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Fiat Chrysler and Renault are reportedly in talks for a major deal that could shake up the global auto industry (FCAU)

Sat, 05/25/2019 - 3:17pm

  • Fiat Chrysler and Renault are in advanced talks for a deal that would combine major segments of their businesses, according to a report Saturday by the Financial Times.  
  • A deal would help the carmakers tackle the slowdown in consumer demand for new cars.
  • Fiat Chrysler may also join the Renault-Nissan-Mitsubishi Alliance, which is pondering its future after Nissan's chairman was arrested and ousted last year. 
  • Visit Business Insider's homepage for more stories.

Fiat Chrysler is in advanced talks with Renault about a deal that would combine major parts of their businesses, the Financial Times and The Wall Street Journal reported on Saturday. 

A tie-up would help the carmakers better tackle the challenges facing automakers including softer demand for new cars. There's no guarantee an agreement will be reached, but if successful, it will come together quickly, the WSJ reported. 

Fiat Chrysler may eventually join the Renault-Nissan-Mitsubishi Alliance that was first created in 1999 as the auto industry went through a period of major consolidation, according to the FT. 

That's because in addition to this tie-up, Renault is looking into options for the alliance's future following the high-profile arrest and ousting last year of Nissan Chairman Carlos Ghosn on allegations of financial misconduct. The Japanese car manufacturer said earlier in May that it was on track to record its weakest annual profit since 2008 following the upheaval.

Fiat Chrysler's inclusion would make the alliance the world's largest carmaker with 15.6 million in combined sales last year, according to the FT. 

The alliance will meet for a board meeting on Wednesday, and its future is expected to be among the topics of discussion.

Read the full story on the Financial Times.

SEE ALSO: MORGAN STANLEY: These 15 large companies are most likely to get acquired within the next 12 months

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SMB LENDING REPORT: How alt lenders are providing SMBs with new funding options, and the ways incumbents can respond to stay ahead

Sat, 05/25/2019 - 12:31pm

This is a preview of a research report from Business Insider Intelligence, Business Insider's premium research service. To learn more about Business Insider Intelligence, click here. Current subscribers can read the report here.

Small- and medium-sized businesses (SMBs) are vital creators of wealth, income, and jobs in the global economy. For example, they make up 99.9% of all private sector businesses in both the US and the UK, and they employ 60% and 48% of all workers in those countries, respectively.

The income and assets of these businesses make them an irreplaceable customer base for financial institutions. However, incumbent financial institutions are falling short of SMBs' lending wants and needs.

Fintechs — including alt lenders, payment providers, and lending platforms — are changing the SMB lending space by filling that gap and capturing an increasingly large sliver of the SMB lending market. For example, alternative financial providers only accounted for 2%, or £11.5 billion ($14.7 billion), of the UK SMB lending market in 2018. However, their share is projected to surge to 9.1%, worth £52.6 billion ($67.4 billion), by 2021.

In the SMB Lending Report, Business Insider Intelligence will examine the key players in the SMB lending space, determine the advantages of each player, and discuss how incumbents can improve their offerings to better serve SMBs and stave off the growing competition from alt lenders in the space. Additionally, we will look at what the future of SMB lending will hold.

The companies mentioned in this report are: NatWest, BNP Paribas, Esme Loans, OnDeck, ING, Kabbage, Funding Circle, Lending Club, PayPal, Square, Lendio, ING, Funding Options, INTRUST Bank, Behalf, Lending Express, and Fundbox, among others.

Here are some of the key takeaways from the report:

  • SMBs are underserved by conventional lenders, so fintechs are increasingly offering digital services tailored to meet SMBs' wants and needs.
  • Some incumbents have already woken up to the opportunity of better serving SMBs and leveraging this revenue stream, but the majority are still unaware.
  • This has given fintechs the opportunity to grow their market share among SMBs. If incumbents don't fight back with their own digital services, they will like lose further share to fintechs. 
  • There are three main ways incumbents can revamp their SMB lending products, each of which requires a different level of effort: partnering with fintechs, developing tech-enabled solutions in-house, or launching their own challenger products. 

 In full, the report:

  • Outlines the current state of the SMB lending space.
  • Details the different players that are involved in SMB lending.
  • Explains three ways in which incumbents can up their SMB lending game and fight off competition.
  • Highlights the benefits and hurdles that come with each of those strategies.
  • Discusses what the future of the SMB lending space will hold.

Interested in getting the full report? Here are two ways to access it:

  1. Purchase & download the full report from our research store. >>Purchase & Download Now
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The choice is yours. But however you decide to acquire this report, you've given yourself a powerful advantage in your understanding of SMB lending.

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A financial expert and bestselling author says the best money advice he can give isn't a mystery or magic — it's just math

Sat, 05/25/2019 - 11:30am

Almost anyone can learn to be good with money, according to financial expert Ramit Sethi.

"It's not that hard. It's not a mystery. It's not magic. It's just math. It's totally, totally understandable," he told Business Insider.

Everyone battles their own "invisible money scripts," Sethi writes in the latest edition of his bestselling book "I Will Teach You To Be Rich." These are messages we tell ourselves about money, often based on ideas or perceptions we picked up from our parents or peers as children.

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Some of the most common money scripts include "money changes people"; "credit cards are a scam"; or "the stock market is gambling." In order to manage money effectively, we have to "rewrite" our scripts, Sethi said.

"You might think 'Well, I'm not the kind of person who's good at money,' but you can actually become very good at money — and the bar is so low," he told Business Insider. "All you need to do is just have your money automatically going where it needs to go — it's not that hard. You can do it and you can become very good at it."

Sethi, like many financial experts, encourages automating as much of your finances as possible — this is where the math comes in (the good news is, you really only have to do it once). First and foremost, he said, decide what percentage of your salary you're going to contribute to your 401(k) or other retirement contribution plan. That money will be taken out before it hits your bank account, so you'll learn to live without it.

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The remainder of your paycheck should be deposited in your checking account — it's like an email inbox for your money: Everything goes there before it's filtered into the right place, Sethi writes. From your checking account, set up automatic transfers to, A) pay your credit-card bill and any fixed monthly costs that can't be paid for by credit card, and B) fund other investment and savings accounts outside of your salary deferral plan at work. Whatever money is left over is yours to spend.

Sethi says setting up automatic funding and bill pay helps you create a unique and profitable system that requires little to no work to maintain.

"Not only are your bills paid automatically and on time, but you're actually saving and investing money each month," he wrote. "The beauty of this system is that it works without your involvement and it's flexible enough to add or remove accounts at any time. You're accumulating money by default." 

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The Payment Industry Ecosystem: The trend towards digital payments and key players moving markets

Sat, 05/25/2019 - 9:02am

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

The digitization of daily life is making phones and connected devices the preferred payment tools for consumers — preferences that are causing digital payment volume to blossom worldwide.

As noncash payment volume accelerates, the power dynamics of the payments industry are shifting further in favor of digital and omnichannel providers, attracting a wide swath of providers to the space and forcing firms to diversify, collaborate, or consolidate in order to capitalize on a growing revenue opportunity.

More and more, consumers want fast and simple payments — that's opening up opportunities for providers. Rising e- and m-commerce, surges in mobile P2P, and increasing willingness among customers in developed countries to try new transaction channels, like mobile in-store payments, voice and chatbot payments, or connected device payments are all increasing transaction touchpoints for providers.

This growing access is helping payments become seamless, in turn allowing firms to boost adoption, build and strengthen relationships, offer more services, and increase usage.

But payment ubiquity and invisibility also comes with challenges. Gains in volume come with increases in per-transaction fee payouts, which is pushing consumer and merchant clients alike to seek out inexpensive solutions — a shift that limits revenue that providers use to fund critical programs and squeezes margins.

Regulatory changes and geopolitical tensions are forcing players to reevaluate their approach to scale. And fraudsters are more aggressively exploiting vulnerabilities, making data breaches feel almost inevitable and pushing providers to improve their defenses and crisis response capabilities alike.

In the latest annual edition of The Payments Ecosystem Report, Business Insider Intelligence unpacks the current digital payments ecosystem, and explores how changes will impact the industry in both the short- and long-term. The report begins by tracing the path of an in-store card payment from processing to settlement to clarify the role of key stakeholders and assess how the landscape has shifted.

It also uses forecasts, case studies, and product developments from the past year to explain how digital transformation is impacting major industry segments and evaluate the pace of change. Finally, it highlights five trends that should shape payments in the year ahead, looking at how regulatory shifts, emerging technologies, and competition could impact the payments ecosystem.

Here are some key takeaways from the report:

  • Behind the scenes, payment processes and stakeholders remain similar. But providers are forced to make payments as frictionless as possible as online shopping surges: E-commerce is poised to exceed $1 trillion — nearly a fifth of total US retail — by 2023.
  • The channels and front-end methods that consumers use to make payments are evolving. Mobile in-store payments are huge in developing markets, but approaching an inflection point in developed regions where adoption has been laggy. And the ubiquity of mobile P2P services like Venmo and Square Cash will propel digital P2P to $574 billion by 2023.
  • The competitive landscape will shift as companies pursue joint ventures to grow abroad in response to geopolitical tensions, or consolidate to achieve rapid scale amid digitization.
  • Fees, bans, steering, or regulation could impact the way consumers pay, pushing them toward emerging methods that bypass card rails, and limit key revenue sources that providers use to fund rewards and marketing initiatives.
  • Tokenization will continue to mainstream as a key way providers are preventing and responding to the omnipresent data breach threat.

The companies mentioned in the report are: CCEL, Adyen, Affirm, Afterpay, Amazon, American Express, Ant Financial, Apple, AribaPay, Authorize.Net, Bank of America, Barclays, Beem It, Billtrust, Braintree, Capital One, Cardtronics, Chase Paymentech, Citi, Discover, First Data, Flywire, Fraedom, Gemalto, GM, Google, Green Dot, Huifu, Hyundai, Ingenico, Jaguar, JPMorgan Chase, Klarna, Kroger, LianLian, Lydia, Macy’s, Mastercard, MICROS, MoneyGram, Monzo, NCR, Netflix, P97, PayPal, Paytm, Poynt, QuickBooks, Sainsbury’s, Samsung, Santander, Shell, Square, Starbucks, Stripe, Synchrony Financial, Target, TransferWise, TSYS, UnionPay, Venmo, Verifone, Visa, Vocalink, Walmart, WeChat/Tencent, Weebly, Wells Fargo, Western Union, Worldpay, WorldRemit, Xevo, Zelle, Zesty, and ZipRecruiter, among others

In full, the report:

  • Explains the factors contributing to a swell in global noncash payments
  • Examines shifts in the roles of major industry stakeholders, including issuers, card networks, acquirer-processors, POS terminal vendors, and gateways
  • Presents forecasts and highlights major trends and industry events driving digital payments growth
  • Identifies five trends that will shape the payments ecosystem in the year ahead

SEE ALSO: These are the four transformations payments providers must undergo to survive digitization

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People laughed at startup guru Eric Ries' idea to reinvent Wall Street, so he started a new stock exchange to prove them wrong

Sat, 05/25/2019 - 9:00am

  • People laughed at Eric Ries, startup guru and author of the Lean Startup, when he first pitched the idea of a long-term stock exchange. 
  • Initially Ries wanted someone else to run with his idea, he told Business Insider. But when no one did, he decided to start the Long-Term Stock Exchange, a competitor to Nasdaq and the New York Stock Exchange that requires companies to look beyond quarterly earnings.
  • On May 10, the Securities and Exchange Commission approved the LTSE's application. Now it can finally get to work.
  • Read more on the Business Insider homepage.

Eric Ries knows a thing or two about thinking long-term.

Nearly a decade ago Ries, the author of the Lean Startup, purposed an idea for a new stock exchange that would force companies to think and act based on how decisions would impact investors 10, 25, and 100 years down the road.

The best companies that had ever lived all had long-term, purpose-driven visions, he reasoned, and a highly-regulated entity like a stock exchange would keep companies and their executives accountable. 

"People literally laughed at me and said this can't be done," Ries told Business Insider. "I had a test reader of the Lean Startup manuscript tell me I had to take it out of the manuscript, it was such a bad idea, it destroyed all of my hard-earned credibility from the preceding 299 pages. But I couldn't really understand why."

So when nobody else volunteered to start the Long-Term Stock Exchange, Ries decided to launch it himself.

SEC approval took three years

On May 10, nine years after the Long-Term Stock Exchange was dreamed up, and three years after it first engaged with regulators, the Securities and Exchange Commission approved its application.

"There's nothing in this world quite like speaking an idea out loud for the first time, and then some number of years later — in this case nine years later — seeing it become a reality," Ries said. 

Officially, the company started five years ago with just Ries and a few advisors. LTSE raised a friends-and-family funding round in 2015, then went on to raise more money from venture capital firms including Andreessen Horowitz, Greylock, Founders Fund, Collaborative Fund, and Obvious Ventures.

Read more: A Silicon Valley stock exchange backed by Peter Thiel and Andreessen Horowitz just got SEC approval

The exchange also managed to recruit some industry heavyweights. Chief Policy Officer Michelle Green jumped on board out of a career at the NYSE and the US Department of the Treasury, and Chief Commercial Officer Martin Alvarez joined out of investment banking roles at Piper Jaffray and Morgan Stanley.

With 20 people working between San Francisco and New York City, LTSE has mostly focused on building out its cloud stock exchange software and a product for private companies. Without SEC approval, LTSE wasn't able to solicit IPO clients or engage in its main line of business, taking companies public.

Until the SEC sanctioned the exchange, it wasn't so clear that things would work out.

In April 2018, The SEC received impassioned letters of support from a cohort of the tech elite like Marc Andreessen, Sam Altman and Ev Williams, as well as long-term investors like CalPER's Marcie Frost.

"We're facing a dangerous trend in our public markets," Andreessen wrote. "IPOs have been falling drastically and companies are staying private longer."

As with any company with limited revenue streams, LTSE was burning through its reserves.

In a public filing, the LTSE exchange disclosed $0 in revenue and expenses, and just $10 in assets for 2018. Its holding company, LTSE Holdings, reported $5.4 million in losses on $10,900 in revenue for the same period. At the end of the year, the holding company had around $6.6 million in cash thanks to investors — just over half of the $11.8 million in cash reserves it had the year before.

Read more: Uber wanted to IPO with a $120 billion valuation but ran into trouble when some of its biggest shareholders held out for a lower price

Now that it's on the books, LTSE is among an exclusive group of around a dozen exchanges in the US that are allowed to list public companies. Like the New York Stock Exchange and Nasdaq, LTSE will make money on trading fees and data fees, listing fees, and tools and services. Ries expects that many of LTSE's clients will dual list with other exchanges.

The big difference, Ries said, is that the LTSE will require companies to follow through on their commitment to long-term investors. It will give long-term investors like pension funds and endowments a guarantee that companies won't over emphasize quarterly results at the expense of the future. And it will give company executives structural and regulatory support to make decisions with the long-term in mind, he said. 

"The way one long-term investor put it to me, anything a company can voluntarily adopt they can voluntarily un-adopt whenever they feel like it," Ries said. With the LTSE, "they're not just taking a pledge or putting out some kumbaya statement, but taking an binding commitment to do the right thing," he said. 

That said, many of the LTSE's ideas for ensuring that companies adhere to a long-term business approach — such as tying voting power to the amount of time someone has owned shares — must still be approved by regulators in a separate process.

Two weeks in, but no IPOs yet

For Ries, SEC approval means the LTSE can finally get to business.

While there's zero chance that any of the companies planning to go public in the near term will list with LTSE, regulatory approval means the LTSE can start to solicit potential clients from the next cohort of IPO candidates, he said.

Many, but not all, of those companies will be in tech, Ries said. But that doesn't mean they will all be based in Silicon Valley.

"People have this vision that we're going to conjure a marble building with a bull and stick it on Market Street," Ries said. "But the reality is, not even the NYSE is in that building anymore. The servers are in New Jersey. So people have a very outdated model of what a stock exchange is."

The LTSE instead will live in the cloud. Companies will list on the exchange from all over the country. And then in 100 years — if everything goes as planned — those companies will deliver long-term value to shareholders.

"The value that is created by capital markets comes through the process of capital formation. When patient and visionary investors are able to really back and partner with visionary entrepreneurs, that's where the magic happens," Ries said. "Everything else is just dividing up the spoils."

SEE ALSO: Uber, Tesla, and Slack show how Saudi cash is flowing into Silicon Valley. Here are 5 questions every US tech startup founder needs to ask before taking money from a foreign investor.

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This Seattle-based VC firm raised $11 million for its plan to convince Amazon and Microsoft employees to take the plunge into entrepreneurship (MSFT, AMZN)

Sat, 05/25/2019 - 9:00am

  • On Wednesday, Seattle-based startup studio Madrona Venture Labs announced it raised $11 million in funding to help build between 8 and 12 startups.
  • Madrona Venture Labs is a startup studio backed by Madrona Venture Group and specializes in artificial intelligence and machine learning technology.
  • Mike Fridgen, Managing Director at Madrona Venture Labs, told Business Insider that Seattle is full of top technical talent from Amazon and Microsoft that he hopes to recruit to the startup studio as founders and mentors.
  • According to Fridgen, many of the legacy companies' top executives have made enough money to be financially secure enough to take the leap into entrepreneurship.
  • Visit Business Insider's homepage for more stories.

Seattle has become a top destination for tech talent. Amazon, Microsoft, and Boeing all call it their homes, while just about every other major tech company under the sun has set up shop in the city in a big way. 

Madrona Venture Labs, a startup studio backed by Madrona Venture Group, is betting that tech talent cooped up at tech behemoths like Amazon and Microsoft are ready to strike it big on their own with its latest $11 million fund. The fund will go towards building 8 to 12 companies over the next year.

"We've had executives from those kind of companies that had seven-figure comp packages leave to do this," Managing Director Mike Fridgen said of the Madrona Venture Labs program. "At some point they're at a place financially where they can take more risks and do what they're actually passionate about."

This program operates under a slightly different model than accelerators like the famed Y Combinator. Where other programs accept applications, choose a select few startups, and provide early funding and rigorous mentorship, Madrona Venture Labs enters the equation right at the beginning. 

As Fridgen explains, Madrona Venture Labs works with would-be founders to help them find and develop an idea for a startup. Then, Madrona matches the founder with a team to build the company. It can overcome a major hurdle to entrepreneurship, says Fridgen, by giving the newly-minted CEO an idea and a team right off the bat.

Read More: Auth0, a cybersecurity software company started by a Microsoft veteran, scooped up $103 million and says its valuation doubled to over $1 billion in just 12 months

"They immediately gave me a team, with a Helix designer, a business analyst, an interim CTO, and a developer," said Mia Lewin, founder and CEO of Spruce Up, a Madrona Venture Labs spin-off company. "Instead of going through the traditional founding process trying to validate your idea, I went with the team to validation process."

Madrona Venture Labs works closely with the investment arm of Madrona to identify opportunities, both in the market and in terms of technology. It then goes out through its connections in Seattle's talent pool for the top artificial intelligence and machine learning technologists to help actually build the solutions.

Having to compete with the larger companies in terms of paycheck and compensation may be difficult, Fridgen said, especially with Amazon literally in its backyard. But there is something special that makes executives leave the comfortable confines of an established organization for the challenges of entrepreneurship.

"We are unlocking the value of entrepreneurs in our market by providing value for extremely capable executives in our market that, without this process, wouldn't start a company," Fridgen said. "What we focus on is venture capability and diversity, so we are trying to expand the pool of founders that we attract."

Fridgen says that Madrona is the only investment group of its size in Seattle compared to 85 similar firms in Silicon Valley, giving Madrona Venture Labs graduates a leg up on other entrepreneurs hoping to gain a foothold in the market.

"It's an opportunity to provide onboarding for executives at companies in larger companies and folks not as familiar with building their own company," Fridgen said. "We are their cofounders, and connecting on that level is less obvious and capital is less available. Our goal is to remove all the hurdles to build the company by bringing it into the Lab."

SEE ALSO: Design startup Canva is now a $2.5 billion company, thanks to the first-ever investment from legendary VC Mary Meeker's new fund

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Tesla's tanking stock price is actually the best thing that's happened to the company recently (TSLA)

Sat, 05/25/2019 - 8:57am

  • Tesla's stock price has plummeted 35% since the beginning of the year.
  • A wave of Wall Street reassessment is now underway, as analysts cut their target prices and develop new arguments for whether Tesla will succeed or fail.
  • Tesla's stock has long been overpriced, and that has distorted the company's triumphs. A lower stock price, with less trading action, could be a boon for the company's future.
  • Visit Business Insider's homepage for more stories.


The white flag of surrender, or at least a fighting retreat, is being run up all over Wall Street.

As Tesla's stock price slides 35% year-to-date, dropping below $200, its market cap sheds billions, and the dreaded 'B-word' is once again uttered, analysts are racing to reaffirm some semblance of their former optimism — or slashing their target prices and offering new, rather bearish (some would say hibernating) worst-cases. 

For example, longtime Tesla bull Adam Jonas suggesting that if things get ugly the stock could go to $10.

It's commonly said that the stock market isn't the economy. In Tesla's case, the stock price isn't the company's business, nor has it ever been. In fact, the stock price isn't really even a stock price, if you think about it, in the sense that the number represents a fairly valued claim on future profits or cash flows.

Read more: Tesla is facing scrutiny for its cars catching on fire, but electric cars could actually end up being safer than gas-powered cars

I've been saying this for years, but the idea that Tesla is worth more than, at most, $150 per share is sort of silly. This is a relatively small carmaker. It sold 250,000 vehicles last year. It could have margins that align with Porsche or BMW (a good thing, but still speculative at this juncture). But for now it has managed three profitable quarters since it went public in 2010; General Motors sold nearly 3 million vehicles in the US alone and has made tens of billions on profits since its own 2010 IPO.

Car companies don't experience wild swings in stock value

Tesla's stock-price swings are also unhinged. Car companies don't lose over $10 billion on market cap in a matter of months. Nor do they surge to absurd heights on thin news. The truth is that as Tesla's business has matured, share-price action should have settled down; it shouldn't be too difficult to determine if sales level, and therefore revenue and profits, can hold up. 

For the record, they ought to — at production and sales levels around where they are now. Forget about a million robotaxis and the semi-truck project. What ultimately matters is the heart of the lineup, the high-ish volume Model 3 sedan and the two luxury vehicles, the Model S and Model X. Tesla has a near-monopoly on the high-end electric vehicle market and should be able to support a share of 1%-2% on gradually expanding sales levels.

Don't worry about China, don't worry about the Model Y. Just look at the established business and figure out what Tesla is worth based on that. The figure of $150 per share doesn't seem, to me, too crazy. Obviously, that's $100 lower than where Tesla has raised money in the past, but it would behoove Tesla to get off the Wall-Street-is-my-ATM train and operate without that backstopping. 

Ignore the buzz

The buzz around Tesla, both among citizen enthusiasts and overheated Wall Street bulls, has always fed on over-the-top predictions about the company. The case was always weak, the story full of holes. It was easy to dismantle. 

But what gets missed in that process is Tesla's clear triumph. As Ford Chairman Bill Ford once told me when I asked him about the auto industry, "This is a tough business." That's why there hasn't been a new, major US carmaker that's succeeded in decades. Tesla's very existence is staggering, in that context, it wasn't supposed to happen.

Don't believe me? How many other new carmakers do you see selling a quarter of a million vehicles a year? Right, exactly.

Tesla's success, against the odds, is really its main challenge at this point. Ford and GM, not to mention Toyota and Honda, built up their businesses with 20th-century cost structures. Ford has factories — still cranking out vehicles — that it built in the 1920s. Tesla has to contend with 21st-century prices, as well as 20th-century technologies, while the entire worldwide auto industry rose on engineering that was developed in the 1890s.

The end of "disruption"

It also has to back off from disruption and concentrate on execution, never its strong suit. Overall, the global auto industry is a daily grind, and that's the part that Tesla keeps screwing up, as CEO Elon Musk strives to reinvent various wheels.

In this context, Musk's recent enthusiasm for cost control should be welcome. It's about time Tesla started making every dollar of invested capital count.

I've always preferred the idea of Tesla as a solid, small-to-medium-sized carmaker, serving what is a modest but growing market for electric vehicles. I've never liked the idea of Tesla as an energy company, a solar-panel company, or a mobility provider. The electric car has endured a fraught existence, and it still isn't quite there, but Tesla has made more progress than anyone ever thought possible. 

A couple of years with a normal stock price would go a long way toward bolstering that achievement and, more importantly, keep the electric-car revolution going in their face of the inevitable financial setbacks it could face in decades to come.

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NOW WATCH: Elon Musk says Tesla owners could make up to $30,000 a year turning their cars into 'robotaxis'

The most expensive home for sale in Paris is a massive $280 million mansion right next to the Eiffel Tower, and it's owned by 2 mysterious sisters of 'a rich French dynasty'

Sat, 05/25/2019 - 7:30am

 

A 113,000-square-foot mansion in Paris is on the market for 250 million euros, or about $280 million.

It's the most expensive home currently for sale in Paris, according to the Russia-based Kalinka Realty, which is selling the property with Hong Kong-based Sindex Development.

The massive mansion sits along the banks of the Seine River, right next to the city's most famous landmark: the Eiffel Tower. The price recently went up from 220 million euros — about $246 million — because of buyer interest, particularly among Russian clients, Kalinka Realty told Business Insider. 

"This is an ideal purchase for investment and similar offers — within walking distance from the [Eiffel] Tower and with views of it ..." Tatyana Burlakovskaya, head of Kalinka International, said in the listing. "Such properties are called trophy [properties]. Possession of them is not so much a question of profit as the opportunity to get a unique asset into your collection — one of a kind."

The owners of the mansion are reportedly two elderly sisters who are "representatives of a rich French dynasty," according to Kalinka Realty. But the interior and other details of the home remain a mystery to the public. 

Here's a look at the $280 million mansion.

SEE ALSO: One of the most expensive homes for sale in the Hamptons got a $30 million price cut. Take a look at the massive estate that's been on the market for almost 2 years.

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A massive mansion right next to the Eiffel Tower in Paris is on the market for 250 million euros, or about $280 million.

It's the most expensive home for sale in Paris right now, according to Russia-based Kalinka Realty, which is selling the home with Sindex Development, a Hong Kong-based company providing legal services to the seller. 

The price recently went up from 220 million euros — about $246 million — because of buyer interest, particularly among Russian clients, Kalinka Realty told Business Insider. 



The six-story home sits along the River Seine, right next to the Eiffel Tower and the Champs de Mars, the public green space that surrounds it.

The mansion's location at the intersection of Avenue de Suffren and Quai Branly in the ritzy seventh arrondissement is one of the most sought-after areas of Paris.



The seventh arrondissement is home to embassies and ministry buildings, as well as world-renowned museums and cultural institutions.

The average price per square foot in the seventh arrondissement is about $1,235, but luxury properties can cost up to $2,787 per square foot.



According to Paris Property Group, a view of the Eiffel Tower can double or triple a property's price.

"Since the end of 2018, we've noticed increased interest in the 7th linked to Brexit with the return of French citizens from abroad who have a high budget at their disposal," Dominique de Saint Priest of the Era Saint Priest agency told Paris Property Group. 



The opulent mansion remains mysterious except to those elite few who may actually be prospective buyers.

The owners of the mansion, reportedly two elderly sisters who are "representatives of a rich French dynasty," have forbidden Kalinka Realty to publish photos of the interior and any additional details about the home, the company told Business Insider.



If the home sells for its asking price of $280 million, it would be one of the most expensive homes ever sold in the world.

But it wouldn't break the record — even within France. In 2015, Mohammed bin Salman, the Saudi crown prince who has been at the center of human rights scandals such as the death of the death of journalist Jamal Khashoggi, bought a 17th-century chateau just west of Paris for $300 million.



A key weapon that helped the US economy recover from the Great Recession could soon wreak havoc on financial markets — and the Fed just confirmed the risk

Sat, 05/25/2019 - 6:05am

  • The Federal Reserve recently debated reviving its so-called Operation Twist to fight the next recession. 
  • Back in 2011, the Fed exchanged short-term bonds for their longer-dated counterparts to keep some borrowing costs like mortgage rates low. 
  • But minutes from the Fed's recent policy meeting showed that there are new risks to investors if this tool is adopted again. 
  • Visit Business Insider's homepage for more stories.

One of the big mysteries that has dogged investors since the end of the Great Recession relates to what the Federal Reserve will do with its $4 trillion-plus stockpile of bonds.

During the worst financial crisis of our lifetimes, the Fed and other central banks purchased Treasurys, mortgage-backed securities, and other debt instruments to keep borrowing costs low. It was an unprecedented policy move — and it worked.

Now that there's widespread curiosity about the timing of the next recession, the Fed is scrutinizing the tools at its disposal. This much was clear in minutes of the Fed's most recent policy meeting released earlier this week.

One of the tools under consideration was the so-called Operation Twist — formally known as a Maturity Extension Program — carried out between 2011 and 2012.

Its implementation is as follows: The Fed loads up on short-term bonds so that when a downturn arrives, it can sell these for an equal number of longer-term bonds. The intended outcomes are that some long-term borrowing costs like mortgage rates are kept low and the Fed's overall balance sheet size remains steady.

However, in discussing this strategy as an option for the next recession, Fed officials flagged a number of risks that could make it a counterproductive move. 

Firstly, Fed officials said their purchases of short-term debt could increase the incentives for private companies to start issuing short-term bonds of their own. That's not an ideal outcome in a corporate-credit market already besieged by low-quality borrowers, and where the word "bubble" is frequently thrown around.

For those doubting that this is already a time bomb begging to be defused, consider that there has never been a greater share of the corporate-bond market rated BBB, the lowest rung on the investment-grade ladder.  

Secondly, Fed officials were concerned that "financial market functioning might be adversely affected" if shorter-dated bonds became too large a part of their Treasury holdings. 

Before the Fed confirmed these risks in writing, economists at Goldman Sachs speculated on them.

"While favoring shorter maturities more aggressively now would provide more ammunition for a twist by the time the next recession comes, Fed officials might worry about having too large of an unintended market impact during the reverse twist phase," Jan Hatzius, Goldman's chief economist, said in a note to clients.

He continued: "Relative to the current policy for US Treasury investment, favoring the front end would put more duration in the market, steepen the curve, and tighten financial conditions." 

We now know for sure that the Fed is worried about these adverse outcomes. 

In the end, officials said they won't need to make a decision "for some time." After all, they don't expect the next recession to arrive anytime soon. 

But should the trade war or any other recession risk heat up, this option might be too dangerous to be on the table. 

SEE ALSO: A $17 billion investor explains her uncommon tactics for finding the market's biggest cash cows — a strategy that's historically guarded against crashes

Join the conversation about this story »

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China's biggest chipmaker has applied for 'voluntary delisting' from the New York Stock Exchange amid the trade war and Trump's crackdown on Chinese tech (SMI)

Sat, 05/25/2019 - 5:11am

  • Semiconductor Manufacturing International Corporation (SMIC), the largest chipmaker in China, is delisting from the New York Stock Exchange.
  • The "voluntary delisting" comes amid increased tensions between the US and China over trade and President Donald Trump's crackdown on Chinese tech companies.
  • SMIC claimed its decision has nothing to do with those tensions, attributing its decision instead to low trading volumes and administrative costs.
  • Visit Business Insider's homepage for more stories.

The largest chipmaker in China has applied for a "voluntary delisting" from the New York Stock Exchange as President Donald Trump's administration increases its crackdown on Chinese tech.

Semiconductor Manufacturing International Corporation (SMIC) said in a Friday statement that it will file a form to delist with the US Securities and Exchange Commission (SEC) on June 3, and cease trading on June 13.

The company, whose primary listing is in Hong Kong, specializes in integrated circuit manufacturing and works with American companies like Qualcomm and Texas Instruments. Qualcomm, the Chinese telcom giant Huawei, and Belgian nanotechnology firm imec are minority shareholders in SMIC's R&D arm.

SMIC attributed its decision to delist to "a number of considerations," which included "limited trading volume of its ADSs [American depositary shares] relative to its worldwide trading volume, and the significant administrative burden and costs" of maintaining the NYSE listings and reporting to the SEC.

Read SMIC's full statement here.

SMIC made no mention of the ongoing trade war or the US's growing crackdown on Chinese tech in its Friday statement, and insisted that its decision to delist had nothing to do with either of those factors.

Washington and Beijing are in the throes of a yearlong trade war, in which both sides have imposed billions of dollars' worth of additional tariffs on each others' products.

Read more: It's been more than a year since the US-China trade war started. Here's a timeline of everything that's happened so far.

Last week, the Trump administration labeled Chinese telcom giant Huawei a national security threat, and effectively banned it from doing business with US companies. Major tech companies in the US and around the world have severed ties with Huawei since.

 

There was some speculation that SMIC's decision to delist was due to the trade war, CNBC reported.

But a spokesperson for the Chinese company told CNBC: "SMIC has been considering this migration for a long time and it has nothing to do with the trade war and Huawei incident."

"The migration requires a long preparation and timing has coincided with the current trade rhetoric, which may lead to misconceptions," the spokesperson added.

It's not clear if the trade war or Trump's penalizing Chinese tech affected SMIC's American trades. Business Insider has contacted SMIC for comment.

SMIC made a profit of $746.7 million in 2018 on a $3.36 billion revenue, TechCrunch reported. Its revenue for the first quarter of 2019 was $668.9 million, which was 19% lower year-on-year, according to first-quarter earnings reported earlier this month.

Investors were caught off guard by the announcement, and the company's stock fell 4.9% on Friday, the South China Morning Post reported.

Join the conversation about this story »

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6 strategies I used to pay off $81,000 in student loans

Sat, 05/25/2019 - 12:00am

  • Melanie Lockert graduated from college with $81,000 in student loans, and spent several years paying the minimum amount due every month.
  • When she still had $68,000 of debt left after getting her Masters degree, she decided to get serious about paying off her debt, and implemented the debt avalanche.
  • She then put her energy toward earning more, took advantage of any freebies that could lower her cost of living, put cash back toward her loans, and adjusted her tax withholding.
  • Visit Business Insider's homepage for more stories.

When I graduated in May 2011, I was filled with anxiety about my student loans.

I had just graduated with my Master's in Performance Studies from New York University. For my BA, I had borrowed $23,000 and for my MA I borrowed $58,000. Between graduating with my BA in 2006 and getting my Master's, I treated my student loan payment like a bill and just paid the minimum.

But after several years of payment and taking on more debt, I graduated and still had $68,000 left. Once I got serious about my debt and faced my debt head-on, I was able to make progress and paid off the $68,000 I had left in less than five years.

Here are the six strategies I used to get out of $81,000 in student loan debt.

1. I used the debt avalanche method

My Grad PLUS loans had interest rates of 6.8% and 7.9%, whereas my undergraduate loans had interest rates at less than 3% (I can no longer remember exactly how much). When I calculated how much money I was spending on interest, it came to $11 per day. After that, I knew I had to ditch my high-interest debt first.

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I used the debt avalanche method where I paid the minimum on all my loans, while throwing extra cash at my highest interest debt — the 7.9% loans. I continued to do this, until that was paid off, and then threw extra cash at the 6.8% loans, and so on and so forth. The avalanche method will help you save money on interest over time, which can mean putting more toward your principal balance.

2. I made biweekly payments

One thing I didn't realize about student loan debt is that the interest accrues daily. In order to combat the interest that was growing each day, I changed up my strategy. Instead of making monthly payments as required, I made biweekly payments. I divided my monthly payment in two and paid that amount every two weeks. This helped me keep the interest more manageable without even having to pay more.

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3. I put my energy toward earning more

After graduating and not finding a full-time job, I moved to Portland, Oregon. I cut my expenses in half but still only found temp work making $10 to $12 per hour. I had scaled back as much as I could. That's when I realized if I wanted to make real progress on my debt, I had to focus on earning more.

I began to side hustle any way I could. I worked as a brand ambassador, working as the public face of a company at public events. I pet sat for coworkers, found gigs on TaskRabbit like helping someone move, and once I found a gig on Craigslist where I ended up selling water bottles overnight at an underground dance party.

The holiday season was especially lucrative. I worked for a wealthy family assisting with their Halloween party. I worked as a coat check for holiday parties. I pet sat during Thanksgiving and passed out appetizers during Christmas parties. Any gig I could find, I'd do. I put all that extra money toward my debt.

4. I took advantage of free items

One way I was able to keep my expenses low was to take advantage of free stuff. I was lucky enough to get some free samples of soap, free coupons for food items, etc. with my brand ambassador side hustle.

!function(){function e(){var e=document.createElement("script"),n=document.getElementById("myFinance-widget-script"),a=t+"static/widget/myFinance.js";e.type="text/javascript",e.async=!0,e.src=a,n.parentNode.insertBefore(e,n);var c="myFinance-widget-css";if(!document.getElementById(c)){var d=document.getElementsByTagName("head")[0],i=document.createElement("link");i.id=c,i.rel="stylesheet",i.type="text/css",i.href=t+"static/widget/myFinance.css",i.media="all",d.appendChild(i)}}var t="https://www.myfinance.com/";document.attachEvent?document.attachEvent("onreadystatechange",function(){"complete"===document.readyState&&e()}):document.addEventListener("DOMContentLoaded",e,!1)}();


I started working as an event assistant for a congregation. From that side hustle, there were many leftover items of food and wine, which helped lower my food budget.

If I had to shop and buy something, I researched free coupon codes by typing "[company] + coupon code". Taking advantage of free things helped keep my expenses low.

5. I put my cash back toward my loans

If I had to spend money on something, I wanted to make sure I was making some money in return. When I shopped online, I used Ebates, a site where you can get cash back at certain retailers.

I also had the Capital One Quicksilver card, where I got 1.5% cash back on all my purchases.

These are the best cash-back credit cards of 2019 »

I took the cash back that I got from Ebates and my credit card and put it toward my student loans.

6. I adjusted my tax withholding

Like most people, I was excited every year to receive a tax refund. But then I realized I'd be better off adjusting my tax withholding and boosting my paycheck each month. That way, instead of receiving a lump sum once a year, I'd have more money to work with each month. I used that extra buffer of cash to put more toward my student loans.

Becoming debt-free has been one of the great joys of my life. It wasn't easy or glamorous. It took a lot of dedication and hard work. Using these six strategies, I was able to streamline the debt payoff process and get out of debt faster.

Join the conversation about this story »

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A Wall Street firm figured out how much money Google will sacrifice by cutting off Huawei (GOOG, GOOGL)

Fri, 05/24/2019 - 11:58pm

  • President Trump's blacklisting of Huawei led Google to announce that it would be pulling its Android license from smartphones made by the Chinese manufacturing giant.
  • That means users with new Huawei devices will no longer be able to download apps from the Play Store, which could cost the tech giant hundreds of millions of dollars per year. 
  • Analysts at Nomura Instinet wrote that Google could lose between $375 million and $425 million per year in a "worst case" scenario from the Huawei ban.
  • Managing Director at Wedbush Securities, Dan Ives, estimates that it will be closer to $150 million to $200 million per year.
  • Visit Business Insider's homepage for more stories.

Google's decision to cut off China's Huawei could cost it as much as $425 million in lost annual revenue.

That's the estimate from equity research firm Nomura Instinet, which crunched the numbers in response to the news that Google will no longer license its Android smartphone software to Huawei.

Google doesn't have much choice in the matter. The Trump administration placed Huawei on a blacklist this month, making it almost impossible for US companies to do business with the Chinese smartphone and telecom equipment maker. 

That means new Huawei devices in markets around the world will no longer be able to run the version of Android that comes with all the latest security patches, access cutting-edge Google services like Assistant, or download apps from the Google Play store. 

Huawei's breakup with the Google Play store, in which Google typically takes a 30% cut of every transaction, is where Google stands to lose the most. Instinet pegs the general range in potential lost Play Store sales for Google between $375 million to $425 million. 

The biggest impact will be in Europe

Instinet estimated that Huawei currently has around 500 million smartphone users worldwide.

But 52% of Huawei phone owners are in China, where Google Play is not available, according to Instinet's estimates. So Google would only feel an impact in markets — like Europe and Asia (excluding China) — where it profits from app sales today.  

Google generated $7 billion in global Play Store sales in 2018, Instinet estimates. The portion of that $7 billion that comes from Huawei phones is likely around $388 million, according to Instinet's calculations. The biggest driver of that revenue is in Europe, where Google generated $190 million from Play Store sales on Huawei devices last year, Instinet reckons. Huawei users in Asia (excluding China) contributed about $137 million in Play Store sales, according the report.

Huawei "switchers" will make a difference

That blow would likely be softened, they wrote, because some users will switch to phones from another manufacturer to be able to access a fully-loaded Android experience. Huawei has announced it was developing its own operating system to replace Android on its devices, but experts are highly skeptical that consumers will react positively to the switch. 

"You can build a different OS... but what are consumers going to do for search, for maps, for YouTube?" Carolina Milanesi, Principal Analyst at Creative Strategies, told Business Insider in a recent interview. "All of these things have alternatives, but why would I do that? It's not like Huawei's phones are that amazing that I would forego all the services I've been using for years."

Read more: Google has more control over Android than we realize, and right now, companies like Huawei have no other choice but to accept that

Colin Sebastian, Senior Equity Research Analyst at Baird & Co., told Business Insider that he thinks "most impacted [Huawei] users" will start looking to switch to devices made by other companies. 

"My general assumption is that since there aren't really viable alternatives to Android/Google apps (except for Apple), then most impacted users would migrate to other Android devices," Sebastian said. "Obviously there could be a transition period, but my guess is it would happen pretty quickly." 

Others, like Managing Director at Wedbush Securities Dan Ives, think Huawei will some lose market share in places like Europe, but that it won't be a doomsday scenario for the world's second-largest smartphone manufacturer. 

In terms of revenue losses for Google, Ives estimates that it will be closer to $150 million to $200 million per year. And for a company that brought in over $130 billion in revenue in 2018, Ives said these upcoming losses are a "rounding error" for the tech giant and that "ultimately the bark may be a lot worse than the bite." 

Do you work at Google? Got a tip? Contact this reporter via Signal or WhatsApp at +1 (209) 730-3387 using a non-work phone, email at nbastone@businessinsider.com, Telegram at nickbastone, or Twitter DM at @nickbastone.

SEE ALSO: A longtime industry expert explains why Trump's attack on Huawei could end up hurting Google and other US tech giants

Join the conversation about this story »

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The trade war is speeding up tech manufacturers' plans to move out of China, a longtime industry analyst says

Fri, 05/24/2019 - 9:08pm

  • The trade war is prompting tech manufacturers to speed up plans to shift production out of China, said Gregor Berkowitz, a longtime tech industry consultant.
  • Wages have been rising rapidly in the country, taking away one of the key reasons many companies set up shop there, he said.
  • The latest threatened tariffs could make Chinese-goods significantly more expensive than those made elsewhere, he said.
  • The big Taiwanese manufacturers are already shifting production from China back to Taiwan and are making plans to set up shop in Southeast Asia, according to Berkowitz.
  • Visit Business Insider's homepage for more stories.

The trade war may be hastening the day when China is no longer the world's factory.

The country established itself as ground zero for global manufacturing largely due to its cheap workforce. But wages in the country for manufacturing workers have been rising rapidly in recent years and are now at about the same level as those in nearby Taiwan, said Gregor Berkowitz, a longtime tech industry consultant who travels frequently to Asia.

With the Trump administration threatening to impose new tariffs on Chinese-made goods that could hit tech products hard, manufacturers — particularly the big Taiwanese companies that make many of the tech products on US shelves — are already starting to move production out of the country, Berkowitz said.

"They are already assertively moving out of China," he said.

The Taiwanese manufacturing companies are initially looking at moving production back to Taiwan, Berkowitz said. Because they already have their engineers and teams in the country, they can get factories up and running there in about six months, he said.

Read this: A longtime industry expert explains why Trump's attack on Huawei could end up hurting Google and other US tech giants

Manufacturers plan to eventually set up shop in Southeast Asia

Some of the companies have already shifted the production of server computers to Taiwan, Berkowitz said. But in recent months, they spoke of shifting their laptop production to the country, too, if US tariffs on such goods rose to 25%. After already announcing two sets of tariffs on Chinese goods, the Trump administration threatened early this month to impose a 25% tariff on some $300 billion worth of additional products from the country. That latest set of duties would likely cover laptops and other computer-related products.

Moving "laptop manufacturing is quite a significant deal," Berkowitz said.

Both manufacturers and the Chinese government have expected the country to transition from an export economy focused on making products for other countries to a domestic consumer-based one. But the trade war is prodding manufacturers to speed up their timetable for shifting production elsewhere, he said.

The Taiwanese manufactures plan to eventually move their plants to Thailand, Vietnam, and Indonesia, Berkowitz said. But that move will likely take them two to three years, he added.

"They're building facilities in Taiwan to meet short-term needs and making plans to make major transitions into Southeast Asia," he said.

Initially the companies are shifting the final assembly and testing of their products out of China, Berkowitz said. Next they may move over the part of the process that involves putting components on printed circuit boards. Eventually, they'll move what he calls the mechanical process, the making of enclosures and plastic and metal parts that go into devices.

It's unclear when or the extent to which the manufacturers might move the production of the perhaps the most important tech product, smartphones, out of China. But because it's such a huge industry with so few phone manufacturers these days, that move is likely to take place more slowly than other products, Berkowitz said.

"I think they're going to be much more strategic and slower in that process," he said. "Although I would expect, based on what I've heard, they've already started."

Got a tip about the tech industry? 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: President Trump's national emergency likely won't stop you from buying a Huawei phone, much less an iPhone. Here's what it means for you.

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THE TECH COLD WAR: Everything that's happened in the new China-US tech conflict involving Google, Huawei, Apple, and Trump (GOOG, GOOGL, AAPL)

Fri, 05/24/2019 - 7:56pm

  • From tariffs and levies to the Huawei ban, the global tech industry is at the center of an escalating cold war between the US and China.
  • This clash affects giant tech companies with global supply chains, like Apple, Intel and Qualcomm. And Chinese tech giants like Huawei that want to do business with US companies. 
  • Among the causes for the standoff are accusations of unfair trade practices, economic espionage and military links. It's involved everyone from government officials and tech execs to ordinary consumers.
  • Business Insider has covered all of the drama, and we've pulled together all our latest reporting on the key areas of conflict in this trans-Pacific showdown. Here's everything you need to know.

 

Google Android and the Huawei ban

A Wall Street firm figured out how much money Google will sacrifice by cutting off Huawei

A longtime industry expert explains why Trump's attack on Huawei could end up hurting Google and other US tech giants

Huawei developed a 'plan B' operating system for smartphones in case it was banned by the US government from using Google products. Here's what we know about it so far.

Google has more control over Android than we realize, and right now, companies like Huawei have no other choice but to accept that

Huawei and 5G

Huawei slams Trump's 'unreasonable' ban, saying that the move will only harm US interests in its own 5G rollout

President Trump's national emergency likely won't stop you from buying a Huawei phone, much less an iPhone. Here's what it means for you.

Huawei CEO Ren Zhengfei says the company is 'fully prepared' for a conflict with the US

Everything you need to know about Huawei, the Chinese tech giant accused of spying that the US just banned from doing business in America

Trump is being mocked on Chinese social media for giving Huawei free publicity

Here's why it's so hard to buy Huawei devices in the US

 

Apple and China

Trump's Huawei ban could spark a tit-for-tat fight with Beijing that puts Apple in the crossfire

Trump's Huawei ban may have dire implications for Apple — but investors shouldn't 'jump to conclusions' just yet, analyst says

Wall Street is worried that the US-China trade war could drive up iPhone prices, which is the last thing Apple needs right now

Huawei, the Chinese tech giant embroiled in controversy, just overtook Apple to become the second-largest smartphone maker

 

Artificial Intelligence, chips and enterprise software

As a tech Cold War looms, this veteran Silicon Valley patent attorney says that China's push to win the AI processor market is a serious threat to American tech

Trump's blacklist of Huawei has serious implications for Red Hat, Oracle, VMware, and other huge US software companies

We spent a day with China's rock star of AI, whose new book says China's machine learning superiority will subjugate Americans to 'technological colonization'

Google's former China boss says the search company won't stand a chance against today's Chinese 'gladiator' entrepreneurs

 

Spies, surveillance, trade secrets, and arrests

The US just warned that drones made in China could be used as a way to spy, but not in the way you think

The founder of Chinese tech giant Huawei reportedly expects his daughter, Huawei's CFO, to go to jail, but he's 'not worried about her future'

'My inner self has never felt so colorful and vast': Huawei's CFO wrote a heartfelt email to staff in a show of defiance to the US

Explosive report claims Europe's biggest phone company found 'backdoors' in Huawei equipment

Huawei's CFO was carrying a whole bunch of Apple products when she was arrested

Huawei's security boss says the company would sooner 'shut down' than spy for China

Huawei is accused of attempting to copycat a T-Mobile robot, and the charges read like a comical spy movie

Join the conversation about this story »

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Reigning 'Jeopardy!' champion James Holzhauer crosses the $2 million threshold

Fri, 05/24/2019 - 7:42pm

  • The reigning "Jeopardy!" champion James Holzhauer crossed the $2 million threshold on Friday evening.
  • The 34-year-old professional sports gambler is on a winning streak, second only to Ken Jennings.
  • Jennings crossed the $2 million mark with a final total of $2.5 million, which was racked up over 74 games. Holzhauer, by comparison, just hit this mark during his 27th game.
  • Business Insider previously reported that Holzhauer broke the record for the most amount of money in a single game — and in the show's hall of fame, he is in the top 10 spots for "single-game winnings."
  • Visit Business Insider's homepage for more stories.

The reigning "Jeopardy!" champion James Holzhauer crossed the $2 million threshold on Friday evening.

The 34-year-old professional sports gambler is on a winning streak, second only to Ken Jennings who also crossed the $2 million mark, raking in $2.5 million over a 74-game winning streak. (Jennings' total winnings including tournaments is higher.)

Holzhauer, by comparison, crossed $2 million during his 27th consecutive win. His total winnings are $2,065,535, and he is roughly $455,000 shy of Jennings' winning-streak earnings, The New York Times reported.

He has made his mark on the show by taking monetary risks, going after "high-value clues first and big bets on Daily Doubles, often doubling his total," Business Insider's Hillary Hoffower previously wrote.

Holzhauer wagered $35,000 during Final Jeopardy, TVLine reported, bringing his total game winnings to $74,000.

 

Business Insider previously reported that Holzhauer broke the record for the most amount of money in a single game — and in the show's hall of fame, he is in the top 10 spots for "single-game winnings."

In terms of all-time winnings, which includes tournaments, Brad Rutter holds the record with $4.6 million, followed by Jennings, who with his additional tournament wins has won a total of $3.3 million.

SEE ALSO: Meet the professional gambler from Illinois who's shattering 'Jeopardy!' records, just tied for the 2nd-longest winning streak, and has taken home $1.6 million in 21 days

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Hewlett Packard Enterprise is projecting a strong outlook for the rest of the year — but the CEO says that the overall data center market slowdown is his 'biggest worry' (HPE)

Fri, 05/24/2019 - 6:33pm

  • Hewlett-Packard Enterprise CEO Antonio Neri says the tech giant is grappling with market uncertainty marked by longer sales cycles.
  • The tech giant's most recent financial results, announced on Thursday, were welcomed by Wall Street— especially after HPE raised its outlook.
  • But Wedbush's head of technology trading says the results underline HPE's struggles in the cloud.
  • Visit Business Insider's homepage for more stories

Hewlett Packard Enterprise boosted its profit outlook for the year, which is lifting its shares up some 1% on Friday. But CEO Antonio Neri says the tech giant is grappling with a more ambivalent corporate tech market.

HPE's stock was ahead 2% in afternoon trades. On Thursday, the tech giant raised its adjusted profit outlook for the current fiscal year to a range of $1.62 to $1.72 a share, up from a previous target of $1.56 to $1.66 a share.

"There is uncertainty there, and the uncertainty drives elongated sales cycles," he told Business Insider. "That's my biggest worry."

To his point: After seeing a strong uptick in 2018, corporate IT spending has hit pause, which was also highlighted in the recent earnings reports of chipmakers Intel and Nvidia, which make chips that power data centers and cloud platforms.

Read more: New Intel CEO Bob Swan takes a humble tone in a meeting with investors after a huge earnings shortfall: 'We let you down'

The good news, for now, is that Wall Street was happy with HPE's second-quarter report, announced on Thursday — which featured a dip in sales, but a higher earnings target for the year. It also comes in the wake of HPE's recent announcement that it intends to buy legendary supercomputing company Cray for $1.3 billion.

But on the call with analysts, Neri said that some HPE deals were not closing in the time the company expected.

"The longer the uncertainty goes, the worse it gets," Neri said on the call. "We continue to monitor to see what else we can do."

HPE's two main businesses posted lower sales. Its division focused on networking equipment, which includes products from its Aruba Networks subsidiary, saw revenue fall by 6% year-over-year, while its hybrid cloud business, which includes high performance computing systems, severs and data storage, reported a 4% drop.

Lingering uncertainty

HPE was the product of the 2015 split of Hewlett-Packard, the iconic Silicon Valley giant, which once sold everything from PCs and printers to servers, storage systems used for data centers and cloud platforms.

HPE got the data center and cloud stuff, and is slugging it out with longtime rivals such as IBM and Microsoft. But it has struggled in the battle for the cloud, where HPE is pushing a hybrid strategy — offering products and services that integrate its own servers and data center hardware with the major cloud computing platforms, including Amazon Web Services and Microsoft Azure. Revenue for that hybrid business slipped last quarter.

HPE reported gains in operating margin, which IDC President Crawford Del Prete "shows positive momentum around their strategy to go after higher margin pools." But the company's Aruba Networks business, which competes head-to-head with the likes of Cisco, clearly showed some weakness.

"I don't think there's something wrong with the Aruba product set per se, but they are not executing in the US," he told Business Insider. "This is clearly a sales issue."

'Cloud cannibalization'

Joel Kulina, head of technology trading at Wedbush, said HPE's sluggish revenue underscores the impact of the ongoing shift to the cloud.

Cloud computing has allowed companies to access computing power via the web, dramatically lowering their IT costs since they don't have to spend a fortune building their own data centers. This trend has hurt big tech companies selling high-margin computing gear, including HPE.

"These results are a reminder that last year's robust enterprise spend was an outlier," he told Business Insider. And that robust spend, he said, "will likely be followed by years of sluggishness/declining revenue trends for the enterprise server and storage market as cautious capex spend and cloud cannibalization weighs on enterprise budget allocation."

Got a tip about Hewlett-Packard Enterprise or another tech company? Contact this reporter via email at bpimentel@businessinsider.com, message him on Twitter @benpimentel, or send him a secure message through Signal at 510.731.8429. You can also contact Business Insider securely via SecureDrop.

 

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The managing director of a nonprofit founded by BlackRock and McKinsey explains the one thing companies can do to be more like Amazon

Fri, 05/24/2019 - 6:32pm

  • Want to be more like Amazon? Think long-term, says Alison Loat, the managing director of FCLT Global, a nonprofit that researches and advocates for long-term investors.
  • Amazon's board of directors has a statement of purpose that explicitly says that their job is to look out for long-term shareholders. Just creating a statement of purpose can make a difference in the right direction, Loat said last month at the Milken Institute Global Conference. 
  • But this is just one strategy public companies can use to keep long-term value front of mind, she said.
  • Executive compensation, quarterly guidance, and long-term road maps can all influence how a company performs over the long haul.
  • Read more on the Business Insider homepage.

Alison Loat is on a mission to end quarterly guidance, and BlackRock, McKinsey, and Dow are all on her side.

Loat is the managing director at FCLT Global. It's a Canadian nonprofit founded by teams at McKinsey, the Canada Pension Plan Investment Board, Dow, BlackRock and India's Tata.  The firm thinks about investments over a 75-year period.

Loat said that telling investors and analysts what to expect from quarter to quarter puts too much emphasis on what happens at a company in the short term. 

What executives should be thinking about is what will happen over years, Loat told Business Insider from the Milken Institute Global Conference in Beverly Hills, California, last month.

"There's the narrative that's set up where if you want to be long-term, you have to stay private for longer," Loat said. "But there's lots of stuff you could do on the public markets to be long-term as well."

Thinking long-term is the name of the game for Loat. FCLT Global's name stands for Focusing Capital on the Long Term.

 "We think about the baby born today and their retirement," she said.

Read more: A Silicon Valley stock exchange backed by Peter Thiel and Andreessen Horowitz just got SEC approval

FCLT does advocacy and research around one question: What changes can public companies implement to make them better investments for long-term shareholders?

"We're trying to create a movement or momentum around this, bringing together people who make very material investment decisions everyday by the nature of their jobs," Loat said.

To be like Amazon, write a statement of purpose

To get there, FCLT has some best practices it recommends to all public companies.

One is giving the board of directors a clear statement of purpose. 

Amazon is an all-star in this arena, since the $914 billion company's board of directors has a mission statement that explicitly says its purpose is to "build long-term shareowner value."

"It's a symbol, but it's important because of their way of orienting everyone and bringing them together over a shared objective," Loat said.

Another tip: Don't give guidance. Companies are legally required to give quarterly financial updates, but quarterly guidance takes it a step further.

When a company gives guidance, it tells investors what to expect in an upcoming quarter that hasn't closed yet. Apple, Cisco, and Twitter all issued quarterly guidance in their latest earnings, for example.

"It's not a good practice, and it orients everybody around 'what am I going to do in three months?' Not, 'what am I going to do in three to five years,'" she said, adding that this leads to volatility that benefits only short-term traders.

Instead of quarter-to-quarter guidance, FCLT recommends that companies create a long-term road map that includes their three-to-five-year plan, the key performance indicators for that period, and an outline of how the company plans to allocate capital to meet its goals.

To quench investors' and analysts' desire for metrics, companies can give a quarterly update on that long-term road map, Loat said.

And if all else fails — hit company leadership where it hurts. Executive compensation is another tool that can be used to keep companies on track for the long-term.

Loat suggested companies lock up share compensation for five to 10 years — likely longer than the duration of the executive's term — so that leaders are motivated to think about the company's performance long after they have left. 

"The upshot is, companies that act in a long-term way outperform others on basically any metric that matters, including job creation and contribution to GDP," Loat said.

SEE ALSO: Uber, Tesla, and Slack show how Saudi cash is flowing into Silicon Valley. Here are 5 questions every US tech startup founder needs to ask before taking money from a foreign investor.

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A Wall Street firm focused on disruption is delusional when it comes to Tesla (TSLA)

Fri, 05/24/2019 - 6:31pm

  • Ark Invest is sticking to its bullish predictions about Tesla's future production capabilities.
  • Much of the firm's case hinges on the creation of a Tesla autonomous ride-hailing network. But it's now proposing a $1,200-a-share (or higher) case based on the premise of Tesla selling over 1.5 million electric vehicles by 2023.
  • There's a major problem here: Tesla currently lacks the manufacturing capacity to build more than 500,000 vehicles a year.
  • It would be nearly impossible for Tesla to build enough new factories by 2023 to vindicate Ark's case.


In the world of professional Tesla investors, Ark Invest and its chief, Cathie Wood, have gained some fame — or notoriety — for arguing that Tesla shares could hit $4,000 at some point in the not-so-distant future.

On Friday, Tesla headed into the holiday weekend at $190, having dropped about 40% year-to-date. Depending on your point of view, this is either a rout or the markets at long last properly assessing Tesla as what it has been for the past five years: an overvalued, relatively small carmaker.

Much of Ark's speculation around Tesla's potential hinges on the company shifting from the traditional (albeit electrified) auto business to a transportation-as-service operation, running a large fleet of what is now being routinely referred to as a robo-taxis, powered by Tesla's advanced Autopilot self-driving tech.

Of course, there's still the established business of selling cars to consider, and on that front Ark now predicts Tesla will deliver, best case, 3 million vehicles by 2023. Worst case is 1.7 million. Ark is also hedging, but only in a manner of speaking: absent the robo-taxis, the stock could still get to $1,200.

Read more: Tesla could escape 'production hell' for its Model 3 — but it would require a huge leap

In 2018, Tesla sold about 250,000 vehicles. If the company maxed out production at its single factory in California, it could perhaps double that tally. The bottom line is that on the manufacturing side, Tesla would require not just one new factory to achieve what Ark calls its bull case, but four.

To hit the bear case, it would need two — or to hire a contract manufacturer to handle the extra output.

Tesla is adding capacity, just not enough

Tesla is building a factory in China, so, optimistically, there's another half-million in annual production. At this juncture, that plant's assembly lines could be rolling by the middle of next year. If you do the math, you can see that Tesla is a factory short of reaching that 1.7 million by 2023. And it's three short on 3 million.

What about the Nevada Gigafactory, where Tesla now makes batteries and drivetrains? Well, it could be pressed into service to assemble vehicles. But if you were going to build a car plant, the Reno vicinity would not be high on your list. Tesla's California factory is already off the grid of the US auto-manufacturing supply chain, which is found in the South and the Upper Midwest. Tesla could really use a plant in, say, Tennessee.

You'll note that I haven't even delved into how Tesla would pay for new plants. If it were an established carmaker, it would borrow the money and watch inflation reduce its cost over decades of operation. But given its volatile financials, Tesla may not have that option at the scale it requires. At least not until its balance sheet settles down.

This week, the Ark analysts Tasha Keeney and Sam Korus published an outline of their case for a more robust Tesla valuation — more than $4,000 a share, an astonishing example of zagging while the rest of the market is zigging. It contains a lot of financial jabber and offers open access to the firm's model, but the whole thing is reverse engineered from those higher production figures — which, as far as I can tell, Ark believes are plausible through the addition of one new Gigafactory.

I've been following Ark's position on Tesla for a while. It is, in a word, entertaining. There's nothing wrong with entertainment: Humans like to laugh. There's also nothing wrong with offering wild, blue-sky takes on where Tesla is headed. Anything that spurs debate and discussion around the company is a good thing, and investors should be grown-ups who can decide where to put their money all by themselves.

Delusional to the core

The core problem with Ark's analysis, however, is that it's premised on a delusion. You can't build 3 million vehicles by 2023 if you can build just 500,000, max, in 2019 (Tesla isn't going to build that many, and even when its factory was fully utilized back in the 1980s, as a GM-Toyota joint venture, it managed just about 450,000).

My own best case for Tesla production would involve hiring Magna, the world's largest contract manufacturer, to build the Model 3 and the Model Y crossover. But when I floated the idea to Magna's CEO, he said it would still take a year to a year and a half, assuming a finished design. A from-scratch design would require three years.

There is also the matter of selling the cars you produce. It's not clear what the right level of production is for Tesla to meet demand. The electric-vehicle market is supposed to grow in the next decade. But over the past decade, it's grown far slower than expected. For Tesla, it could make sense to settle into a production plateau for a few years to find out whether it has stable demand for, say, half a million vehicles.

That would not mean a $50 billion market cap, of course. Nor would it lead to $4,000 a share.

In the end, I get why Ark continues to press on with what I would characterize as its delusional Tesla position. It's swell marketing, and if you want to wager on disruption, Tesla's story represents an easy bet (even if there isn't any real disruption, according to the guy who developed the theory).

But Ark really does need to fill in the gaping blank about where all those millions of Teslas are going to come from by 2023.

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Samsung could emerge as the big winner from Huawei's miserable week (GOOG, INTC)

Fri, 05/24/2019 - 6:25pm

  • Huawei is Samsung's biggest competitor in the worldwide smartphone market. But without Google's Android, it could be difficult for Huawei to expand outside China.
  • This could make Samsung's position at the top of the smartphone market all the more certain, leaving Apple as the only meaningful threat to its dominance.
  • If Huawei's foldable smartphone, the Mate X, does not run on Google's Android, it could make the device noticeably less appealing — therefore leaving an opportunity for Samsung to emerge as a leader in the foldable-phone market despite its rocky Galaxy Fold launch.
  • Visit Business Insider's homepage for more stories.  

The biggest winner in the US government's battle with China's Huawei could turn out to be Samsung's smartphones.

The South Korean tech giant has seen its perch at the top of the smartphone market threatened by Huawei's surging tide of handhelds. And Samsung's recent missteps in the rollout of its cutting-edge foldable phone, which was delayed because of quality problems, have added further uncertainty to Samsung's reign.

But the Trump administration's decision to put Huawei on a US trade blacklist could be the helping hand Samsung needs to retain its status as the world's unrivaled smartphone superpower. 

The blacklist has forced tech companies such as Google and Intel to suspend business with Huawei. That means Huawei's future phones will not be able to run on Google's Android operating system, the most popular mobile software.

While Huawei says it has built its own homemade smartphone operating system that will be ready by next year, there's no guarantee that consumers will buy Huawei phones if they have a new, unknown operating system, especially if that means the phones don't have system-level access to popular Google services such as Gmail and Google Maps. 

That's potentially good news for Samsung, which has been steadily losing market share to Huawei. In the first three months of 2019, Samsung accounted for 23.1% of the worldwide smartphone market, representing an 8.1% decrease from the year-ago period, according to the International Data Corp. Huawei's position jumped 50% year-over-year to claim a 19% share of the market in the first quarter.

Besides Huawei, no other smartphone maker comes close to Samsung in terms of the global market share. Apple trailed in third place with 11.7% of the market in the first quarter, whereas the China-based smartphone maker Xiaomi ranked fourth with 8% of the market.

If Huawei sees a dip in smartphone sales as a result of these new US government requirements, rivals like Apple and Xiaomi would still have a lot of catching up to do in order to endanger Samsung's spot at the top.

An Apple backlash in China

That's not to say it's impossible and that Samsung's position at the top is guaranteed. The smartphone market often fluctuates between quarters based on a variety of factors, with Apple and Huawei usually switching back and forth to place in second behind Samsung. In the fourth quarter of 2018, for example, Apple held 18.2% of the worldwide smartphone market, coming very close to Samsung's 18.7% lead. Huawei placed in third with 16.1% of the market — although its share grew by 43.9% year-over-year, while both Apple's and Samsung's declined.

But some analysts believe that the backlash against Huawei in the US could hurt Apple's business in China. A team of analysts at UBS recently circulated a note citing the treatment of Huawei in the US as a potential risk to Apple, writing that nationalist sentiment has been known to sometimes affect foreign goods in China. People in China also recently called for a boycott of Apple's products after the Trump administration's decision to put Huawei on a trade blacklist, according to BuzzFeed News.

To be sure, Samsung's smartphones do not have a strong presence in China, according to data from Counterpoint Research, which doesn't even break out the Seoul-based tech giant in its ranking of the top smartphone vendors in the region.

But China is important for Apple's business; it's the company's third-largest market, and the iPhone accounted for 12% of China's smartphone market as of the fourth quarter of 2018, according to Counterpoint Research. If there is a boycott against Apple products in China, it could make it more difficult for the company to broaden the iPhone's reach and catch up to Samsung's global market share.

The folding-phone debacle

There's another key way Samsung could stand to benefit from Huawei's misfortunes when it comes to the smartphone space: foldable phones. Samsung's Galaxy Fold got off to a rocky start to say the least after small number of reviewers reported that the device's screen had broken, prompting Samsung to indefinitely delay the Fold's launch. Samsung still hasn't said when the phone would be released.

But the new restrictions Huawei faces when working with US companies could give Samsung's Galaxy Fold a second chance.

Huawei unveiled its Mate X foldable phone just days after Samsung debuted the Fold in February, showcasing an impressively designed device with a crease that appeared to be less noticeable than the one found on Samsung's phone. Huawei hasn't announced when the phone would be released yet, making it unclear whether or not it will be able to run on Google's Android software. The US government has granted Huawei a 90-day reprieve that allows it to maintain and support its products until August 19. But we don't know if the Mate X will launch before then, although a report from GizmoChina suggested it could be released in June.

Losing Android would be a tough blow for Huawei, but it's especially damaging for a device as expensive as the Mate X, which will be priced at around $2,600 when it launches. For shoppers outside of China, not having Google's widely popular suite of services and its enormous app store could drastically lower the Mate X's value proposition should it not run on Google's software. There's also the concern as to whether or not the software on Huawei's Mate X will be as feature-rich and polished as foldable phones that run on Google's Android, considering the search giant has tailored the next version of Android to make it adaptable to foldable form factors.

Of course, Huawei and Samsung are not the only companies working on foldable devices. Xiaomi and Motorola are developing foldable phones of their own, but neither of those products seem as far along as those made by Samsung and Huawei. That could leave Samsung with an opportunity to own the nascent foldable-smartphone market for a considerable amount of time should it relaunch the Galaxy Fold in the near future.

It's too soon to know precisely what will happen to Huawei as a result of the US government's recent trade sanctions. The company has said it has been working on its own operating system to replace Android, and Ren Zhengfei, the company's CEO, recently told the Nikkei Asian Review that he expects the company's growth to slow only a little bit. But even if Zhengfei proves to be correct, and Huawei's growth only mildly slows, that's still bound to be good news for Samsung's reign over the global smartphone market.  

SEE ALSO: Trump's Huawei ban may leave the tech giant up a creek without a paddle for its next 2 major smartphones

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Uber's first employee and one of Travis Kalanick's last allies has left the company's board just 2 weeks after IPO (UBER)

Fri, 05/24/2019 - 6:16pm

  • Ryan Graves, Uber employee No. 1 and its former CEO, is leaving Uber's board of directors, the company said in a filing on Friday.
  • It's unclear why Graves is leaving the board. The company said in its filing that the departure is not related to any disagreements.
  • Graves' resignation comes just two weeks after Uber went public. Graves' personal stake in the company is valued around $1.4 billion.
  • Visit Business Insider's homepage for more stories.

Ryan Graves, Uber's first-ever employee and its former CEO, has stepped down from the board of directors just two weeks after the ride-hailing company's massive initial public offering.

In a statement filed with the Securities and Exchange Commission on Friday, the company said that Graves is not stepping down over any disagreement with the company, its management, its board, or any other matter related to Uber's operations, policies, or practices. 

It's unclear why he resigned. His resignation goes into effect on May 27.

His departure comes just weeks after Uber went public in an $8.1 billion IPO that valued that company at $75.5 million. The share price has consistently hovered below its IPO price of $45 a share. Calculated at $43 per share, Graves' personal stake in Uber is worth $1.4 billion.

Graves left Uber in 2017 after serving as senior vice president of global operations and for a short time before that as CEO. But he remained on the board alongside disgraced former CEO Travis Kalanick and cofounder Garrett Camp.

Read more: The career of Ryan Graves, Uber's first employee and billionaire CEO, was launched by a single tweet

In a note to the board of directors shared with the SEC, Uber chairman Ron Sugar described Graves' departure as "bittersweet."

"Ryan was one of the key people who helped shape Uber into the company that it is today. As a thoughtful and engaged director, Ryan has continued to add value to Uber, offering insights and judgement that have helped us navigate the ups and downs of the business as we have grown over the past decade," Sugar said.

"While this is a bittersweet moment, we accept his personal decision that this is the right time for him to step down. Dara and I are grateful for his contributions to Uber's success and wish him all the best going forward," he said.

SEE ALSO: Palantir was expected to IPO in 2019, but that dream is now reportedly on hold until next year

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