|Bid||1,855.09 x 1200|
|Ask||1,858.00 x 900|
|Day's range||1,847.44 - 1,894.96|
|52-week range||1,566.76 - 2,035.80|
|Beta (5Y monthly)||1.51|
|PE ratio (TTM)||82.49|
|Earnings date||29 Jan 2020|
|Forward dividend & yield||N/A (N/A)|
|1y target est||2,181.63|
(Bloomberg Opinion) -- Encouraging trends in emerging markets belie their volatility since the taper tantrum of 2013, when the Federal Reserve signaled it was pulling back on quantitative easing. Further turbulence is likely, despite the improving outlook for advanced economies, easing trade tensions and accommodative monetary policy.The International Monetary Fund estimates that growth in developing countries fell to 3.7% last year, the slowest pace since 2009 and well below the IMF’s July 2019 forecast of 4.1%. An expected rebound to 4.4% this year assumes highly uncertain recoveries in stressed economies such as Argentina, Iran and Turkey, as well as in countries where growth has slowed significantly — China, Brazil, India, Russia and South Africa among them.Rising friction in the Middle East, if sustained, could result in higher energy prices and supply disruptions for developing countries. India, which recently downgraded growth for the 2020-21 fiscal year to 5%, the slowest pace in a decade, imports more than 70% of its oil needs. A price rise of $10 per barrel widens the current account deficit by 0.4 % of gross domestic product. Every increase of 10% adds 0.2% to the rate of inflation, which is already above the Reserve Bank of India’s 4% target.Higher borrowing costs and a stronger U.S. currency due to haven demand would hurt developing countries. Between 2010 and 2018, low exchange-rate volatility and high interest-rate differentials caused non-bank financial institutions in emerging markets to double their U.S. dollar-denominated debt to $3.7 trillion. Much of this is unhedged.Further geopolitical risks include North Korea’s missile-rattling, challenges in Hong Kong and Taiwan to Beijing’s assertions of authority, and China’s territorial maritime disputes with its neighbors. Japan and South Korea are contesting matters arising from World War II. India’s proposed changes to citizenship laws and the status of Kashmir is fomenting domestic unrest and tensions with predominantly Muslim Pakistan and Bangladesh.Meanwhile, the spread of a new virus that originated in China threatens to depress retail sales and tourism in Asia, helping to bring a global stock rally to a halt last week.These stresses exacerbate long-term structural problems. The early 2000s and the period immediately following the global financial crisis saw a synchronized acceleration of growth across the world. But advanced economies have slowed and their long-term potential rate of expansion has fallen.The latest IMF estimates released last week have growth in advanced economies stabilizing at 1.6% in 2020-21, compared with 2.3% in 2018 and 0.1 percentage point lower than in its October forecast. Underlying this stagnation is the flagging potency of debt-fueled growth, flat productivity, limited policy options, and unfavorable demographics. Emerging economies cannot rely on historic demand for exports to drive future expansion.Despite the U.S.-China phase one trade agreement, conflicts won’t abate. Sino-American trade tensions alone will cumulatively reduce the level of global GDP by 0.8% by 2020. The Trump administration also has trade disputes with the European Union, Australia, India and Vietnam, among others. France and the U.S. are trying to de-escalate threatened tariffs on champagne and cheese in retaliation for a digital tax affecting Alphabet Inc.’s Google and Amazon.com Inc.Trade volume growth fell to about 1% in 2019, the weakest level since 2012. The retreat from a rules-based trade system and the weaponizing of trade interdependence will damage everyone.In the past 20 years, China, a crucial driver of emerging markets, went from a 10th to two-thirds the size of the U.S. economy, assisted by trade within the WTO framework. Today, China’s blacklisted Huawei Technologies Co. relies on chips designed in America while advanced economies benefit from its cheaper and often cutting-edge 5G technology. Three-quarters of the world’s smartphones, mostly made in emerging markets, use Google’s Android mobile operating system. American restrictions hurt developing nations as well as consumers in advanced economies.In a world of limited demand, irrespective of leadership or ideology, governments everywhere face a mounting anti-globalization backlash. Nationalist agendas and a shift to autarky – closed economies – will persist. A return to strong growth in trade and cross-border capital flows seems unlikely.This affects developing-world economic models. Lower-income nations focused on export-oriented industries, such as textiles and manufacturing, exploiting cheap costs. Now, weak demand and trade disputes limit this option. Higher-income developing countries face technology transfer restrictions that affect improvements in productivity. Meanwhile, automation decreases the advantages of low-skilled, cheap labor and offshoring. Bringing manufacturing home to advanced economies decreases companies’ exposure to disruption, currency fluctuation and political interference. The failure of Prime Minister Narendra Modi’s “Make in India” strategy reflects these shifts. India has failed to produce the 1 million new jobs per month needed to absorb new entrants into the workforce. Indian Railways recently received 23 million applications for 90,000 vacancies.Slower growth creates a dangerous feedback loop. Dissatisfaction with improving ordinary lives can prompt civil unrest. Countries rich in scarce resources, or having large internal markets such as China, India, and Indonesia, may muddle through.Others will struggle. Rising nationalism and protectionism are likely outcomes, and will only deepen the wedge between advanced and emerging economies. It will make an interesting if rough ride ahead for investors. To contact the author of this story: Satyajit Das at firstname.lastname@example.orgTo contact the editor responsible for this story: Patrick McDowell at email@example.comThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Satyajit Das is a former banker and the author, most recently, of "A Banquet of Consequences."For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Companies in the Nasdaq 100 are headed into earnings season with momentum that approaches the unprecedented, their value up by more than $1 trillion since October.Now the world finds out if the rally made any sense.Twenty-six constituents are due to report quarterly results next week, including three of the four biggest U.S. companies, over one blistering 48-hour stretch starting Tuesday. With trillion-dollar-plus market capitalizations and a doubling in Apple Inc. since 2018 to account for, it’s possible investors will be in a less-forgiving mood than usual.As things stand now, Nasdaq stocks are perched at the highest forward valuation since 2007 and investors are getting progressively less patient with failure. Already this reporting season, companies in the broader market whose sales and earnings trailed analyst estimates have seen their shares pummeled the next day by the most in five quarters.“The market isn’t going parabolic, but some of these tech stocks really have,” said Randy Frederick, a vice president of trading and derivatives at Charles Schwab. “If you miss the bar, you’re going to get punished, no question about that.”A four-day week before the landing of big tech earnings saw the Nasdaq 100 slip 0.4% as stocks wavered amid concern over the spread of a virus that started in China. Seven straight weeks of gains have pushed the index to 23 times its forecast earnings, about 30% higher than its 10-year average. That valuations are stretched doesn’t mean stocks can’t rally further. It does raise the drama headed into earnings season.The latest leg of the bull market has come at a time when overall earnings have stopped rising for most industries -- the reason valuations have swelled so much. While the index rose every quarter of 2019 in terms of price, profits fell in two and are now forecast to contract in a third. Given the Nasdaq surged 38%, investors have obviously been OK looking past those numbers. But any indication that 2020’s expectations are optimistic may be taken poorly by stock bulls.That dynamic is writ large in the tech industry, where earnings have dropped 3% or more in each of the past three quarters. Computer and software makers are expected to post a 0.8% profit contraction in the three months through December. Early returns have been encouraging. Texas Instruments, a bellwether for chip stocks, posted results that topped estimates. Intel Corp. reported sales guidance that came in above industry trends.Despite the recent quarterly hiccups, combined net income of five largest tech companies -- Apple, Amazon, Microsoft, Alphabet and Facebook -- totaled $40 billion in the third quarter, 38% above the same period two years ago.“Multiples have expanded, but quarter-over-quarter these companies continue to grow earnings and that’s the whole key,” said Gary Bradshaw, a Texas-based portfolio manager at Hodges Capital Management, who owns shares of Apple, Microsoft, Amazon and Facebook. “It’s one of the areas in the marketplace where you’re seeing good growth. This isn’t 1999 or 2000 when you were valuating those tech stocks on eyeballs.”The cost of falling short has risen as well. A broader gauge of tech, online retail and Internet services stocks dropped 0.9% the day after reporting a miss on second-quarter sales and earnings per share, data compiled by Credit Suisse show. In the third quarter, the average slump was 6.8%.Apple will release quarterly figures on Tuesday, and analysts are focused on how the firm fared during the holiday season and dealt with uncertainty around tariffs. Microsoft, up 62% since the start of 2019, reports Wednesday. Investors will see whether the demand for its cloud-computing programs remains strong. Facebook, which has rallied 66% over that stretch, reports the same day.“I’d expect a little more leadership out of value-oriented sectors, more economically sensitive parts of the market,” Jeff Kleintop, chief global investment strategist at Schwab Center for Financial Research, said by phone. “I think investors seem to be comfortable with sticking with the leaders that got them here, at least for the time being,”\--With assistance from Wendy Soong.To contact the reporters on this story: Elena Popina in Hong Kong at firstname.lastname@example.org;Sarah Ponczek in New York at email@example.comTo contact the editors responsible for this story: Brad Olesen at firstname.lastname@example.org, Chris Nagi, Richard RichtmyerFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- YouTube secured the exclusive rights to broadcast some of the biggest esports leagues, giving Google a boost in its efforts to push into the lucrative world of video games.The deal, signed between Alphabet Inc.’s Google and video game publisher Activision Blizzard Inc., gives YouTube the rights to broadcast the new Call of Duty League and the already-popular Overwatch League, which was broadcast on Amazon.com Inc.’s Twitch for the past two years at a reported cost of $90 million. As part of the agreement, Google will provide cloud infrastructure for Activision’s online games. Financial terms of the multiyear deal were not disclosed.Gaming is a significant new frontier for Google. Last year, it released a game-streaming service called Stadia, which lets people play games through the internet without having to buy a console or high-powered computer. YouTube has always been a major destination for watching people play video games, but the company is trying to take even more territory by poaching well-known game players from Twitch.‘All-Out Talent War’ in Video Gaming Sparked by Ninja Defection“In 2020 Google is going all out to claim a piece of the $120 billion games market,” said Joost van Dreunen, managing director of Nielsen’s video-game research arm. “Google is off to a great start to building strong relationships with content creators which it will need to differentiate as it tries to penetrate the industry via different avenues.”The news isn’t good for Amazon, which hasn’t announced a competitor to Stadia and still faces uncertainty about its in-house gaming studio, van Dreunen said. “The longer Amazon remains on the sidelines of technological shifts in the games business, the harder it will be to capture share down the line,” he said.The deal offers a strong boost to the central thesis of Activision’s esports efforts. The publisher pitched investors on the Overwatch League and the Call of Duty League, which launches later this month, as esports equivalents to traditional sports leagues like the National Basketball Association or National Football League. Selling media rights to companies like YouTube is a central piece of how these leagues make money.Providing hosting services to Activision is also a win for Google’s cloud division, which is trailing Amazon and Microsoft Corp. in that market.(Updates with comment from analyst in the fourth paragraph.)\--With assistance from Eben Novy-Williams.To contact the reporter on this story: Gerrit De Vynck in New York at email@example.comTo contact the editors responsible for this story: Jillian Ward at firstname.lastname@example.org, Andrew PollackFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Facebook's (FB) fourth-quarter 2019 results are likely to reflect continued subscriber growth, driven by rapid adoption of Stories and Gaming endeavors.
Sundance Institute artists and supporters celebrate opening night of the 2020 Sundance Film Festival at 'An Artist at the Table Presented By IMDbPro'
(Bloomberg Opinion) -- Late one evening last week, my phone lit up. “Gather all our jars and bottles and fill them up,” my wife messaged me. “If we wait until the contaminated water comes, it’ll be too late.” Ok, so I confess was skeptical. I live in Rio de Janeiro, an excitable town where emergency lurks in every WhatsApp group and Twitter feed.This was different, as I soon found. Tales of tainted water spreading through the city’s pipes were multiplying. Hundreds of people had reportedly fallen sick from drinking the dark, fetid stuff. In two weeks, more than 60 Rio neighborhoods were blighted, triggering a run on emergency rooms, bottled water and conspiracy theories. “I suspect sabotage,” Rio state governor Wilson Witzel said.Political hubris was the more likely culprit. For years, state and local authorities grooming the city ahead of international events such as the 2014 World Cup and the 2016 Olympic games had heralded transformative public works that either fell short or never happened. Half a decade on, raw sewage and untreated solid waste flow unchecked into the streams feeding the municipal reservoir, giving rise to toxic algae blooms in the potable water source for nine million people. Brazil’s second largest metropolis ranks 51st in water quality nationwide, down 12 places from 2018. Fewer than 37% of households are connected to sewage mains, prompting the state attorney’s office to file suit against state authorities.Forget, for a moment, the conflagration in the Amazon rain forest. Rio’s blighted tap water is a reminder that, for much of Latin America, the environmental monster in the room is mismanaged urban waste. Organic or solid, domestic or industrial, human refuse chokes city streets and fouls urban waterways.The emergency this time was in Rio, but it might have been in Lima, Santiago, Buenos Aires or Bogotá. Latin America is the world’s most urbanized region, with 83% of South Americans living in cities. As cities go, so goes trash. By 2025, Latin America’s projected 567 million city dwellers are expected to throw out 671,000 tons of trash a day, a 25% increase. “The Latin American middle classes have grown and are consuming more and more,” said Marcos Alegre, Peru’s former vice minister for environmental management. “Waste per capita is growing as never before.”Fortunately, where there’s waste, there’s also opportunity. Latin Americans, belatedly, seem to be catching on. In January 2018, China, once the world’s dumpster, banned imports of most plastics and cardboard. Environmental degradation was one reason, but mostly the move was calculated to wean Chinese industry from imported scrap and jump-start domestic recycling. It also helped to wean Latin America from the world’s biggest scrap buyer. Nothing like losing the world’s janitor to goose greener sensibilities and start a global drive to repurpose trash.A 2018 UN study showed that Colombia, Ecuador, Panama and Peru shipped 60,000 tons of used plastic a year to China, compared with just 11,000 tons to the U.S. Not coincidentally, all these countries have extremely low recycling rates. Now China’s new import restrictions may send refuse the other way.Argentina took the lead in the Americas: Late last year, outgoing President Mauricio Macri issued a ruling to facilitate imports of plastic scrap that will feed a nascent recycling hub. It was a bold plan: Argentina, like most of its neighbors, has a dismal record in managing its refuse. Green groups howled that Argentina would become the next China, the country flooded with low-grade plastic that would only end up in the incinerator. With Macri voted out of office for failing to revive the economy, incoming President Alberto Fernandez is expected to revoke the decree.Argentina’s false start is a caveat for willful technocrats banking on innovation without a political pact or safeguards. “The decree was a promising example of what could be a policy of sustainable management,” said former Argentine secretary for innovation and sustainability Prem Zalzman. “But first we need to establish a social consensus while also ensuring that good monitoring and enforcement are in place to avoid importing dangerous materials.”Latin Americans neglect recycling at their own peril. The region has a laudable 94% average collection rate for household and industrial garbage. Yet a third of the haul ends up in open dumpsites, exposing 170 million to contamination, pests and disease. Only about 10% of collected waste gets recycled region wide, and much of the rest goes up in smoke. “For every four tons of toxic waste you burn, you get a ton of toxic ash,” said Melissa MacEwen, who heads the energy, environment and resources department at Chatham House.The way forward is a mix of smarter government, environmental education and partnerships with the private sector. A number of initiatives are under way. In Guayaquil, Ecuador, mass transit users can deposit their used plastic bottles in a vending machine for about two cents each, redeemable for bus fare. Since the 1980’s, Curitiba, one of Brazil’s greenest cities, has swapped food for garbage to keep the streets clean. One Argentine town has even experimented with behavioral incentives – pep talks and inspirational messages – to encourage residents to sort household trash for recycling.Cleaner cities also call for some conceptual recycling. Urban waste collection and disposal are costly, and although most people agree that burden should be shared, they are often loath to shell out for the service they believe general taxes ought to cover. In Argentina, the fees and tariffs residents pay for collection cover only 18% of total expenditures. Such shortfalls, naturally, jeopardize collection, proper disposal and recycling. Hence it’s no mystery that aside from major metropolises like Buenos Aires, Santiago and Sao Paulo, “there is no infrastructure for waste treatment and recovery,” the United Nations Environment Program concluded in a recent study.Greening up waste management is a job for many partners. Governments must invest in collection, transport and treatment. Residents must help foot the bill. The legion of freelance trash pickers who serve the public good on the cheap by scouring the streets for scrap should be invited into the formal economy and allowed to do their job in safety. None of this will work, however, unless the private sector pitches in and gets creative. To that end, policymakers are calling on companies to join in a pact to keep discarded materials from dirtying the streets and atmosphere. The result is what international waste wonks call the Extended Producer Agreement, whereby businesses shoulder the responsibility for handling and recycling the used goods they sell. That’s key to building “the circular economy,” greenspeak for the notion that nothing goes to waste that can be re-purposed. After all, one person’s trash is another’s merchandise. With the right scavenging technology, there’s a treasure trove in precious metals to be recovered in discarded mobile phones and other electronics— a potential boon to Latin America, where electrical and electronic equipment waste grew 70% from 2009 to 2018, compared with 55% globally.Uruguay and Chile pioneered such pacts for recovering lead batteries and non-returnable containers. Costa Rica requires companies and distributors to take responsibility for their products from factory to reprocessing centers. In Colombia, consumer goods must be made with traceable components, a key to curbing potentially hazardous waste like pesticide containers, tires, light bulbs and medication. Ecuadoran companies must submit waste management plans to regulators.Such arrangements turn on the circular economy’s bet that responsible waste management will not just spare companies punitive costs but also stimulate sustainability and competition for customers through greener products. “We have to drastically reduce the volume and variety of waste packaging,” said MacEwen. “It’s harder to recycle a colored plastic bottle than a clear one. More than recycling, that means product design is the way to go.” Manufacturers may be reluctant to retool, she allows.Another market frontier is tapping organic waste for energy. No other region squanders as much food as Latin America. Organic waste, including sewage, may not be the biggest contributor to climate-baking greenhouse gases, but it is a huge source of methane, 28 times more potent for trapping heat than carbon dioxide. Better than a third of Peru’s methane emissions can be traced to landfill burning.Now this waste is fouling the skies and waters. It could light up homes and power industries. Argentina’s Environmental Complex Norte III converts 16,000 tons of daily solid waste from greater Buenos Aires into enough energy for 25,000 homes. By transforming instead of burning waste, the plant also avoids releasing more than 1 billion tons of carbon emissions a year. Generating biogas from organic waste is still incipient in the region, with around 20 plants in eight Latin American countries. Yet with landfills aplenty and regional energy demand growing by more than 3% a year, analysts reckon far more waste will have to be turned into energy.Latin America’s aspiring middle class needs the juice, preferably without the collateral environmental damage or political double-talk. More than 90% of consumers in seven South American countries demanded corporate sustainability, compared with 81% globally, and 85% said they would change their buying habits (compared with 73% of their global peers) to ease their environmental footprint, according to a recent Nielsen survey. Water pollution and shortages, polluted air and excessive waste packaging lead the list of worries for regional consumers.They’ll get no argument from water-challenged Brazilians. This week pediatricians in Rio de Janeiro counseled parents to avoid bathing young children in the swill dripping out of their taps. My friend David says he won’t even let the dog drink it. Latin Americans know they need to clean up their act, lest the potential blessings of the circular economy go down with the crud in the drain.To contact the author of this story: Mac Margolis at email@example.comTo contact the editor responsible for this story: James Gibney at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Mac Margolis is a Bloomberg Opinion columnist covering Latin and South America. He was a reporter for Newsweek and is the author of “The Last New World: The Conquest of the Amazon Frontier.”For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. Having just persuaded France to hold off on a digital tax that would hurt its biggest technology firms, the U.S. is facing a similar threat from another part of Europe.The Czech Republic is debating plans to impose one of the world’s highest levies on global internet companies -- albeit as a stop-gap measure -- brushing aside possible U.S. retaliation.The initiative comes as transatlantic trade tensions once again bubble over. Shortly after agreeing on the truce with France, President Donald Trump’s tone changed as he complained that Europeans are “more difficult to do business with than China.”Cars are another bone of contention. Commerce Secretary Wilbur Ross said this week at the World Economic Forum in Davos, Switzerland, that the U.S. was still considering slapping levies on European auto imports, even as it hopes for a “peaceful resolution” of differences.Czech Foreign Minister Tomas Petricek said Thursday that he’s aware of the risks in imposing the 7% levy, which would target local revenue because the majority of profits are booked and taxed in other jurisdictions.“I understand the United States perceives this negatively,” he said in televised comments. “We’re trying to explain that this step is only temporary until an international solution is found.”Petricek met U.S. Ambassador Stephen King after the envoy wrote a newspaper opinion piece saying America may respond with proportional countermeasures against the Czech Republic.The local unit of Google last year reported a net income of 15.9 million koruna ($697,000) and paid 8.8 million koruna in tax, while the Czech arm of Amazon made a profit of 19 million koruna and paid 9.7 million koruna of tax, according to regulatory filings.That’s a fraction of the income recorded and taxes paid by the U.S. companies’ local competitors, which include search engine and online media group Seznam.cz and internet retailer Alza.cz.Billionaire Czech Prime Minister Andrej Babis is trying to impose the digital tax alongside higher levies on gambling, alcohol and tobacco to boost public-sector wages and fund welfare spending. He’s previously enjoyed warm relations with Trump.Other European countries that have introduced a similar tax or are planning to do so include the U.K., Italy and Austria.France agreed this week to delay collecting its 3% digital levy until the end of the year to avoid the threat of higher U.S. tariffs. The two countries said they’d made progress toward a global pact on the taxation of digital services.(Updates with local internet companies in ninth paragraph.)\--With assistance from Lenka Ponikelska.To contact the reporter on this story: Krystof Chamonikolas in Prague at email@example.comTo contact the editors responsible for this story: Blaise Robinson at firstname.lastname@example.org, Andrew Langley, Michael WinfreyFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Microsoft's (MSFT) fiscal second-quarter results are likely to reflect gains from strength in Azure and robust adoption of business productivity offerings.
(Bloomberg Opinion) -- Intel Inc. closed out 2019 learning the hard lesson that making cutting-edge semiconductors is truly difficult.Like a prizefighter who refuses to admit he just hit the mat, the world’s biggest chipmaker is coming out swinging. And it should, because how it gets through 2020 could decide the company’s fate. Once the most advanced supplier of semiconductors, Intel struggled last year to ramp up production of chips that use its latest 14-nanometer process node, “letting customers down,” as CEO Bob Swan said in October. Its full-year results released Thursday showed that revenue climbed 2% and that net income was flat — hiding the fact that Intel dodged a bullet when it wasn’t able to supply enough of its most advanced products when clients needed them most.It tried to offer some reassurance three months ago by noting that it would increase 14-nanometer capacity 25% this year while raising capital spending to nose-bleed levels. To help overcome that slip-up, executives are keen to tell investors how many customers have signed up for its latest offerings, including a chip dubbed Ice Lake and an upgrade to its Comet Lake mobile processor, which use the next-generation 10-nanometer process. In reality, Intel is badly lagging behind both contract manufacturer Taiwan Semiconductor Manufacturing Co. and South Korea’s Samsung Electronics Co. TSMC, for example, started selling its 10-nanometer chip technology in mid-2017 and last year boosted revenue from its more advanced 7-nanometer offerings by more than 200%. When Intel eventually hits 7 nanometers in 2021, it will be almost three years behind.Intel’s rebuttal is that so-called process-node technology isn’t the only thing. It’s right, and clients should look at total system performance to see how all the parts — the processor, memory and controllers — all slot together. No other company in the world can offer the breadth and depth that Intel can.But with Advanced Micro Devices Inc. back in the game after a decade in the wilderness and a raft of chip designers ready to tap TSMC’s technology advantage, Intel would be foolish to rest on the belief that it can stay ahead of the game while lagging behind on technology. It knows this and has committed to speeding up its migration from the pace of a new node every five to seven quarters to as little as four quarters. Yet investors ought to also note that the introduction of a new node compresses margins during the early stages before better yields provide economies of scale later. A quicker timetable won’t allow as much time to enjoy the upside before the next margin crunch comes.Intel’s strategy to offset this squeeze is to tap continued growth in the data-center market. Cloud providers like Amazon.com Inc., Alphabet Inc.’s Google and Alibaba Group Holding Ltd. are among customers for its 14-nanometer Cascade Lake products, while the global 5G rollout is expected to provide a couple of solid growth years. Its Data Center Group accounts for 32.6% of revenue but 46.4% of operating income, making it Intel’s most lucrative business unit by operating margin.But that business relies on Intel’s ability to churn out leading-edge chips that, even if not equivalent to what TSMC can offer clients, won’t be too far behind. A data center operator might be willing to forgive a single-generation lag, reasoning that the broader platform integration Intel offers can provide the cost-benefit metrics it needs. A two-generation delay is hard to overlook, though. Intel’s size and strength means it won’t be easily knocked out. But it needs to get through this year unscathed if it’s to remain the undisputed heavyweight champ.(Updates with details about Intel’s 10-nanometer offerings in the fourth paragraph.)To contact the author of this story: Tim Culpan at email@example.comTo contact the editor responsible for this story: Daniel Niemi at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- The innocuous-looking video file believed to have been used to hack Jeff Bezos’s smartphone says a lot about the technological sophistication of today’s spyware. Within hours of receiving the file and its encrypted downloader from the personal WhatsApp account of Saudi Crown Prince Mohamed bin Salman, the Amazon founder’s phone began transmitting “massive” amounts of data without authorization, according to the forensic report by Bezos’s team (obtained by Vice). While no smoking gun has been uncovered — and experts still have many unanswered questions — the purported attack bears all the hallmarks of spyware such as NSO Group’s Pegasus, which has exploited weaknesses in WhatsApp to hack phones. (NSO denies its tech was used in this instance.)Yet the story also says a lot about the non-technological aspects of 21st-century hacking, and what it takes to uncover the secrets of the richest man in the world. Money helps, obviously: This kind of spyware doesn’t come cheap. Saudi Arabia has, in the past, reportedly paid $55 million for the use of NSO’s tools — though the kingdom says it’s “absurd” to imagine it’s behind the attack. Then there’s the relaxed attitude to mobile hygiene on the target’s part: We know from the technical report that Bezos doesn't use a burner phone, keeps personal selfies on his system and might not even know his iTunes password. The icing on the cake, though, is personal trust. The “last mile” of the hack seems to have simply come down to getting Bezos’s number and sending him a message. Access, not technology, was the key.This is not a dig at Bezos. Unlike the CEOs and world leaders who have been hoodwinked by undercover pranksters, the billionaire was taken in by the real thing. Who wouldn’t exchange numbers with a crown prince feted by the U.S. media and the White House as a millennial modernizer? The fact that the infamous 4.22 MB video file landed in Bezos’s phone on May 1, 2018 — just four weeks after the pair exchanged numbers — suggests the hack really began when they first met in April 2018. In the hierarchy of scams, if a phishing hack is disseminated to unsuspecting members of the public, and spear-phishing targets one individual, then securing this kind of personal connection surely tops both. As the owner of the Washington Post, which employed dissident Saudi columnist Jamal Khashoggi, Bezos was a prime target.There has always been a human element to hacking. In the early years of the internet, Kevin Mitnick, once the world’s most famous hacker, used the term “social engineering” to describe the skill of talking his way into key network infrastructure or obtaining passwords. Today, there’s a multitude of ways hackers interact with the physical world. Stuxnet, a virus specifically used to sabotage Iran’s nuclear program, was reportedly injected directly into machines at the Natanz facility by a double agent using a thumb drive. The long global supply chain of consumer electronics offers plenty of opportunities for malicious actors to physically plant microscopic bugs. Phishing is the most common type of hack, according to a U.K. survey, but cyber-physical attacks are rising.Maybe the personal connection between Bezos and MBS that apparently enabled this hack is, on one level, a sign that iPhone-toting elites are perhaps too quick to trust each other. Spying, even among allies, is always going to be a grim fact of diplomatic life. But the possibility that authoritarian state actors are prepared to deploy weapons-grade spyware on their WhatsApp contacts is somewhat of a game-changer. Consumers are being advised to learn from Bezos’s errors. This is also something for the Davos set to take on board. If the forensic findings turn out to be on target, what comes next should be as much about policy and regulation as about tech-savviness. Rules of engagement are needed in the world of state-backed cyber warfare, including spyware. Humanity doesn’t seem well-prepared for the myriad of cyber security threats coming down the pipe. That's especially true with the unrelenting march of connected devices and an Internet of Things where physical objects like cars and critical infrastructure can be hacked. There, too, we need better regulation and a more interventionist response instead of trusting the market forces driving innovation, as author Bruce Schneier has suggested. Until then, the Bezoses of the world will simply have to guard their secrets, and all of their other data, more closely than usual.To contact the author of this story: Lionel Laurent at email@example.comTo contact the editor responsible for this story: Melissa Pozsgay at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Lionel Laurent is a Bloomberg Opinion columnist covering Brussels. He previously worked at Reuters and Forbes.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Sign up here to receive the Davos Diary, a special daily newsletter that will run from Jan. 20-24.Technology’s most influential leaders have a new message: It’s not us you need to worry about -- it’s artificial intelligence.Two years ago big tech embarked on a repentance tour to Davos in response to criticism about the companies’ role in issues such as election interference by Russia-backed groups; spreading misinformation; the distribution of extremist content; antitrust violations; and tax avoidance. Uber Technologies Inc.’s new chief even asked to be regulated.These problems haven’t gone away -- last year tech’s issues were overshadowed by the world’s --- but this time executives warned audiences that AI that must be regulated, rather than the companies themselves.“AI is one of the most profound things we’re working on as humanity. It’s more profound than fire or electricity,” Alphabet Inc. Chief Executive Officer Sundar Pichai said in an interview at the World Economic Forum in Switzerland on Wednesday. Comparing it to international discussions on climate change, he said, “You can’t get safety by having one country or a set of countries working on it. You need a global framework.”The call for standardized rules on AI was echoed by Microsoft Corp. CEO Satya Nadella and IBM CEO Ginni Rometty.“I think the U.S. and China and the EU having a set of principles that governs what this technology can mean in our societies and the world at large is more in need than it was over the last 30 years,” Nadella said.It’s an easy argument to make. Letting companies dictate their own ethics around AI has led to employee protests. Google notably decided to withdraw from Project Maven, a secret government program that used the technology to analyze images from military drones, in 2018 after a backlash. Researchers agree.“We should not put companies in a position of having to decide between ethical principles and bottom line,” said Stefan Heumann, co-director of think tank Stiftung Neue Verantwortung in Berlin. “Instead our political institutions need to set and enforce the rules regarding AI.”The current wave of AI angst is also timely. In a few weeks the EU is set to unveil its plans to legislate the technology, which could include new legally binding requirements for AI developers in “high-risk sectors,” such as health care and transport, according to an early draft obtained by Bloomberg. The new rules could require companies to be transparent about how they build their systems.Warning the business elite about the dangers of AI has meant little time has been spent at Davos on recurring problems, notably a series of revelations about how much privacy users are sacrificing to use tech products. Amazon.com Inc. workers were found to be listening in to people’s conversations via their Alexa digital assistants, Bloomberg reported last year, leading EU regulators to look at more ways to police the technology. In July, Facebook Inc. agreed to pay U.S. regulators $5 billion to resolve the Cambridge Analytica data scandal. And in September Google’s YouTube settled claims that it violated U.S. rules, which ban data collection on children under 13.Read more: Thousands of Amazon Workers Are Listening to What You Tell AlexaPrivacy DebateInstead of apologies over privacy violations, big tech focused on how far it has come in the past few years in terms of looking after personal data.Facebook Vice President Nicola Mendelsohn said in an interview with Bloomberg Television on Friday that the company has rolled out standards similar to Europe’s General Data Protection Regulation in other markets.“Let’s be very clear, we already have regulation, GDPR,” Mendelsohn said in response to a question about the conversations Facebook is having with regulators. “We didn’t just do it in Europe where it was actually regulated. We thought it was a very considered and useful way of thinking about things so we actually rolled a lot of that out around the world as well.”Keith Enright, Google’s chief privacy officer, also spoke at a separate conference in Brussels this week about how the company is working to find ways to minimize the amount of customer data it needs to collect.“We’re right now really focused on doing more with less data,” Enright said at a data-protection conference on Wednesday. “This is counter-intuitive to a lot of people, because the popular narrative is that companies like ours are trying to amass as much data as possible.”Holding on to data that isn’t delivering value for users is “a risk,” he said.But regulators are still devising on new laws to protect user data. The U.S. is working on federal legislation that calls for limits on sharing customer information and, similar to GDPR, require companies get consent from consumers before sharing data with third parties. Facebook, Amazon, Apple Inc. and Microsoft all increased the amount they spent on lobbying in Washington last year, with some of those funds going to pushing industry-friendly privacy bills.And even though tech executives called for AI rules, they still cautioned against regulating too much, too fast. Pichai reminded lawmakers that existing rules may already apply in many cases. Lawmakers “don’t need to start from scratch” he said.\--With assistance from Nate Lanxon and Stephanie Bodoni.To contact the reporters on this story: Amy Thomson in London at email@example.com;Natalia Drozdiak in Brussels at firstname.lastname@example.orgTo contact the editors responsible for this story: Giles Turner at email@example.com, Jillian WardFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The Trump administration plans to unveil efforts on Friday to crack down on counterfeit and pirated goods sold on major e-commerce sites and urge companies to do more to vet third-party sellers and increase self-policing efforts. Acting Department of Homeland Security Secretary Chad Wolf and White House adviser Peter Navarro will be among officials at a news conference on Friday to discuss the effort at the National Intellectual Property Rights Coordination Center in Arlington, Virginia, administration officials said on Thursday. Law enforcement agencies are planning "immediate actions" to identify counterfeit goods and seek "all available statutory authorities to pursue civil fines and other penalties against these entities," according to a DHS report reported by the Wall Street Journal on Thursday and confirmed by an administration official.
(Bloomberg) -- Intel Corp. gave bullish quarterly and full-year revenue forecasts, driven by a surge in demand for chips that power large cloud-computing centers. The shares jumped as much as 7.8% in late trading.Sales in the current quarter and in 2020 will be well above what analysts had predicted and are outpacing normal industry trends, the chipmaker said on Thursday. Fourth-quarter revenue and profit also topped Wall Street’s highest estimates. As the biggest provider of server chips, Intel is benefiting from a rush to build capacity in data centers operated by companies such as Alphabet Inc.’s Google, Facebook Inc. and Amazon.com Inc’s AWS.“We’re well ahead of our expectations in the quarter and it’s continuing into this year,” Chief Financial Officer George Davis said in an interview. “That’s just a great dynamic.”Revenue from cloud-service providers, which offer computing power and storage via the internet, surged 48% in the fourth quarter, fueling a gain in sales of the company’s most lucrative chips. A spike in demand from these buyers is helping to ease concerns that Intel was losing its technology leadership in computer processors and faced a competitive threat from customers’ own development efforts. Some high-end server chips cost more than compact car.Revenue in the current period will be about $19 billion, and profit will be $1.23 a share, excluding certain items, Intel said. That compares with average analysts’ projections for $17.2 billion and $1.04 a share. Sales in 2020 will be about $73.5 billion, the company said late Thursday in a statement. Analysts were looking for $72.2 billion on average, according to data compiled by Bloomberg.The company’s annual forecast implies growth will abate in the second half of the year, Davis said. Big purchases from data-center owners tend to come in lumps, followed by slower periods when the components are being built into computers.“The hard part is forecasting when they’re going to slow down and digest,” he said.Fourth-quarter sales rose 8% to $20.2 billion, the Santa Clara, California-based company said. Analysts on average had predicted $19.2 billion. Net income was $6.9 billion, or $1.58 a share, compared with estimates for $1.23 a share. Gross margin, or the percentage of sales remaining after deducting the cost of production, was 58.8% in the quarter.The largest U.S. chipmaker has fallen behind rivals in semiconductor-manufacturing technology, sparking concern on Wall Street about sales growth and future profit. In November, the company told PC customers inventory remained tight because of limited manufacturing capacity. Still, executives have said that Intel is targeting a broader range of markets and the company has plenty of room to expand in new areas, such as networking and the auto industry.Intel will increase spending on new plants and equipment to $17 billion in 2020 in part to boost production to a point where it’s not only able to fill all customer orders, but build inventory, Chief Executive Officer Bob Swan said on a conference call. After again failing to meet all demand in the fourth quarter, avoiding a repeat of that mistake is one of his biggest priorities, he said.The company’s struggles with its move to advanced 10-nanometer production are beginning to ease, Swan said. Intel plans to have server chips built with that technique available in the second half.Demand for personal computers held up well in the recent period, Davis said. Global PC shipments rose 2.3% from a year earlier in the December period as companies upgraded to a new version of Microsoft Corp.’s Windows operating system, according to research firm Gartner Inc. Intel expects the market this year for PCs to be flat from 2019 as that replacement cycle comes to an end.Intel has more than 80% market share in PC processors, and it controls even more of the server-chip market. In that business, semiconductor rival Advanced Micro Devices Inc. has fielded new products, and companies such as Amazon have said they’re designing some chips on their own -- leading some analysts to predict Intel would begin to lose business and struggle to grow this year. Intel executives said that part of the reason they’re predicting less growth for the second half is the expectation that competition will intensify.So far, there’s no sign of that hurting the company’s performance. In the fourth quarter, Intel’s data center unit reported a sales increase of 19% to $7.2 billion. PC-chip sales gained 2% to $10 billion. The company’s programmable-chip unit was the only division to post a decline. Sales at the Mobileye unit, which makes chips used to help vehicles pilot themselves, grew 31% to $240 million.(Updates with comment from CEO in 10th paragraph.)To contact the reporter on this story: Ian King in San Francisco at firstname.lastname@example.orgTo contact the editor responsible for this story: Jillian Ward at email@example.comFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Sonos Inc. Chief Executive Officer Patrick Spence apologized to customers after a backlash over the company’s plan to halt software updates for older products.The Santa Barbara, California-based speaker maker earlier this week said it would stop providing updates and new features for speakers launched in the 2000s, including the Connect, ZonePlayer, the original Play:5 and Bridge.The company warned that even if customers only had one older speaker, their entire Sonos sound systems might lose access to services and functionality would “eventually be disrupted.” It also suggested users buy new speakers with a 30% credit for each legacy device traded in. Sonos devotees quickly went berserk on social media, accusing the company of purposely degrading existing hardware to spur new sales.“I have over 1000USD of *speakers* that must be retired now? Terrible product life cycle support,” Scott Jenson, a longtime Google executive, wrote on Twitter. “I clearly have no choice to upgrade but I’m certainly NOT going to trust my money with Sonos ever again.”In a statement Thursday, Sonos didn’t reverse the decision to nix software updates in May, but pledged to keep older speakers “updated with bug fixes and security patches for as long as possible.” The company also said it would “work to offer an alternative solution” to major issues that can’t be addressed.“We heard you. We did not get this right from the start. My apologies for that and I wanted to personally assure you of the path forward,” Spence wrote in a letter posted on Sonos’s blog. “First, rest assured that come May, when we end new software updates for our legacy products, they will continue to work as they do today. We are not bricking them, we are not forcing them into obsolescence, and we are not taking anything away.”Sonos’s original announcement suggested that legacy products would eventually stop working with newer speakers. On Thursday, the company said that would no longer be the case. “We are working on a way to split your system so that modern products work together and get the latest features, while legacy products work together and remain in their current state,” Spence wrote. Jenson applauded the response on Twitter Despite the backlash, it’s common for technology companies to cut off software updates for older devices. Apple Inc.’s latest iOS operating system doesn’t support iPhones sold before 2015 and iPads made before 2014. That spurs millions of people to spend hundreds of dollars buying new handsets.Apple’s Lower Prices, Users’ Aging Handsets Drive IPhone DemandSonos is under pressure from larger rivals including Apple, Amazon.com Inc. and Google, which sell internet-connected speakers with digital assistants built in. Sonos sued Google recently, accusing the tech giant of ripping off its designs.Spence testified at a Congressional antitrust hearing this month and argued that Sonos was different from larger rivals because it supports products for many years. “Our business model is simple — we sell products which people pay for once, and we make them better over time with software updates,” Spence said.Some users on Twitter quickly contrasted that statement with this week’s decision to end software updates on many speakers.To contact the reporter on this story: Mark Gurman in Los Angeles at firstname.lastname@example.orgTo contact the editors responsible for this story: Alistair Barr at email@example.com, Jillian WardFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The economic impact of the Wuhan coronavirus is likely to be less than SARS for technological reasons — the rise of online shopping.
Microsoft shares have surged 55% in the last year. Here's what investors can expect from the tech giant's Q2 fiscal 2020 earnings results and beyond...
The top stories here are Apple's ITP vulnerability, Amazon's motion to stop work under the JEDI contract, Amazon's soaring music subs and the UK digital tax.