take a minute to think about how they're spending their own money and take two minutes to think about how they're spending the company's money. This frugal philosophy, Yuan and Steckelberg said, also helped make Zoom profitable.

"We're striving for how it helps people think about how people can be as efficient as possible," Steckelberg said. "We want them to be thoughtful about how they bring value to our customers."

That's because Yuan doesn't see venture-capital money as money. And every time managers or department heads want to spend money, they ask themselves if there's a workaround, why they're spending that money, and what they'll get as a result.

"I remind myself, the money from the investors is not money from our perspective," Yuan said. "That's trust. Every dollar is trust. Those investors trust us ... That's one reason that contributed to the profitability."

This, Yuan said, is an important aspect of Zoom's top company value: care.

"We care for our community, customer, company, teammates, and our ourselves," Yuan said. "Today, we added one more: shareholders."

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The lawyer who led Canopy Growth's groundbreaking $3.4 billion purchase of US marijuana cultivator Acreage Holdings says it will 'untap the market' for companies hunting similar deals

Thu, 04/18/2019 - 6:42pm  |  Clusterstock

  • Canopy Growth on Thursday announced it entered an agreement to purchase Acreage Holdings, a US pot company.
  • The groundbreaking, $3.4 billion deal would be the first example of a Canadian cannabis company buying up a US operator.
  • The deal will provide an opportunity for companies from consumer packaged goods, cannabis, and pharmaceutical industries to get exposure to the lucrative US market without violating federal law.

Canadian marijuana behemoth Canopy Growth announced on Thursday morning that it has entered into a conditional agreement to purchase Acreage Holdings, a US pot company, for $3.4 billion pending federal legalization in the US.

But the reason the deal sent a shockwave through the cannabis industry was not only because of its size. 

It's because of the complicated nature of the cannabis industry, where the drug is fully legalized in Canada but not in the US. It was long thought by Canadian marijuana cultivators, or licensed producers (LPs), that investing in US assets would be considered illegal — thereby putting their stock exchange listing in jeopardy. Until this deal, Canadian marijuana producers like Canopy have generally avoided investing in the US even though that market is set to be much more lucrative. 

"This would certainly be one of the most complex M&A transactions I've ever worked on," said Jonathan Sherman, a partner at the law firm Cassels Brock, in an interview. Sherman, along with Cassels Brock partner Jamie Litchen, led Canopy's involvement on the deal.

"It's probably one of the most complex M&A transactions that's happened in the Canadian space for a long time," added Sherman. 

Read more: 'My lips are wet, my mouth is watering to get a piece of that': A war is brewing between US and Canadian marijuana companies to claim a $75 billion market

Under current rules, neither the Toronto Stock Exchange nor the New York Stock Exchange, where Canopy is dual-listed, allow companies to violate US federal law by purchasing assets or investing in companies that sell THC-containing products to the US.  

A spokesperson for TMX Group, which owns the TSX, declined to comment.

Sherman said that the deal had been in the works for eight months and that regulators from both the NYSE and TSX had been looped into the discussions.

Business Insider previously reported that Canadian cannabis companies had been lobbying the TSX to change exchange regulations to allow them to purchase US assets. 

Sherman pointed to Canopy's November investment in TerrAscend Corporation, a cannabis company with exposure to the US market, as providing a legally-compliant framework for this type of deal. 

Read more: Canadian marijuana companies are quietly pushing the Toronto Stock Exchange to allow them to invest in the lucrative US market and it could be transformative for the $75 billion industry

"That kind of got the conversation going on what would end up being the structure of this transaction," said Sherman. 

As part of the deal, Acreage shareholders — including former Republican Speaker of the House John Boehner — will receive an immediate $300 million payment, pending approval by the Supreme Court of British Columbia as well as both Canopy and Acreage shareholders.

The rest of the money would come when the US federally legalizes marijuana. Or, as many Wall Street analysts have pointed out, if Congress passes something like the STATES Act — which would allow states' to choose their own route on marijuana legalization, as many have already done — it would pave the way for banks to work with the industry.

That interim period was one of the main "sticking points" in the negotiations, said Sherman, and he declined to say which exact policy would allow the deal to close.

Sherman said there isn't really historical precedence for this type of deal, and that they had to get creative and "put a lot of time and energy" into the deal in order to structure it in a way that was legally permissible and beneficial to both companies.

Read more: Unilever is the latest consumer giant to break into the potentially $16 billion hemp and CBD space with a new line of deodorants

"When we were negotiating the transaction, we kind of had to pull from a bunch of different places — it's a little bit part M&A, part joint venture in the sense that you've got two companies coming together with separate management teams, separate boards, and remain distinct entities for some time," said Sherman.

The closest analogy Sherman could think of would be in a pharmaceutical transaction, where the deal is dependent on a drug getting approved by the FDA — a process that could take years. 

What is clear, however, is how groundbreaking the structure of this deal is for corporations who want to get in on the US cannabis market.

"I think this is going to untap the market," said Sherman. "You're going to see some interest from alcohol, tobacco, and pharmaceutical companies that aren't in the space right now because of sensitivity to cannabis generally."

If you have a structure where you can legally acquire another entity, like a US cannabis operator, said Sherman, it will open up interest from companies from those other sectors that "we may not have seen as recently as yesterday."

"Canopy Growth kind of set the standard here and paved the way for these novel transactions to be something we see a bit more regularly," said Sherman.

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The companies disrupting the payments industry in major markets through digital

Thu, 04/18/2019 - 6:04pm  |  Clusterstock

This is a preview of the Global Payments Landscape report from Business Insider Intelligence. Current subscribers can read the report  here.

  • Noncash payments are on the rise worldwide.
  • As new players emerge to capitalize on consumer appetite for digital payment methods, three mature markets — the UK, Australia, and Sweden — have become standouts for what a more cashless society could look like.
  • The UK, Australia, and Sweden are transitioning to digital particularly well, and can serve as a roadmap for other mature markets seeking to overcome the legacy channel of cash.

Noncash payments have been gaining popularity around the world for the last decade. And though cash isn’t anywhere near dead, its global growth is slowing as consumers turn to emerging cashless alternatives.

But there are a few key markets - Australia, Sweden, and the UK - where annual noncash payments have already surpassed traditional cash transactions altogether — and they’re stong early indicators of what a truly cashless society could look like.

Why are digital payments on the rise?

The growing adoption of noncash payments is a direct result of the rise of e-commerce, but that’s not the only factor. Consumers today are adaptable to disruptive technologies and are generally open to trying new types of digital payment methods.

This consumer appetite is compounded by their access to infrastructure, as well as the emergence of government-backed initiatives, such as real-time transfers and the backing of electronic currencies, that make digital payments more enticing to both consumers and merchants.

How are Australia, Sweden, and the UK driving the world towards cashless payments?

Australia, Sweden, and the UK are emblematic of opportunities for payments players to lead the world away from cash. The Global Payments Landscape from Business Insider Intelligence, Business Insider’s premium research service, provides a snapshot of the payments industry in each of these three markets.

The report shows that several leading payments players have already emerged or are dominant within each of these regions — and they’re finding success in different ways. For other mature markets seeking to overcome the legacy channel of cash, the digital transformations of Australia, Sweden, and the UK can serve as a roadmap.

Here are the strategies these regions are implementing in the race to become the world’s first cashless society:

  • Australia is launching government initiatives and instating new regulations. The Australian government has banned purchases over AU$10,000 ($7,500) from being made in cash, as well as launched the New Payments Platform (NPP) to allow real-time funds transfer as a means of replacing transactions typically made in cash, such as paying back a friend.
  • In Sweden, consumers are rapidly abandoning cash in favor of cards. In fact, only 2% of the total value of transactions in Sweden consist of cash — a figure that’s expected to decline to less than half a percent by 2020.
  • Contactless payments are leading the shift away from cash in the UK. Nearly the entire population has a debit card, and debit card transactions surpassed cash payments for the first time at the end of 2017. This milestone was largely fueled by the surge in contactless cards, which grew 97% annually last year to hit 5.6 billion transactions.

Want to Learn More?

The Global Payments Landscape from Business Insider Intelligence compiles various payments snapshots, together illustrating how digital payment methods are supplementing or replacing cash in each market.

Each snapshot provides an overview of the payments industry in a particular country, and details the evolution of its development. They also highlight notable payments players in each region and discuss the opportunities and challenges that players are facing in their respective markets.

Get The Global Payments Landscape

 

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Pinterest was one of the most-downloaded apps in the U.S. in the months leading up to its IPO (PINS)

Thu, 04/18/2019 - 5:55pm  |  Clusterstock

Pinterest's IPO appears to have raised more than just money.

In the months leading up to Pinterest's trading debut on Thursday, the social media app saw a surge in users that propelled it to the top of the download charts.

Pinterest was one of the 20 most downloaded apps in the the U.S. in the first quarter of 2019, according to numbers from mobile data analyst Sensor Tower.

These first quarter results mark the end of Pinterest' yearlong hiatus from the list of most-downloaded non-game apps. The social platform's number of downloads flatlined in 2018, but it was able to recover in the beginning months of the 2019 fiscal year. Sensor Tower estimates Pinterest was installed by 32.5 million new users on iOS and Android devices around the world in the first quarter, a 16% increase from Pinterest's numbers in the beginning of the 2018 fiscal year.

Read more: Pinterest prices IPO at $19 per share, giving it a $10 billion valuation — lower than its $12.3 billion private valuation

Pinterest's growing audience mirrors other numbers the company has produced. According to its S-1 filings, Pinterest generated $755.9 million in revenue in 2018, up 60% from $472.9 million in 2017. Additionally, Pinterest cut down on its losses: it lost $63 million in 2018, down from $130 million the previous year.

In its first day of trading, Pinterest's shares opened 25% higher than where the company priced its IPO. The company started trading Thursday on the New York Stock Exchange under the ticker symbol "PINS."

The company has been emphasizing to investors how it differentiates itself from Snap, a rival social platform whose valuation has shrunk drastically since it went public in 2017. Now, Pinterest and CEO Ben Silbermann are trying to position the company as a "visual discovery tool" instead of a social media platform.

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A report on Trump's NAFTA overhaul found that it's not going to do much for the economy

Thu, 04/18/2019 - 5:37pm  |  Clusterstock

  • A report on Thursday said President Donald Trump's new North American trade deal would increase gross domestic product by 0.35% by the time it is fully implemented in six years.
  • The US-Mexico-Canada Agreement has been a key initiative for the Trump administration in its bid to bring jobs back to the US.
  • Adam Ozimek, an economist at Moody's Analytics, questioned how different it is from the trade dynamics that have governed the US, Mexico, and Canada for decades.

A North American Free Trade Agreement overhaul that was rolled out last year would have a positive but modest effect on the US economy, the International Trade Commission said on Thursday.

In a congressionally mandated report, independent experts said President Donald Trump's United States-Mexico-Canada Agreement (USMCA) would increase gross domestic product by 0.35%, or $68.5 billion, and jobs by 0.12%, or 176,000, by the time the deal is fully implemented in six years. 

The increase in economic output would be largely driven by reduced trade-policy uncertainty, according to the International Trade Commission report. If the trade-policy uncertainty remains, gross domestic product would actually fall by 0.12%.

The deal has been a key initiative for the Trump administration in its bid to bring jobs back to the US. But some experts have said USMCA isn't a significant departure from the trade dynamics that have governed North American countries for decades.

"The results are consistent with what economists have been saying about the trade deal, which is that the changes are not of serious consequence for the US economy," Adam Ozimek, an economist at Moody's Analytics, said.

USMCA also modifies production standards for automakers across the three countries. The report found that under the new agreement, the auto industry would create 30,000 jobs, but overall American car production and consumption would fall in part because of higher prices.

In March, an International Monetary Fund study found USMCA would have a muted effect on the overall economy and could curtail trade. It found the new rules would lead to a decline in the production of vehicles and parts in all three North-American countries, shifting them toward greater sourcing from outside of the region.

"The results show that together these provisions would adversely affect trade in the automotive, textiles and apparel sectors, while generating modest aggregate gains in terms of welfare, mostly driven by improved goods market access, with a negligible effect on real GDP," the report said.

The report clears a procedural hurdle for USMCA, which is still subject to an up-or-down vote in Congress. Over the past year, Democrats have been pushing for stricter labor standards and enforcement mechanisms.

"This report confirms what has been clear since this deal was announced — Donald Trump's NAFTA represents at best a minor update to NAFTA, which will offer only limited benefits to U.S. workers," said Democratic Sen. Ron Wyden of Oregon, who is the ranking member of the Senate Finance Committee.

SEE ALSO: IBM is preparing to close its $34 billion acquisition of Red Hat, but Wall Street has 'real question marks' after its 'mediocre' quarter

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Tax reform is working now, and the best is yet to come, says the global chairman and CEO of EY

Thu, 04/18/2019 - 5:30pm  |  Clusterstock

  • Mark Weinberger is the global chairman and CEO of EY, and he previously served as assistant secretary of the US Department of the Treasury (Tax Policy) in the George W. Bush administration. 
  • In this op-ed, he writes that the positive results of the Tax Cuts and Jobs Act (TCJA) are just beginning, and if we follow through, Americans will see the economic benefits for many years to come.
  • In total, companies invested nearly $3 trillion in the US in 2018, including $460 billion in research and development. When business invests at these levels, it creates a strong foundation for long-term economic growth, he writes.
  • Visit BusinessInsider.com for more stories.

Tax reform is back in the headlines. Barely a year since the Tax Cuts and Jobs Act's (TCJA) passage, some are already renewing their calls for higher tax rates on individuals, businesses, and families. Backing away from the landmark reform law now, however, would be a serious mistake. By lowering tax rates on businesses and families, TCJA fundamentally reshaped the tax landscape for the better, putting more money in people's pockets and creating new opportunities for companies to invest in the economy. The results so far have been positive — and there's still more to come.

As CEO of EY and as former assistant secretary of the treasury for tax policy, I've spent much of my professional life at the intersection of tax and business. For years, leaders from across the political spectrum have agreed that we needed to fix America's outdated and uncompetitive tax system. My support for the TCJA was rooted in the belief that, by reducing the tax burden on families and removing impediments for global businesses to invest in their US employees and operations, the law would provide a basis for higher wages and long-term economic growth. In just a year, the expected benefits are already being realized. 

Benefits for workers

The impact on workers and families has been immediate and substantial. Employees have seen wages and benefits increase at companies nationwide. In 2018, wages increased by 3.2%, the highest rate since 2009, and the US economy created over 2.6 million jobs, the most since 2015. Today, there are more job openings than available workers for the first time since we began keeping records. In the wake of the bill's passage, many large employers, including Walmart and Aflac, also expanded their retirement and family leave benefits. Disney announced a $50 million investment in employee education. FedEx invested $200 million in pay increases and $1.5 billion in pension funding. And these are just a few examples of what has been happening all over the country, making a real difference for many American workers and their families. 

Domestic and foreign investment increasing

Businesses have also invested heavily in the US with the savings resulting from TCJA. During the first three quarters of 2018, capital expenditures among S&P 500 companies jumped nearly 20% from the previous year. In total, companies invested nearly $3 trillion in the US in 2018, including $460 billion in research and development. When business invests at these levels, it creates a strong foundation for long-term economic growth.

By moving the US toward a territorial system for foreign earnings, the TCJA also eliminated incentives for corporations to move abroad and made it more attractive for global companies to invest in the US The first quarter of 2018 marked the first time in 13 years that American companies brought more money home from abroad than they invested overseas. Meanwhile, as a result of the law's incentives, scores of companies are currently modeling supply chains to see how they can directly invest in their US market locations.

Longer-term investment to come

It is true that TCJA provided a strong incentive for companies to reward their shareholders, fueling criticism of the more than $1 trillion in stock buybacks announced in 2018. The issue is more complicated and less controversial than many of the headlines would suggest. It should not be a surprise that stock buybacks would occur before businesses have laid out plans for significant supply chain changes or determined where to make permanent capital investments Such changes require time and complex analysis even under the best circumstances, and the current trade and tariff uncertainty has slowed decision making.

Since the law went into effect, businesses have confronted major trade disputes, widespread geopolitical uncertainty, and three US government shutdowns. These external conditions could easily have produced sharp declines in business investment and economic growth. Instead, GDP has grown at a rate of nearly 3%, surpassing most of the developed world. In the absence of tax reform, it is unlikely that we would have seen economic expansion at this scale, if at all.

Tax reform was certainly not perfect. In a complex global environment, no legislation can ever anticipate all of its unintended consequences. Compromises were made to limit long term costs and secure the necessary political support. And, of course, regulations still have to be written and technical corrections to the law made.

But the central promise of the TCJA was always that it would strengthen the economy in the long run by removing tax barriers to US investment. The performance of the US economy in the face of a challenging global economic and geopolitical climate is evidence of that promise being fulfilled. And while the early results of tax reform are promising, we won't see the full benefits for several more years. The positive results to date are just the beginning. If we follow through, Americans will see the economic benefits of the TCJA for many years to come.

Mark Weinberger is the global chairman and CEO of EY, one of the largest professional services organizations in the world with approximately 260,000 people in more than 150 countries. He previously served as the assistant secretary of the US Department of the Treasury (Tax Policy) in the George W. Bush Administration.

 

SEE ALSO: 14 places you can retire in the US where the typical home value is less than the cost of a new car

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The best cash-back credit cards of 2019

Thu, 04/18/2019 - 5:15pm  |  Clusterstock

Business Insider may receive a commission from The Points Guy Affiliate Network if you apply for a credit card, but our reporting and recommendations are always independent and objective.

  • Cash-back cards are the most popular rewards credit cards, according to a recent study.
  • While it's possible to get more value from travel rewards cards, cash back is simpler, more flexible, and often easier.
  • Like most rewards credit cards, cash-back cards work by giving you a portion of the processing fee that the issuer gets from the merchant for each transaction.
  • While some cards offer a consistent 1.5–2% cash-back rate on purchases, you may be better off with a card that offers higher amounts back in bonus categories, or large new membership bonuses. Similarly, you might actually earn more from a card with an annual fee than a no-annual-fee option.
  • These are the best cash back credit cards currently available, from Chase, Citi, Wells Fargo, Capital One, and American Express.

When you're looking to earn credit card rewards, the type of rewards you go for, beyond just the specific card you open, can make a big difference in how much value you get.

Specifically, the best type is transferable credit card points. That's because it can be possible to earn anywhere from 1–4x points per dollar spent, and each point can be worth anywhere from 1¢ when redeemed for cash, 1.25¢–1.5¢ when used to purchase travel, and a potentially unlimited amount, even 10-15¢ each, when transferred to an airline's frequent flyer program.

However, a downside to most credit card points and frequent flyer miles is that using them is complicated. Getting the highest value often requires compromises, like using points for travel when you'd rather use them for something else, or having to work around blackout dates or search for sparse availability. 

Consequently, there's a big argument to be made for cash back.

Cash is king, and even if the 3x points per dollar you earn from the Chase Sapphire Reserve can score a higher redemption value, cash is simpler, more flexible, and offers real, immediate value, rather than the perceived value you can get redeeming points for a flight you'd never, ever actually pay for with money.

Learn more: The best credit card rewards, bonuses, and benefits of 2019

Cash-back cards tend to be simple, straightforward, and rewarding. Best of all, some of the best ones don't have an annual fee. 

Take a look below at a few of the best cash back cards available.

Keep in mind that we're focusing on the rewards, perks, and sign-up bonuses that make these cards great options, not things like interest rates and late fees, which can far outweigh the value of any rewards.

When you're working to earn credit card rewards, it's important to practice financial discipline, like paying your balances off in full each month (unless you're taking advantage of an introductory APR), making payments on time, and not spending more than you can afford to pay back. Basically, treat your credit card like a debit card.

1. Capital One Savor Cash Rewards Credit Card

Sign-up bonus: $500 (after spending $3,000 in the first three months).

If dining and cooking are your thing, the Capital One Savor is the winner.

The card earns unlimited 4% cash back on all dining and entertainment, 2% back at grocery stores, and 1% on everything else. Plus, the card offers a whopping $500 sign-up bonus when you spend $3,000 in the first three months.

The Savor makes it easy to earn cash back quickly, but the downside is that it has a $95 annual fee, which is, at least, waived the first year. The earning rate may make up for the fee in some cases, but if that's too high for you, there's an alternative: the Capital One SavorOne Cash Rewards Credit Card.

The SavorOne card has no annual fee, and offers a slightly lower — but still valuable — earning rate of 3% cash back on dining and entertainment, 2% back at grocery stores, and 1% on everything else. It offers a sign-up bonus of $150 when you spend $500 in the first three months.

Click here to learn more about the Capital One Savor card from Insider Picks' partner: The Points Guy. Click here to learn more about the Capital One SavorOne card from Insider Picks' partner: The Points Guy.

Read more: The Capital One Savor offers 4% cash back on dining and entertainment — here's how much the average American saves each year with the card

2. Chase Freedom Unlimited

Sign-up bonus: 15,000 points or $150 cash back (after spending $500 in the first three months).

While Chase markets the Freedom Unlimited as "cash back," it actually earns Ultimate Rewards points that you can redeem for cash (1 point = 1¢).

That means that if you also have a premium card like the Sapphire Reserve, you can pool your points from the two cards. The Freedom Unlimited earns 1.5 points (or 1.5% cash back) per dollar spent, so paired with a Sapphire Reserve, it's a great card to use for purchases that aren't made on travel expenses or dining. Then, you'll be able to transfer the whole body of points to partnering frequent flyer programs or use them to book travel through Chase with a bonus.

Of course, if you're simply looking for cash back, the Freedom Unlimited remains a strong contender. The $150 sign-up bonus is equivalent to the cash back you'd earn after spending $10,000 with the card — that's nothing to sneeze at. The 1.5% cash-back rate can add up quickly, and is a strong earning rate across the board, without any need to figure out bonus spending categories.

Best of all, the card has no annual fee and often has 0% APR for the first 15 months on purchases and balance transfers. After that, there's a 17.24%-25.99% variable APR. If you have a major purchase ahead of you, that introductory offer can be useful.

Click here to learn more about the Chase Freedom Unlimited from Insider Picks' partner: The Points Guy.

Read more: 11 lucrative credit card deals you can get when opening a new card in October — including a 150,000-point bonus

3. Citi Double Cash Card

Sign-up bonus: None.

In terms of spending rewards, the Citi Double Cash is the best single cash-back card. It earns 2% cash back on every purchase — 1% when you make the purchase, and 1% when you pay your bill. Since you should be paying your bill in full each month, that means you'll earn 2% back on purchases each billing cycle.

However, there are a few reasons that this card isn't our top pick.

First, there's no sign-up bonus. Assuming you spend $15,000 on the Double Cash in a year, you'll earn $300 in cash back. On the Freedom Unlimited, with a lower earning rate, you'll only earn $225. However, factoring in the Freedom Unlimited's $150 sign-up bonus, you'll actually earn $375 that first year, making it easily the winner.

Second, while it offers a 0% introductory APR for 18 months, that's only on balance transfers, not purchases, so you can't use it to fund a major expense without interest. After those 18 months, it's a variable 15.49%–25.49% APR.

Additionally, unlike with Chase, you don't have the flexibility to decide later to combine unredeemed cash back with a points-earning card. The Citi Double Cash has a minimum redemption amount of $25, and if you don't have any account activity for 12 months, unredeemed rewards can expire.

Still, 2% across the board is a good earning rate, and the $0 annual fee is attractive if not uncommon. Whether that's worth passing on a sign-up bonus is up to you.

Click here to learn more about the Citi Double Cash.

 

4. Chase Freedom

Sign-up bonus: 15,000 points or $150 cash back (after spending $500 in the first three months).

The Chase Freedom is the older sibling of the Freedom Unlimited, and is essentially the same exact card except for how it earns cash back.

The Freedom offers 5% cash back on a few different categories that change quarterly, on the first $1,500 of purchases. The card earns 1% on all other purchases, and on those bonus categories after you pass $1,500.

Sometimes there's just one major category per quarter, while other times there can be a few different ones. Past categories have included gas stations, local commuter transportation, department stores, grocery stores, drug stores, restaurants, movie theaters, and event Amazon. Q1 this year was one of the broadest ever: any payment made through a mobile wallet like Apple Pay, Chase Pay, or Android Pay.

This quarter, Q2 2019, the Freedom's 5% categories are home improvement stores like Home Depot, as well as grocery stores..

The usefulness of the categories varies each quarter, with some being better than others. If I had to choose one, I'd stick with the Freedom Unlimited. However, there's no denying the potential value of the bonus categories, and fortunately, Chase lets you hold both cards.

Like the Freedom Unlimited, the regular Freedom has no annual fee, offers a 0% introductory APR on purchases for the first 15 months (and a 17.24%-25.99% variable APR after), and cash back can be combined with points earned from other Chase cards.

Click here to learn more about the Chase Freedom from Insider Picks' partner: The Points Guy.

Read more: The Chase Freedom isn't just a cash-back card — here's how it can be a lucrative travel rewards card as well

5. American Express Cash Magnet™ Card

Welcome bonus: $250 ($150 after spending $1,000 in the first three months; another $100 after spending an additional $6,500 in the first 12 months).

The American Express Cash Magnet card is one of AmEx's most straightforward rewards cards. It earns 1.5% cash back on all purchases, and a welcome bonus of up to $250, broken into two chunks — $150 after you spend $1,000 or more in the first three months, and another $100 if you spend an additional $6,500 in the first 12 months.

Like the Freedom Unlimited, the card has no annual fee, and a 0% introductory APR for 15 months (with a variable 14.99%–25.99% APR after). However, unlike the Chase card, you don't have an option to redeem your rewards as transferable points by combining them with another card. 

However, the welcome bonus is certainly higher than the Freedom Unlimited, and some people who already use an AmEx may prefer to stick with that lender. If that sounds like you, the Cash Magnet makes a solid option.

Click here to learn more about the Cash Magnet from Insider Picks' partner: The Points Guy. 6. Wells Fargo Propel American Express® Card

Welcome bonus: 30,000 Go Far points, worth $300 (after spending $3,000 in the first three months).

This new card from Wells Fargo has one of the more attractive rewards programs you'll find from a no-annual-fee card. In terms of marketing, it's the exact opposite of the Chase Freedom Unlimited — while it's marketed as earning "points," those points are worth 1¢ each and can be redeemed for cash, essentially making it a cash-back card.

The card earns 3x points (essentially 3% cash back) on all travel, dining, and select streaming services (and 1x point on everything else). If that sounds familiar, it's because it's almost the same as the popular Chase Sapphire Reserve.

Of course, there are some key differences between the cards. The Propel is basically a cash-back card with a range of redemption opportunities, all of which value points at 1¢ each, while the Sapphire Reserve offers a potentially more valuable redemption options. Plus, the Sapphire Reserve offers a number of premium perks that the Propel doesn't, like airport lounge access, a $300 annual travel credit travel delay insurance, and more.

Of course, the Sapphire Reserve also comes with a $450 annual fee, while the Wells Fargo Propel doesn't have a fee.

The $300 welcome bonus, combined with the high 3% earning rate on popular spend categories including all dining and travel (and 1% on everything else), as well as the $0 annual fee, makes this a stellar option for a cash-back card. If I were solely interested in cash back, this would be my go-to.

Click here to learn more about the Wells Fargo Propel card from Insider Picks' partner: The Points Guy.

READ MORE: I pay $1,000 in annual fees for the Chase Sapphire Reserve and the Amex Platinum — and as far as I’m concerned, the math checks out

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DON'T MISS: Preferred vs Reserve: How the Chase Sapphire credit cards stack up

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IBM is preparing to close its $34 billion acquisition of Red Hat, but Wall Street has 'real question marks' after its 'mediocre' quarter (IBM, RHT)

Thu, 04/18/2019 - 4:16pm  |  Clusterstock

  • IBM missed Wall Street's revenue expectations when it announced earnings on Tuesday, but analysts are paying close attention to its upcoming acquisition of Red Hat, which will close later this year.
  • IBM saw declines in its cloud and cognitive-software unit, and analysts say this is a sign that IBM is struggling to compete in artificial intelligence, one of IBM's flagship offerings, against other cloud vendors.
  • IBM has been betting on Red Hat to improve its hybrid cloud, but analysts say Red Hat alone won't turn IBM around, and the company will have to do more work in both technical integrations and cultural adjustments.
  • Visit BusinessInsider.com for more stories.

Analysts say that IBM delivered a "mediocre" quarter, but now all eyes are on its forthcoming $34 billion acquisition of Red Hat and whether IBM's big bet will pay off.

On Tuesday, IBM announced it generated $18.18 billion in revenue this past quarter, missing analysts' expectations of $18.51 billion. The following day, IBM's stock was down 4%.

IBM's multibillion-dollar acquisition got the company a lot of attention, but it hasn't resolved fundamental questions about its big-picture vision and strategy. 

"IBM today, they go to a hockey game wearing a football uniform," Marty Wolf, the founder and president of the mergers and acquisitions advisory firm Martinwolf, told Business Insider. "They're growing slower, their margins are less. Their business model is too complicated. They need to deconsolidate. Our belief is, they're looking like a rhino in a field of cheetahs."

As IBM prepares to close its Red Hat acquisition in the coming quarters, the company has the benefit of a "wait and see" attitude from investors, Katy Ring, a research director for IT services at the 451 Group, said.

Namely, IBM is betting on hybrid cloud, which allows companies to run their workloads both on the public cloud and on on-premise data centers. While Red Hat might be an important part of doubling down on this strategy, that alone won't help IBM secure the cloud business, analysts say.

"I think IBM has got to make hybrid cloud work as a strategy in order to remain technically relevant in the longer term," Ring said. "It understands large enterprise IT better than any other cloud provider, and so, could potentially emerge as a much stronger 21st century service provider by taking open source software to its big blue heart."

'Everything in the kitchen sink'

IBM said its cloud business grew 10% year-over-year, generating revenue of $19.5 billion. However, analysts say that when IBM reports cloud business, it can also lump in other aspects that are not necessarily cloud applications and cloud services but are related to cloud, such as consulting and hardware.

Read more: IBM stock sinks 3% after hours after missing Wall Street expectations on revenue

And the growth still lags the performance of other cloud providers: Microsoft Azure grew 76% from a year ago, and Amazon Web Services grew 45%.

"They have an 'everything in the kitchen sink' approach to cloud," Andrew Bartels, vice president and principal analyst at Forrester, told Business Insider. "They toss everything that might be related to cloud into that bucket. There's a lot of ambiguity and probably misdirection which is in their cloud numbers."

IBM's cloud and cognitive-software unit itself was down 2%, generating revenues of $5 billion, and analysts say this is because IBM is facing fierce competition from other cloud providers, even in artificial intelligence.

"I think this shows that companies like Microsoft and Google and Amazon are gaining more cognitive solution business," Maribel Lopez, the founder and principal analyst at Lopez Research, told Business Insider. "I think IBM needs to get ahead of that trend and make sure they don't lose that marketplace to the other big cloud providers."

Investing.com senior analyst Haris Anwar said IBM's turnaround strategy "remains very much a work in progress," as all its segments either declined or were flat.

"That was a little disappointing for investors," Anwar told Business Insider. "They were expecting they will see some clear improvements, but that's obviously not the case. They're still struggling to compete in this cloud-computing segment in which Amazon and Microsoft had a great run."

That being said, this lack of growth might not necessarily be specific to IBM, Bartels said. On the downside, it could be reflective of the market as a whole as other tech companies report earnings this month.

"It could well be that IBM is a harbinger of disappointing earnings to come of other vendors in the coming weeks," Bartels said.

And there's still some positives, John Roy, UBS's lead analyst, said. He expects cloud and cognitive services at IBM to grow, and the company will also benefit from getting rid of underperforming assets of the company that slow down the business.

"They are doing more work in artificial intelligence and hopefully I'll hear more about that," Roy said.

'Real question marks'

Analysts say the coming quarters will be crucial for IBM as it closes its acquisition of Red Hat. Analysts predict this will help IBM generate revenue.

Once the deal closes, IBM can focus on technical integrations and creating a product portfolio that includes Red Hat's offerings — not to mention that there will be a cultural adjustment.

Wolf said he has "real question marks" about this.

"Lots of people who work at Red Hat are not going to be that excited to work at IBM," Wolf said. "There's a combination thing. Red Hat looks like a small piece of IBM's business. Some of the reasons people like working at Red Hat is because it's not a big conglomerate."

However, analysts say, the question is whether the IBM salesforce can sell Red Hat and if IBM services can benefit from Red Hat being part of the company. It might take at least two quarters for that to happen.

Ring believes the market sentiment toward IBM is still positive, but the company will need to make "some bold moves."

"The Red Hat acquisition could be very good for IBM if it takes on board the open source culture that the business brings to IBM and its customers," Ring said. "It could be a disaster if IBM does not adapt its culture quickly enough to pull through this benefit for enterprise buyers."

SEE ALSO: The leader of one of Google's most important cloud businesses explains why it took her 14 years of convincing to join the company

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12 department stores that imploded before the retail apocalypse even began to rage

Thu, 04/18/2019 - 3:39pm  |  Clusterstock

  • Keeping a department-store chain afloat can be tricky.
  • Dozens of regional and national chains have collapsed over the years, even before the retail apocalypse got started.
  • Check out these companies that have succumbed to changing tastes, the advent of shopping malls, poor business practices, and tough luck.

Retail can be a merciless business. 

Take department stores, for instance. A quick scan of any list of defunct department-store chains reveals that it's a business that doesn't take kindly to mistakes — or even just plain old bad luck.

Read more: 7 crimes that shook the world of retail

The retail apocalypse began roughly around 2008, around the time the recession kicked off. But the history of retail is littered with department-store chains that sunk long before that.

Here's a list of department store chains that went under — or fell into an irreversible decline — before the retail apocalypse began raging:

SEE ALSO: Here's what Home Depot looked like when it first opened in 1979

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Marshall Field's survived the Great Chicago Fire and the Great Depression, but the Chicago-based department-store chain couldn't survive Macy's. The May Department Stores Company acquired the stores from Target in 2000. Then, five years later, Macy's acquired May and its assets. The remaining Marshall Field's stores, including the famed flagship store in downtown Chicago, were controversially rebranded as Macy's stores.

Source: Chicago Tribune



Department store chain E. J. Korvette was a harbinger of future discount-oriented chains like Walmart. Despite its success in the years after WWII, it overstretched itself and closed permanently in 1980.

Source: PennLive



Jordan Marsh was a dominant New England retailer with roots dating back to 1841. Jordan Marsh was acquired several times before Macy's bought up the stores and retired the brand in 1996.

Source: The New York Times



See the rest of the story at Business Insider

Jet Airways is on the brink of collapse. Here are 5 airlines that have gone bust since October.

Thu, 04/18/2019 - 3:36pm  |  Clusterstock

  • India's Jet Airways suspended flight operations on Wednesday.
  • The Mumbai-based airline has been struggling in recent months to secure short-term funding and long-term investment.
  • According to NPR, the airline is saddled with more than $1 billion in debt.
  • The company's lenders are looking for an investor to buy the airline.
  • Should Jet's lenders fail to find a new buyer, the carrier will join Wow Air and Primera as airlines that have failed since October. 

India's Jet Airways suspended flight operations on Wednesday. The Mumbai-based airline has been struggling in recent months to secure short-term funding and long-term investment. As a result, the company was forced to stop flying due to its inability to pay for fuel and other expenses.

"It is with deep sadness and with a heavy heart that we would like to share with you that, effective immediately, Jet Airways will be suspending all its domestic and international operations," Jet Airways CEO Vinay Dube said in a statement. 

Founded in 1993, Jet Airways grew to become India's most prominent international airline with a fleet of more than 115 aircraft. However, the airline's fleet dwindled to less than 20 aircraft in the days before it ceased flight operations, the SCMP reported.  The bulk of the airline's planes had been grounded due to missed lease payments.  Aircraft leasing companies have initiated repossession actions against Jet Airways for the missed payments. 

Read more: 22 famous airlines that have gone out of business.

According to NPR, the airline owes debts of more than $1 billion while the entire company was valued at just $260 million. The current valuation pales in comparison to its $1.6 billion valuation during the airline's heyday.

Jet Airways founder and chairman Naresh Goyal stepped down from the airline in late March.

Even though Jet Airways has stopped flying, its CEO believes the airline can be saved as the company's lenders are currently working to broker a sale to new investors. 

"We sincerely and profusely apologize for the disruption to your travel plans. We would like to thank you for your continued patronage, support, and loyalty over the years," Dube said in a statement.

"We are hopeful that we will be able to bring the Joy of Flying back to you soon."

Should Jet's lenders fail to find a new buyer, the carrier will join this list of five other airlines that have failed since October. 

SEE ALSO: Boeing can't deliver the 737 Max to customers, and now the planes are clogging up its storage lots

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Primera Air: defunct October 2018.

Primera Air was a subsidiary of Icelandic tourism company Primera Travel Group. Primera Air had been in the process of expanding into the low-cost inter trans-Atlantic airline with a fleet of Airbus A321neo aircraft. The carrier ceased operations on October 2, 2018. 



Cobalt Airways: defunct October 2018.

Cypress-based Cobalt Air was founded in late 2015 following the shutdown of the country's national airline Cypress Airways earlier that year. Unfortunately, the airline could not sustain its operation financially and shut down on October 17, 2018. 



Germania: defunct February 2019.

Founded in 1978, Berlin-based Germania offered by charter and scheduled passenger service. The airline ceased operations on February 5, 2019, citing financial insolvency due to high fuel prices and the devaluation of the Euro against the US dollar



See the rest of the story at Business Insider

14 places you can retire in the US where the typical home value is less than the cost of a new car

Thu, 04/18/2019 - 3:30pm  |  Clusterstock

Picking a place to retire boils down to a number of factors.

There's weather and climate, retiree taxes, access to healthcare, cost of living, and housing affordability to consider. But depending on how much you're saving for retirement, the latter might be the most important item to check off the list. Homes are getting more expensive: the median home value is $226,300, according to Zillow.

But that's not to say more affordable homes don't exist. We teamed up with Zillow to find some of the most affordable places to retire, where the median home value is less than the average cost of a new car (and therefore the car's value) — about $37,000, according to Kelley Blue Book. While a few of these cities are in the Carolinas, most are sprinkled throughout the Midwest.

Below, take a look at places you can retire in the US for less than the cost of a new car.

SEE ALSO: The 50 best places to retire in America for 2019, ranked

DON'T MISS: Florida is one of the best places to retire in America — here's exactly how much it costs for a dream retirement in the Sunshine State

14. Eldorado, Illinois

Median home value: $35,900

Eldorado is in Saline County, Illinois. Its cost of living is about 25% lower than the US average.



13. Blair, South Carolina

Median home value: $35,300

Located in Fairfield County, South Carolina, Blair is near the Broad River and is home to three plantations



12. Princeville, North Carolina

Median home value: $34,400

Princeville, North Carolina, was founded after the Civil War. As of 2010, it had a population of 2,082.



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A financial planner shares her best advice to save more money — and what to do with that cash once you've saved it

Thu, 04/18/2019 - 2:52pm  |  Clusterstock

Most people would like to be saving more money.

Whether it's to pad an emergency savings account, to eventually buy a house or to some day be able to take that dream vacation to Europe, it's the general consensus that the more you can save, the better.

If saving equals good stuff, then why is it so hard for us, in general, to save more? These days things like student loan debt and an overall high cost of living can stop people from reaching their ultimate savings goals.

Plus, it can be hard to get started, since you'll need to have a good understanding of your overall financials before you can actually plan to save more.


To that end, Molly Stanifer, CFP®, financial advisor with Old Peak Finance, suggests tracking your spending, then mapping out a budget to including your additional savings.

The most effective way to track your budget is to write down every expense as you incur it, said Stanifer.

"Just like if you are bringing attention to your diet, it forces awareness," she said. "There are also apps — or perhaps your credit card company or bank already does this — for tracking your spending after the fact. That type of tracking software is good for spotting trends."

Once you've tracked your spending and are starting to create a budget, Stanifer suggests using the following hierarchy of goals:

  1. Pay down high interest rate debt.
  2. Top up your emergency fund to a comfortable amount. Keep in mind that while the general guideline is still three to six months' worth of your essential expenses, the actual idea behind this goal is considering how long it would take for you to find a new job should you lose your current source of income. "If you are in a dual-income household or a high-demand industry, perhaps you would feel comfortable on the lesser side of three to six months," said Stanifer.
  3. Take advantage of all tax beneficial accounts, like a 401k, IRA and 529s.
  4. Invest in a non-retirement brokerage account to further your savings.

If you're considering saving for a vacation or some other non-essential before you've established an emergency fund, paid down debt, or maxed out your retirement accounts, Stanifer suggests thinking twice.


"Sometimes we get focused on desires right in front of us and justify immediate gratification for sacrificing something that may be more beneficial to you in the long term," she said. "Take a step back and project what impact each financial decision would have," and consider shifting priorities, if need be.

As far as short-term savings goals go, Stanifer says a bank savings account or CD should work fine. If you do plan to work with an advisor for long-term investments, though, Stanifer says to proceed with caution and "make sure they are putting your interests ahead of their own. NAPFA advisors are all CFP professionals and are fee-only, held to a fiduciary standard."

Need a better place to keep your savings? Consider these offers from our partners:

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Share your opinion — become a BI Insider!

Thu, 04/18/2019 - 2:22pm  |  Clusterstock

As a dedicated Business Insider reader, we’d like to invite you to join our BI Insiders Panel, an exclusive online community of Business Insider readers!

Here are some of the TOP benefits of being a BI Insider!

  • Earn points towards cutting-edge research reports from the Business Insider Intelligence report store.
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  • The satisfaction that your input will help guide decision-making at the most influential companies around the world.

As a BI Insider, you'll be invited to take online surveys via email a few times a month to provide opinions and insights on a variety of topics and emerging trends, based on your personal and professional experiences. 

To become a BI Insider, you'll be asked to complete a short survey, after which you'll receive a notification within 24 hours to let you know if you've qualified. We want to hear from you!

 

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And today we're giving you one more reason to join:

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Marriott is building the tallest modular hotel in the world in NYC — and it's expected to only take 90 days to assemble

Thu, 04/18/2019 - 2:21pm  |  Clusterstock

The world's tallest modular hotel is coming to New York City.

The 360-foot-tall AC Hotel New York NoMad will include 168 guest rooms that will be built in a factory in Poland before being shipped to the city.

Once they arrive, the tower will be erected in just 90 days, according to Marriott. 

The construction process in North America is "ripe for innovation," Marriott's chief development officer in North America, Eric Jacobs, said in a press release. "The world's tallest modular hotel in one of the world's greatest destinations will act as a game-changing symbol to ignite even greater interest in modular among the real estate and lending industries," he said.

The 168 prefabricated guest rooms will arrive in New York City fully constructed. Each "module" will house a fully outfitted hotel room complete with beds, sheets, pillow, flooring, and toiletries. 

The hotel, which is expected to cost $65 million to build, will be topped off with a modular roof and a modular rooftop bar, but the restaurant and lobby will be built using traditional construction methods.

According to Bloomberg, one benefit of a modular hotel for guests is quieter rooms.

"In traditional construction, a hotel room usually shares a wall with its neighbor, but modular designs typically call for an insulated gap between rooms," wrote. 

The AC Hotel New York NoMad is expected to open in late 2020.

SEE ALSO: Hudson Yards, NYC's $25 billion neighborhood, was financed with more than $1 billion that was meant for 'distressed' urban areas. Here's a look inside the glitzy development.

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The former hedge-fund manager Whitney Tilson reveals what may be the 'most shocking stock pick' of his career (LL)

Thu, 04/18/2019 - 1:53pm  |  Clusterstock

  • The former hedge-fund manger Whitney Tilson says Lumber Liquidators is a "buy."
  • Tilson previously exposed fraud at the company, making $4 million from his short bet. 
  • The recommendation marks a "rare reversal" for Tilson. He has only made five long recommendations on stocks he was previously short.
  • Watch Lumber Liquidators trade live.

The former hedge-fund manager Whitney Tilson has made a recommendation that he says may be the "most shocking" of his career.

Tilson, who helped uncover fraud at the flooring firm Lumber Liquidators, now says the stock is a "buy." He points to a discussion he had with former CEO Rob Lynch back in 2015 as the reason for his "rare reversal."

At the time, Tilson was short the stock based on his belief that management knew the flooring it bought from China was toxic, but didn't care because they just wanted to buy the product at the lowest price possible. He believed that was the reason why Lumber Liquidators' operating margin doubled during the first 18 months that Lynch was CEO. 

But Lynch told him that wasn't the case, and that the middle man in China was taking an extra six percentage points from the company. 

"You see, Whitney, one thing you really got wrong in your analysis is that this is a 6% operating margin business," Lynch said. "Run properly, it's really double that."

That's when Tilson knew he had to close out his short bet, locking in a $4 million profit.

"In the past week, I've received information (I can't reveal the details at this point) which leads me to believe that it's likely that senior management of Lumber Liquidators: 1) Wasn't aware that the company was selling Chinese-made laminate that had high (non-CARB2-compliant) levels of formaldehyde; and 2) Made the decision to continue selling the product even after the 60 Minutes story aired in large part because they genuinely believed that the product was safe and compliant," Tilson said in a Seeking Alpha blog post.

"If this information is correct, then the company was sloppy and naïve, but not evil."

Over the next two years the stock rallied by more than 200% to more than $40 a share, which would've resulted in a $7 million loss, according to Tilson. 

Flash forward to Wednesday, and in the debut report put out by his new research firm Empire Financial Research, Tilson says for only the fifth time in his career he is going long a stock that he previously recommended to short. The other cases were Fairfax Financial, General Growth Properties, Wells Fargo, and Netflix — all of which led to big gains. 

"My recommendation to buy Lumber Liquidators may well be the most shocking stock pick of my career, given that I'm largely responsible for taking the company down," Tilson wrote. "But in doing so, I got to know the company well."

He says Lumber Liquidators is a buy for a number of reasons:

  1. The executives responsible for the scandal have left the company.
  2. Lumber Liquidators recently settled its remaining lawsuits related to the scandal.
  3. It has a great business.
  4. He sees margins tripling over the next three years.

Tilson says the company's share price, which is now near $11, is out of whack with the fundamentals. He notes that operating margins were only 1.9% in 2018 because of the high legal costs related to the scandal. Now that the scandal is in the rear-view mirror, Tilson says operating margins could reach 6% over the next two years, causing shares to double or even triple. 

"The following graphic explains why earnings should more than triple to $1.74 in the next couple of years, due to reductions in other costs and salaries, partly offset by increased advertising expenses and a smidge of taxes," Tilson wrote (Note that due to losses since 2014, the company won't pay full taxes for a while.) "Multiply 15 times earnings by $1.74 and you get a $26 stock, almost two and a half times today's level."

While Tilson is bullish on the stock, he's still aware there are some risks. Mainly, he sees the company's debt level climbing from $65 million to $90 million over the next year due to settlements relating to the scandal.  

"If I'm right and management can execute, then margins should at a minimum revert to the low end of historical levels, which should lead to the stock doubling – or more – over the next two years," Tilson concluded. He recommends the position not commanding more than 3% to 5% of a portfolio. 

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Chicago and Miami are among 5 cities getting a $15 million boost from JPMorgan Chase

Thu, 04/18/2019 - 1:47pm  |  Clusterstock

  • JPMorgan Chase's AdvancingCities initiative is a five-year, $500 million plan for investing in rising cities around the world.
  • It announced the winners of its first contest for $3 million over three years: Chicago, Louisville, Miami, San Diego, and Syracuse.
  • The money will go to coalitions of nonprofits that are working with local and state governments.
  • This article is part of Business Insider's ongoing series on Better Capitalism.
  • Visit BusinessInsider.com for more stories

JPMorgan Chase's ambitious five-year, $500 million AdvancingCities plan has moved to five more cities.

On Thursday, CEO Jamie Dimon announced in Louisville, Kentucky, that the first winners of the initiative's inaugural competition were Louisville; Chicago, Illinois; Miami, Florida; Syracuse, New York; and San Diego, California. Each will get $3 million in grants over the next three years, through a partnership with a local coalition.

"As we looked at each of these, every city brought something unique to the table, but all of them successfully built these local coalitions of public, private, and nonprofit leaders working to address a single challenge," AdvancingCities head Irene Baker told Business Insider.

The initiative has two components: one where the team selects cities to get large investments, and the other where local groups compete for smaller investments. So far, AdvancingCities has invested $30 million in Greater Paris and $10 million in Chicago's South and West Sides. It launched last September, building on the momentum of the $100 million investment into Detroit since 2014.

More than 250 groups applied to the annual contest. "Even in cities where we didn't choose things for this, we see other opportunities to potentially collaborate," Peter Scher, the bank's head of corporate responsibility and one of Business Insider's 100 People Transforming Business, told us. "The competition itself is revealing incredible models and opportunities that we think could be relevant well beyond just the AdvancingCities work."

Read more: JAMIE DIMON: 'Alarm bells' should be ringing in corporate boardrooms over the challenges facing our communities

The winners had to demonstrate a plan to leverage $3 million in a way that would take advantage of existing momentum in each of the cities. They also had to have an infrastructure demonstrating at least two of seven traits (collaboration, inclusive growth, taking on big problems by starting small, tracking progress through data, active community support, anchor institutions, and a proven ability to take risks and learn from experience).

Baker explained why the cities were chosen and how the money will be used:

Chicago: The investment will go to West Side United nonprofit, which will help connect low-wage workers to jobs in hospitals as well as support local entrepreneurs. Its proposal demonstrated how it would utilize existing partnerships with institutions in the West Side.

Louisville: A coalition of nonprofits led by Metro United Way developed a "Digital Inclusion and Economic Resilience" plan will use the investment to fund job-training programs that will connect candidates to jobs through a referral network. The plan stood out for its focus, centered on six specific low-income neighborhoods.

Miami: The investment will fuel Resilient305, a collaboration among Miami-Dade County, Miami, and Miami Beach's city governments, and The Miami Foundation. It will develop long-term job security strategies with local businesses and residents, for the sake of adding resilience to economic downturns and damage caused by climate change. The AdvancingCities team was impressed by the scope of its plan and the breadth of its partnership.

San Diego: The San Diego Regional Economic Development nonprofit led a group of organizations in developing a plan aimed at creating 50,000 new small business jobs by 2030. Baker said the plan includes ways of breaking down silos to ensure that job training programs are teaching its candidates skills that are directly applicable to jobs in their region, particularly in high-growth business sectors.

Syracuse: The nonprofit CenterState CEO led a group of organizations that proposed a "Syracuse Surge" plan that is aimed at ensuring that incoming investments into the city will benefit all residents, rather than those in already privileged neighborhoods. The AdvancingCities team was impressed with the way the coalition is working with the local and state governments to ensure the inclusivity of Syracuse's growth.

AdvancingCities will have a local and national evaluator to ensure that the city coalitions remain on track for meeting milestones that were agreed to in their proposals.

While this round of investments is smaller than the former ones from AdvancingCities, Baker said, "We want this $3 million to be the catalyst for this activity that we think is already underway."

Baker said she and her team are focused both on making the proposals work and collecting data on best practices for future investments. "It's our first year with the challenge — it's a learning year," she said.

SEE ALSO: INTRODUCING: The 10 people transforming how we think about capitalism

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