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The CEO of Kroger, America's largest supermarket chain, explains why the company's merger with the country's 6th favorite grocer puts them in the perfect position to take on Amazon and Whole Foods (KR)

Sun, 01/13/2019 - 3:51pm

  • Kroger CEO Rodney McMullen spoke about his company's omnichannel strategy at the National Retail Federation's 2019 Big Show.
  • In an interview with CNBC anchor Sara Eisen, McMullen discussed how Kroger's merger with grocery chain Harris Teeter spurred a digital expansion.
  • The Kroger CEO and chairman said that the 2014 merger was a response to the belief that Amazon would eventually acquire or create a physical grocery chain.
  • In 2017, Amazon confirmed those suspicions by acquiring Whole Foods.

NEW YORK — Amazon's acquisition of Whole Foods didn't come as much of a surprise to Kroger CEO Rodney McMullen.

"We assumed that at some point, Amazon was going to do something in the physical world," McMullen told CNBC anchor Sara Eisen at the National Retail Federation's 2019 Big Show.

He said that his company, which currently has a $22.39 billion market cap, has worked for years under the assumption that the online retail giant would either establish their own grocery business or acquire a retail chain. The latter happened in 2017 when Amazon gobbled up Whole Foods.

According to McMullen, that longstanding prediction propelled Kroger Co. to "accelerate" its ecommerce capabilities over the past several years, even before Amazon's acquisition went through. McMullen singled out his company's 2014 merger with North Carolina-based grocer Harris Teeter as a major step. Harris Teeter was ranked America's sixth favorite grocer in Market Watch's 2018 rankings. Kroger took the 12th spot.

McMullen said that the merger was "driven by what we assumed others would do, not what they actually did."

The CEO added that Kroger was able to "leverage" Harris Teeter's existing technology and tech team in order to "accelerate" its own digital position. In 2018, Kroger Co.'s digital sales were a $5 billion business. And the grocer is predicting that that number could nearly double in 2019.

Read more: Your 'role will be removed': Whole Foods fires workers in 7-minute leaked conference call

But the team-up with Harris Teeter isn't the only move Kroger has made in the battle to gain ground in the ever-shifting retail environment. The grocer has also embarked on tech-centric partnership with Microsoft and Ocado, and even launched a number of pilot stores with Walgreens.

In a move that directly pits Kroger against Amazon's Whole Foods, the grocer is also doubling down on its Simple Truth brand. The organic brand first launched in 2012. Simple Truth products are billed as being free of artificial preservatives, GMOs, and, generally, unnatural ingredients "you can't pronounce."

"It's over a $2 billion brand today, growing in double digits," McMullen said.

Eisen asked McMullen if the Simple Truth was Kroger's solution to Whole Foods. He demurred, but said that "This was our solution to customers telling us that they don't want to have to look at the labels to understand what's in the product. They love it. The quality is outstanding."

In response to Eisen's question about whether Amazon, Walmart, and Kroger would be the three main figures dominating the grocery business 10 years from now, McMullen said that he believed that Kroger would certainly be "one of the players."

"It's such a big industry," he said. "Fortunately people will always eat. It's a $1.5 trillion industry, so I think there's plenty of room for a lot of players."

SEE ALSO: Truckers reveal in a new survey who they hate shipping for the most

DON'T MISS: Kroger is changing grocery shopping as we know it — and it's becoming a bigger threat to Amazon

SEE ALSO: Here's why 2019 could be the year that an autonomous vehicle delivers your pizza and groceries

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NOW WATCH: NYU professor who correctly called Amazon's Whole Foods acquisition makes more big predictions

A revolutionary drug that could treat a rare and devastating disease is prohibitively expensive. But one state has a plan to pay for its potential $5 million price tag.

Sun, 01/13/2019 - 2:21pm

  • A one-time treatment for a devastating rare disease could be paid for with an installment plan as soon as this summer in Massachusetts. 
  • Novartis's AveXis unit is involved in the discussions. Its gene therapy could cost up to $5 million per treatment. 
  • Organizers hope the plan will ensure patients can access a potentially life-changing treatment.
  • Business Insider is the first to report on the discussions and the interest from AveXis. 

In recent years, no treatments were even available for the rare, devastating disease known as spinal muscular atrophy.

Now, in a matter of months, an experimental one-time therapy designed to address the disease's underlying genetic cause could treat the disorder. First though, someone has to pay for its potential multimillion-dollar pricetag. 

A new effort is underway in Massachusetts to figure out how to do that. The idea is to let health insurers pay for the treatment over several years. If it succeeds, organizers hope that it could prove to be a viable model for the entire US. 

Novartis's AveXis unit, which makes the gene therapy, Zolgensma, and has suggested a price tag of up to $5 million could be appropriate, is in talks to participate. Business Insider is the first to report both the plan and interest from Novartis's AveXis. 

Americans have long paid for big-ticket items like houses and cars in a similar manner. But the plan — if it is finalized — would mark one of the first such approaches for a medicine. And Novartis would only receive each of its payment if the treatment is effective.

Paying for drugs on an installment plan

"Think of it as installment plan that’s then tied to how well the therapy works. This would be a car loan but you’ve still got to see if the car is going to work," Mark Trusheim, strategic director of the MIT Center for Biomedical Innovation's NEWDIGS program, told Business Insider.

NEWDIGS brings organizations together to discuss how the US health system will be able to pay for costly cures, and the Massachusetts initiative came out of that, Trusheim said.

That work has become increasingly important as more gene therapies are likely to become available in coming years for different diseases, according to experts interviewed for this story. Gene therapies are typically administered in a single treatment and can have very high price tags compared to other types of pharmaceuticals. That could impose massive costs and challenges for an unprepared health system

Read more: From the gene therapy that spurred a $9 billion acquisition to a CBD medication for rare types of childhood epilepsy, here are the 12 promising drugs to watch in 2019

Doing the unthinkable, at an exceptional price

Gene therapy is a cutting-edge technology with the potential to cure diseases by tinkering with the body's genetic material. Drugmakers have cited the value these new products could bring to patients and the medical system to justify their high prices.

Spinal muscular atrophy is a rare genetic condition that affects muscle movement in children and is the leading genetic cause of mortality in infants.

About 10,000 to 25,000 individuals in the U.S. are thought to have SMA, according to the SMA Foundation. But far fewer individuals would likely be treated with Zolgensma, since it's thought that only newborns would be eligible.

In Massachusetts, only one or two dozen patients are expected each year at most, according to Trusheim. A US approval decision Zolgensma, is expected in May, and Novartis isn't likely to release a precise price tag until then.

An independent group that evaluates drug prices has said the treatment could merit a price of $1.6 million to $5 million, Novartis Pharmaceuticals CEO Paul Hudson told Business Insider this week, noting that the cost of ventilators and another expensive therapy for the rare disease over a five-year period were, in total, comparable.

AveXis plans to explore `creative' ways to get paid for its new treatment

Hudson heads up the business that oversees AveXis's SMA gene therapy. AveXis would not comment specifically about its participation in the Massachusetts program, but said in a statement that gene therapies require new approaches in the US health system.

"Our objective is to ensure patients get access to this therapy, so we can make a meaningful difference in their lives," the AveXis statement said. "We are working closely with payers to ensure we establish appropriate prices reflecting the value of gene therapy and explore creative options for payers, including installment payment options, as well as outcomes-based arrangements."

As the Massachusetts pilot currently stands, the price of Zolgensma would be paid by health insurers in five annual installments, spread out over four years. It is similar to a plan unveiled by biotech Bluebird Bio earlier this week, MIT's Trusheim said. 

Read more: A biotech is proposing a plan to pay for its pricey rare-disease treatment the same way you'd buy a TV or dishwasher

The program is starting with the Novartis product, but intends to add other gene therapies over time. Many but not all health insurers in Massachusetts are involved in the discussions, Trusheim said, and others could eventually join. Its organizers hope to launch it by this summer, and they believe they have addressed many of the challenges of this type of approach. 

'We shouldn't let cost get in the way'

One crucial challenge for these types of installment plans is what happens when patients switch health insurers. In this case, the insurers that intend to participate in the Massachusetts pilot have agreed to pick up the remaining payments left on the installment plan.

"If you believe these are likely to be life-changing to the people who need them, then we shouldn't let cost get in the way," Dr. Michael Sherman, chief medical officer of the nonprofit health insurer Harvard Pilgrim, told Business Insider. If the program gets off the ground, Harvard Pilgrim intends to be a part of it, he said. 

The planners are still working out other details. For instance, even though the payment structure and performance metrics for the gene therapy would be the same across insurers, each individual health plan would negotiate its own price for Zolgensma.

Insurers will also have to work out with Novartis what happens if a patient moves to another state. That might include continuing to make the payments or potentially making a one-time exit payment.

Another challenge is a legal requirement that the government Medicaid program get the "best price" on a drug. That could complicate this type of installment plan, since a failed treatment in which only one installment is paid could be interpreted as violating that "best price" guarantee. 

Read more: Bill Gates warns that nobody is paying attention to gene editing, a new technology that could make inequality even worse

Because spinal muscular atrophy is so rare, health insurers haven't expressed concerns about Zolgensma's price tag specifically, Hudson told Business Insider this week. Instead, they'd like the flexibility to pay in installments if needed, according to Hudson. 

"What they're not saying is, 'We're worried about the price.' What they are saying is, 'We may have concerns about staging payments,'" Hudson said. 

Additional reporting by Lydia Ramsey

Read more about pharmaceutical innovation: 

The CEO of $230 billion pharma giant Novartis explains why he's not scared of buying biotechs at an earlier — and riskier — stage

Big drugmakers are sitting on billions of cash — and top pharma executives are hinting about big M&A to come in 2019

One of the biggest drugmakers in the world thinks it has 26 billion-dollar drugs in the pipeline — here's what they aim to treat

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Bitcoin 101: Your essential guide to cryptocurrency

Sun, 01/13/2019 - 1:34pm

Bitcoin is everywhere.

The cryptocurrency is seemingly in the news every day as investors and businesses try to understand the future of this digital finance.

But what is Bitcoin all about?

Why is it suddenly on every financial news program?

And what does it mean to you?

Find out the answers to these questions and more in Bitcoin 101, a brand new FREE report from Business Insider Intelligence.

To get your copy of the FREE slide deck, simply click here.

Join the conversation about this story »

Jeff Bezos' divorce could soon make MacKenzie Bezos one of Amazon's biggest shareholders (AMZN)

Sun, 01/13/2019 - 12:42pm

  • Amazon could soon have a large new individual shareholder in MacKenzie Bezos as a result of her divorce from her husband, Jeff Bezos, the company's CEO.
  • On Thursday TMZ reported that the couple did not have a prenuptial agreement, citing "sources with direct knowledge" of the situation.
  • Jeff Bezos owns 16% of the e-commerce giant, and MacKenzie Bezos could be entitled to up to half of those shares, which would give her one of the two largest stakes in the company.
  • Though Jeff Bezos is worth $137 billion on paper, nearly all of the Bezoses' assets are in the form of Amazon stock.
  • They live in, and are likely to file for divorce in, Washington, a community-property state, which could give her a claim to a sizable portion of their wealth. But it's unclear exactly how much Amazon stock she'll end up with.

Jeff Bezos may soon have someone familiar looking over his shoulder when it comes to running Amazon and having a substantial say about it: his soon-to-be ex-wife.

Jeff and MacKenzie Bezos announced Wednesday that they planned to divorce after more than 25 years of marriage.

Because nearly all of his $137 billion net worth is in the form of his stock in Amazon, it's highly likely she will end up with a substantial stake in the company as part of any separation agreement.

On Thursday, TMZ reported that the couple did not have a prenuptial agreement, citing "sources with direct knowledge" of the situation.

If that's the case, there's a good chance that MacKenzie Bezos could end up having the biggest stake in the company other than Jeff Bezos.

"One would think so," said Ira Garr, a family-law attorney in New York who represented Rupert Murdoch and Ivana Trump in their respective divorce cases. "I can't see anywhere else the settlement could come from."

Read this: Jeff and MacKenzie Bezos may split his $137 billion fortune in half when they divorce — here's what typically happens when billionaires break up

Jeff Bezos owns about 79 million shares of Amazon's stock, worth about $130 billion. The shares give him a 16% stake in the company, making him by far its largest shareholder. The second largest is Vanguard, which had about 6% of Amazon's shares as of last February.

Should Jeff Bezos have to give half of his shares to MacKenzie Bezos — a not unthinkable outcome, especially if they didn't have a prenup — her 39 million or so shares would give her an 8% stake in the company and vault her over Vanguard.

Though she could opt for cash instead — which would force Jeff Bezos to sell off tens of millions of shares — or immediately turn around and sell the shares herself, it's likely she'll choose to hold on to her shares instead, legal experts said.

If MacKenzie Bezos chose to sell — or forced Jeff Bezos to — "the stock would go way down," Garr said.

MacKenzie Bezos is likely to benefit from Washington state law

The reasons MacKenzie Bezos could end up with such a huge stake in Amazon have a lot do with where the Bezoses' divorce proceedings are likely to occur.

Though the Bezoses have dwellings in different areas of the country, they're likely to file for divorce in Washington state, legal experts said. They have a home in the Seattle area, where Amazon has its headquarters, and have lived there for most of their marriage, said Deirdre Bowen, an associate professor of law at Seattle University's School of Law.

"Washington seems to be the most logical place" for the divorce proceedings, Bowen said.

That's important, because it would mean that Washington law would govern the dissolution of the Bezoses' marriage.

Washington is a community-property state; generally, assets acquired during a marriage are considered jointly held by the two parties. In the case of a divorce, those community assets have to be divvied up between the spouses.

Community-property law works a little bit differently in Washington than in other parts of the country. Unlike states such as California, Washington doesn't require community assets to be divided evenly between the parties, legal experts noted.

But in the Bezoses' case, where the two have been married for a long time and the founding of Amazon took place after they got married, it's likely that's where a court would end up, said James Spencer, an adjunct professor at Seattle University's law school and an attorney with Brothers & Henderson.

"Considering the totality of the circumstances (as are publicly known), I think it more likely than not that a court would divide the stock roughly in half," Spencer said.

Jeff and MacKenzie Bezos will most likely settle out of court

Legal experts such as Spencer, though, don't expect the Bezoses' case to end up being decided by a judge. Instead, they expect the two to reach a settlement out of court, whether through negotiations between themselves or among their lawyers, or through arbitration proceedings. So Washington's community-property law may not have a direct effect on the divorce's outcome.

But it's likely that MacKenzie Bezos will use it — and the assumption that she should get half of the couple's community assets — as a starting point for negotiations, Bowen said.

"She can go in and tell her attorney ... to work with the assumption that it's going to be 50-50," she said.

To be sure, MacKenzie Bezos could end up with a far smaller stake in Amazon than half of Jeff Bezos' current holdings. If they signed a prenup or a postnuptial agreement, for example, such a contract could severely limit her claims on his shares of the company.

Amazon representatives did not respond to an email inquiry about whether the Bezoses had such an agreement, but TMZ reported on Thursday that the couple had not.

They could fight over what she's entitled to

Another complicating factor is how negotiators for the two parties — and potentially an arbiter or a judge — classify Jeff Bezos' stock holdings. Though assets acquired in marriage or the amount by which they appreciate are generally considered community property, courts can make a distinction between passive and active appreciation of assets, Bowen said.

Jeff Bezos could argue that the massive increase in the value of his Amazon stock was largely due to his personal active management of the company and had nothing to do with MacKenzie Bezos. Should he take that stance and have it affirmed by a judge or an arbiter, MacKenzie Bezos could end up with a much smaller stake in Amazon than she might otherwise.

He could argue his Amazon stake "should remain mine," Bowen said.

The outcome of the case also will hinge in large part on Jeff's and MacKenzie's mental and emotional states going into it. In their joint statement announcing the divorce, the two portrayed their parting as amicable. But late Wednesday, reports in the New York Post and the National Enquirer charged that Jeff Bezos had been having an affair with Lauren Sanchez, a former TV anchor, which could indicate their separation wasn't all that friendly.

If there's rancor involved, it could have a major effect on what each party will demand and settle for, Bowen said.

"The wild card here is I don't know the psychology each party has going into this divorce," Bowen said.

MacKenzie Bezos could end up demanding a large cash payout, she said.

"I don't think she's an unreasonable person, so I don't see that happening," Bowen said. But, she added, MacKenzie Bezos could say in the proceedings something like: "Why would I want Amazon stock when you're controlling it? I want you removed from my life."

And there's another potential wrinkle. Amazon's board and Jeff Bezos may be uncomfortable and unwilling to hand over that much of the company's stock to MacKenzie Bezos, particularly if the two are at odds. He or the board may push to limit her ownership, either by having Jeff Bezos sell shares and give her stake in cash or by giving her other assets, such as his ownership of The Washington Post or his rocket company, Blue Origin, instead.

"With someone who is as closely associated to his brand as Jeff Bezos, it may be that he will refuse a settlement that gives his ex-wife that much Amazon corporate power," said Terry Price, a family law professor at the University of Washington's School of Law.

SEE ALSO: Amazon Web Services could be worth $600 billion by itself. Here's why Wall Street analysts think a spinoff won't happen any time soon.

Join the conversation about this story »

NOW WATCH: Jeff Bezos is worth over $100 billion — here's how the world's richest man makes and spends his money

Apple is reportedly cutting iPhone production by 10% after one of the darkest weeks in its history

Sun, 01/13/2019 - 12:41pm

  • Apple is cutting iPhone production by 10% between January and March, according to the Nikkei Asian Review.
  • It is believed to be the second time in two months when Apple has trimmed production plans.
  • The revelation comes just a week after Apple shook global markets with its first sales warning in nearly 17 years.

Apple is cutting its production plan for new iPhones by about 10% between January and March, the Nikkei Asian Review reported on Wednesday.

The company late last month asked its suppliers to produce fewer of its new iPhones than planned in the first quarter of 2019, Nikkei said, citing sources with knowledge of the request.

It said the planned production volume for new and old iPhones, including the XS Max, the XS, and the XR, would fall to between 40 million and 43 million units. This is down from the previous projection of 47 million to 48 million units.

Read more: Tim Cook repeats one of Steve Jobs' favorite sayings to defend Apple during its slump: 'It just works'

It is the second time in two months when Apple has trimmed production plans, Nikkei said.

The revelation comes just a week after Apple shook global markets with its first sales warning in nearly 17 years, in which it said revenue in the holiday quarter would be more than 7% lower than it expected.

Among a shopping list of reasons for the revised projection, Apple blamed weakness in the Chinese economy and US President Donald Trump's trade war.

The warning led the Wedbush analyst Daniel Ives to say it was "Apple's darkest day in the iPhone era." He added that the magnitude of the revenue miss "was jaw-dropping in our opinion."

Business Insider has contacted Apple for comment. The company did not respond to Nikkei's request for comment.

SEE ALSO: Apple just warned its holiday quarter was a huge miss, and the stock is getting crushed

Join the conversation about this story »

NOW WATCH: How Apple went from a $1 trillion company to losing over 20% of its share price in 3 months

MacKenzie Bezos deserves half of Jeff Bezos' fortune because there would be no Amazon without her (AMZN)

Sun, 01/13/2019 - 12:41pm

  • Amazon CEO Jeff Bezos created the world's most valuable company during the 25 years he was married to MacKenzie Bezos.
  • The couple, who announced plans for divorce on Wednesday, apparently have no prenuptial agreement and live in a state where assets are split 50-50.
  • MacKenzie was part of Amazon's early team, helping to come up with the name and serving as its first accountant. But there's another reason she deserves half of the $137 billion Amazon fortune.

Jeff Bezos, the world's wealthiest person and the CEO of Amazon, is getting divorced from MacKenzie Bezos, his spouse of 25 years.

Apparently, there was no prenup. And in Washington, where the couple lives, assets acquired during a prenup-less marriage are split 50-50.

If you're married to the world's richest person (Bezos' net worth is $137 billion!) who is entirely self-made, do you deserve to get half?

For MacKenzie Bezos, absolutely. For one simple reason: There would be no Amazon without her.

MacKenzie Tuttle and Jeff Bezos met in 1992 when they both worked for hedge fund D.E. Shaw. MacKenzie graduated from Princeton and became a research associate at the firm where Bezos was a vice president. Her office was next door to his, and three months after they began dating, in 1993, they were married.

While at D.E. Shaw, Bezos came up with the idea for Amazon. MacKenzie was supportive from the beginning, despite the high probability that his venture would fail (after all, almost all startups do).

Brad Stone writes in The Everything Store: "At the time, Bezos was newly married, with a comfortable apartment on the Upper West Side and a well-paying job. While MacKenzie said she would be supportive if he decided to strike out on his own, the decision was not an easy one."

MacKenzie later told CBS: "I'm not a businessperson. So to me, what I'm hearing when he tells me that idea is the passion and the excitement... And to me, you know, watching your spouse, somebody that you love, have an adventure — what is better than that, and being part of that?"

In 1994, at ages 30 and 24, respectively, Jeff and MacKenzie decided to blow up their cushy lives.

They road-tripped across the US in search of a new home and headquarters for Amazon. MacKenzie drove while Bezos punched out a business plan and revenue projections in the passenger seat. After starting in Texas and buying a beat-up car, they wound up in Seattle.

The pair brainstormed the name "Amazon" together after almost choosing a different name: Relentless.com. MacKenzie became Amazon's first accountant, despite being an aspiring novelist.

She did a lot of other grunt work, like most early startup employees do, from driving book orders to the post office to handling the company's bank account and line of credit. She met early Amazon investor John Doerr and partied with the team in Mexico after Amazon's IPO.

But beyond her early role in the company is the significant role any spouse plays in a partner's career.

Both Warren Buffett and Sheryl Sandberg say that the most important career decision you can make is who you marry.

Sure, there's the sacrifice one partner might make to allow the other to pursue a demanding career. But that's not what Buffett was getting at.

"Marry the right person," he said at the 2009 Berkshire Hathaway annual meeting. "I'm serious about that. It will make more difference in your life. It will change your aspirations, all kinds of things."

Would the notion of opening an online bookstore have taken hold of Bezos as forcibly if he hadn't met MacKenzie? Would he have executed on that vision in the same way, hired the same people and taken the same kinds of risks with a different partner?

These are impossible questions to answer. But it's not outrageous to suggest that a person's motivations, attitudes, and goals are influenced by the most important person in their life.

Regardless of whether a spouse is listed as a partner on a business masthead, many couples operate as a team focused on a grand, overarching enterprise and work in tandem to achieve common goals. That's part of the reason many state laws recognize the concept of community property.

Buffett has said that without his first wife, Susie, who died in 2004, he would not have built his fortune.

"What happened with me would not have happened without her," he said in a 2017 HBO documentary.

What happened to Bezos would not have happened without MacKenzie.

SEE ALSO: Jeff Bezos' divorce could soon make MacKenzie Bezos one of Amazon's biggest shareholders

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NOW WATCH: Jeff Bezos is worth over $100 billion — here's how the world's richest man makes and spends his money

Kevin Hart's new movie 'The Upside' exceeded expectations and dethroned 'Aquaman' from top of the box office

Sun, 01/13/2019 - 11:24am

  • The Kevin Hart-Bryan Cranston dramedy "The Upside" won the domestic weekend box office, taking in an estimated $19.6 million.
  • That knocks "Aquaman" from the top spot after being there for three-straight weekends.
  • "The Upside" had an impressive win, exceeding box office projections that had the movie opening around $10 million-$15 million.
  • The movie was originally to be released by The Weinstein Company before the sexual misconduct allegations against Harvey Weinstein crippled the company. Lantern Entertainment took over the title when the company bought remaining Weinstein Company assets in a bankruptcy auction in July 2018.
  • STXfilms was brought on to release the movie, it marks the first box office win for the company since it launched in 2014.
  • "Aquaman" has now earned over $1 billion at the global box office, marking the first DC Extended Universe title to hit that milestone.

"Aquaman" has finally been taken down from the number one spot at the domestic box office after being perched there for three straight weeks, and the movie that did it was the unlikely movie to pull it off.

STXfilms' dramedy "The Upside" — starring Bryan Cranston as a paralyzed billionaire who hires a recently paroled convict, played by Kevin Hart — won the weekend box office with an estimated $19.6 million.

It's not only a remarkable feat that a $37.5 million-budgeted character study took down "Aquaman," the biggest movie in the world since the holidays. "The Upside" faced tough odds of even making it to screens.

At one time "The Upside" was part of the upcoming slate for The Weinstein Company, the now defunct production and distribution company of Harvey and Bob Weinstein. Following the numerous sexual misconduct allegations against Harvey Weinstein that forced him out of Hollywood and left The Weinstein Company and its movies in question, Lantern Entertainment purchased the remaining assets of the company in a bankruptcy auction in July 2018.

Lantern brought on STX to release "The Upside," which then worked with its director Neil Burger to recut the movie from an R-rated title to a more audience-friendly PG-13 version before its release. 

Despite sitting on the shelf since being shot in the beginning of 2017, Kevin Hart's Oscar host controversy that surrounded his promotion of the movie, and the movie only having a 40% Rotten Tomatoes score, "The Upside" exceeded industry projections.

Projected to only open around $10 million-$15 million, the movie's $19.6 million take showed that audiences were ready for a change after weeks of seeing the DC Comics superhero, and it's evident Hart didn't lose his huge fanbase despite backlash from his past anti-gay jokes.

Read more: The 43 biggest movies coming out in 2019, which could propel the box office to another record-breaking year

It's a huge win for STX, as this marks the first time a movie it's released has gone number one at the box office since the company launched in 2014.

But don't feel bad for "Aquaman." The latest DC Comics title from Warner Bros. succeeded beyond any DC Extended Universe release to date, hitting the $1 billion milestone at the global box office. The movie hit the figure on Sunday following a $17.2 million take over the weekend putting its domestic total at $287.8 million.

SEE ALSO: The 31 best movies you can watch on Amazon's new free streaming channel, IMDb Freedive

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It took a day for WeWork's CEO to recover from the shock of a $16 billion SoftBank investment falling apart

Sun, 01/13/2019 - 11:05am

  • WeWork, the coworking-space startup that just changed its name to The We Company, was recently informed it wouldn't receive the full $16 billion investment it was expecting from SoftBank.
  • Plans for the major investment reportedly upset some of SoftBank's government-supported financial backers in Saudi Arabia and Abu Dhabi, who questioned putting so much capital into a startup that was losing money.
  • It reportedly took only a day for Adam Neumann, CEO of The We Company, to shake off the blow and resume negotiations with SoftBank to hammer out a revised deal for $1 billion in new capital and another $1 billion that would go to shareholders.

After hearing that SoftBank could no longer invest $16 billion into his startup, The We Company CEO Adam Neumann was reportedly able to salvage $1 billion in new capital by refusing to accept the deal was completely dead.

It reportedly took only "a day" for Neumann to recover from the bad news, Fast Company reported. The CEO then quickly hashed out a revised deal, announced Tuesday, with the Japanese investment firm that will provide The We Company with $1 billion in new capital, $1 billion that would go to shareholders, and the promise of an additional $1.5 billion that would arrive in 2020.

SoftBank has previously invested $8 billion into The We Company, the new name for the coworking startup WeWork. The rebranding will allow the company to expand its offerings beyond collaborative workspaces and into new ventures in co-living housing units, education, and banking services, the company said when announcing the name change.

Read more: WeWork is changing its name to 'The We Company' as SoftBank invests $2 billion

It was initially reported back in October that SoftBank planned to invest $16 billion in The We Company, which would give the Japanese firm a majority stake in the startup. However, SoftBank's backers — which notably include government-backed funders in Saudi Arabia and the United Arab Emirates — reportedly balked at such a hefty investment in a company that saw a net loss of more than $1 billion in 2018.

The last straw that broke the $16 billion deal was the poor debut for SoftBank's telecommunications unit when it went public on the Japanese stock market in December, Fast Company said. Neumann said that not long after the tumultuous IPO showing, he received a call from SoftBank's CEO Masayoshi Son to cancel the multimillion-dollar investment.

Here's how Neumann reacted to hearing SoftBank would no longer invest $16 billion, according to Fast Company:

[Softbank CEO Masayoshi] Son "called me," Neumann recalls, in an interview on Monday with Fast Company. "He said, 'We're partners. What should we do?'" Son told him that the deal SoftBank and WeWork had spent months negotiating was no longer viable.

It was a blow, but those inside WeWork who worked closely with Neumann on the deal say that, almost immediately, he returned to the negotiating table. "It took a day for Adam to recover," says one source who was close to the negotiations.

Working around the clock, through the holidays into early January, WeWork and SoftBank hammered out a revised deal, announced this week, for $2 billion of new capital at a $47 billion valuation. WeWork now has more than $10 billion of funding from SoftBank and close to $7 billion on its balance sheet.

You can read more about SoftBank's latest investment and the thinking behind WeWork's name change over at Fast Company.

SEE ALSO: WeWork is changing its name to 'The We Company' as SoftBank invests $2 billion

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Goldman Sachs CEO David Solomon shares his number one piece of advice for millennials who want to get ahead in their careers

Sun, 01/13/2019 - 11:04am

  • Millennials shouldn't expect to always know what's next in their careers.
  • That's according to Goldman Sachs CEO David Solomon.
  • Other experts say the traditional career ladder has been replaced by something less linear, like a "jungle gym."

As of 2016, roughly 70% of Goldman Sachs employees were millennials. And according to Goldman CEO David Solomon, they're "so, so talented" and "so, so motivated."

Solomon said as much on an episode of The JJ Redick Podcast; host Redick plays for the Philadelphia 76ers. Solomon also shared the career advice that he gives most often to millennials.

"You have these goals, you have these ambitions, and it’s going to be hard, there are going to be bumps, there are going to ups and downs," Solomon said. "But you don’t have to have all the answers right away, you don’t have to get to the finish line right away, you don’t have to know what’s next right away."

Read more: Graduates who flock to Wall Street, Silicon Valley, and big law in search of prestige might be in for a harsh wake-up call only a few years later

Solomon isn't the only successful person to share this advice. Facebook COO Sheryl Sandberg popularized the concept of a career "jungle gym" to replace the traditional ladder. Instead of taking a predictable series of upward steps from graduation until retirement, today's professionals are making lateral moves and unexpected jumps.

As Libby Leffler, vice president of membership at personal finance company SoFi (she worked with Sandberg at Google and at Facebook) previously told Business Insider: "Sometimes this means taking that role that might be the same level on a different team, where you can learn a totally new skill, or you can change roles. Then you can level up into something else where you can leverage the new skill you learned."

Meanwhile, Business Insider's Mark Abadi reported on the "career myth," which, according to the psychology researcher Tania Luna and the Weight Watchers International executive Jordan Cohen, is "a delusional belief in the outdated idea of linear career progression."

Luna and Cohen write in the Harvard Business Review that "every job you've held and every relationship you've forged is a kind of key that can unlock a future opportunity."

Solomon didn't exactly have an unpredictable career path. But it was in some ways unusual, in that he didn't start his career at Goldman Sachs and was instead hired as a partner after rising through the ranks at Bear Stearns.

As for Solomon's advice, he likes to tell ambitious millennials of their career path, "You don’t have to know where it's all going to go. Just live it and try to enjoy it as much as you can."

SEE ALSO: People say if you love what you do, you'll never work a day in your life — but CEOs and experts caution that could be dangerous advice

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A growing number of companies are flashing a warning sign on China's economy

Sun, 01/13/2019 - 11:04am

  • Trade tensions have added to a policy-engineered slowdown in China.
  • Last week, Apple blamed slowing economic growth there as it cut its revenue forecast.
  • Several other large companies have issued similar warnings about the second-largest economy.

Apple rattled global markets last week as it cited cooling activity in China as a risk to revenue, underscoring expectations for the second-largest economy to slow. And it was far from alone in its warning.

Prominent companies around the world have been keeping watchful eyes on China's economy, which has been growing at its weakest pace in a decade.

After the start of a state-led deleveraging campaign in 2017, the slowdown had been widely expected. A spate of tariffs on hundreds of billions of dollars worth of American and Chinese products hasn't helped.

But as warning signs emerge left and right, some seem to have underestimated just how much steam the once-booming economy would lose.

"While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China," Apple CEO Tim Cook said in his January 2 statement.

The China Passenger Car Association said Wednesday auto sales in the country slumped for the first time in more than two decades in 2018, laying onto concerns as factory activity contracts and after Chinese stocks closed their worst year in a decade.

To be sure, not all corporations are struggling in China. Nike, for instance, saw double-digit percentage sales growth in the country during the fiscal second quarter. In the post-earnings call, CFO Andy Campion said ongoing trade tensions had not affected the retailer.

But in recent months, an increasing number of companies seem to be on the other side of things. Here are a few of them:

Apple

In a letter lowering the technology giant's revenue forecast last week, CEO Tim Cook blamed weak sales in China. Forecasting $84 billion in revenue for the first quarter, compared with analyst expectations of more than $91 billion, he said most of his the revenue decline occurred in greater China across products including iPhones, Macs, and iPads.



Samsung

Samsung Electronics on Wednesday estimated that its profit in the last three months of 2018 was down nearly a third from the previous year's. It cited "lackluster" demand for what would mark its first quarterly decline in two years. The company’s market share for smartphones in China has slumped to less than 1%.

"Depressed demand in China will further drive down Samsung's chip sales there," Song Myung-sup, a senior analyst at HI Investment & Securities, told Reuters. And China's overall smartphone market is stalled and declining, which will affect not only Apple but Samsung."



Starbucks

China is the second-largest market for Starbucks after the US, growing consistently. But that could become a problem when consumer demand fizzles. As a luxury brand in China, the coffee company is particularly vulnerable to economic conditions.

Bloomberg reported last month that Starbucks CFO Patrick Grismer said same-stores sales growth in China, a closely-watched indicator in the restaurant industry, could fall to as low as 1% in the long-run.



See the rest of the story at Business Insider

GOLDMAN SACHS: These 13 stocks are set to soar

Sun, 01/13/2019 - 11:04am

  • The past few months have been tough for traders, with the S&P 500 tumbling 14% in the fourth quarter.
  • While firms across Wall Street are warning of evaporating stock market returns as soon as this year, Goldman Sachs is here to bring some reassurance.
  • Goldman has a strategy tailor-made for such conditions: Buy high-growth-potential companies early and often.
  • The firm has highlighted a list of stocks it believes are most undervalued and likely to rocket higher because of solid earnings.

The past few months have been extremely challenging for investors. After returning 11% through the first three quarters of 2018, the benchmark S&P 500 tumbled 14% during the last three months, dropping its annual total return to a negative 4%.

While firms across Wall Street are warning of an impending economic slowdown and evaporating stock market returns as soon as this year, Goldman Sachs is here to bring some reassurance.

The bank has a strategy tailor-made for such conditions: Buy high-growth-potential companies early and often.

It has published a list of stocks that it believes are most undervalued and likely to rocket higher because of solid earnings.

Here are the 13 companies Goldman says could deliver the biggest return going forward, in ascending order of their potential upsides (comparing Goldman's price target to where shares were trading as of December 31):

American Airlines

Ticker: AAL

Sector: Industrial

2018 performance: -40%

Price as of December 31: $32.11

Upside to target: 65.1%

 

Source: Goldman Sachs 



Albemarle

Ticker: ALB

Sector: Material

2018 performance: -41%

Price as of December 31: $77.07

Upside to target: 68.7%

 

Source: Goldman Sachs 



Aptiv

Ticker: APTV

Sector: Auto

2018 performance: -30%

Price as of December 31: $61.57

Upside to target: 68.9%

 

Source: Goldman Sachs 



See the rest of the story at Business Insider

It's more affordable to rent than buy in most US cities, report finds

Sun, 01/13/2019 - 11:02am

  • It was more affordable to rent than to buy across the US in 2018, according to a new report.
  • Many Americans have been priced out of the housing market in recent years.
  • Sluggish wages are in part to blame, with living costs outpacing earnings in many cities.

As home prices continue to grow faster than wages, an increasing number of Americans may turn to rentals.

Renting a home was more affordable than buying one in 2018 in more than half of the counties analyzed by the national property database ATTOM Data Solutions, according to a rental affordability report out Thursday, with real-estate prices rising faster than wages in 80% of US markets.

"Renting a home is clearly becoming the more attractive option in this volatile housing market," said Jennifer von Pohlmann, spokesperson for ATTOM.

In 2018, it was less expensive to rent a three-bedroom property than to buy a median-priced home in 442 of 755 analyzed counties, or 59%, the company found using official wage and housing figures and public record sales deed data.

That held true in each of the nation's 18 most populated counties and in all but three counties with a population of one million or more, according to the report, which encompass cities like New York, San Francisco, Chicago, Houston, and Phoenix. The three counties where it was more affordable to buy a home than rent were Wayne County in Michigan, Philadelphia County in Pennsylvania, and Cuyahoga County in Ohio.

The findings underscore affordability concerns that have been growing in the housing market over the past few years, as slowing construction activity, the new tax law, and rising interest rates compound housing shortages across the country.

In October, a survey by the mortgage company Freddie Mac found that more than three-quarters of Americans viewed renting as more affordable than owning a home, up 11 percentage points from six months earlier.

But with stubbornly weak wage growth across the US, affordability issues have not spared renters either. According to the ATTOM report, average rents climbed faster than earnings in 52% of markets last year.

There have been signs Americans could soon begin seeing pay rates increase as the labor market continues to tighten. But in 2018, real wages increased at about 2.9% on average.

"One of the missing equations over the past decade has been wage growth," Jonathan Miller, the chief executive of real estate and appraisal firm Miller Samuel, said in a recent interview. "If you look at wage growth with inflation factored in and then at housing prices, there's a big disconnect."

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250 more hospitals just joined in on a plan to make their own drugs and the effort could upend the generic pharma business

Sun, 01/13/2019 - 11:02am

  • A group of hospitals have built a nonprofit generic drugmaker called Civica Rx. 
  • On Monday, another 12 health systems joined the organization. 
  • The hope is to make generic drugs that are in shortage or have artificially high prices based on what hospitals need. 

Hospitals have a creative plan to tackle the high price and frequent shortages of generic drugs. 

The nonprofit company, dubbed Civica Rx, was first announced in early 2018, and has gained a lot of attention from other hospitals around the US who are interested in being a part of the venture. 

On Monday, the organization said that another 12 health systems had joined its ranks, including Illinois and Wisconsin-based Advocate Aurora Health, Michigan's Spectrum Health, and NYU Langone Health. Together, they make add another 250 hospitals to the venture.

They join a slew of hospitals, including Catholic Health Initiatives, HCA Healthcare, Intermountain Healthcare, Mayo Clinic, and Providence St. Joseph Health that serve as governing members. The Department of Veterans Affairs is also consulting with Civica to make sure the agency is getting what it needs for patients. 

Read more: Hospital groups and the VA are trying to upend the generic drug business

In September, Civica Rx named Martin VanTrieste as its CEO. VanTrieste is the former chief quality officer for Amgen who spent most of his career working at large pharma companies like Abbott and Bayer on sterile injectable drugs. He'd been in retirement for two years and had one condition to coming back: no salary. Instead, the funds that may have gone to his compensation will be used for other aspects of the company.  

To start, Civica will focus on making 14 drugs that are used in hospitals, typically injectable drugs. Those are expected to come in 2019. The company's priorities include making essential medicines that have been on the FDA drug shortage list, and taking on decades-old drugs that have artificially higher prices because they don't face any competition. 

In those cases, companies made business choices that led to those shortages. Some drug shortages are related to manufacturing problems. In other cases, some of the companies making the drug simply stop making it, or a drug is only being produced by a single manufacturer, which can lead to price hikes. There's also been a consolidation of the manufacturers that produce generic drugs.

For years, health systems have been on the hook for skyrocketing drug prices for injections or drugs delivered through IV solutions. And as of Thursday, there were 205 drugs currently facing shortages, according to the American Society of Health-System Pharmacists. Those shortages include everything from bags of saline solution to common antibiotics and a type of epidural used for pregnant women during childbirth

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CVS Health just revealed a key piece of its plan to change how Americans get healthcare

Sun, 01/13/2019 - 11:02am

  • CVS Health and Aetna have officially combined to create an entirely new kind of healthcare company.
  • In a presentation Tuesday at the J.P. Morgan Healthcare Conference in San Francisco, CVS CEO Larry Merlo laid out the first steps the combined company is taking to change healthcare.
  • CVS is opening a test store in Houston with more healthcare services, and also plans to test programs to treat chronic diseases and keep patients out of the hospital.

CVS Health and Aetna officially merged at the end of 2018.

The $70 billion merger combines a chain of nearly 10,000 pharmacies that also owns a drug benefits business with one of the biggest US health insurers. The result is an entirely new healthcare company that can wield a tremendous amount of power over how healthcare gets paid for and provided to patients.

In a presentation on Tuesday at the JPMorgan Healthcare Conference in San Francisco, CVS CEO Larry Merlo outlined for the first time how the combined company will provide healthcare differently. The main goals are: keeping patients healthier and out of the hospital, caring for patients at less-costly locations (such as CVS's clinics instead of emergency rooms), and pioneering new methods of caring for devastating chronic diseases like cancer and heart failure.

Achieving those goals will help CVS boost its profits. Since it now owns is a health insurer, the company will spend less on medical care if it can keep customers healthier, or care for them at clinics instead of hospitals. 

Read more of Business Insider's coverage from the J.P. Morgan Healthcare Conference here

A big component of the strategy is providing more healthcare in CVS stores, both at the pharmacy counter and via the company's MinuteClinics. To make space, CVS is removing some products from the front of the stores where it's piloting the new approach.

"We can open a new front door to health that is both easier to use and less expensive, while at the same time, providing convenient access to high-quality health care," Merlo said during the presentation.

The strategy also helps CVS find new use for the floor space in its 9,800 locations, as customers increasingly shop for everyday goods on Amazon. And providing more care in stores can help CVS counter forays by rivals like Amazon into healthcare. Amazon, for its part, acquired the pharmacy startup PillPack last year, marking its entry into the drug-delivery business. 

To start, CVS is opening up its first "health hub" in a redesigned store in Houston in February. On Tuesday, the company revealed what that store will look like. You can see that there's a lot more store space devoted to providing healthcare, including at the clinic and pharmacy.

The MinuteClinics in the pilot stores will offer more services, including disease screenings and blood draws. CVS already has about 1,100 MinuteClinics across its stores. They're usually staffed by nurse practitioners or physicians' assistants, and now provide basic checkups and care for minor illnesses and ailments.

The stores will also have a "care concierge," who might help individuals understand how their health insurance works, or help them use health and wellness devices and technology.

Read more: Take a look inside Walgreens' futuristic store where it's plotting new ways to take on Amazon and CVS

CVS is also testing several other initiatives to improve how its customers get healthcare, using the resources of the combined company.

In one program, CVS pharmacists will call Aetna members who the company thinks could be at high risk of a negative health event, and counsel them on how to improve their health. A second outreach program will focus specifically on Aetna members with heart disease.

Another focuses on Aetna customers who've been in the hospital. To make sure they get the care they need after leaving the hospital and prevent them from having to go back, Aetna care managers will schedule followup visits for them at MinuteClinics, if they can't get in to see their usual doctor.

At the MinuteClinic, healthcare providers can make sure the patients understand their disease and how to manage it. They'll also check that patients have the right prescription drugs and know how to take them.

"Helping people on their path to better health has been a cornerstone of our purpose at CVS," Merlo said. "As we zoom out and look at the broader health care market and the savings that can be achieved by more effectively managing chronic conditions, the opportunity here is massive"

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Apple and Samsung put aside their war and signed a deal that will let people access iTunes on their smart TVs

Sat, 01/12/2019 - 12:24pm

  • Apple and Samsung have put aside their protracted rivalry and signed a deal that will let people access iTunes on their smart Samsung TVs.
  • Samsung plans to add an app to its televisions that lets users browse and play their iTunes movies and television shows as well as purchase or rent new content.
  • Apple is increasingly leaning on its services business for revenue amid slowing smartphone sales.

Samsung on Sunday said it would add an app to its smart televisions in the coming months to let owners watch content bought on Apple's iTunes service, a possible first sign Apple is looking to distribute its forthcoming television service on devices made by others.

The deal is part of an ongoing strategy shift for Apple, which is facing weak hardware sales in China and a saturated global smartphone market in which users are hanging on to their old iPhones longer than ever, hammering its biggest business.

As a result, Apple is increasingly leaning on its services segment, which includes businesses such as iCloud storage in addition to its music, television, and movie content businesses.

It has announced several high-profile deals for original television content, including a forthcoming show with Oprah Winfrey, but has not yet said how it plans to distribute that content or when its service will launch.

The Samsung deal could be a step toward Apple distributing content to devices made by others. Apple makes a device called Apple TV that connects to a full television set, but Apple has never produced a full set.

Read more: The $450 billion wipeout: Apple's value has fallen by more than Facebook's entire worth in 3 short months

Under the deal unveiled Sunday, Samsung will add an app to its televisions that lets users browse and play their iTunes movies and television shows as well as purchase or rent new content. Samsung also said it would add Apple's AirPlay 2 software that will allow iPhone owners to stream content from their device to Samsung televisions.

Many existing deals between content companies and smart-television makers involve the content companies paying television makers for the right to appear on their devices. Apple and Samsung declined to comment on whether Apple was paying any fees or a percentage of sales made on the televisions under the new deal.

The impact of iTunes landing on Samsung movies will be muted for now. Since late 2017, consumers who purchased movies through iTunes have been able to watch them on any device, including Samsung televisions, that supported the Movies Anywhere consortium.

Films from Warner Bros, Walt Disney, Universal, Sony, and Fox purchased through iTunes, Amazon, Google Play, and Vudu could be viewed on the respective apps and devices and TVs that support the apps.

The Samsung deal is the second time in recent months in which Apple has made a pact with another technology company to land its services on their devices. In November, it said its Apple Music streaming service would be made available on Amazon's Echo smart speakers, despite Apple selling its own line of HomePod speakers that compete directly with Echo speakers.

Apple and Samsung are better known as fierce rivals, battling it out for smartphone sales across the world. Samsung is the world's biggest phone manufacturer, while Apple has traditionally been in first or second place but was last year leapfrogged by China's Huawei.

Apple and Samsung also fought a seven-year legal battle in which Apple accused Samsung of ripping off its ideas and violating its patents. The companies settled last year in a move that could have helped pave the way for this week's iTunes deal.

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Uber CEO Dara Khosrowshahi says there's a chance the company may not IPO in 2019 after all

Sat, 01/12/2019 - 12:23pm

  • Uber is in no rush to go public this year, according to CEO Dara Khosrowshahi.
  • Khosrowshahi told The Wall Street Journal in an interview published Tuesday that he and investors would be "disappointed" if there was no IPO but that "the company would be just fine."
  • The comments appear to be a softening of Khosrowshahi's position from last year, when he consistently said Uber was "on track" for a 2019 initial public offering.

Uber may not go public this year after all, CEO Dara Khosrowshahi has told The Wall Street Journal.

In an interview published Tuesday, Khosrowshahi said the company was in no rush to go public and may choose to bide its time and ride out rough market conditions.

"We'll do it when we're ready, and, hopefully, the markets will be in a good state," he said, adding that the ride-hailing firm had "a strong balance sheet so we don't need to go public this year."

"It's a desire," he continued, but "if it doesn't happen it doesn't happen."

"I'd be disappointed and I think our shareholders would be disappointed but the company would be just fine," he said.

The comments appear to be a softening of Khosrowshahi's position from last year, when he consistently said Uber was "on track" for a 2019 initial public offering. He did, however, add the caveat of "market conditions permitting" during an interview with Reuters in September.

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Since that interview, tech stocks have taken a hammering, led by companies including Apple and Facebook. Apple has lost about $450 billion from its valuation since it hit a record high of $1.12 trillion in October, and last week it issued its first sales warning in nearly 17 years.

But Uber's youth means it's not subject to the same market forces as more established players, Khosrowshahi said. "I view us as a company that's still very, very young and has a long way to go and therefore hopefully won’t be as subject to cycles the way, let's say, Apple or Samsung is," he told The Journal.

Khosrowshahi added that Uber's earnings remained healthy despite market gloom, with revenue up.

Uber could be valued at a massive $120 billion if it has an IPO this year, according to proposals put forward to the company from Goldman Sachs and Morgan Stanley. The valuations are 66% higher than Uber's most recent valuation, which pegged the company at $72 billion after Toyota invested $500 million into the ride-hailing firm.

Now tell us what you think!

SEE ALSO: Uber's CEO says the company is 'on track' to go public by the end of next year

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Hey Apple, what happens on iPhones doesn't stay there, and your 'clever' CES ad is promoting a dangerous illusion (AAPL, GOOGL, FB)

Sat, 01/12/2019 - 12:23pm

 

  • Apple has a big — and misleading — ad on display in Las Vegas during this year's CES convention.
  • The ad states, "What happens on your iPhone, stays on your iPhone."
  • The ad is literally untrue; much of what users do on their iPhones and the data they generate doesn't stay on their devices.
  • IPhones leak data to wireless carriers, websites, app developers — and to Apple's own servers and services.
  • Apple benefits directly and indirectly from the information that can be gleaned off of users' iPhones.

Give me a break, Apple.

That's a cute ad you have in Las Vegas for the CES tech convention. "What happens on your iPhone, stays on your iPhone" is both a good dig at your rivals and a clever restating of Sin City's popular catch phrase.

But it's literally a lie. What happens on customers' iPhones doesn't stay on them — and you know it.

All kinds of data leaks off of iPhones, much of it with user permission to the numerous software developers who offer the apps that make your devices so useful. But plenty of it also goes to your own servers and services. That's something you both encourage and make money off of — in some cases in ways that aren't all that different from the companies your ad is implicitly deriding.

Read this: Apple trolled Google with a massive billboard at the world's biggest tech show, which it's not even attending

Paul Manafort knows what's on iPhones doesn't stay there

To cite one prominent example of how data on iPhones doesn't actually stay on them, take the case of Paul Manafort, President Trump's former campaign manager who was recently convicted of multiple federal crimes. Part of what got him in trouble were some WhatsApp messages he sent from his iPhone.

That may seem strange at first. WhatsApp is renowned for offering a secure messaging service with end-to-end encryption, which blocks anyone but the sending and receiving parties from reading messages. iPhones are also renowned for their own security — and everything stays on an iPhone, right?

Wrong. Manafort backed up his WhatsApp messages to your iCloud service, a common practice. What he apparently didn't realize is those backups aren't secure, that you have the keys to them and can access them when federal prosecutors ask you to.

Other companies do the same thing, of course. Businesses are legally obliged to hand over customer information when they receive a subpoena from law enforcement (unless they choose to legally challenge the subpoena, as Apple and others do from time to time). 

Manafort's case may also be the one of the more extreme, and justified, examples of how the things people do on their iPhones don't actually stay on them. But it's certainly not an isolated one.

iPhones regularly leak all kinds of information

Even at a very basic level, iPhones leak information. It's not a bad thing, it's just the nature of phones and networked computers. When users make a call or access the internet, they are providing information via the cell towers or wireless routers they are connecting through to carriers or website operators about where they are and, in many cases, who they are connecting with. That kind of metadata absolutely doesn't stay on users' iPhones.

But you as a company also get all kinds of data off iPhones. Your Maps app and its real-time traffic conditions service relies on data you glean from iPhone users. Many iPhones are customized to automatically send you diagnostic and other data, so you can identify bugs in your operating system. When iPhone users asks questions of Siri, their devices submit those queries to your servers, and you use that information to get a better idea of the kind of information users are looking for.

You've made a big deal about how the iPhone has built-in encryption and advanced authentication technology, such as your Face ID facial recognition system, to protect the data stored on users' devices. And for the most part, the iPhone's built in security technology is pretty robust.

But as the Manafort case illustrates, the locks you've put on people's devices are irrelevant when you've left open a huge back door in the form of your iCloud service.

iCloud is a big back door to users' iPhones

It used to be that most customers backed up their phones to their home computers via your iTunes software, assuming they backed them up at all. Now, the default is to back up to iCloud — something you've been pushing customers to do. It's true that the iCloud backup service is a lot easier and user friendly than iTunes. But you make money off it; you charge customers who want more than the pittance of storage you offer.

All that data — including sensitive things like chat and email messages — is copied to your computers through iCloud. While your policy may be to not access user data, it's factually incorrect to claim that the data "stays" on a customer's iPhone.

It's a particularly dangerous illusion to perpetuate for people who may not be technically savvy enough to know any better and who are foolish enough to take you at your word. 

Just look at what happened to Jennifer Lawrence. 

Like many people, Lawrence used your iClould Photos service, which stores on your servers the pictures users take on their iPhones. The service is great; I use it to backup all my digital photos and to access them on my numerous Apple devices.

The downside of iCloud Photos, though, is that photos are no longer just on users' devices, and they too can leak out. That's something that Lawrence and several other celebrities found out to their dismay several years ago when malicious actors were able to figure out their iCloud passwords, gain access to their photo libraries, and post on the public web some of the risque pictures they found there.

Apple benefits from Google searches and Facebook's app

In recent years, as your iPhone sales have started to stagnate and even fall, you've been touting your services business. According to analysts, one of the biggest and most profitable money makers in that business is your deal with Google. That deal ensures that Google is the default search engine in the iPhone's Safari web browser, a position which ends up sending likely billions of search requests to the company every year.

That's a significant data leak in and of itself; Google uses those searches to glean lots of information about iPhone users and to precisely target them with ads. That's the core of Google's business — a business you implicitly are deriding in your ad — and you help enable it for a huge chunk of change. How exactly are you better than Google, again?

Besides Google, the other big target of your pro-privacy campaign has been Facebook. But users must have a device of some kind to access Facebook. Most of them these days get to the service using their phones, and in the United States and many other countries, a large portion of those mobile users are getting to Facebook via their iPhones. Another way of saying that is that what users do on Facebook on their iPhone isn't staying on their iPhones.

Sure, you're not collecting the data. But you benefit from Facebook's app being available for the iPhone and, indirectly, from the data it collects. After all, Facebook's app has long been one of the most popular apps in the iPhone App Store. It's quite possible that if it weren't available for the iPhone at all or only offered a fraction of the features as the Android version — features, after all, that are often enabled or powered by the data Facebook collects — a significant portion of your user base would buy an Android phone instead.

But it's not just Facebook's app that leaks data off of users' iPhones. A huge portion of apps in your store do that. And you know that, because you designed iOS, the operating system underlying the iPhone, to do just that. You built in hooks that allow developers to access and use all kinds of information off users' phones, including their location, their photos, their contacts in their address books, even their health and fitness information.

Yes, there are good reasons to allow that access. And you do offer some relatively good settings in iOS to give users some measure of control over who has access to that information and how it's used. But it's absolutely false to suggest to users that such information stays on their device.

iPhone apps are finely tracking users' locations

What's more, even with the tools you offer, users still sometimes have little control or even knowledge of how data collected from their iPhones is being used. In a report last month, the New York Times found dozens of companies that collect consumers' location data via their mobile phones, including iPhones. Although the data was collected anonymously, the companies' databases often contained enough information about the comings and goings of particular phones to identify individuals and their patterns of behavior.

What's more, the report found that at least some affected consumers were unaware that their location information was being used for purposes other than the explicit features of the apps that gleaned it. Some were also unaware that, in many cases, their location information — such as what stores they visited — was being sold or passed along to other companies, including hedge funds.

Look, Apple, I appreciate your commitment to privacy. As a consumer, one of the things I like about being a customer of yours is that your business isn't dependent on tracking my every move so that you can sell ads. I understand and appreciate that you make efforts to anonymize the data I and other users send to you. I also like the fact that in many cases you have given me choices about what data I share and with whom.

But iPhones aren't closed boxes. Much that happens on them — sometimes all of it — definitely doesn't stay on them. And to suggest that it does is dishonest and a disservice to your customers.

SEE ALSO: Hey Tim Cook, there's a simple solution to your iPhone sales problem

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Tim Cook teases that Apple has 'new services' coming in 2019

Sat, 01/12/2019 - 12:22pm

  • Apple CEO Tim Cook teased 'new services' expected from the company in 2019 during an interview with Jim Cramer on CNBC's 'Mad Money.'
  • Those "new services" could include Apple's already-rumored video-streaming platform and a monthly news subscription service. 
  • Cook gave the interview at a time when Apple is facing intense scrutiny following its recent warning that iPhone sales during the holiday quarter were lower than previously expected, the first time in nearly 17 years the company has made such an announcement.

During an interview with Jim Cramer on CNBC’s “Mad Money” Tuesday evening, Tim Cook teased 'new services' from Apple were coming in 2019, less than a week after the company shocked global markets with a warning about lower-than-expected iPhone sales.

Cook, however, did not go into specifics. "On services, you will see us announce new services this year," he told Cramer. "There will be more things coming. I don’t wanna tell you about what they are."

This ambiguous snippet could mean many things. First, he may be referring to Apple's new video streaming service, reported on last October, which Apple has already sunk $1 billion into as part of its larger move into producing original content. Apple is already creating or developing at least 17 original, scripted series, ranging from a biographical drama on NBA all-star Kevin Durant's life growing up, an animated show from the creator of "Bob's Burgers," and an untitled series from M. Night Shyamalan.

Cook could also be referencing Apple's rumored monthly news subscription service, which could look a lot like Apple's streaming-music service, Apple Music. Apple's acquisition of magazine subscription app Texture in March 2018 is reportedly related to those efforts.

Cook told Cramer that the new services are those that Apple has been "working on for multiple years."

Apple has been keen to stress its growing services revenue as it finds itself under intense scrutiny following its recent warning that revenue from iPhone sales during the holiday quarter would be down from previous expectations.

Apple executives have said in the past that the company's goal is to hit $50 billion in services revenue by 2021.

Watch Tim Cook's full interview over at CNBC.

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NOW WATCH: Tim Cook's estimated net worth is $625 million — here's how he makes and spends his money

Tim Cook made over $136 million in total compensation in 2018, including a $12 million bonus (AAPL)

Sat, 01/12/2019 - 12:19pm

  • Apple revealed that CEO Tim Cook was paid $15,682,219 in 2018 in an SEC filing. 
  • That doesn't include $121 million in Apple stock that vested last year. 
  • The median Apple employee makes $55,426. 
  • Lots of Apple employees work in its retail stores and with AppleCare support and they factor into the median employee compensation calculation.

It's good to be Apple CEO Tim Cook.

The leader of the iPhone giant made over $15 million in 2018, according to a new filing with the SEC

That includes a base salary of $3 million, $12 million in bonus incentives for hitting performance goals related to sales and operating income, and $294,082 to pay for Cook's private jet fare.

That's not including the massive stock incentives that Apple also provides to its chief executive as part of a 2011 grant. Cook cashed in $121 million of stock that vested earlier this year. Cook still has over 1.5 million Apple shares that haven't vested, worth about $189 million at the current share price. 

Apple also revealed on Tuesday how much money its median employee makes: $55,426. That means that of Apple's 132,000 total employees, half make less than that, and half make more. Lots of Apple employees work in its retail stores and with AppleCare and they factor into the median employee compensation.

For example, Facebook's median employee makes significantly more: Over $240,000 per year. But Facebook doesn't have retail or call center workers. 

Cook's compensation, not counting his restricted stock, is 283 times what the median Apple employee makes, according to the filing. Other Apple executives were also well-paid last year. CFO Luca Maestri, general counsel Kate Adams, retail head Angela Ahrendts, and COO Jeff Williams all made over $26 million each, according to the SEC filing. 

"We believe the compensation paid to our named executive officers for 2018 appropriately reflects and rewards their contribution to our performance," Apple states in the filing. 

Cook said in 2015 that he plans to give his entire fortune to charity. In 2018, he donated nearly $5 million in Apple stock to an unspecified charity, according to an SEC filing.

SEE ALSO: Apple CEO Tim Cook is a few days away from a $120 million payday

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NOW WATCH: Tim Cook's estimated net worth is $625 million — here's how he makes and spends his money

One Medical is teaming up with a $23 billion health system as it works to reinvent how you visit your doctor

Sat, 01/12/2019 - 12:17pm

  • One Medical is teaming up with Providence St. Joseph Health to link its primary-care clinics into a health system.
  • The idea is to partner with the health system to offer services that go beyond the scope of primary care, such as more convenient OB-GYN visits during pregnancy.
  • The partnership will be available to One Medical members in Seattle and Los Angeles.

One Medical, a startup medical group that aims to make it easier for patients to see their doctors, is teaming up with a big hospital system as lines blur between tech upstarts and old-school healthcare providers.

The company is working with Providence St. Joseph Health, a West Coast-based health system with 51 hospitals that made $23 billion in revenue in 2017. The idea is to to offer services that go beyond primary care but can often be done by a primary-care doctor, as well as give One Medical users access to the larger health system.

One Medical charges individuals a flat fee of $199 a year for unlimited same-day visits with a doctor or other care provider. Increasingly, the company is striking deals with big companies to offer the service to their workers.

One Medical got a $350 million investment from Carlyle Group last year and now offers care in eight — soon to be nine — cities.

One Medical is increasingly partnering with established healthcare providers to help patients get more types of healthcare. In San Diego, where the company is planning to open offices, it's partnering with UC San Diego Health.

Read more: Check out Business Insider's coverage of the biggest healthcare-investor conference.

One example of services that could be offered in the partnership: One Medical has been working with obstetricians to manage some of the healthcare visits associated with pregnancy. Instead of having to go to the OB-GYN office for routine checkups, those visits could happen at a One Medical office that may be more convenient.

"Our partnership with Providence St. Joseph will enable us to better coordinate primary and specialty services for our patients, communicating directly with the doctors at PSJH when One Medical members require additional clinical services," One Medical CEO Amir Rubin told Business Insider in an emailed statement.

Providence announced the collaboration on Tuesday at the J.P. Morgan Healthcare Conference in San Francisco. The partnership is part of Providence's strategy to disrupt itself before others get the chance to.

The health system has been turning to its high-tech neighbors for executive hires over the last five years as it works to improve its operations, bringing on executives including Chief Digital Officer Aaron Martin, who comes from Amazon, as well as Microsoft veterans. The hope is to use technology to make the health system run smoother, whether that's through primary-care scheduling or making a better internal directory.

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