IBM could be set for gains after long slump: Barron's

NEW YORK (Reuters) – International Business Machines Corp (IBM.N) could be the next blue-chip company with a rising valuation, according to a report in financial publication Barron‘s.

The logo for IBM is seen at the SIBOS banking and financial conference in Toronto, Ontario, Canada October 19, 2017. Picture taken October 19, 2017. REUTERS/Chris Helgren – RC14185AA8E0

Some analysts expect IBM to return to growth this quarter, Barron’s said in its Nov. 20 edition.

IBM reported higher quarterly revenue from social, mobile, analytics, cloud and security technology last month, and a long decline in gross profit has slowed already, Barron’s said.

Shares are trading at about 11 times this year’s earnings forecast, well below that of the S&P 500 .SPX, Barron’s said.

Investors could get their first clear sign that IBM is turning the corner in January, when the company will probably give its 2018 outlook, the publication said.

Even with just some upbeat news, investors could make 30 percent or more over the next year, Barron’s said.

IBM’s shares shot up 8.9 percent on Oct. 18, the day after the company reported quarterly results, but have since given back most of those gains.

The stock closed on Friday at $148.97 and is down 10.3 percent for the year to date.

Reporting by Caroline Valetkevitch; Editing by Lisa Von Ahn

Our Standards:The Thomson Reuters Trust Principles.

Marvell Technology clinches roughly $6 billion deal to buy Cavium: sources

(Reuters) – Chipmaker Marvell Technology Group Ltd (MRVL.O) has agreed to acquire smaller peer Cavium Inc (CAVM.O) for around $6 billion, as it seeks to expand in the networking equipment sector, people familiar with the matter said on Sunday.

The deal will allow Marvell to diversify away from its traditional storage devices business following an agreement with Starboard Value LP last year to accept three new directors nominated by the activist hedge fund to its board.

Marvell plans to announce its cash-and-stock acquisition of Cavium on Monday, the sources said, asking not to be identified ahead of an official announcement. Marvell and Cavium did not immediately respond to requests for comment.

Marvell CEO Matt Murphy, who took the reins of the chipmaker last year, has embarked on a restructuring of the company, slashing jobs and seeking to add offerings in areas such as data centers and wireless communications.

Based in San Jose, California, Cavium produces network, security, server, and switching processors and systems. Last year it acquired QLogic Corp, a manufacturer of interface devices for storage area networks, for about $1.3 billion.

Marvell has a market capitalization of $10 billion while Cavium, whose shares have risen more than 10 percent since the Wall Street Journal reported earlier this month that the companies were in advanced talks, has a market capitalization of $5.2 billion.

Mergers and acquisitions activity in the semiconductor sector has been picking up. Earlier this month, chipmaker Qualcomm Inc (QCOM.O) rejected rival Broadcom Ltd’s (AVGO.O) $103 billion takeover bid, one of the biggest ever in technology dealmaking, saying the offer undervalued the company and would face regulatory hurdles.

Reporting by Liana B. Baker in New York; Editing by Cynthia Osterman

Our Standards:The Thomson Reuters Trust Principles.

MoviePass Drops Rates Even More – But Can It Make Money?

Movie theater subscription service MoviePass announced on Friday that it would offer a package letting subscribers go to the multiplex as often as once a day for an entire year for only $89.95 – which works out to $6.95 a month plus a small fee.

The service has been around since 2011, but attracted a huge influx of subscribers when it lowered its monthly charge to $9.95 in August. You might think MoviePass is able to offer such a good deal because it’s passing along discounts from theaters – but you’d be wrong. MoviePass pays full price for each ticket, meaning that a subscriber who goes to even two films a month is probably costing the company money. The new, even steeper rate cut signals a willingness to continue trading profit for market share as MoviePass crafts a sustainable business model.

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In the long run, MoviePass says it wants to turn losses into profits by selling subscriber data to studios and other advertisers, and cut deals to share concession stand revenue. Parent company Helios & Matheson Analytics’ stock has exploded on that premise. But despite denials from the company, it also seems likely to recalibrate prices and terms of service – the $6.95 a month deal will only be available for a limited time, suggesting this is a market test and expansion push backed up by deep pockets.

The new deal is also likely to renew theaters’ anxiety over the service. AMC Theaters has already floated the possibility of legal action, echoing the idea that MoviePass was a “shaky and unsustainable” money-losing proposition that would ultimately frustrate consumers when its prices inevitably changed. More to the point, AMC explicitly said that it “will not be able to offer discounts to MoviePass in the future, which seems to be among their aims.” The implicit plan to push down underlying ticket prices is one reason theater stocks dipped after MoviePass’s August rate cut.

But AMC doth protest too much. MoviePass is a hypothetical threat that is probably increasing attendance in the short run, while theater and studio stocks have been battered much more directly by the worst summer movie season in a decade. Under those circumstances, MoviePass’s aggressive expansion gives it increasing leverage to extract concessions (pun intended) from theaters looking to fill empty seats, but the opportunity only exists because so many movies have disappointed theatergoers. MoviePass’s CEO, in fact, has frequently referred to the service as “bad movie insurance.”

That makes MoviePass, like Rotten Tomatoes before it, a convenient scapegoat for an industry whose wounds are largely self-inflicted.

Twitter Will Ban User Ties to Violent Groups ‘Both On and Off the Platform’

Early Friday, Twitter announced changes to its policies on violent and hateful speech, some of them dramatic. Users will no longer be able to use “hateful images or symbols” in profile images or headers. And, in a step with few recent parallels, Twitter says users “may not affiliate with organizations that – whether by their own statements or activity both on and off the platform – use or promote violence against civilians to further their causes.”

The ban on violent affiliations, even when violent views aren’t promoted on Twitter itself, raises a number of questions about enforcement. Among those is whether or to what extent Twitter staff will monitor questionable groups’ behavior outside of the platform; whether only formally organized groups will be impacted; and where the line will be drawn between ‘official’ group stances and activity by group members.

Given the constantly-evolving way Twitter has enforced its existing rules, answers to those questions are only likely to be clear well after the new policies go into effect on December 18 — if ever.

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The ethical case for the new restrictions is likely straightforward to many – Twitter, along with Facebook and YouTube, have in recent years been accused of giving extremists including both Islamic terrorists and white supremacists a vast new platform. Under mounting public pressure, all three sites have taken increasingly stringent steps to limit access to extremist content or ban users who promote it.

But the business case for those moves is at least slightly more ambiguous. Earlier in its development, Twitter took an uncompromising free-speech stance, but over time it has become clear that such permissiveness bred harassment, which in turn may have alienated some users and throttled growth. By that logic, policing user affiliations could help build a larger, more mainstream user base.

On the other hand, at least some Twitter users have reveled in their ability to say whatever they wanted on the platform, for better or worse. Tighter restrictions could push away such users, and small upstarts – including the Twitter copycat Gab – are poised to poach them.

The FCC's Latest Moves Could Worsen the Digital Divide

When Ajit Pai became chair of the Federal Communications Commission earlier this year, he pledged to make bridging the digital divide a top priority. Thursday, the commission took several steps that could worsen the divide, by making it harder for poor and rural Americans to access telecom services.

In particular, the agency said it is considering changes to its Lifeline program that helps low-income Americans pay for telephone and internet service, and to allow telecom companies to decommission aging DSL connections in rural areas without replacing them. The proposed changes to the Lifeline program would reduce the available subsidies, make them available to fewer people, and cover fewer carriers.

During a busy meeting, the commission also approved, as expected, a controversial overhaul of media ownership rules, and reforms enabling telcos to crack down robocallers, amongst other proposals.

The Lifeline program, created during the Reagan administration, is funded by a surcharge on phone services. It initially subsidized landline phones, but was later expanded to mobile-phone service. Last year, the FCC voted to include broadband internet as well. In February, however, Pai reversed his predecessor’s decision and halted a planned expansion to nine broadband providers.

Thursday, the FCC voted to consider a proposal that would tighten eligibility rules for consumers to qualify for subsidies and strengthen audits of Lifeline providers. Republican members said they were responding to a Government Accountability Office report that found widespread abuse of the Lifeline program, including enrollments filed in the names of dead people, and wasteful spending.

Another part of the proposal suggests stopping Lifeline subsidies through carriers like Tracfone that sell access to networks owned by other companies, such as AT&T and Verizon. According to the advocacy group Public Knowledge, about 70 percent of Lifeline enrollees use these types of resellers. (Tracfone parent company América Móvil didn’t respond to a request for comment.)

Today, some Lifeline enrollees are able to pay their entire bill using their subsidies. The proposal suggests that these users should have to pay some portion of their service costs themselves. Critics like Public Knowledge point out that many low-income families and individuals don’t have bank accounts, which would make it difficult for them to make payments. The proposal also suggests limiting the amount of time that a household can receive subsidies. And it suggests capping annual spending on Lifeline, which critics argue could result in fewer people being covered by the program or reduced subsidies for each household.

Separately, as part of a proposal that also considers much-needed utility-pole access regulations, FCC staffers are considering a rule change that could allow telcos more freedom to abandon aging copper landlines without replacing them with similar or better infrastructure, such as fiber optic networks. The proposed rule changes, as reported by Ars Technica, would streamline the process for companies to decommission old infrastructure, leading to concerns that instead of upgrading copper networks, the companies will simply declare that mobile phone and internet services are adequate replacements. In an open letter to the FCC, critics such as the Center for Rural Strategies warn this could have hurt rural America, where high-speed cable internet access is less often available.

During the meeting, Pai dismissed these concerns as fearmongering, pointing out that telcos will still need permission from the FCC to decommission old infrastructure. But considering the Republican FCC members’ recent history of claiming that wireless internet services are an adequate replacement for home broadband, Pai’s assurances will be of little comfort.

Former Time Warner CEO and Investment Head Launch New VC Firm

In January, Rachel Lam retired from her longtime role as head of investments at Time Warner’s venture-capital arm, where she worked from 2003 to 2016. Less than a year later, she’s back investing in startups. Lam has teamed up with Richard Parsons, former Time Warner CEO, to launch a new venture-capital firm, WIRED has learned.

The firm is called Imagination Capital. Lam and Parsons plan to invest their personal money into early-stage startups, writing checks of $500,000 or less in seed rounds. Building on their backgrounds in media, they’ll target 20 to 25 investments in digital media, machine learning, big data, and esports companies over the next three years. Imagination Capital has already backed an esports startup called alongside existing investors First Round, Crosslink and Tandem Ventures.

After taking most of the year off, Lam was drawn back into investing by a desire to change the predominantly white, male venture-capital industry. “With all of the discussion around the scarcity of women-led venture firms, Dick and I wanted to do what we could to ‘change the equation’ just a little bit, and put one more example out there for other women that it can be done,” she told WIRED. “Instead of just complaining about the current situation, which is easy to do, we decided to do something.” The firm doesn’t have a specific focus on diversity, Lam says, but notes that pitching a venture fund run by an Asian-American woman and an African American man “is likely to be a bit different than when pitching your typical VC.”

As head of Time Warner’s venture capital arm, Lam backed media-related companies like video network Maker Studios, which sold to Walt Disney Company, and a social-media analytics company Bluefin Labs, which sold to Twitter. At the time, she noted a desire to have “one more adventure that will ideally have an impact on the women/diversity equation in venture investing.” Parsons left Time Warner in 2007.

A 12% Yield With Rising Coverage And Record Income For This Midstream LP

We circled back onto the midstream LP high-yield trail this week to cover Summit Midstream Partners LP (SMLP), one of many midstream companies we’ve written articles about.

Profile: Formed in 2012, SMLP provides natural gas, crude oil and produced water-gathering services, primarily via long term, fee-based contracts with its customers in these five unconventional resource basins:

– The Appalachian Basin, which includes the Marcellus and Utica shale formations in West Virginia and Ohio.

– The Williston Basin, which includes the Bakken and Three Forks shale formations in North Dakota.

– The Fort Worth Basin, which includes the Barnett Shale formation in Texas.

– The Piceance Basin, which includes the Mesaverde formation as well as the Mancos and Niobrara shale formations in Colorado and Utah.

– The Denver-Julesburg Basin, which includes the Niobrara and Codell shale formations in Colorado.

(Source: SMLP site)

SMLP reported its Q3 ’17 earnings last week, and the revenue and net income growth were robust year over year:

Revenues, net income and EPU all hit company records, while EBITDA and DCF were down -4% to -5% vs. Q3 ’16, but improved sequentially vs. Q2/17:

SMLP has had good revenue growth in its Utica, Williston, Piceance/DJ, and Marcellus segments in 2017:

However, this didn’t translate into EBITDA growth in the Ohio, Williston and Barnett segments, where some customers delayed completing new wells in Q1-2 ’17. The Ohio segment improved in Q3, but Williston and Barnett still lagged Q3 ’16 figures.

Management was upbeat though about Q4 activity thus far for its Williston, Barnett and Utica segments on the Q3 earnings call.

“We have already begun to see completion activity accelerate in the fourth quarter of 2017 from a number of customers across several of our gathering systems, including in the Utica, Williston, and Barnett. We continue to expect that these activities will lead to volume and cash flow growth across these assets throughout the rest of 2017 and into 2018.”:

“Total operated natural gas volumes averaged 1.83 bcf a day in the quarter, a new record for the Partnership, and a 2.6% sequential increase over the prior quarter. Gathered volumes for SMLPs Ohio gathering JV Utica averaged 763 million cubic feet a day in the third quarter, up 8% over the second quarter ’17.”

“This was primarily due to the completion of more than 20 wells across OGC system in July and August. Natural gas throughput on our operated asset was led by the Marcellus segment, which averaged 554 million cubic feet a day in the quarter, our highest quarterly volume ever and a 15% sequential increase over the second quarter ’17.”

“We are seeing an uptick in drilling and completion activity across our DJ Basin asset as operators experienced assess in drilling the Codell Niobrara formations in the northern extension part of the play. September volumes for this sub-system were up nearly threefold from year ago levels and are approaching our current 20 million a day of processing capacity. These are higher margin volumes and contributed to our sequential segment adjusted EBITDA growth in the overall Piceance/DJ segment.”:

(Source: SMLP Q3 ’17 Earnings release)

Looking back over the past four quarters shows a similar pattern – revenue and net income grew very well, but EBITDA and DCF not so much. The total distributions coverage fell from 1.27x to 1.16x, which is still a respectable figure, particularly as units grew by 7.69%, and bumped up total distributions by over 9%:


Management has kept the quarterly distribution at $.575 since November 2015. They commented on this on the earnings call, when asked if any distribution hikes might be in the offing:

“A distribution increase just really isn’t in the cards currently.”

Not very upbeat, but they did point out that, “Since 2014, 32 of the 50 Alerian Index constituents have effectively cut their distribution, either through an outright cut or a merger that resulted in a cut. Summit has not. And in fact, since 2014, we’ve grown our EBITDA by 12% per year. During that time, our distribution coverage has increased and our leverage metrics have remained constant.”

Like many of the LPs we’ve covered, SMLP pays in a Feb-May-Aug-Nov. cycle. Unit holders receive a K-1 at tax time. You can track SMLP’s current price and yield in our High Dividend Stocks By Sector Tables, (in the Basic Materials section).

Note: Investing in LPs and MLPs may present tax complications when done in an IRA. Additionally, since LPs usually make tax-deferred distributions, you’d reap more tax benefits by holding them in a non-IRA account. Please consult your accountant about this issue.

SMLP’s distributions/unit coverage got back to a more typical level in Q3, rising from 1.11x to 1.17x, and has averaged 1.17x over the past four quarters:


We just added this March 2018 trade for SMLP to our Covered Calls Table, which tracks over 25 other trades daily. The March $20.00 call strike is at the money, and has a $.90 bid.

This trade includes one quarterly distribution ($.575 most likely) coming in early February. It allows you to hedge your bet with SMLP by taking in the extra $.90 in option premium. But the trade-off is that the $20.00 call is only $.35 above SMLP’s $19.65 price/unit.

If your units get assigned before the February ex-dividend date, you’d end up with $1.25, the combo of the $.90 option premium and the $.35 assigned price gain. If they don’t get assigned, your income would be $1.48, the $.575 distribution and the $.90 call premium.

SMLP’s puts didn’t look that attractive at press time, but you can see details for over 25 other trades in our Cash Secured Puts Table.


Debt and Dilution – As with most LPs, which pay out the lion’s share of their cash flow, SMLP has to access the equity and capital markets in order to grow. They currently have an at the market unit sales program under which they’ve issued 763K units in 2017 (but none in Q3 ’17) for gross proceeds of $17.7M. Their net debt/EBITDA has risen slightly, from 4.23x to 4.46x over the past four quarters, but they’re currently within all of their debt covenants.

Commodity Cycle – Although SMLP’s contracts are fee-based, if there’s another protracted downturn in energy prices, the finishing of its customers’ DUC wells inventory could be pushed out further into the future, which would pressure SMLP’s earnings.

Deferred Payment Liability: In addition to its current debt load, SMLP has a deferred payment due in 2020 as a remaining payment due for a 2016 asset drop-down from its Summit Midstream Partners Holdings LLC. Management arranged new financing in Q1 2017, with an eye to preparing for the 2020 payment, which was listed at $508.67M on the balance sheet, as of 9/30/17.

“The Deferred Payment calculation was designed to ensure that, during the deferral period, all of the EBITDA growth and capex development risk associated with the 2016 Drop Down Assets is held by the GP, Summit Investments. The Deferred Payment was structured such that SMLP will ultimately pay a 6.5x multiple of the actual EBITDA generated from the 2016 Drop Down Assets in 2018 and 2019.”

“While we remain bullish about the outlook for volume growth for our Utica assets over the next several years, our current outlook for ’18 is flatter compared to previous expectations, primarily due to volume growth and associated CapEx projects being delayed to the second half of 2018. This is the primary reason why the undiscounted value of our DPPO decreased in the third quarter and now stands at an estimated $656 million.” (Source: Q3 earnings call)

New Developments:

New Preferred Units: Management just announced a new Preferred units offering today, 11/8/17. Normally, preferred offerings start out with a temporary ticker for the first few days, as institutional buyers accumulate them, (often at a price below the liquidation value). You can sometimes buy them under par also, and build in a small potential price gain, along with the yield.

However, Schwab had no ticker as of yet. The prospectus also had no yield data as of yet either, other than to mention that the units could be called in sometime in 2022, but that after 2022, they’d trade at a floating rate. There should be more information coming out over the next few days:

“Summit Midstream Partners, LP, announced today that it has commenced, subject to market conditions, an underwritten public offering of Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units representing limited partner interests in the Partnership. The Partnership intends to use the net proceeds from the offering to repay outstanding borrowings under its revolving credit facility and for general partnership purposes.” (Source: SMLP site)

“Today, we are announcing an expansion of our existing 20 MMcf/d gathering and processing complex in northern Weld County, Colorado, with the addition of a new 60 MMcf/d processing plant. This $60 million expansion project is designed to support increasing volumes from existing customers. We are encouraged by the increased level of upstream development activity in and around our DJ Basin assets and we expect to place this project in service by the end of 2018. We plan to finance the project with excess distribution coverage and borrowings under our Revolver.” (Q3 earnings call)

When asked on the earnings call about new developments with its customer XTO in the Delaware Basin (is a more mature sub-basin in the Greater Permian Basin), management was upbeat. “The opportunity with XTO in the Delaware is large. They’ve (got) 275,000 acres – they dominate the Northern Delaware from an acreage position. It’s contiguous acreage as well too so that always helps. It’s in three different blocks of acreage, and we just acquired right of way that basically cuts right through it, and saves us about a year of timing from a permitting standpoint.”

Analysts’ Price Targets:

SMLP is currently ~18% below analysts’ average price target of $24.00.

Curiously, although it has received upward estimate revisions over the past month, actual EPS estimates have only risen for 2017 during this time. However, the estimates for Q4 ’17, 2017 and 2018 are all higher than they were 60 days ago:

(Source: YahooFinance)


SMLP has had a rough time of it in 2017, lagging both the Alerian MLP ETF (AMLP) and the market.


This updated valuation table includes some other midstream firms we cover on SA – Arc Logistics Partners LP (ARCX), PBF Logistics LP (PBFX), Holly Energy Partners LP (HEP), MPLX LP (MPLX), Green Plains Partners LP (GPP), Martin Midstream Partners (MMLP), Delek Logistics Partners LP (DKL), and Plains All American Partners (PAA).

SMLP has the second-highest yield in the group, at 11.68%, while its 1.17x coverage factor is in line with the group average. At 7.35, its Price/DCF is in the lower tier of valuations, as is its 1.34 price/book valuation:


Management has improved the company’s ROA, ROE and operating margin considerably over the past four quarters. Meanwhile, the debt/equity and net debt/EBITDA have both crept up a bit.

SMLP’s debt/equity ratio is one of the lower ones in the group, but they’ll need to ramp up EBITDA to bring the net debt/EBITDA more in line. The operating margin is above average, but the ROA and ROE are both below group averages:

Debt and Liquidity:

As of September 30, 2017, SMLP had $506.0 million of outstanding debt under its $1.25 billion revolving credit facility and $744.0 million of available borrowing capacity, subject to covenant limits. Based upon the terms of SMLP’s revolving credit facility and total outstanding debt of $1.306 billion (inclusive of $800.0 million of senior unsecured notes), SMLP’s total leverage ratio and senior secured leverage ratio (as defined in the credit agreement) as of September 30, 2017, were 4.16 to 1.0 and 1.61 to 1.0, respectively.

SMLP redeemed its 7.5% Senior notes in March ’17, which left it with no maturities coming due until 2022:

(Source: SMLP Q3 ’17 10Q)


We rate the SMLP common units a hold, but we may pursue a position in the new preferred series, depending upon the final yield structure. As is usually the case, the coverage for the preferreds will be even better than the common units. The long-term story for SMLP seems like it can work out, but we’d still like to see some growth in DCF and EBITDA in coming quarters before committing to the common units.

Preferred issuance by LPs seems to be on the rise in 2017. It makes sense, particularly if the market isn’t supporting the common units’ price. Issuing lower-yielding preferreds can offer the company a cheaper source of capital than doing a secondary IPO of common units, when their price has been depressed.

All tables furnished by, unless otherwise noted.

Disclaimer: This article was written for informational purposes only, and is not intended as personal investment advice. Articles posted on SA aren’t meant to be all-inclusive white papers by any means. Please practice due diligence before investing in any investment vehicle mentioned in this article.

Disclosure: I am/we are long PBFX, MPLX, MMLP.

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

Valeant Surges Post-Q3: A Reassessment

Why Valeant may have been treading water for months

As a bear on Seeking Alpha about Valeant (VRX) since October 2015, when the stock was around $100, I modified my views some months ago subsequent to the stock falling below $10, after which several positives emerged. These positives included:

  • Removal of the Ackman overhang,
  • pending or actual launch of Siliq,
  • expectations that Vyzulta would finally launch, and
  • rescheduling of the debt.

The modified trading views were to expect VRX to trade in a range rather than collapse immediately. After all, a 95% bear market since the Q3 2015 highs is plenty. Furthermore, the psychology of speculators gets very interesting when a stock with about a $5 B market cap has $25 B of net debt. In this situation, the enterprise value may be viewed as the $5 B value of shares outstanding X price, plus $25 B or $30 B. This is the amount the company needs to earn to pay back the debt and earn the value of the stated market cap. Thus, if the company can earn not just $30 B but $35 B, subtracting the same $25 B debt means that the equity is suddenly worth $10 B. This implies that the stock price doubles. From there, one can imagine an “up, up and away” move as Bausch & Lomb strengthens and new products succeed, one after the other. Meanwhile, interest costs decline as debt gets paid down, etc. So then one can think of a triple to, say, $40. All this upside, and the worst is that the stock can go to zero – but the usual speculator psychology is that one can limit one’s loss by selling at some predetermined point, such as $10.

Thus there is a pool of buying power that likes the reward:risk ratio. At the same time, there is a large pool of stockholders that is down on the stock and is perhaps grimly determined to wait for better times.

So the combination of the company offering hope from new products and receiving breathing space from its creditors led me to think of a range-bound stock price, but within a bearish big picture setting where I believed and said the major trend for the stock was probably still down, possibly to or near zero.

However, with VRX having rallied post-earnings to close the week at $15.38, this article explains why the earnings release, slide presentation, and conference call continue to support a bearish long term view

A personal note: I’ve never been long or short VRX, and am a long-only investor. I am not working with or in any other way aligned with a short seller, put buyer, etc.

As far as analysis of companies that have lots of debt and little cash, and which emphasize non-GAAP “earnings,” I look at them two ways to see if they correlate. If they point in the same direction, both bearish, then I can think about them bearishly and explain it both ways in an article. The two ways that cover the bases with VRX are GAAP EPS and balance sheet/cash flow analysis. It is the latter that allows me to join the bulls and ignore amortization charges, goodwill writedowns, etc. But because stock prices basically rise with earnings, I will begin first with earnings and ask if the core of VRX is, or is not, profitable, using generally accepted accounting principles that prevail in the United States of America.

Another complicated quarter for VRX, but at the core, VRX is unprofitable (and this may worsen)

As VRX’s CFO explained in his prepared remarks in the conference call, VRX showed a GAAP profit due to a very large tax benefit. There were also significant one-time events, which I will try to exclude. I will just try to get to a recurring core of the P&L. Thus I am excluding negatives that some other perma-bears on VRX mention, such as writedowns goodwill/intangibles/in-process R&D, and legal risk (I have never worried much about legal risk for VRX, though the legal fees are significant). I do this to try to accurately uncover the true story.

Now to my P&L analysis.

From the first table in the earnings release, we learn of $2.2 B in revenues for Q3. Here are the expenses I list as reasonably recurring, in millions of USD:

  • 659 = cost of goods and revenues
  • 623 = SG&A
  • 81 = R&D
  • 657 = amortization of intangibles
  • 456 = net interest expense.

Total recurring expenses: $2.48 B.

Loss from continuing operations, excluding tax expenses or benefits, about $300 MM.

So, VRX is unprofitable even after excluding writedowns and the like, and excluding one-time tax benefits.

The next question is whether this will change in future years. Only time will tell, of course. I discuss this later and explain why I have a point of view that is negative for VRX’s chances.

Why amortization charges are included in measuring profitability (or, “a false construct”)

Some VRX bulls dispute amortization as a continuing cost when doing a profit and loss analysis. I disagree: it is a real cost when doing P&L analysis. In addition, unlike writedowns, amortization charges are recurring; they end on schedule, or when changing conditions change or eliminate the amortization charges. All the amortization does is measure money previously spent that never entered the P&L as the loss that it was. This accounting convention was done to benefit shareholders. Then it got misused by aggressive managements and their allies/enablers in the financial community. The reasoning in a little more detail:

A purchase costs money, with the operative word being “costs.” That cost has to either be put in the P&L line when the money is spent (cash basis) or spread out over time (amortized). This basic insight led me to correctly diagnose VRX going back to my first article, written when VRX was around $100:

Basic Problems With Valeant’s Valuation, With Comments On Recent News

One of the overlooked aspects of the stock is a conventional analysis of its operations based on generally accepted accounting principles…

The conclusion is that VRX was grossly overpriced simply based on GAAP EPS and a very weak balance sheet.

That article also correctly estimated that VRX was probably worth $10 per share or less (at least a 90% haircut) even if the allegations then hitting the news from short sellers such as Andrew Left were false.

This helps to show the value of paying attention to GAAP profits or losses. The media was propounding the idea that VRX was highly profitable (even the previously conservative Value Line joined in), but that was using fake non-GAAP “earnings.” These numbers omitted such key points as bringing the cost of the acquisitions into the ongoing P&L statements via amortization charges. There were other evasions in the non-GAAP numbers, but ignoring amortization was the largest. Because VRX’s tens of billions of dollars expended on acquisition was funded entirely, or almost entirely, with debt, the importance of thinking through underlying profitability was much more important than with a company that spent its own cash in the bank on a deal. In that case, GAAP continues to be the right way to measure whether the deal is working out, but the company’s solvency is not at stake as it is when the deals bring in mounds and mounds of debt.

As it happened, within mere months of my article, VRX was on the brink of having to default on its debt, which I think would probably have destroyed the share price, until lenders saved it. Undoubtedly saving it was to benefit the lenders, not shareholders, and this led to the lenders coming into control of the company’s goals. Debt repayment rather than growth and gambling suddenly took priority.

The theme of the importance of GAAP was just then coming into public consciousness. About a week after my article was published, the New York Times achieved much greater awareness of the same issue I was pointing to in a Sunday article by the well-known realist on financial affairs, Gretchen Morgenson. The title of her piece was clear: Valeant Shows the Perils of Fantasy Numbers. Two paragraphs from her article show the validity of our arguments:

Valeant is among a growing number of companies that regularly present two types of financial results: those that adhere to generally accepted accounting principles, and those that help executives put the best spin on their operations.

In accounting parlance, such adjusted figures — which exclude certain costs from calculations of a company’s earnings — are known as pro forma or non-GAAP numbers. But let’s call them what they really are: a false construct.

In case you still disagree, just look at all the pharma roll-ups that have emphasized non-GAAP numbers always trying to get investors to ignore those pesky amortization charges. These worthies include Teva (TEVA), Mallinckrodt (MNK), Endo (ENDP), etc. All of them are huge losers in one of America’s great bull markets. Even Allergan (AGN), a stronger contender, has done as well as it has done only because it made a huge capital gain by dumping its large rolled-up generic division (Actavis) to TEVA. But as I have pointed out in my AGN articles, I have always resolutely refused to turn fundamentally bullish on AGN even when the stock was down, because using GAAP, profitability remained absent despite the stronger assets and strong management.

Moving on, the next section discusses a cash flow method, not the P&L method, of looking at VRX. This is the proper way to ignore amortization charges.

This method allows us to think about whether VRX is ultimately solvent based on free cash flows: is it generating more than enough cash to meet its ongoing interest and, beginning in 2020, its debt repayment obligations? What are the trends for cash flow from operations going forward?

Cash flow is not good enough now, and it looks worse for next year

The trend in cash flows this year is poor, mostly but not exclusively reflecting ongoing problems in VRX’s dermatology division, the sale of FCF-positive assets, and ongoing losses of exclusivity. From the CFO’s prepared remarks (see Slide 16):

We generated $490 million of cash from operations in the quarter, and year to date we generated more than $1.7 billion.

This sentence calls for analysis. Cash flow from operations, or CFFO, for nine months was $1.71 B. Subtract $0.49 B for Q3’s contribution and you see that H1 had CFFO of $1.22 B, which is $0.61 B on average per quarter. Thus:

CFFO in Q3 saw a drop of about 20% from the H1 average.

How is that a justification for this debt-ridden company’s stock to have surged? Just because, just maybe, the bear market in generic pricing is winding down (no guarantees)? VRX has only a small generic division, which has low profitability. VRX is a combination of B&L and specialty branded pharma, with a small generic business as well.

Now let’s look at the debt set-up to see if likely forward CFFO run rates are adequate to meet the upcoming obligations. I think this shows that there is no reason for any fundamentally-based investor to go long this stock anywhere near the current price.

VRX’s debt maturity schedule requires huge cash flows

As shown on slide 16 of the presentation linked to above, VRX must repay about $20 B by 2023 to meet its debt obligations. Clearly, $2 B per year X 6 years is only $12 B, so it’s $8 B short by that quick calculation. (Perhaps $20 B shrank to $19 B or so after the quarter ended, due to debt repayments the company made, so maybe it would be $7 B short using this simple calculation).

This multi-billion-dollar shortfall is much more than VRX’s entire market cap, so good luck getting the money from the sale of equity.

But it looks worse than that to yours truly just looking forward to next year.

There are at least two ongoing problems with attaining that number, discussed next.

Ongoing losses of exclusivity (slides 31-32)

From Slide 32, we see that two ophtho drugs, Lotemax and Istalol, are anticipated both to go generic this quarter. Their estimated 2017 sales apparently will be around $111 MM. Critically, the pre-tax profit from these sales is $106 MM (Not all sales are equal. B&L has much lower gross margins than these old cash cows).

That point is important in assessing VRX. Old drugs getting near end of life lose marketing support and thus represent almost pure profit. Whereas, new drugs are expensive to introduce to the market and tend to be cash flow negative for some time.

Two other drugs, Mephyton and Syprine, likely both lose exclusivity in Q4. Finally, Isuprel has lost exclusivity in Q3, and unless that occurred early in July, the full impact of that was not seen in CFFO last quarter.

The 2016 Annual Report shows that Mephyton and Syprine together achieved $144 MM in sales. Isuprel did $188 MM in 2016 sales. Per slide 40, Mephyton and Syprine together had $32 MM in Q3 sales. I assume that translated to around $120 MM annualized in FCF for these two brands. Isuprel did $30 MM in Q3 2016, $30 MM in Q2 2017, and $23 MM in Q3 2017.

The five drugs discussed above may cost VRX $300 MM annualized as soon as next year, according to my calculations.

Thus CFFO at VRX has a serious structural problem: it looks ready to get worse.

Also, based on p. 148 of the annual report which shows the decline in annual amortization for several years hence, significant additional losses of exclusivity are likely in 2018 and beyond. As one example, Apriso, with sales annualizing around $160 MM, may go generic in April next year. Others, possibly a relatively major product called Uceris, are anticipated to go generic in the next several years. Again, many of these are not being promoted much, so that their pre-tax profit margins can easily exceed 90%. Thus if their sales drop to near-zero, the hit to profits is proportionally greater than the sales that remain, which generally have much lower all-in pre-tax margins.

All this creates continuing headwinds. In addition…

Recent divestitures hurt CFFO

Per slide 33, the sale of iNova at the end of Q3 did not materially affect cash flow, but beginning this quarter, its annualized $100 MM EBITDA will be gone. Then, this quarter, Obagi, with EBITDA around $20 MM will have flown out the door.

The divestiture of two divisions alone will cost around $120 MM in FCCO next year.


Putting things together, VRX looks to me to likely run about $400 MM less in CFFO annualized next year versus this. So, instead of CFFO annualizing at $2 B per year, I propose $1.6 B. Multiply that by the six years from 2018 to 2023, inclusive, and you get $9.6 B in cumulative CFFO.

This is inadequate compared to $19-20 B in debt maturities by 2023. I doubt that anything that VRX is launching, or anything arising from its shrunken pipeline, can make up the approximate $9 B gap.

In addition, remember the $5-6 B in long-term debt due after 2023. Even if Xifaxan retains patent protection for a long time, eventually it too will go generic.

So, the cash flow method of looking at VRX makes it mandatory for massive profits and free cash flows to be generated from new products, plus hoped-for growth of Xifaxan and other products such as Relistor, and from B&L. Everybody is, of course, free to be as optimistic as they want on the above. To keep this article from becoming a whale, I will focus on three new or expected products, where perhaps the Street does not have as clear a view of what they may achieve than for the known quantities of Xifaxan et al and B&L.

Brief analysis Of Siliq, Vyzulta and IDP-118


Sales were nominal in Q3. Competition is fierce in psoriasis. Even the leading oral entry, Otezla from Celgene (CELG) faced both pricing and volume pressure in Q3. Siliq is thus a “show me” story, because of its black box warning and because of newer, also highly effective antibodies that lack that black box warning. Also, the innovator, AstraZeneca (AZN), is VRX’s partner, splitting profits, if any, and also in line for another lump sum payout if sales reach a certain level. Right now and perhaps permanently, Siliq uses cash.

It is difficult for me to be optimistic about Siliq’s cash generation ability for VRX knowing that before Siliq is prescribed, patients must be advised that this drug may make them suddenly want to kill themselves. The black box warning may be removed at some point, but A) the clock is ticking and B) competition is tough and growing in the psoriasis space. So I am very cautious about Siliq.


This is an eyedrop for glaucoma. The active ingredient is related to the heavily genericized glaucoma drug Xalatan, the dominant force in the market. The leading brand of this type of glaucoma treated is Travatan Z, is an improved formulation of Travatan. The active ingredient is the same in both Travatan and Travatan Z, but the latter is easier on the eyes.

Travatan Z’s marketer is Alcon, the powerful eye care division of the giant Novartis (NVS).

Comparing the Vyzulta P.I. to the P.I. of Travatan Z, similar levels of therapeutic effect were demonstrated, even though the VRX drug, Vyzulta, may work by two mechanisms within the eye whereas Travatan Z may work by one mechanism. The P.I. of Travatan Z also mentions results of its effects as monotherapy as well as its use as add-on therapy to a beta-blocker eye drop. However, the following is the entirety of the clinical results listed for Vyzulta:


In clinical studies up to 12 months duration, patients with open-angle glaucoma or ocular hypertension with average baseline intraocular pressures (IOPs) of 26.7 mmHg, the IOP-lowering effect of VYZULTA™ (latanoprostene bunod ophthalmic solution) 0.024% once daily (in the evening) was up to 7 to 9 mmHg.

This FDA-approved language stands in contrast to all the studies listed in VRX’s press release announcing FDA approval of Vyzulta, which mention other clinical trials results. These may have been Phase 2 results that the FDA did not consider scientifically strong enough to allow mention of them in the label.

There is also competition in the branded space from Lumigan, an Allergan (AGN) product; AGN is also very strong in ophtho.

So, this again is a “show me” story. The incumbent brands will fight hard for every percentage point of market share (and fractions of points). They may be able to bundle products, and they will likely do what it takes on price as well to withstand Vyzulta. For VRX to make a lot of profit from this eyedrop is not going to be easy, in my humble opinion.


This pipeline candidate is a combination of two generic topical agents for psoriasis. An NDA was submitted in September. Assuming FDA approval, which I expect next year, there are obvious problems with the prospects for this. Psoriasis topicals comprise a crowded field with numerous generics. The two drugs in IDP-118 are each available generically. In the press release linked to above, VRX makes this statement on that topic:

Both [drugs] approved to treat plaque psoriasis, halobetasol propionate and tazarotene, when used separately, are limited to a four-week or less duration of use. Based on existing data from clinical studies, the combination of these ingredients in IDP-118 with a dual mechanism of action, potentially allows for expanded duration of use, with reduced adverse events.

The first point within this first problem is that four weeks of treatment are often enough.

A second problem is that once the combination is approved for a longer period, then it may be logical for the doctor to try each drug individually, and if treatment needs to go longer than four weeks, continue them individually.

The basic question on sales is why insurers will not create major financial incentives for each drug to be dispensed individually if a prescription for the combo is written.

In the linked press release, VRX references a Phase 2 study that it says shows that IDP-118 was superior to each drug given separately. Let us see if that sort of language is included in the P.I. I am skeptical at this point of this.

Finally, there are the twin questions of what intellectual property VRX will have to protect this combination, and the related question that if this idea is so good, and VRX has been talking about it for some time, how much similar competition from other combinations will also come to market?

Putting it together, I look at IDP-118 the way I look at Siliq and Vyzulta, namely a “show me” product with uncertain commercial prospects.

Other products

VRX does have some other projects, including several “IDP-” type dermatologics. It is implausible in my view that all of them collectively will move the needle given the massive scale of VRX’s net debt load. VRX spends about 4% of revenues on R&D, which is on the downswing. With no platform technology or discovery engine, structurally VRX is not much of a drug company in my eyes. Rather, it is primarily a bunch of old brands, in-licensed products such as Siliq, and B&L.

Upside potential

Since I have disclosed no confidential information in writing this article, the information I have analyzed can be known by all. So, whether for technical reasons or because I am missing something, VRX can rise, perhaps leaving its lows behind permanently.

If all the above new products do well, and if B&L can break out in Asia and elsewhere, then the leverage inherent in VRX shares may work for shareholders.


As usual, I write this article from the neutral standpoint of myself or other investor who has cash and is looking to invest it.

My view remains that VRX is de facto under the control of its creditors. I think it has been that way ever since it avoided a forced liquidation about 1 1/2 years ago. Looked at through this prism, the company’s behavior and comments in the conference call make sense. The lenders want the company to repay debt as the priority. In the meantime, cutting R&D and other costs and generating CFFO allow interest payments to be paid easily. Eventually, if some of the principal cannot be repaid, creditors are maximizing their recovery.

Joseph Papa, the new CEO, is not a magician. His history and that of the VRX team suggests there will not be the sort of magic that Steve Jobs accomplished when he rejoined a trouble Apple (AAPL) in 1997. It would appear doubtful that there would even be the turnaround of the sort that Howard Schultz led when he stepped back into the CEO role at Starbucks (SBUX) several years ago. Mr. Papa tried to relaunch Addyi, the “female Viagra,” but now the Sprout deal that brought Addyi to VRX with some fanfare has been acknowledged as a near-total failure.

If my fundamental analysis is mostly correct, then while I do not short stocks and provide no advice, I will comment that this may be a reasonable set-up for traders who do short stocks to think that VRX may be set for a more sustainable drop once again. Reasons that come to mind include:

  • Rally to a difficult level (near recent highs of the prior rally),
  • Siliq Rx data will be rolling in and may disappoint,
  • rotation to pharma/biotechs that have dropped recently while VRX has surged, such as Merck (MRK) and Regeneron (REGN), and
  • debt-heavy companies tend to falter when the Fed is tightening.

While it would be nice to see VRX succeed, producing wealth rather than disclosing all the wealth that prior management failed to crease, I continue to doubt that the stock ultimately has much if any value given the massive debt load.

Thanks for reading and sharing any comments you wish to contribute.

Disclosure: I am/we are long CELG, REGN, AAPL.

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

Additional disclosure: Not investment advice. I am not an investment adviser.

Chinese Bike-Sharing Startup Mobike Has Its Eye on Expansion

When Chinese bike-sharing company Mobike first formed, investors and suppliers were skeptical. The idea of a bike share program without storage docks had been tried before in China. But when Mobike launched with a few bikes last April, the service exploded, especially on social media.

“It became more of a lifestyle in the city, rather than just a boring bike-sharing service,” cofounder and CTO Joe Xia said on stage this week at the Web Summit conference in Lisbon. The company had initially aimed for a million trips by the end of 2016. It ended doing three to four times that, he said.

In just two years, investors have poured an astonishing $928 million into the company. That cash has propelled Mobike to a leading position in a fast-expanding category. It now operates in more than 180 cities, with 8 million bikes and more than 200 million registered users.

But investors weren’t the only ones to notice the company’s runaway success. More than 70 bike share startups now operate in China, and local competitors are springing up around the world. (In the US, that includes has LimeBike, Spin, and Motivate.) Xia says he expects consolidation to happen, and Mobike is looking at acquisition opportunities outside of China.

One deal Mobike isn’t exploring is a merger with its largest Chinese rival, Ofo. In October Bloomberg reported that the two companies were holding talks to merge, creating a market leader with a valuation of more than $4 billion. But Xia denied any deal was in the works.

Instead, Mobike is racing to expand as quickly as possible, to fend off competition and to keep investor interest high. Xia said Mobike’s fast growth is what attracted the investor interest, and it’s crucial to keeping momentum going. “We’re kind of the company where we will have a plan for two to three months, but we want to achieve what a company would do in maybe a half-year or 12 months, so it’s kinda crazy,” he said.

Among those crazy plans is expansion beyond simple bikes. Mobike has been reportedly working on rentable electric bikes, and electric cars as well. Xia would not comment specifically on the company’s plans, but said the company is looking at “the whole transportation perspective” in China. “Bikes cover only the one to five kilometer category. We are also looking at the same business model to power services that cover three to eight kilometers, eight to 15, 15 to 25. In the next three months, you’ll be able to see more and varied product from us happening in the China market in large scale.”

The company embraces a Silicon Valley-style ethos of radically changing its industry. “Anything we do we want to totally just disrupt,” Xia said backstage at the conference. “No matter what no business we bring to the customer, it’s definitely going to be different.”

China's 24-hour online shopping binge nears $16 billion

SHANGHAI (Reuters) – Chinese e-commerce giant Alibaba (BABA.N) saw its Singles’ Day sales hit $16 billion by mid-morning on Saturday after racing to a billion dollars in just two minutes after the world’s biggest shopping spree opened at midnight.

Jack Ma, Chairman of Alibaba Group, and actor Nicole Kidman attend a show during Alibaba Group’s 11.11 Singles’ Day global shopping festival in Shanghai, China, November 10, 2017. REUTERS/Aly Song

Once a celebration for China’s lonely hearts, Singles’ Day has become an annual 24-hour extravaganza that exceeds the combined sales for Black Friday and Cyber Monday in the United States, and acts as a barometer for China’s consumers.

After a star-studded event in Shanghai late Friday to ring in the event, the volume of goods sold on Alibaba’s platforms hit $10 billion in just over an hour, and was already heading towards last year’s total of $17.7 billion.

The event gets shoppers around China scouting for bargains and loading up their online shopping carts, while delivery men – and robots – are braced for an estimated 1.5 billion parcels expected over the next six days.

“This is a big event for China, for the Chinese economy,” Joseph Tsai, Ali Baba’s co-founder and vice chairman, said ahead of the sales bonanza. “On Singles’ Day, shopping is a sport, it’s entertainment.”

Tsai said rising disposable incomes of China’s “over 300 million middle-class consumers” was helping drive the company’s online sales – and would continue. “This powerful group is propelling the consumption of China,” he said.

Analysts and investors will closely watch the headline sales number, which looks likely to fly past last year’s total. Spending rose by nearly a third at 2016’s sale – the eighth iteration of the event – but that was slower than the 60 percent increase logged in 2015.

At Alibaba’s Friday night gala, the company’s co-founder and chairman, Jack Ma, hosted guests including the actress Nicole Kidman, singer Pharrell Williams and Chinese musicians and film stars such as Zhang Ziyi and Fan Bingbing.


The excitement around the shopping blitz, however, masks the challenges facing China’s online retailers such as Alibaba and Inc (JD.O), which are having to spend more to compete for shoppers in a broader economy where growth is slowing.

A screen shows the value of goods being transacted at Alibaba Group’s 11.11 Singles’ Day global shopping festival in Shanghai, China, November 11, 2017. REUTERS/Aly Song

“A lot of the lower hanging fruit has been picked and there’s increased competition for a share of consumer spending,” said Matthew Crabbe, Asia Pacific research director at Mintel.

He estimated Alibaba’s Singles’ Day sales growth would likely slow to around 20 percent. Online retailers were being forced to push offline as well as overseas to attract new shoppers, and the overall online retail market was close to “saturation”.

“They’re having to spill over out of the purely online realm into the wider consumer market,” Crabbe said.

Slideshow (5 Images)

This has sparked deals to buy bricks-and-mortar stores in China, and overseas tie-ups especially in Southeast Asia. Technology, too, has been key, with virtual reality dressing rooms and live fashion shows to attract shoppers to haute couture.

Ben Cavender, Shanghai-based principal at China Market Research Group, noted that brands were being more careful with the deals they have on offer this year to avoid “margins getting killed”, and were often asking for deposits in advance.

In previous years, most prices were often halved.

“I think prices seem high and I‘m totally lost as to the rules” about discounts, said Gao Wantong, 21, a student in Beijing.

Fu Wenyue, a 23-year-old dresser in Shanghai, said she had spent around 4,000 yuan ($600) on clothes, cosmetics and kitchen utensils in pre-event sales, transactions ahead of the day which officially only go through once midnight strikes.

“I’ve bought some stuff already, but I haven’t finished shopping yet,” she said.

For a graphic on China’s Singles’ Day spending, click

Reporting by Adam Jourdan and SHANGHAI newsroom; Editing by Ian Geoghegan

Our Standards:The Thomson Reuters Trust Principles.

British official urges social media companies to block militant content

WASHINGTON (Reuters) – Britain’s top internal security official is pressing social media companies to devise automatic systems to spot and block violent militant messaging before it is posted on their networks.

Amber Rudd, Britain’s Home Secretary, leaves 10 Downing Street in London, Britain, October 17, 2017. REUTERS/Hannah Mckay

Amber Rudd, home secretary in the conservative British government led by Prime Minister Theresa May, told an audience at New America, a Washington think tank, on Thursday night that there was an “online arms race” between militants and the forces of law and order.

Rudd said government authorities and companies were already working to ensure that militant messaging promoting violence should be removed from the internet within one or two hours of initial posting.

But she said companies should press ahead with development and deployment of artificial intelligence systems that could spot such content before it is posted on the internet and block it from being disseminated.

Since the beginning of 2017, violent militant operatives have created 40,000 new internet destinations, Rudd said. She noted that she visited Silicon Valley companies, including Alphabet Inc’s Google and YouTube, Facebook Inc and Twitter Inc, earlier this year and called on them to do more to take down or block militant content.

As of 12 months ago, social media companies were taking down about half of the violent militant material from their sites within two hours of its discovery, and lately that proportion has increased to two thirds, she said.

YouTube is now taking down 83 percent of violent militant videos it discovers, Rudd said, adding that UK authorities have “evidence” that the Islamic State militant group was now “struggling” to get some of its materials online.

But she said there was “much more” companies can do to use cutting edge technology to spot dangerous content more quickly.

She added that in the wake of an increasing number of vehicle attacks by militants, such as the one at London’s Borough Market earlier this year, British security authorities were reviewing rental car regulations and considering ways for authorities to collect more relevant data from car hire companies.

Reporting by Mark Hosenball; Editing by Leslie Adler

Our Standards:The Thomson Reuters Trust Principles.

Toshiba considering $5.3 billion capital injection: source

TOKYO (Reuters) – Toshiba Corp, desperate for cash to avoid a possible delisting, is considering raising about 600 billion yen ($5.3 billion) by offering new shares in a third-party allotment, a person briefed on the matter said on Friday.

FILE PHOTO: Shoppers look at Toshiba Corp’s Regza television at an electronics store in Yokohama, south of Tokyo, June 25, 2013. REUTERS/Toru Hanai/File Photo

The Japanese conglomerate has received proposals from several domestic and overseas brokerages for plans to raise money through a public offering or third-party allotment, and is looking into the option of allocating shares mainly to overseas investors, the person said.

In early trade, shares of Toshiba fell as much as 8 percent on the capital injection plan, first reported by public broadcaster NHK. They were down 4.5 percent by mid-morning, underperforming the benchmark Nikkei average’s 1 percent fall.

Strapped with liabilities arising from its bankrupt U.S. nuclear unit, Toshiba agreed in September to sell its prized chip unit, Toshiba Memory, to a group led by Bain Capital for $18 billion. It needs to beef up its balance sheet by the end of the fiscal year in end-March to avoid a possible delisting.

The source told Reuters that Toshiba wants to finalize the capital injection plan by year-end because it would need shareholder approval depending on the offering price and scope of share dilution. The person declined to be identified because the plan is not public.

In a statement, Toshiba repeated its stance that it was aiming to close the deal to sell its chip business by the end of March, saying in response to the NHK report that nothing specific had been decided regarding any funding plans.

Announcing half-year results a day earlier, Chief Financial Officer Masayoshi Hirata said Toshiba had launched a working group to consider various options to raise capital in case the deal did not close in time. He offered no specifics.

Toshiba reported robust second-quarter results with a 76 percent jump in operating profit driven almost entirely by a strong performance from its memory chip unit.

If Toshiba fails to close the sale in time, that could keep Toshiba in negative net worth for a second year in a row, putting pressure on the Tokyo Stock Exchange to delist it.

Reporting by Taro Fuse; Writing by Chang-Ran Kim; Editing by Stephen Coates

Our Standards:The Thomson Reuters Trust Principles.

4 Ways Fast Growing Companies Develop Talent for Free

Your company is growing fast, you know you should be developing your future leaders but you don’t have a $5 million development budget to send your star employees on that fancy leadership course.

Leadership development experts Morgan McCall and David Day found that 70 percent of development comes from challenging experiences like turning around a business, implementing a new process, handling a difficult customer or stepping into a new role, 20 percent comes from managerial support and only 10 percent comes from training courses and structured learning.

The good news about being in a small and nimble fast-paced environment is that there are lots of challenging learning opportunities. Experience is a terrific asset for development but you need to leverage it consciously and deliberately so that it supports your growth plans. Decide on a core set of capabilities that your company needs to grow and look at how you can develop these in your people.

The first thing you need do is to adopt an abundance mindset — start thinking about developing anyone, anytime, anywhere. Don’t just focus on the one or two superstars but think about developing a critical mass of people — you will need them as your company grows.

1. Empower people.

Dan Neary, who heads Facebook for the Asia Pacific region says  “I focus on doing my job and I let my team do theirs.” In spite of fast pace of growth, his people are empowered to make decisions. Dan is giving his people one of the best resources for them to develop: decision-making authority and responsibility.

He doesn’t make the decisions for them and he doesn’t’ micromanage them to make the “right” decision. Dan typically shows up to a meeting he has scheduled along with one of his team. In the meeting, Dan delegates. He gives clear instruction and really hands over to the person in the meeting without delay.

2. Delegate, delegate, delegate.

Even if they are crazy busy, most leaders find it really hard to delegate and tend to keep too much on their plates — but this is a big mistake if your want to scale your business and scale your talent. Review the work you need to do over the next one to three months.

Then identify work that presents a challenge that could serve as a trigger for someone else’s development. For example, are you presenting to a new important client. Or do you have an important engagement with a business partner.

Delegating this work can liberate some of your time to spend on broader challenges. Keep in mind that you’ll need to plow back some of that time to coach and support the person to whom you delegate the work. I’ve seen this routine work with peers as well when a team is working together to reallocate workloads.

3. Make the most of meetings.

Don’t have time to develop people because you are always at meetings? Use them to develop your people. Bring a team member to important your meetings with customers, leads, investors and other stakeholders. The employee will get to see the bigger picture and also how you operate.

Make sure the employee is clear on the purpose of the meeting and how you expect them to contribute. After the meeting, do a quick 5 minute  debrief on what they learned and how effectively they executed their role in the meeting.

4. Pause after projects.

Look at every project as a learning opportunity. Assign employees to projects where you think they can develop the capabilities that you need in your business. Be clear about their role in the project and that you expect them to develop these capabilities while working on the project so they can consciously develop them.

Pause at the end of each project and debrief — what went well, what could have gone better. How did did they perform and how do they think they can apply what they learnt.

By using experience to drive your team’s development, you can get your talent truly supporting and driving your business growth.

Self-Driving Bus Crashes on its First Day in Las Vegas

A big public debut for a self-driving bus in Las Vegas turned out to be trouble.

An autonomous shuttle bus collided with a semi-truck just a few hours after Las Vegas city officials held a ceremony to celebrate its first day as part of a larger city-wide test.

There were no injuries reported, and the shuttle didn’t suffer any major damage, according to a report by a local Fox news station.

Las Vegas city officials said in blog post that the self-driving shuttle, built by the French automobile company Navya, was not at fault. Although a delivery truck “grazed” the shuttle, the post said, the ”shuttle did what it was supposed to do, in that its sensors registered the truck and the shuttle stopped to avoid the accident.”

“Unfortunately the delivery truck did not stop and grazed the front fender of the shuttle,” the officials wrote. “Had the truck had the same sensing equipment that the shuttle has the accident would have been avoided.”

The shuttle, called Arma, can carry up to 12 passengers. It is built without a steering wheel or brake pedals for human drivers, according to the Fox report.

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The accident occurred on the first day of the Arma shuttle’s 12-month long test in downtown Las Vegas over a half-mile route near the city’s strip. Las Vegas city officials said that the city would continue to test the shuttle despite the accident. The delivery truck driver was given a citation, the officials added.

GE: Is Now A Good Time To Buy?

A painful 2-year TBTF “core holding”

General Electric Company (GE), a perpetual member of the Dow-Jones 30 stock index has evolved through several commercial “lifetimes”, demonstrating that it truly is “too big to (need to) fail”. Recasting its owned business components as though they were just “portfolio holdings” has been characteristic of the company’s established culture.

A new CEO is in the process of putting his brand on the portfolio, giving investors refreshed hopes of regaining a turn-of-century stock price high of $58, continuing a recovery from 2008-09 market low under $10.

The current price of $20 is a 2-year slump from an interim high of $34 as investors became disenchanted with recent management inheritors of the effects of an earlier, ably-promoted CEO who had the cover of market gyrations in this new 21st century.

Will institutional investors climb back aboard GE?

Right now, institutional ownership has declined to only 56% of GE’s market capitalization.

The best place to test institutional investor acceptability on GE is at the point of volume (block trade) market orders. These are handled by a market-making [MM] community which negotiates the placements of single trade orders large enough to make a difference in a $-Billion-plus portfolio.

Markets usually are not “deep” enough to allow the near-instant “filling” of such orders, so the MM involved often will “position” the “stub end” of the trade that is, at the moment, unacceptable to the market at the price being required.

The MM will only do so if a hedging deal can be negotiated that will hold the firm’s capital safe from the risk of unwanted market price moves while it has that exposure. The prices and structure of the hedges involved are a statement about how far these market professionals (both the buyer of the protection and its seller, often a MM’s prop-trade desk) agree the subject’s price might move – in either direction.

How does that look now for GE?

Figure 1


(used with permission)

Figure 1 looks at the implied upside price changes resulting from the hedges needed currently to fill institutional volume trades on all of the 30 Dow Jones Index stocks. Those upsides are measured on the green horizontal scale.

The numbered locations are defined by the intersections of the upside reward forecasts with actual worst-case percentage price drawdowns in each stock, following prior forecasts of the past 5 years which were similar to those seen today. The drawdowns are measured on the red vertical scale.

Good on this map is down and to the right. Locations above the diagonal dotted line are of stocks where past experienced price risks have been larger than current offered prospective gains. The “best” boundary today is defined by GE at [7] and Microsoft (MSFT) at [5].

For investors looking to build capital wealth, rather than those simply seeking current dividend income, GE seems to present an attraction. But many have seen this show before. May it have a more satisfying outcome this time?

Here is a look at similar forecasts of the last 5 years:

Figure 2


(used with permission)

Caution! This picture is not the conventional “technical analysis chart” of past price ranges. Do not jump to conclusions of what it shows. Instead of looking backwards in time at what has happened, the vertical lines here are Market-Maker [MM] forward-in-time forecasts of what is believed likely to occur as price extremes in the coming few months.

The vertical price-range forecast lines of Figure 2 are split into upside and downside prospects by the heavy-dot end-of-day market quote for the issue on the day of the forecast. A measure of the imbalance between up and down possible price change implications is the Range Index [RI], which tells what percent of the whole forecast range lies to the downside. On Friday the 3rd it is 38, indicating almost 2 times as much upside (100-38=62) as downside.

The distribution of RIs pictured at the bottom of Figure 1 shows that while GE occasionally is viewed with large upside or downside price change in prospect, at this point it is well centered on its usual scope of expectations.

What is of interest is that the level of price uncertainty has widened out in the past day to include both higher and lower potential coming prices than what has been seen recently, relative to the day’s closing market quote.

Those extremes suggest the possibility of a nearly +19% upside from Friday’s close, or a target of almost $24. Now $2 on a $20 stock may seem less than important, but if it was the start of a trend that could be extended for a year, the 20% gain would compound 4 times into a possible double, a +100% gain. Interested now?

Well, please keep in mind that the MM forecast, while derived from real-money bets in leveraged derivatives made by experienced, well-informed market professionals, they may well be balanced by other prospects of equal likelihood in the opposite direction. And the derivative contracts involved likely will have lifetimes of no more than a few months, so extending their implications beyond that period may be an exercise in fantasy.

Instead, let’s look at what has actually happened, on average, to the 391 prior MM forecasts for GE that had RIs of 38. It turns out that only 53% of them actually ended within 3 months of having any profit, let alone reaching their forecast sell target. The net results under a standard, disciplined portfolio management procedure was a trivial net negative average of less than -1%. But a loss, nonetheless, not a +19% gain.

This time could be different. In 207 cases (53% of 391) it was. But are you an odds-player? Ed Thorp (Beat the Dealer author) says you should be. If you are, there are probably are many other better bets to be made.

Just for comparison sake, let’s look at the other best current Reward vs. Risk tradeoff among the DJ-30 stocks, MSFT. Here is what the MMs have to say about its current possibilities: Figure 3.

Figure 3


(used with permission)

Now there is a much more encouraging picture! Both prices and price expectations of what is yet to come are rising.

But have they risen too much, too far, too fast? What do the odds say?

The current forecast Range Index is 30, with more than twice as much upside as down. And MSFT’s typical RI forecasts are usually higher than 30, which usually calls for higher price expectations than at present.

Still, trends don’t grow to the sky, how likely is a profit when initiated at this kind of a forecast level? So far, in over 200 instances, they have come up with gains 96% of the time. With gains, net of losses, of +8.5%, just the same size as what is currently expected.

And in the past it took positions taken under forecasts like this only 54 market days to pay off, that’s a day shy of 11 weeks. It could be repeated over 4 times in a year, and if done would compound to +46%. Hmmm.


Maybe MSFT would be a better choice than GE for right now. Perhaps giving GE a little more time to see how Institutional investment organizations continue to appraise GE’s attractiveness may provide a more competitive, odds-on opportunity for portfolio wealth-building.

After all, a potential double is more than twice +46%.

But the prospect of a double remains to be seen. Let’s wait a bit.

Additional disclosure: Peter Way and generations of the Way Family are long-term providers of perspective information, earlier helping professional investors and now individual investors, discriminate between wealth-building opportunities in individual stocks and ETFs. We do not manage money for others outside of the family but do provide pro bono consulting for a limited number of not-for-profit organizations.

We firmly believe investors need to maintain skin in their game by actively initiating commitment choices of capital and time investments in their personal portfolios. So our information presents for D-I-Y investor guidance what the arguably best-informed professional investors are thinking. Their insights, revealed through their own self-protective hedging actions, tell what they believe is most likely to happen to the prices of specific issues in coming weeks and months. Evidences of how such prior forecasts have worked out are routinely provided. Our website, has further information.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in MSFT over the next 72 hours.

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

Fox in the Mouse House could give Disney an edge in streaming wars

LOS ANGELES (Reuters) – If Walt Disney Co (DIS.N) buys some Twenty-First Century Fox (FOXA.O) businesses, it could provide a quick path for the traditional media giant to create a substantial competitor to Netflix Inc (NFLX.O) in the battle for TV and movie viewers.

FILE PHOTO: The Twenty-First Century Fox Studios flag flies over the company building in Los Angeles, California U.S. November 6, 2017. REUTERS/Lucy Nicholson /File Photo

The two companies reportedly held talks in recent weeks about a potential sale of Fox’s FX and National Geographic channels, its movie studio and some other international assets to Disney, according to media reports. The discussions had stopped as of Monday but could restart, the reports said.

Television viewers have been rapidly embracing online services like Netflix over traditional pay TV packages, a shift that is enticing deep-pocketed technology companies like Inc (AMZN.O) and Facebook Inc (FB.O) into video offerings.

Investors who have driven Netflix shares to record highs this year were selling on Tuesday, sending the company’s stock down more than 2 percent. Disney and Fox shares rose roughly 1 percent each as analysts said a deal between the two media giants could benefit Disney’s planned streaming push.

“It could be very formidable,” said Bruce Tuchman, a media investor, entrepreneur and adviser to streaming services like iflix. “They wouldn’t have to leave the confines of their own company to build a competitive service.”

Disney announced in August it was pulling its first-run movies from Netflix starting in 2019 to put them on a Disney-branded service.

With Fox, Disney in the future could yank Fox programming from Netflix and put shows like “The Simpsons” and movie franchises including “Avatar” alongside Disney classics such as “Beauty and the Beast” plus “Star Wars” and Marvel films.

FILE PHOTO: The logo of the Disney store on the Champs Elysee is seen in Paris, France, March 3, 2016. REUTERS/Jacky Naegelen/File Photo

That would leave a hole in Netflix. Fox made up 17 percent of Netflix’s top-rated shows by IMDb as of June, while Disney made up 7 percent, according to MoffettNathanson and YipitData.

Disney and Fox also each own roughly 25 percent of streaming service Hulu, which could serve as another platform for content.

Disney, Fox and Netflix had no comment.

In August, Netflix’s chief content officer, Ted Sarandos, told Reuters that his company was investing more in its own programming to counter moves by traditional media companies.

“That’s why we got into the originals business five years ago, anticipating it may be not as easy a conversation with studios and networks” to license their programming, Sarandos said.

Netflix plans to spend $8 billion on content next year, the company has said. Disney spent $13.5 billion on content in fiscal 2017, about half of it on sports programming, according to MoffettNathanson estimates.

Disney will be starting its online service more than a decade after Netflix, which now boasts 109 million streaming customers around the world. Disney could expand its global reach if it acquires Fox TV channel Star India and the company’s stake in European pay TV provider Sky Plc (SKYB.L), which already has made inroads in the streaming market.

Needham & Co analyst Laura Martin said Disney needs to buy a film library from Fox or another big company to compete directly with Netflix. “Disney’s libraries are very high quality, but they are very small,” Martin said. “They could not do it alone.”

Reporting by Lisa Richwine in Los Angeles, Jessica Toonkel in New York, and Munsif Vengattil in Bengaluru; Editing by Lisa Shumaker

Our Standards:The Thomson Reuters Trust Principles.

Facebook, Pepsi, and 7 Other Brand Disasters of 2017

In the decade that I’ve been posting the year’s worst brand disasters, I’ve never seen a year where most of the big scandals involved either sexism or racism. In 2017, sexual harassment crawled out from under the corporate rock pile and into the glare of sunlight. Meanwhile, corporate racism reared its ugly head although I suspect the cause in this case was mostly insensitivity rather than intention.

Without further ado, then, here are this year’s worst of the worst:

1. Dove

Dove has been trying to position itself as a company that encourages a more diverse definition of beauty. However, when a Dove Soap ad depicted women changing races by pulling off T-shirts that matched the model’s skin color, it echoed racist soap ads of the past that positioned dark skin as something that could (and should) be washed away.

2. Equifax

You’d think that a company storing credit cards, personal information and social security numbers for hundreds of millions of people would make cybersecurity a priority. Instead, Equifax was not only hacked but failed to report the hack for months and then, rather than compensating its victim, offered them a free year of a useless service… in return for signing away their right to sue.

3. Facebook

Facebook is betting big that Virtual Reality will be the next big thing… presumably after 3D TV finally takes off. However, when CEO Mark Zuckerberg tried to promote VR by hosting, in cartoon form, a visit through Puerto Rico’s devastated countryside, it came off just a teeny bit insensitive.

4. Nivea

Given the wide variety of cultures around the world, it’s not surprising that international brands sometimes run afoul of local taboos. However, you’d think that Germany-based Beiersdorf Global AG would have run a pre-launch reality check before running an ad campaign for Nivea skin cream with the tag line “White Is Beautiful.”

5. Pepsi

Whatever you think of the “Black Lives Matter” movement, there’s no question that it’s a serious issue that requires serious thought. Not surprisingly, some people were appropriately offended when Pepsi tried to turn the movement into money with an ad showing Kendall Jenner (of all people) providing a Pepsi to protestors.

6. Twitter

Poor Twitter. While it finally might become profitable in 2017, the company has been caught up in the growing distaste over the role social media plays in the spreading of fake news. As such, there couldn’t be a worse time for it to be revealed that a departing employee could easily bypass security to delete the company’s most famous user.

7. Uber

In branding, there are good problems and bad problems. The best problem of all is keep control of your brand after it becomes a common noun or verb (like Kleenex or Xerox). Uber was in that enviable position when its erstwhile CEO Travis Kalanick got caught on social media basically being a d***, less than 10 days after a former engineer, Susan Fowler penned a viral post positioning the company as a hotbed of sexual harassment and gender bias.

8. United Airlines

Sometimes it seems like the airlines are in competition for a secret award for the worst customer service in the industry. If that award exists, United Airlines certainly won it this year when the carrier forcibly yanked an elderly physician from his seat–bloodying him in the process–to make room for a freeloading employee.

9. Weinstein

‘Nuff said.

Giving Back: What's Your Company's 'Why'?

Alex Yastrebenetsky is an Entrepreneurs’ Organization (EO) member in Cincinnati and founder of InfoTrust, a digital analytics consulting and technology company helping marketers use data to make smarter decisions. The company started its own Basket Brigade program to give back to their local community at Thanksgiving, and is expanding internationally this year. We asked Alex to tell us about the program he started. Here’s what he shared.


How did the Basket Brigade begin?

AY/ Inspiration for our Basket Brigade came from two people: Tony Robbins, who started the Anthony Robbins Foundation, which feeds an estimated two million people annually; and Verne Harnish, who started Entrepreneurs’ Organization and said that the best way to scale a business is to find something that you absolutely, 100% believe in and then commit resources to it. That resonates with me: Once you make a promise, you will find a way to make it happen.

We started our Basket Brigade in 2013, providing 33 baskets filled with all the trimmings for a Thanksgiving meal to local families in Cincinnati. By 2016, our program had grown considerably: We delivered a total of 161 baskets to local Cincinnati families, veterans and those in shelters; a women’s shelter in Seattle; and an organization in San Diego that helps people transition home after hospital stays. We aim to keep growing the program!

What’s in the baskets?

AY/ We provide everything a family needs to make a delicious, traditional Thanksgiving dinner:

  • Stuffing
  • Gravy
  • Green Beans
  • Corn
  • Mashed Potatoes
  • Cranberries
  • Cereal
  • Macaroni and Cheese
  • Granola Bars
  • Marshmallows
  • Turkey, or a gift card for perishable items

Many baskets are delivered through Cincinnati Children’s Hospital. Since privacy rules prohibit us from delivering to those families personally, we can’t include perishables, thus the gift cards.

What’s the process?

AY/ As autumn approaches, we hang index cards listing items we need on our company bulletin board. For example, “10 boxes of macaroni and cheese” or “20 boxes of gravy.” Employees decide if they want to purchase specific items or donate money.

We don’t monitor employee contributions, but low-cost options encourage everyone to participate. Our employees’ generosity is amazing–some have purchased a full 10 baskets out of their family budget while others have written large checks to contribute.

In mid-November, we take inventory and compile a master list of items we need from Amazon, Costco and

Our packing party is the Friday before Thanksgiving. We invite everybody who donated to help pack boxes and baskets. Then we coordinate with families and organizations that receive deliveries, split into teams based on who has a truck or SUV, and make the deliveries on Saturday or early in Thanksgiving week.

How will you expand internationally?

AY/ We have employees from Sri Lanka, the Philippines and India. These Basket Brigade programs will function a little differently. For example, in Sri Lanka, we will support a women’s shelter where cleaning supplies are very expensive and in high demand. Instead of food, we’ll send money to an employee’s family member locally to purchase and deliver the much-needed cleaning supplies.

Is social entrepreneurship contagious?

AY/ We believe it is. Part of our mission is to get more and more small business owners involved. EO provides a great network of committed social entrepreneurs to make that happen. Last year, a fellow EO member, Guy O’Gara, and his team donated money for 10 baskets, came to our office to put them together and delivered them. It was a great moment when Guy proudly showed his son the thank-you card display that they contributed to. He plans to participate again this year, and we’re putting the word out so more entrepreneurs will also join us.

Alex, his son and friends shop for Basket Brigade items.

As a father, one of the most rewarding experiences was taking my 4-year-old son and his two friends to Costco to purchase Basket Brigade items. I explained that we were buying food for little boys and girls who might not have a Thanksgiving dinner without our help, which is an eye-opening lesson at that age. I can’t wait to take them again this year!

How do employees and clients react?

AY/ The most important question any entrepreneur must answer is “Why?” To run a successful company, you must have a compelling Why for yourself and your team.

There’s nothing wrong with being successful and making money. But in my mind, you can’t grow a business if the motivation of the owner and the team aren’t aligned. Why should the team care about growth? Why should they have to put up with the stress and uncertainty that comes with growth? Why should they care in general?

On the surface, we help big corporations sell more stuff. But that’s not our Why. Our true Why is being able to answer:

  • What will we give as we grow?
  • Who will we become?
  • Whom are we helping?

Our team realizes that, as a result of their work, we as a company can now accomplish wonderful things. Basket Brigade is just one of many activities that we are formalizing under our InfoTrust Foundation.

We believe in the social entrepreneur’s mission of giving back to our community. As the quote on our wall from Jeff Hoffman, our mentor and co-founder of says: “Our success is someone else’s miracle.”

Our clients appreciate our efforts, too. Last year, instead of a holiday card, I sent a personal letter thanking each client for the opportunity to teach my son about giving. I thanked our clients for providing us with the resources to give 121 baskets to the hematology/oncology department at Cincinnati Children’s Hospital―because if not us, then who? I explained that this is who we are, this is what’s important to us, and we will provide them with excellent client care so we will continue to have the resources to take care of the families that we support.

That letter made a big impact. Many clients sent thank-you cards and for the first two weeks in January, our consultants were being thanked for what we’ve done–and continue to do.

Putting resources toward our Basket Brigade shows employees in a very hands-on way how their hard work directly benefits our community. Their work truly matters, and they realize it. That’s our Why.

What’s yours?

The Single Most Important Job Skill You Can Learn (It'll Be Relevant Forever)

What will software engineers do when everybody can program? originally appeared on Quora: the place to gain and share knowledge, empowering people to learn from others and better understand the world.

Answer by Ken Mazaika, CTO and Co-founder of The Firehose Project, on Quora:

What will software engineers do when everybody can program?

First off, who says there will be a time when everybody can program?

But even if they could, there are 11 reasons that software engineering will be relevant forever. Personally, I believe that reason 8 by itself is enough to keep software relevant forever.

There’s never going to be a time when everyone can program.There’s a heck of a lot of people who have zero interest in ever being a developer. And that’s a good thing too. Some people genuinely don’t enjoy programming. People who don’t should spend their lives doing something else. But for the people that do, it will always be relevant to be a software engineer, and here are 11 specific reasons software engineering will never die:

Reason 1. Technology will continue to evolve.The phone in your pocket processes billions (think 3.36 billion) more instructions per second than the Apollo Guidance computer that first took us to the moon!

Reason 2. Programming tools will be intuitive and powerful.With a new JavaScript framework that comes out seemingly every week, you better believe the development tools we use are becoming more powerful too.

Reason 3. Programming tools will be appropriated for all industries. Software is eating the world and it’s in a lot of places you probably wouldn’t even expect.

Reason 4. The job market will continue to adapt.But even if you’re a COBOL programmer, you can probably find a job because you realize that software systems can sometimes take a while to adapt.

Reason 5. Careers will require a basic level of coding literacy.Programming skills are relevant even if you’re not programming. Things like SQL, HTML/CSS, JavaScript frameworks can be relevant to know for marketers, designers, salespeople, and lots of other professions too.

Reason 6. Careers for experienced software engineers will always exist to solve complex problems.The best software in the world is made by teams, and teams will always need to have leadership.

Reason 7. Machine learning will never make programmers irrelevant.Some of the industries best implementations of AI and machine learning are done by Google. And by the way, they employ 30,000+ developers.

Reason 8. Culture is shifting and computers are becoming relevant in all aspects of our life.5 years ago you would never have thought about pulling out your phone to hail a cab. Today, you’ll probably be comparing the wait time for Lyft and Uber.

Reason 9. Software Engineering is about a lot more than just writing code.Understanding problems and understanding processes are more important than the syntax of a programming language that happens to be used today.

Reason 10. There are still problems that computers can’t solve efficiently.Unless you have a solution to the traveling salesperson problem, there’s still progress to be made in the realm of computing.

Reason 11. Even some of the older software development projects will be around forever. I’ve already printed out the ImageMagick documentation to give to my future grandchildren.

Software engineers are always going to be relevant. There are a few important lessons you can take if you’re learning to code:

  • Programming will always be a specialized skill.
  • Software is eating the world.
  • The world is still adapting to computers.

There has never been a better time to be a programmer,and I’m thankful every day that I live in the golden age of computing.

If you’re looking to get started learning to code, don’t be discouraged by the naysayers.

This question originally appeared on Quora – the place to gain and share knowledge, empowering people to learn from others and better understand the world. You can follow Quora on Twitter, Facebook, and Google+. More questions:

Did AI Just Make The Leap To Being Intuitive?

One of the most unfortunate things about Artificial Intelligence (AI) is that a moat of mystery has formed around it, convincing most mere mortals that AI is a black box which they couldn’t possibly begin to understand. In a strange way we’re drawn to the mystique of a machine which thinks in ways we can’t understand or predict; the alien intelligence among us! It’s a tantalizing fear. And that fear is fueled by regular reports about AI’s latest conquests.

Most recently, DeepMind (a Google company) announced that its new AlphaGo Zero (AI built specifically to play the game Go) had exceeded the abilities of DeepMind’s earlier version, AlphaGo, which had already won against the world’s best Go player, Lee Sodol; meaning that AlphaGo Zero cannot only beat the best human player, but also the best non-human player! Or, to be blunt, Zero can’t be bothered with humans, they’re just not enough of a challenge.

The ancient game of Go, with 10^800th possible moves (there are 10^80th atoms in the visible universe) is considered by many to be the world’s hardest board game requiring deep intuition as well as strategy.

What makes AlphaGo Zero a breakthrough is that it was not trained to play Go by humans. Prior to Zero you had to at least seed an AI with a good-sized repertoire of basic moves and countermoves. Zero, however, learned Go all on its own over the course of just 40 days by playing against itself.

Pretty amazing, right? But there’s that black box again. How does AlphaGo Zero learn on its own? Is it being intuitive? Does it dream of gleefully squashing human Go opponents?

Follow Your Gut (unless you don’t have one…)

First off, intuition is just a label we use for a correct decision that’s based on incomplete knowledge. We’re okay if people are intuitive, in fact we elevate and admire them for it, but we’re unsettled by the prospect of a machine making a decision that involves intuition, ambiguity, or less than complete data. But what if our gut is nothing more than a bunch of variables that we’re not consciously aware of?

AI is actually very well suited to making those sorts of highly intuitive decisions. Since it’s not conscious, it has no bias as to what it observes and therefore it’s aware of everything that influences a particular decision. It’s sort of like a machine version of Sherlock Holmes who notices every minute detail before arriving at an observation by determining which out of those myriad details is important.

AI is really doing nothing more than observing every possible input and then determining which pattern of inputs results in progress towards a desired goal. Still sound obtuse? Take a look at the second article in this series where I use a very simple analogy that demystifies the AI black box. (Link to the next article in this series.)

Facebook, Google and Other Big Tech Companies Facing Political Scrutiny

After a week of stock market adulation comes political critique.

This article first appeared in Data Sheet, Fortune’s daily newsletter on the top tech news. Sign up here.

Last week the biggest U.S. Internet companies flexed their earnings muscles and added billions in market value. This week expect these leaders to experience what all who achieve great success always do: extra scrutiny.

As The Economist observes in this comprehensive roundup, the era of gooey-eyed support for the wonders of the Internet age are over. Amazon’s amzn destruction of everyone else’s business isn’t cute anymore. Facebook fb and Twitter twtr made for a friendly platform for Russian propagandists. And Google googl has hollowed out the traditional media industry, threatening democracy in the process.

The spotlight grows harsher. This morning a human rights group associated with the World Economic Forum releases a long white paper arguing that as “an alternative to government regulation … companies like Google, Facebook, Twitter, and Microsoft msft should assume a more active self-governance role. Corporate leaders need to take greater responsibility to vindicate such core societal interests as combating harmful online content and elevating journalistic reporting and civil discourse.” Already, a Republican lobbyist has circulated a presentation comparing today’s Internet moguls with the robber barons of yesteryear. On Thursday, the general counsels of Google, Facebook, and Twitter will testify before the House Intelligence Committee’s “Russia Investigative Task Force.”

It doesn’t sound like a lot of fun for them.


The New York Times had a good piece last week on Square, the payments company started by Twitter co-founder Jack Dorsey, which we highlighted in the newsletter on Thursday. I similarly observed nearly two months ago, in a piece called “How Everyone Missed Square’s Comeback,” that low-profile Square sq had more than outshone troubled Twitter. The Times piece, while solid, had some unfortunate timing, given that it predicted Square could shortly surpass Twitter in market value. It appeared just before Twitter turned in a quarter that pleased investors, sending its value to nearly $16 billion versus Square’s $13 billion.


If, like me, you’re trying hard to understand China’s Internet giants, I highly recommend a month-plus-old piece in The Economist that discusses the arcane maneuver many of them pulled to go public outside China while maintaining controls for their Chinese founders. The dense but important piece calls this structure, known as variable interest entities, or VIEs, “a polite legal fiction that papers over serious problems.” It’s one of those techniques that works great—until it doesn’t—and therefore merits close attention.

Why AMD’s Stock Plunged 20% in Less Than a Week

Volatile price amid tough market battles.

Advanced Micro Devices has spent 2017 rolling out its new family of Ryzen chips for desktops and laptops, Epyc chips for servers, and Vega graphics cards. The fruits of several years of crash development under CEO Lisa Su, the new chips were supposed to get AMD back in the game against Intel intc and Nvidia nvda and regain some of its once significant market share that had been frittered away over the past decade.

But with basically all the new products now on the market, AMD’s stock price on Monday sunk as low as $11.07, below where it ended 2016 at $11.34. Monday’s plunge capped a four day, 20% drop since AMD amd reported third quarter earnings on October 24, failing to show the kind of sales growth that Wall Street had expected would be more obvious by now. Over the same period, Intel has gained 9% on the strength of its third quarter earnings while Nvidia, which doesn’t report earnings until November 9, is up 3%.

The problem, at least so far, seems to be slower sales to video game enthusiasts, as the Ryzen desktop chips lagged some of Intel’s fastest silicon for popular games and the Vega graphics architecture was costly to produce, blunting AMD’s ability to compete on price with Nvidia’s graphics cards.

“While Ryzen did meet the performance benchmarks that AMD claimed, making it a solid choice for workstations using highly threaded applications, the single threaded gaming performance has underwhelmed,” Morgan Stanley analyst Joe Moore wrote in a report on Monday downgrading the stock to “underweight” with an $8 price target.

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“Building a chip that outperforms Intel for highly threaded applications on a budget that is a fraction’s of Intel is certainly an impressive engineering achievement, but most high-end consumer purchases are oriented towards gaming, while applications that value higher multicore performance tend to be in corporate markets that are slower to adopt AMD,” Moore explained.

AMD’s third quarter sales grew 26% to 41.6 billion and the company reported net income of $71 million—its first real profits since 2014. AMD did not, however, raise its forecast for fourth quarter sales and profit as much as some investors hoped, igniting the recent sell-off.

Still, one of AMD’s most potent new products, chips for laptops that combine Ryzen and Vega designs, have only just been announced. A few laptop makers have announced they will use the combo chips this year, but the bulk of manufacturers won’t until early 2018.

Apple iPhone Sales in China Soar After 18 Months of Decline

But Apple is still far behind its China-based competitors.

Apple has finally stemmed its losses in China. But the success might only be short-lived.

The tech giant’s iPhone sales in China for the third quarter hit 11 million units, up from 8 million units sold during the third quarter of 2016, according to researcher Canalys. Better yet for Apple, it was the first time in six quarters that the company registered higher year-over-year iPhone sales. It’s also Apple’s best iPhone sales performance in China in two years.

But there’s a problem.

According to Canalys, which analyzes the Chinese smartphone market each quarter, Apple’s success in the third quarter was due only to “pent-up demand of iPhone upgraders.” Looking ahead to the fourth quarter, Canalys research analyst Mo Jia thinks Apple’s shipments will again decline.

“Apple is unlikely to sustain this growth in [the fourth quarter,” the analyst said.

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China is an exceedingly important market for Apple that generates the company billions in revenue each quarter. However, Apple’s China sales across all products, including the iPhone, have dropped precipitously over the last couple of years. Concerned that a major market might be turning its back ever so slightly on Apple, investors have asked for answers.

Apple’s AAPL executive team has continued to say that China is critical to the company’s future. The team also believes that the recent declines are short-lived and reflect early success that is now self-correcting. Ultimately, Apple believes China sales will return to growth.

Looking ahead, Canalys said that Apple’s upcoming iPhone X is attracting demand, but its high price and low supply could combine to garner few sales and ultimately won’t help iPhone sales in the country.

Apple will report its fiscal fourth quarter earnings, which include China sales data, on Thursday.

CVS And Aetna: A Marriage Made In Money Hell

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Facebook Friends With Your Co-Workers? Survey Shows Your Boss Probably Disapproves

You and your colleagues pitch in together on difficult projects, lunch together, and have drinks together after work. You probably think it’s the most natural thing in the world to friend them on Facebook or follow them on Twitter or Instagram. Your boss, though, probably thinks you shouldn’t.

That’s the surprising result of a survey of 1,006 employees and 307 senior managers conducted by staffing company OfficeTeam. Survey respondents were asked how appropriate it was to connect with co-workers on various social media platforms. It turns out that bosses and their employees have very different answers to this question.

When it comes to Facebook, 77 percent of employees thought it was either “very appropriate” or “somewhat appropriate” to be Facebook friends with your work colleagues, but only 49 percent of senior managers agreed. That disagreement carries over to other social media platforms. Sixty-one percent of employees thought it was fine to follow a co-worker on Twitter, but only 34 percent of bosses agreed. With Instagram, 56 percent of employees, but only 30 percent of bosses thought following a co-worker was appropriate. Interestingly, the one social platform bosses and employees seem to almost agree about is Snapchat, with 34 percent of employees thinking it was fine to connect with colleagues, and 26 percent of bosses thinking so too.

What should you do if you want to connect with a colleague on social media–if you get a connection request from a colleague? Here are a few options:

1. Use LinkedIn.

LinkedIn was not included in the OfficeTeam survey, but because it’s a professional networking tool, few bosses will object to you connecting with coworkers there. And LinkedIn has many of the same features as Facebook–you can even send instant messages to your contacts.

2. Keep your social media connections secret.

Most social networks give users the option to limit who can see what they post and who their other connections are. You can use this option to keep your social media interactions limited to the people you choose. If that doesn’t include your boss, he or she may never know that you and your co-workers are connected.

3. Talk to your boss.

He or she may not agree with the surveyed bosses who said connecting on social media was inappropriate, in which case there’s no problem. And if your boss does object, he or she may have some good reasons you hadn’t thought of to keep your professional life separate from your social media one. The only way to find out is to ask.

4. Consider the future.

It may be perfectly fine to connect with your co-workers on social media when you’re colleagues. But what happens if you get promoted to a leadership position? You may regret giving your former co-workers access to all the thoughts you share on Facebook or Twitter. So if a colleague sends you a social media request, or you want to make one yourself, take a moment to think it through. Will you be sorry one day–when you’re the boss yourself?


This Common Speaking Habit Is Draining All Your Negotiating Power

“John – we are receiving some feedback about the team and their presentation style. In particular we get comments about the inflection of their voice going up at the end. Can you work on this with folks on the team?”

Uncertain Language vs. Command Language 

This is something I see a lot. I call it “uncertain language,” vs. “command language.” Let me explain. The problem with using voice inflection at the end of a sentence when it is not a question is that it makes your statement sound like a question, even though it isn’t, and you come across as uncertain. That dramatically reduces the perception of your status and power.

Saying your statement isn’t a question isn’t the complete truth. Often, when your voice tone goes up at the end of a statement there is an implied question. It’s usually something like “do you agree?” “Am I being understandable?” “Are you okay with this?” “Can we just all get along?” or some desire for approval and connection. It can makes you sound like you’re uncertain, and/or lower status than you actually are. 

When you’re speaking; when you’re the host, or tour leader, or speaking to groups of people, your listeners want to believe that you know what you’re talking about. They like to know that you’re in charge and that you’ve got things handled. Going up at the end of your sentences robs you of that.

Lower, Slower and Louder

There is a discipline called Neuro Linguistic Programming (NLP). Pseudo-science? Maybe so, but I’ll take things that work from wherever they may come. NLP has something to offer here.

One of the ways you can be more effective and persuasive is to begin consciously using embedded commands. Embedded commands allow you to make powerful suggestions by embedding them indirectly within longer statements.  One key step to doing this is making your voice subtly lower, slower and louder when you embed the command.

NLP calls this technique analog marking. In NLP analog communication is nonverbal communication, while words are referred to in NLP as digital communication. Analog communication goes back to our earliest communication; pre-language communication. Sound and movement. 

When you use analog marking to communicate some part of what you’re saying, the unconscious mind notices and understands your communication differently than the conscious mind does. And, when you use sounds and movement the unconscious mind pays special attention. Body language, movement, voice tone, volume, speed and so on. And, you’re always using analog marking. The question I ask myself is whether it’s supporting my message, or my insecurity.

Commands vs Questions

The difference between “you’re going now.” and “you’re going now?” is pretty obvious. What is less obvious is that when you go up at the end of something you do not intend to be a question it sends a very strong signal to the unconscious mind of the listener and has as big an impact on your credibility as the question mark vs. the period has in the sentences above.

Here are a few examples of embedded commands.

  • “I’m here to talk with you and I want you to feel good about yourself”- I might mark “feel good” by saying it slightly louder, slower and with a downward pitch to my voice.
  • “You definitely don’t have to accept what I’m saying if you don’t want to.” “Accept what I’m saying” could be marked by making an open hand gesture.
  • “Would you tell me your story sometime?” I could mark “tell me your story” with a subtle body movement closer to the person. 

To be effective your statements must be statements, not questions. We understand a rising tone at the end of a sentence to be the marker of a question. Going up at the end of a non-question sentence sends the message that you have a question. If the sentence isn’t actually a question then the non-language message is still that there is a question, and it becomes a question about your credibility, or status or knowledge, or some other factor that you don’t intend to call into question!  

The Bottom Line

A question has a rising tone; the inflection goes up at the end of the sentence. A statement has no change in inflection at the end; it is flat. And, a command (this can be a subtle command) goes down at the end of the sentence; it has a downward inflection at the end. And, command language is very powerful. Going down at the end of your sentences gives them extra impact. You can’t do it all the time or you’ll sound silly, but if you take on speaking in command language you will avoid unsure language. And, that will have you sounding more powerful everywhere in your life. 


Cloud computing drives massive growth for big U.S. tech firms

SAN FRANCISCO (Reuters) – Inc (AMZN.O), Microsoft Corp (MSFT.O), Alphabet Corp’s (GOOGL.O) Google and Intel Corp (INTC.O) are all putting their chips on the cloud computing business, and it is booming.

FILE PHOTO – A sign marks the Microsoft office in Cambridge, Massachusetts, U.S. January 25, 2017. REUTERS/Brian Snyder/File Photo

All four companies posted stellar quarterly earnings on Thursday, showing the strength of the shift in corporate computing away from company-owned data centers and to the cloud.

Microsoft’s Azure business nearly doubled, with year-over-year growth of 90 percent. The company does not break out revenue figures for Azure, but research firm Canalys estimates it generated $ 2 billion for Microsoft.

“The move to the cloud was one we felt Microsoft could always benefit from, and they’re showing us that they can,” said Kim Forrest, vice president and senior equity analyst at Fort Pitt Capital Group, a portfolio management firm.

Highlighting the quarter for Microsoft was a deal securing retailer Costco (COST.O) as an Azure customer. That came just two months after the close of Amazon’s acquisition of grocery chain Whole Foods, which has heightened unease among retail and e-commerce companies about working with Amazon, said Ed Anderson, an analyst with Gartner.

Tim Green, analyst with the Motley Fool, said Amazon could find it needs to make changes at some point at Amazon Web services. “Spinning off AWS at some point down the road might become necessary to prevent an exodus of customers,” he said.

Amazon Web Services is still delivering far more revenue than any of its peers. For the quarter, AWS raked in nearly $ 4.6 billion — a year-over-year increase of 42 percent. AWS may have missed out on Costco, but the company secured deals with Hulu, Toyota Racing Development, and most notably, General Electric.

Google Cloud Platform landed deals with the likes of department store retailer Kohl’s and payments processor PayPal. Like Microsoft, Alphabet does not break out revenue for Google Cloud Platform, but Canalys estimates the business generated $ 870 million in the quarter, up 76 percent year-over-year.

FILE PHOTO – The logo of Amazon is seen at the company logistics center in Lauwin-Planque, northern France, February 20, 2017. REUTERS/Pascal Rossignol/File Photo

Google Chief Executive Officer Sundar Pichai said Google Cloud Platform is a top-three priority for the company. He said Google plans to continue expanding its cloud sales force.

Canalys estimates the cloud computing market at $ 14.4 billion for the third quarter of 2017, up 43 percent from a year prior. Amazon holds 31.8 percent of the market, followed by Microsoft at 13.9 percent and Google with 6 percent, according to Canalys’ estimates.

The “cloud market will keep growing faster than most of the traditional information technology segment, as the market is still in the developing stage,” said Daniel Liu, research analyst with Canalys.

FILE PHOTO – The Google logo is pictured atop an office building in Irvine, California, U.S. August 7, 2017. REUTERS/Mike Blake/File Photo

Reflecting the overall growth of the market was the strong performance by Intel, which sells processors and chips to cloud vendors. In July, Intel launched its new Xeon Scalable Processors, which drove 7 percent year-to-year growth for the company’s data center group.

The big three cloud vendors also benefit from the decision by many enterprises to build their applications using more than one cloud vendor. Retailers Home Depot Inc (HD.N) and Target Corp (TGT.N), for example, told Reuters they use a combination of cloud providers.

“Our philosophy here is to be cloud agnostic, as much as we can,” said Stephen Holmes, a spokesman for Home Depot, which uses both Azure and Google Cloud Platform.

Some analysts expect cloud services growth to slow over time as competition increases.

Amazon, for instance, has said that price cuts and new products with lower costs on average are a core part of its cloud business. Additionally, Amazon Web Services saw usage growth outpacing that of revenue growth, said Amazon Chief Financial Officer Brian Olsavsky.

“Going forward, cloud services will become more of a commodity, and the prices will quickly compress,” said Adam Sarhan, CEO of 50 Park Investments, an investment advisory service. “For now though, it’s a great business with plenty of room for all to grow.”

Reporting by Salvador Rodriguez; Additional reporting by Jeffrey Dastin and Paresh Dave; Editing by Leslie Adler; Editing by Jonathan Weber

Our Standards:The Thomson Reuters Trust Principles.


GE's CEO sees more partnerships ahead for digital business

SAN FRANCISCO (Reuters) – General Electric Co (GE.N) will use more alliances to build its digital-industrial business in coming years, Chief Executive Officer John Flannery said on Wednesday, suggesting the industrial conglomerate will curb spending in that area.

Microsoft Chief Executive Satya Nadella and General Electric Chief Executive John Flannery speak at General Electric Company’s Minds + Machines conference in San Francisco, California, U.S., October 25, 2017. REUTERS/Alwyn Scott

GE is investing about $ 2.1 billion in GE Digital this year, and executives had said that amount would fall in 2018.

Flannery on Wednesday made his first direct remarks about the digital strategy since he became CEO on Aug. 1. He has begun slashing costs in other areas, including reducing staff, grounding corporate jets and axing the “Maserati benefit” of corporate cars for about 600 senior executives.

Flannery is due to unveil new financial targets on Nov. 13 and is under heavy pressure to turn GE around after the company’s third-quarter earnings and cash flow badly missed targets. GE stock is down 32 percent so far this year, while the S&P 500 index is up 14 percent,

GE’s digital strategy is built around a cloud-based software platform, known as Predix, that connects factories, power plants and other industrial equipment to computers that improve performance and predict outages.

But Predix’s limited capabilities and performance problems have caused GE to lose out to competitors such as Siemens AG (SIEGn.DE) and startups such as Uptake and C3IOT.

Flannery said on Wednesday that GE will focus on selling Predix in its own businesses: energy, oil-and-gas, aviation, healthcare, transportation and mining, as Reuters reported in August.

In other markets, “We’re going to be more selective … and do it largely through partners,” Flannery said at GE’s annual Minds + Machines conference.

FILE PHOTO: The ticker and logo for General Electric Co. is displayed on a screen at the post where it is traded on the floor of the New York Stock Exchange (NYSE) in New York City, U.S. on June 30, 2016. REUTERS/Brendan McDermid/File Photo

Gary Mintchell, chief executive of The Manufacturing Connection, an industrial-internet-focused research and consulting company, said GE’s strategy of using partners reflects the company’s realization that “they can’t build their own ecosystem.”

GE said it was expanding its partnership with Microsoft Corp (MSFT.O), to provide access to Microsoft applications on Predix. The specifics largely duplicated what the companies said when they first announced the deal in July 2016.

GE said Predix will be available on Azure in North America on Nov. 30, months later than the original target of the second quarter. Predix will still be available on Inc’s (AMZN.O) Amazon Web Services cloud platform, GE said.

GE Digital’s chief executive, Bill Ruh, on Wednesday noted a partnership with Hewlett Packard Enterprise Co (HPE.N). GE also is linking Predix with Apple Inc’s (AAPL.O) IOS operating system for iPhones and iPads.

Patrick Franklin, vice president in charge of Predix, said there was still room to improve Predix after the company held a two-month time-out this year to fix bugs, but the platform was showing near-100 percent stability.

“We are paying careful attention to quality,” he said, referring to the delay in deploying Predix on Azure.

GE executives said the company is focusing on developing apps for Predix to boost sales. GE plans to bundle applications for equipment monitoring and service technicians, both of which it bought last year.

GE said orders for Predix were rising sharply. Some customers at the event echoed that view. U.S. utility Exelon Corp (EXC.N), for instance, said it is rolling out Predix to its nuclear, gas, wind and other power plants after a two-year pilot of the system showed it worked as advertised, said Brian Hoff, director of corporate strategy and innovation at Exelon.

“If it didn’t hit its targets, we wouldn’t be moving forward,” Hoff said.

Reporting by Alwyn Scott; Editing by Leslie Adler

Our Standards:The Thomson Reuters Trust Principles.


Why Ventas Belongs In My 'Fab-Five' DAVOS Portfolio

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Amazon says studio executive Joe Lewis resigns

(Reuters) – Inc on Monday said Joe Lewis, the head of comedy and drama at its entertainment studio unit, has stepped down, but gave no reason for his resignation.

FILE PHOTO: Joe Lewis, Head of Original Programming at Amazon Studios, poses during Amazon’s premiere screening of the tv series “Transparent” at the Ace Hotel in downtown Los Angeles, California, September 15, 2014. REUTERS/Kevork Djansezian

Amazon said Sharon Tal Yguado, who is the head of event series, will replace Lewis in the interim.

Lewis’ exit comes after Amazon Studios chief Roy Price resigned this month after taking a leave of absence in the wake of harassment allegations from a female producer.

The Hollywood Reporter, which earlier reported Lewis’ departure, said Lewis will still have a producing deal at Amazon Studios.

Reporting by Shubham Kalia in Bengaluru and Jeffrey Dastin in San Francisco; Editing by Mary Milliken

Our Standards:The Thomson Reuters Trust Principles.