Archives for December 2017

Lessons for the 1939 World's Fair for the Coming Transportation Utopia

The future, according to the folks who make the renderings, will be built mostly around whooshing. The details differ from one imagined utopia to the next, but the broad strokes are the same. Cars will run on electricity, drive themselves, even fly. Networks of vacuum tubes and tunnels will connect cities to each other and to the hinterlands. Supersonic jets will turn transoceanic journeys into river crossings. The burning of fossil fuels will seem as remote and unsavory as human sacrifice. Trees will blanket the urban centers; the air will refresh our lungs instead of blackening them.

Moving about the planet will be faster, safer, easier, comfier, greener, cheaper, and whooshier. Best of all, there will be no traffic.

So say the renderings, of which there are many. They’re created by all the players who imagine themselves profitably managing this future—Elon Musk chief among them, but also Lyft and Uber, Ford and General Motors, and innumerable startups.

Ford—which now calls itself a mobility company as well as an automaker—is among the many companies pitching a new, utopian vision of the future.

FOrd

Americans have been given a glimpse of this sort of transportation paradise before. They stood under the hot sun for hours at a time to see it, because they were fed up with traffic, and any world that promises to end it is worth a look. And so millions of people made it up a winding ramp and into a mysterious building and sat in the navy blue mohair chairs that would ferry them through the marquee exhibit of the 1939 New York World’s Fair.

The progenitor of the optimism-soaked hybrid of amusement park and educational diorama later perfected by Walt Disney, Futurama was a 17-minute pitch by General Motors that showed its audience a world that had solved transportation by signing over the ground floor of city and country to the car. Everyone in the picture had the keys to that era’s smartphone, the device that unlocked access to a world of wealth and convenience.

That vision, for the most part, came true. Futurama predicted the world of 1960. By that new decade, the personal car was in fact dominant, suburbs reigned supreme, and the highway was everyone’s my way. We still live in Futurama today, but it doesn’t feel like utopia. We are locked in a transportation monoculture, reliant on machines that are bad for the planet, bad for the economy, bad for the soul. And, my god, the traffic.

What the hell happened to the future? And how do we stop it from happening again?


Futurama was the creation of Norman Bel Geddes, a Michigan-born designer who started his career building theater sets. By the 1930s, he was leading a field now called industrial design, and his ambition stretched beyond Broadway. Bel Geddes was always looking to solve interesting problems, and when his design firm was between contracts, he would give him employees theoretical problems to keep them busy. One example: What’s the fastest, most luxurious way to get wealthy passengers from New York to Paris? Another: How to eliminate traffic, an increasingly nasty problem in a country with more and more cars crowding roads designed for wagons?

When Bel Geddes heard the 1939 World’s Fair was coming to Flushing, Queens, he spied a stage bigger than any theater’s. And he knew the traffic problem—everyone hates traffic—would bring him his audience. He would fix America’s roadways for the age of the automobile.

Bel Geddes cajoled General Motors into funding the exhibit, and in an 11-month sprint vividly recounted by Barbara Alexandra Szerlip in The Man Who Designed the Future: Norman Bel Geddes and the Invention of Twentieth-Century America, built something no one had seen before. Fair goers who braved the line—sometimes a mile long—would sit on a train of 552 chairs. Each seat had a built-in speaker through which a narrator explained how “this wonderworld of 1960” had eliminated car crashes and congestion with a transcontinental network of cleverly designed highways. Riders would gaze down on that world, marveling at the dioramas of cities dotted by skyscrapers, elevated walkways, and logically placed parks, the cloverleafs that did away with intersections, the networks that let cars coast without interruption.

Over the two years of the New York World’s Fair, close to 30 million people took the ride and walked away with a pin reading “I Have Seen the Future.” Many more heard about the exhibit secondhand, or through radio reports. Perhaps most stunning, Futurama drew more visitors than the Fair’s Midway section, home of amusements like “Miss Nude of 1939” and the burlesque routine of Rosita Royce, whose trained birds removed her clothes.

The Fair came on the heels of the Great Depression and amidst the early days of the Second World War. (Between the 1939 and 1940 seasons, the pavilions put on by Albania, Poland, and Yugoslavia, among others, disappeared.) In the US, it marked a moment when “people were ready for a new vision of prosperity, of a new America,” says Henry Jenkins, a media scholar at the University of Southern California. It was also a moment when science fiction was first entering the cultural mainstream, and with it technological utopianism—the belief that scientific advances could only make life better.

Bel Geddes didn’t invent this idea of the future himself. “Much of Futurama was a pastiche of existing theories and concepts that had appeared in everything from H. G. Wells’s stories and Fritz Lang’s Metropolis to sketches by F. L. Wright and Raymond Hood. And certainly Le Corbusier was in the mix,” Szerlip writes. But it was Bel Geddes and his ride that brought such thinking to the attention of the masses. It was the world of Futurama that took hold.

During the war years, Futurama was put on pause. The production of civilian cars was stopped until 1945, and the resources demanded by a global conflict nixed any thought of major infrastructure work at home. But eventually, the American soldiers came home to a country that had been through more than a decade of deprivation and sacrifice. A sudden superpower, the US was ready to make real that memory of the future.

Car sales boomed. The suburbs flourished, offering an American dream to middle and upper classes that still tempts us today: home ownership, 2.5 kids, prosperity. Highways stretched across the country and bored through urban cores, often devastating vibrant but working-class, usually minority neighborhoods: the South Bronx, Minneapolis’ Rondo, Detroit’s Paradise Valley. As the car monoculture took root, public transportation shriveled, streetcar tracks were torn up. Those who couldn’t afford to buy and keep a car were left with the bus, or their feet. And the traffic was insufferable as ever, as the law of induced demand filled every new square foot of concrete nearly as quick as it was poured.

Yet even before master builder Robert Moses declared “the postwar highway era is here”—in the immediate aftermath of the fighting—some critics had started to resist the tide, at least in New York. Moses was an early example of the deep state, a never-elected bureaucrat who amassed so much power that he dictated how New York built its infrastructure for much of the mid-20th century—and how it’s shaped today. Chief among those who dared challenge him was Lewis Mumford, who railed against New York’s elevation of individual transportation.

“Because we have apparently decided that the private motorcar has a sacred right to go anywhere, halt anywhere, and remain anywhere as long as its owner chooses, we have neglected other means of transportation,” Mumford wrote in The New Yorker in 1955. “The major corrective for this crippling overspecialization is to redevelop now despised modes of circulation—public vehicles and private feet,” an argument common today among 21st century urbanists.

Such warnings proved futile, partly because Moses had nearly complete control over what got funded and built in New York, and he believed in the car above any sort of public transit. (To truly understand today’s cities, take a sabbatical and read Robert Caro’s epic biography of Moses, The Power Broker.)

One man cannot take all the blame. One corporation, though, just might. The ride that wowed millions at the 1939 World’s Fair represented just one strain of the era’s technological utopianism, says Jenkins. The future conjured by H. G. Wells in his book The Shape of Things to Come, and its film adaptation, directed by William Cameron Menzies, included cities full of pedestrians and shared transport.

But Futurama, however artistic, was ultimately a commercial paid for by General Motors. In Szerlip’s telling, Bel Geddes first pitched a similar idea to Shell, and he convinced GM executives to fund his project by telling them the point was to sell not any particular model car, but the future—“With the promise that every citizen can own a piece of that future for the price of a General Motors automobile.”

“We have a corporately sponsored remaking of the technological utopianism through Futurama,” Jenkins says. And that’s the future that we built.


Six decades on, we have a fresh chance. The simultaneous advent of electric, autonomous, and even tubular transportation is an opportunity to rethink and remake our cities. Thus, the renderings, and the promises from companies that before long, the tech they’re developing will clear the air, save lives, and of course, end traffic.

“Highways are an impressive, flashy thing to build. No one is against highways,” Lewis Mumford wrote more than half a century ago. Today, you could swap “hyperloop” for “highway” and you get the same idea—that the shiny future, however ill-conceived, is the one for us.

We have the tools to make sure we don’t repeat our mistakes. “The problem we have now is there is no choice,” says Daniel Sperling, who researches transportation planning at the University of California, Davis. Most places in America, you have to own a car. Autonomous vehicles could change that, and bring mobility to millions. But for the sake of the planet and our lungs, regulators should insist they be electric. To prevent a world where the streets are still clogged with cars, half of them empty, Sperling says, “We desperately need them to be pooled.”

And you can’t settle on one vision, says Di-Ann Eisnor, the director of growth at Waze, who runs the company’s Connected Citizens program. The last time around, “We made assumptions about capacity”—like that you could always make more roads for more cars. Clawing that urban space back demands an experimental mindset. Cities around the world are trying new things. San Francisco is adjusting parking prices based on demand. Mexico City is battling congestion by killing parking. Washington, DC is trying out special zones where Uber and Lyft can safely scoop up passengers. “Technology and community need to go hand in hand,” Eisnor says. “Everyday, test something new.”

Ultimately, we need a future fueled by many imagined utopias, a diversity of approaches and policies. By definition, the monoculture won’t work for all. In the 20th century, the working class was left behind. Any of those lovely renderings would be a fine way to whoosh forward—as long as this time, they bring everyone along for the traffic-free ride.


City Lives

WIRED'S 12 Most-Read Opinion Pieces in 2017

Privacy, Facebook, surveillance, net neutrality, gender issues, climate change, hacking: The list of opinion topics that most attracted attention from WIRED readers in 2017 doubles as a list of Things That Gave Us Angst This Year. Here are the dozen most-read Opinion pieces of 2017.

FCC Wants to Kill Net Neutrality. Congress Will Pay the Price

The Federal Communications Commission’s vote to kill net neutrality provisions drew derision from all corners of WIRED, including our opinion section, which ran several op-eds on the topic. In December Ryan Singel, a former WIRED editor who’s now a media and strategy fellow at the Center for Internet and Society, argued that ending the open internet will have profound effects on the re-election efforts of Congressional Republicans in 2018.

Why Men Don’t Believe the Data on Gender Bias in Science

In August, shortly after Google engineer James Damore posted a diatribe about gender differences on an internal company message board, UC San Diego physics professor Alison Coil explained why male scientists devalue research that identifies gender bias in the field. Academics should believe the research showing discrimination, but, Coil asserted, “What this extensive literature shows is, in fact, scientists are people, subject to the same cultural norms and beliefs as the rest of society.”

A Wet Year Won’t Beat California’s Never-Ending Drought

Last January, as California was saturated with rain and snow, the Pacific Institute’s Peter Gleick, a hydroclimatologist, explained why a wet year didn’t mean the golden state’s drought was over. Nearly a year later, as the state has been incinerated by historically terrible wildfires, it’s all too clear that Gleick was right.

Equifax Deserves the Corporate Death Penalty

What should government do when a company fails to protect the personal data of 143 million people? Give it the corporate version of the death penalty, argued Ron Fein, the legal director of Free Speech for People. Fein’s October essay explained that in Georgia—Equifax’s home state—authorities can file suit to dissolve a corporation if it has abused the authority conveyed upon it by the state.

How Social Media Endangers Knowledge

Hossein Derakhshan, an Iranian-Canadian media analyst, wrote that the rise of social media is reducing humans’ curiosity, as people strive for Likes rather than the pursuit of knowledge. Social media, Derakhshan argued, “engages us in an endless zest for instant approval from an audience, for which we are constantly but unconsciously performing.”

Potential Trump Science Adviser Says Climate Change Is Great

In February Benjamin Sanderson, a climate scientist at the National Center for Atmospheric Research, warned that a top candidate to be Donald Trump’s science advisor, William Happer, was a climate change enthusiast. Ultimately, Happer didn’t get the job, but the position is still vacant.

Hey, Computer Scientists! Stop Hating on the Humanities

Not every question can be answered with code, Emma Pierson, a physics PhD candidate at Stanford, wrote in April. When ethical questions arise in, say, artificial intelligence applications, sound knowledge of other fields—literature, sociology, or ethics, for example—will help uncover solutions that algorithms alone cannot.

A Blackjack Pro Explains How Ignoring the Odds Cost the Falcons the Super Bowl

February’s match-up between the New England Patriots and Atlanta Falcons ended with a killer comeback for the Patriots. Jeff Ma, the leader of the MIT blackjack team that inspired the book Bringing Down the House, explained that the Falcons lost because the team didn’t follow basic probability rules commonly employed at a blackjack table.

Trump’s Taxes Have Probably Already Been Hacked

Given the tremendous amount of attention given to Donald Trump’s tax returns, it’s almost inconceivable that they haven’t already been hacked, wrote John Powers, who runs a New York-based investigative firm, in November.

Facebook’s Not Listening Through Your Phone. It Doesn’t Have To

In November Antonio García Martínez, who was the first ads targeting product manager on Facebook’s ads team, wrote that Facebook isn’t eavesdropping on its users through their smartphones’ microphones. That’s in part because the social network tracks users so many other ways, it doesn’t need to snoop.

Courts Are Using AI to Sentence Criminals. That Must Stop Now

Writer and technologist Jason Tashea explained how algorithms pervade our everyday lives, from our credit scores to the route Waze suggests we take to the airport. Tashea argued that applying algorithms in criminal cases, with no clear oversight or transparency, could result in overly punitive sentences.

A Murder Case Tests Alexa’s Devotion to Your Privacy

As WIRED editors have explained at length, devices like Amazon’s Echo and Google Home series listen to our conversations, eagerly awaiting a “wake” word to command them to turn on some Miriam Makeba or calculate how many tablespoons are in a cup (16). But, as civil attorney Gerald Sauer explained in a February piece, smart home devices’ microphones can also effectively collect evidence that can be used against their owners in court.

Serial SWAT Hoaxer Arrested in Deadly Call of Duty-Linked Police Shooting

Twenty-eight-year-old Andrew Finch was shot and killed by police in Wichita late Thursday, after a fraudulent emergency call drew police to his family’s residence with their weapons drawn. The hoax call — an instance of what’s known as “swatting” — was placed after an argument in the online game Call of Duty.

Wichita police received a 911 call on Thursday purporting to be from an armed man holding his own family hostage. When they arrived at the address, there was no hostage situation, but Finch was shot and killed after opening the door to the house and, according to police, reaching for his waistband several times. According to Finch’s family, he didn’t play video games. He was unarmed.

The swatting call was reportedly made after an online match in the wargame Call of Duty, with a bet of $1.50 on the line.

The alleged perpetrator, who responded to news about the swatting live on twitter, has been arrested in Los Angeles. Tyler Raj Barriss, 25, known online as “SWAuTistic,” has been previously arrested for making hoax calls to police, including two bomb threats in 2015. More recently, he may have been responsible for a bomb threat that disrupted the FCC’s vote to repeal net neutrality rules.

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Security researcher Brian Krebs, himself a former swatting victim, tracked down what appear to be tweets by the perpetrator of the attack. After the fatality was reported, the swatter tweeted: “I DIDNT GET ANYONE KILLED BECAUSE I DIDNT DISCHARGE A WEAPON AND BEING A SWAT MEMBER ISNT MY PROFESSION.”

Krebs also managed to briefly interview the apparent perpetrator via Twitter before Barriss’ arrest. He told Krebs that he had been paid for previous swattings. While he said he felt remorse for the death, he was “too scared” to turn himself in to police.

According to an interview with a man claiming to be the perpetrator on the YouTube channel DramaAlert before the arrest, Barriss was not involved in the inciting online match. Instead, one of the involved players contacted him and asked him to make the fake call.

The phenomenon of swatting has been on the rise in recent years, particularly among online gamers and hackers. According to Krebs, many perpetrators are minors and receive token punishments for their false reports. In some jurisdictions, filing a false police report is a misdemeanor, making it less likely that a swatter could be charged with murder for a resulting death.

Police had not disclosed the charges against Barriss as of this morning.

General Electric: What To Look For In 2018

General Electric (GE) is a company that I have closely followed since 2014 and it would be an understatement to say that the stock performance for this storied industrial conglomerate has been a major disappointment in 2017. So far this year, GE shares have underperformed the broader market by 63 percentage points.

Source: Nasdaq

There is no denying the fact that GE’s new CEO, Mr. John Flannery, has his hands full as we head into 2018 but, in my opinion, there are three things that management can do to improve investor sentiment over the next 12 months. Therefore, I believe that investors with a time horizon longer than one-to-three years should seriously consider hanging onto their shares.

What To Look For In 2018

To start, investors that expect for GE shares to trade in the lower $30 per share range in 2018 should really take some time to reset their expectations. GE’s stock is trading below $18 per share for legitimate reasons and, while I believe this company is still a great long-term buy at today’s price, the next 12-18 months will likely be a bumpy ride.

The dividend cut is coming into play but GE’s largest operating unit, Power, has been the main source for the recent downward movement in the stock price. Management has heavily replied on this operating unit to meet (or beat) numbers for years now so it is going to be tough sledding for GE heading into 2018. Expectations for this division have already been reset by Mr. Flannery (read more about the 2018 Investor Meeting here) so we are now at a point where investors should start to bake in expectations for this operating unit to be more of a drag than a tailwind, for at least the next four-to-five quarters. But, it’s important to note that Mr. Flannery and team are still bullish on the long-term prospects for this unit.

Let’s all be honest about 2018, management will have to positively impact sentiment if they expect for the stock to perform well over the next year. To do this, in my opinion, management will need to change the narrative and show improvements in the following three areas: (1) cash flow metrics, (2) financial leverage, and (3) margins.

(1) Cash Flow Metrics – It’s All About That Cash, Baby

GE’s inability to generate sufficient cash has been the number one concern that has been highlighted by the bears, and rightfully so, as the company’s operating cash flow for the first nine months of 2017 was down significantly when compared to the prior year.

Source: Q3 2017 10-Q

As shown, the company has also issued a lot of debt in 2017. If Mr. Flannery really wants to change the narrative, the company’s cash flow metrics should be his main focus. For 2018, management guided for FCF to be in the range of $6B-$7B.

The previously announced dividend cut (from $0.24 to $0.12 on a quarterly basis), along with several other factors, will give GE the opportunity to greatly improve its cash flow prospects in 2018. Another important factor coming into play is the $6B pension contribution that was funded by debt. GE’s pension shortfall has been widely covered here on Seeking Alpha so I will not spend much time on this topic, but, at the end of the day, borrowing funds at today’s rates to cover pension expenses for the next few years makes sense, at least in mind. Some will say that GE is just kicking the can down the road, but I believe that this analogy could be used for almost any company that has a pension plan.

In 2018, GE’s stock price will likely find its footing if management is able to show the market that the company is capable of generating enough cash to cover its business/restructuring expenses and service its large debt load. The cash flow metrics are that important to the bear story. And before we move on, let’s take a moment to also consider the fact that GE is sitting on a substantial amount of cash (almost $40B). As such, I do not see cash flows being a significant risk over at least the next two years.

(2) Financial Leverage – Up, Up And Away?

GE’s financial leverage is a highly debated topic and, in my opinion, the bears love to tell a one-sided story. The tagline that “GE is leveraged to its eyeballs” is fun to say, but the comment does not factor in the other side of the ledger (i.e., assets).

Source: Q3 2017 10-Q –represents GE’s consolidated balances (i.e., factoring in elimination entries)

GE definitely has a large debt balance but the company also has a significant amount of assets on its books (~$100B more in assets as of September 30, 2017). You can call into question the quality of GE’s assets, i.e. Goodwill, but I just want to stress the fact that the roof is not falling like the financial community would have you believe. Plus, looking back, management selling the majority of GE Capital has put this company in a lot better position today than it was a few short years ago.

Chart
GE Total Long Term Debt (Annual) data by YCharts

In 2018, I do not expect for GE to make a significant dent in the debt balance but I would not be surprised if the company was in a position to shift the focus to reducing leverage by early 2019. The wildcard over the next 3 years is the asset sales – management expects to sell/spin-off $20B in assets – because these disposals could potentially allow for management to greatly reduce the debt balance if the market conditions are right.

(3) Margins – Is It Really That Bad?

GE’s margins are another hot topic for the bears, as the company has struggled to please the market.

Source: Q3 2017 Earnings Presentation

Let’s now compare GE’s margins to one of its close competitors, Honeywell (HON).

Source: Q3 2017 Earnings Presentation

Yes, it is that bad. I definitely consider Honeywell the cream-of-the-crop in the industrial space, as described here, so investors should not be surprised that GE is falling behind as it relates to margins. I do, however, believe that this comparison shows just how far behind GE is when compared to a “great” industrial company.

In 2018, management expects to cut out structural costs by focusing on the digital push and streamlining operations. As of November 2017, management expects to eliminate ~$3B in structural costs through 2018. Mr. Flannery has his work cut out for him and by no means should investors expect for margins to be significantly higher in 2018, but, in my opinion, the only way to go is up. If not, I will have to re-evaluate my investment thesis.

Putting It All Together – A Company That Is Facing Headwinds But That Will Be Soon Operating In An Improving Environment

GE is contending with several stiff headwinds but, on the other hand, this company still has some great businesses that have promising business prospects (i.e., Aviation, Renewables, and Healthcare). Putting politics aside, the tax reform bill that lowered the corporate tax rate to 21% will most likely turn out to be a significant tailwind for GE.

Source: Investopedia

As I previously described, a business-friendly change in the corporate tax rate goes beyond just GE’s tax bill because an improving environment is good for both GE and its customers. Moreover, I tend to agree with others that believe that repatriating overseas funds may actually turn out to be a short-term headwind for GE (i.e., the immediate tax bill) but it is hard to deny the potential long-term benefits of a lower corporate rate/bringing home foreign profits. This bill will help the economy, of course, in my opinion, and it will give companies the opportunity to reinvest in their businesses, which are both positives for large industrial companies like GE. There are real risk with investing in GE, even at today’s price, but investors should be encouraged by the prospects of a business environment that appears to be improving by the day.

Valuation

Management guided for adjusted EPS – as defined as continuing EPS ex. gains, restructuring, and non-operating pension – to be in the range of $1.00-$1.07 for 2018, which makes the forward P/E ratio ~17 based on the low end of the range. My 12-month price target is $19 and this does not even factor in the improving environment for Baker Hughes, a GE Company (BHGE) or the potential benefits of the asset sales, which both could be significant catalysts for the stock.

Risks

The main risk for investing in General Electric starts with management. There is no guarantee that Mr. Flannery is the right man to turn around a company that is widely viewed as a directionless, complex industrial conglomerate. Sentiment is the number one factor for GE shares being down by almost 50% in 2017 so shareholders are putting a lot of faith in a largely unproven leader, at least on this type of stage.

Bottom Line

There will more than likely be additional downward pressure for GE’s stock in the months ahead but the company’s story looks better the further that you look out. Think about this, GE sells/spins off the low margin businesses – Transportation, Lighting, and other misc. units – in 2018/2019 and management makes the necessary changes within the Power unit during this same period of time. By mid-2019, you will be holding a simpler, more-predictable industrial conglomerate that has three main divisions – Aviation, Healthcare, and Power – that have great long-term business prospects. Is uncertainty involved? Yes.

Investing in GE today is risky and there will be a lot of moving pieces to factor in through 2018 in but, in my opinion, GE shares are attractively valued if you are willing (and able) to hold onto your position for the next three-to-five years. Therefore, long-term investors should consider significant pullbacks as buying opportunities.

Author’s Note: General Electric is a top-2 holding in the R.I.P. portfolio, and I have no plans to reduce my stake in the near future.

Disclaimer: This article is not a recommendation to buy or sell any stock mentioned. These are only my personal opinions. Every investor must do his/her own due diligence before making any investment decision

If you found this article to be informative and would like to hear more about this company, or any other company that I analyze, please consider hitting the “Follow” button above. Or, consider joining the Going Long With W.G. premium service to get exclusive content and one-on-one interaction with William J. Block, President and Chief Investment Officer, W.G. Investment Research LLC.

Disclosure: I am/we are long GE, BHGE, HON.

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.

China's Huawei flags slower smartphone and overall revenue growth

HONG KONG (Reuters) – China’s Huawei Technologies Co Ltd [HWT.UL] on Friday flagged overall and smartphone revenue figures for 2017 that represented its slowest growth in four years, and vowed to extend its global reach with more premium products next year.

The telecom equipment and smartphone maker expects 2017 revenue to rise 15 percent to 600 billion yuan ($92.08 billion), Chief Executive Ken Hu said in his New Year’s message.

That represents the slowest growth since 2013 for Huawei. Its fast revenue growth in recent years has been slowing as Chinese telecom carriers complete the construction of the world’s largest 4G mobile network and as competition intensifies in the smartphone market.

Hu said Huawei’s smartphone shipments in 2017 totaled 153 million units and its global market share topped 10 percent, cementing its position as the world’s third-largest smartphone maker after Samsung Electronics Co Ltd and Apple Inc.

Huawei said it would focus on profit after posting near-flat annual profit growth in March, weighed down by its fast-growing but thin-margin smartphone business and marketing spending.

Richard Yu, CEO of Huawei’s consumer business group, in a separate New Year’s message said the group will strive to obtain a larger share in the high-end market globally, after recording “significant” growth in markets such as Italy and Germany in the past year.

“In 2018, we will have disruptive products and innovative technology to lead the global market. I believe that 2018 will be the first year that we will truly be walking the road to global prominence,” Yu said.

In October Huawei launched its Mate 10 series, its most expensive model to date and powered with AI-enhanced chips which the company says are faster than Apple’s iPhones. The model “sold extremely well”, Yu said, without disclosing a number.

Yu said the division’s revenue is expected to rise 30 percent to 236 billion yuan – also its slowest growth since 2013.

“We need to better understand the needs of high-end users outside China and fashion-savvy young consumers in China,” Yu said.

Industry tracker IDC forecasts China’s total smartphone shipments in 2017 to shrink slightly versus a year earlier.

Hu also said Huawei’s enterprise business needs to “maintain mid-to-high growth speed and become a pillar business for the company in five years”.

He also called on the company’s consumer business to improve profitability, its new public cloud business to increase in scale, and its core carrier business to outperform the industry.

Reporting by Sijia Jiang; editing by Christopher Cushing and Jason Neely

Try This Surprisingly Simple Method to Make Giving Your Boss Feedback Less Scary

The list of boss behaviors that employees find uninspiring or that lack any sense of heart is a long one. Like, longer than the line at the DMV.

But the myriad of possible misbehaviors all have two things in common; the employees will bolt and they will persist unless your boss understands the impact they are having. You can address this by giving your boss feedback.

Gulp.

No one relishes the thought of giving a boss feedback. It can be difficult enough to give feedback to any employee (although there are effective methods to do so), but giving a boss feedback is in its own category. The good news is that once you get some practice with the simple four-step method that follows, it becomes much easier.

1. Ensure receptivity.

First, make sure your boss is open to receiving feedback. It’s just a reality that some won’t be, so you want to be sure. If you aren’t certain, ask. Frame it as you have some observations that could be helpful.

On more than one occasion, I’ve asked a boss that I was certain would be reluctant to hear feedback–and it turned out they couldn’t have been more receptive. The bosses that need the most feedback aren’t always blind to that fact.

2. Emit a desire to help, not harp.

Assuming you get a green light, proceed with bravery, reminding yourself the importance of making sure your boss fully understands the impact his/her behaviors are having on you (and others). Watering down what you have to say for fear of offending helps no one. Show transparency–and also empathy.

The truth is, most bosses have no idea of the depth or extent of the negative impact their behavior might be having on you or the organization. Many would be horrified, but appreciative, of finding out the realities of their behavior. 

So, I’m encouraging you to conduct an awareness campaign, and gently help them understand these realities. Come across as you genuinely want to help them (which, hopefully, you do). Being the boss can be lonely, and projecting yourself as an ally in their improvement is powerful and won’t be forgotten.

3. Mind the “big four” of boss feedback.

It’s especially important (since this is your boss we’re talking about here) to do four things as you’re giving the feedback: Be respectful, direct, private, and specific.

Missing any four of these backfires. I’ve experienced failing to provide the feedback privately (she just got embarrassed and angry) and specifically (he just ended up asking for clarification over and over and getting more frustrated).

Give examples that focus on the impact of their behavior, never making it about them as a person. Write the feedback down ahead of time so you aren’t going off the cuff–and so you know just where to pour on the waterworks.

Just kidding. Really. Don’t do that.

4. Make it about them improving, not proving you know better.

Finally, and seriously, as Harvard Business Review’s Amy Gallo writes, “Focus on your perspective/observations to help them improve–not what you would do if you were boss.” 

Very early in my career I made the mistake of telling one boss “If I were in charge for a day…”, thinking he would absorb my wisdom and I’d demonstrate my vision.

Um, yeah.  That didn’t go over well–my boss viewed it as outright arrogance.

We’re not hardwired to give feedback well and without anxiety, especially when it comes to our boss. So put this method into practice and put yourself at ease–you just built a new skill. 

Which means you’ll be a bigger boss soon. Which means you’ll have to learn to be receptive to, well, you know.

These 5 Surprising Myths About Entrepreneurs Just Aren't True (and Here's the Brutal Truth)

To understand how entrepreneurs think, you first need to drop a few myths or stereotypes you may be carrying around. Given the media’s ongoing love affair with entrepreneurs, it shouldn’t surprise you that these myths have grown up around them.

Myth #1: Entrepreneurs are born, not made

This is the same as saying that you can’t teach entrepreneurship. According to management guru Peter Drucker, entrepreneurship is a discipline that can be learned. Passion and persistence may be in your genes, but it takes work to develop the skills that entrepreneurs have.

Myth #2: It takes a lot of money to start a business

Not true! In fact, every year Inc magazine profiles businesses that have started on $1,000 or less. And among Inc‘s annual list of the 5000 fastest-growing private companies, there is no direct relationship between the amount of start-up capital invested and ultimate business success.

Myth #3: You need a business plan to succeed

Sure, investors and lenders want to see a business plan before handing you a wad of cash, but if you don’t need these resources at start up, you may be able to launch your business based on the results of a feasibility analysis and then get some traction with customers. Some Internet entrepreneurs, like Richard Rosenblatt of Demand Media, know how to get a website up and making money within a couple weeks. These savvy entrepreneurs know that testing the market is more important than spending the time to write a business plan.

Myth #4: Entrepreneurs are in it for the money

Okay, some entrepreneurs do think that making money is what it’s all about, but the #1 reason that most entrepreneurs start businesses is independence — the ability to create something they can call their own instead of working for someone else. Entrepreneurs want to control their destiny.

Myth #5: You have to be young and restless to be an entrepreneur

You definitely do not have to be young to be a successful entrepreneur. In fact, a Global Entrepreneurship Monitor report found that the number of older adults who are self employed outweighs that of young adults. Entrepreneurship is for all ages!

This Is Your Guide to Buying Ripple

Let us preface this by saying that this is not an endorsement for any cryptocurrency, Ripple or otherwise. The markets for these largely untested, unproven digital assets are extremely young and fickle—as evidenced by the recent bloodbath that’s been taking place in the past day or so.

Amid this week’s crash, Ripple has managed to avoid some of the wilder downward swings afflicting other cryptocurrencies, like Bitcoin. In fact, XRP, as Ripple’s token is technically called, broke the $1 mark for the first time last Thursday, and quintupled its market cap to more than $5 billion between Wednesday and Friday of that week, according to data from CoinMarketCap, a cryptocurrency price tracker.

Exactly why Ripple’s XRP has rallied is not obvious. Recent partnerships with banks like American Express (axp), new hires from Facebook and elsewhere, hedge funds devoted to it, or quirks of the coin itself, as well as its supply, may contribute to the phenomenon.

In seeking an explanation for the uptick, some people have pointed to unverifiable rumors circulating in online forums that Coinbase, one of the biggest U.S. cryptocurrency exchanges, may add add support for it, thus allowing retail investors to purchase it on its website or app. Who knows. We certainly have no evidence that that’s true.

However, given the search interest, we put together a quick guide on how to purchase the stuff. If you were interested in acquiring some Ripple’s XRP, here’s how you might go about doing so.

First off, note that you cannot buy XRP on Coinbase. The site, which has soared to become one of the iPhone’s most popular in recent weeks, recently added support for Bitcoin Cash, a controversial “fork,” or spin-off, of Bitcoin. Coinbase already let’s you buy other cryptocurrencies such as Bitcoin, Ethereum, and Litecoin.

Ripple’s website lists all of the exchanges where XRP is available for purchase. Some of the top exchanges include Bitstamp, Kraken, and Gatehub.

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From here, it’s pretty simple. You create an account at your exchange of choice, enter some personal information, and navigate to make your purchase. For detailed instructions, Ripple’s website provides step-by-step instructions with screenshots for each exchange. Here are the guides for Bitstamp, for Kraken, and for Gatehub.

Trading in cryptocurrencies is an inherently risky business. You could lose everything—or not. We don’t know. Just don’t say we didn’t warn you.

Warren Buffett Thinks You're A Crummy Investor

The idea that index investing is a great way to invest is fundamentally flawed. Index investing guarantees average returns, nothing more, nothing less.

For indexers, if the stock market return is 100% over 5 years, you’ll get just a shade under 100% return on your money. If the stock market return is 0% over 5 years, you’ll get just a shade under 0% return on your money.

Warren Buffett has famously said that most people ought to invest in indexes. That implies it’s the best way to invest. But common sense and the results of great investors says that isn’t true.

Indexing is the best way to invest for below average investors. The problem is that investors aren’t on a bell curve. Most investors are below average. That is why the small percentage of good investors do so well, they are taking money from a big group of bad investors.

So, it’s not that Buffett believes indexing is a great way to invest, he just knows most investors are crummy and they shouldn’t even try, better to just index.

Average is as Average Does

The facts make it clear that the average investor inevitably underperforms the market. One study published by The Hartford Fund shows the average investor’s performance vs. the broader market:

Another informative study, published by JPMorgan (JPM) each quarter, makes the case more real. This chart shows how the average investor compares to multiple individual asset classes.

20-Year Annualized ReturnsThe orange bar represents the average investor. It is clear that over 20 years the typical investor achieved remarkably poor results. Looking at the light blue bar tells us the typical investor fell way behind the market average which is measured by the S&P 500 Index. While the S&P 500 returned 7.7% the average investor returned 2.3%, underperforming the market by a whopping 70%. The average investor barely even keeps up with inflation at 2.1%.

With individual investor performance so abysmal, it’s no wonder that Buffett suggest index investing. Here’s where it gets tough for people though. Which index should they use?

Proof is in the Performance

Warren Buffett has said the only fund you need to own is a simple low cost S&P 500 fund (SPY) (VOO). Stick with average and you won’t get yourself in trouble over the long-term. Ironically though, Berkshire Hathaway (BRK.B) owns about 60 companies and stocks. Berkshire Hathaway owns no S&P 500 funds.

I wrote a deep-dive article titled “ETF File: The Only ETF You Need To Start Investing.” In that article I explain to beginning investors why the PowerShares QQQ (QQQ) based on the Nasdaq 100 is the index fund to use for building a portfolio. I would submit that no matter what your portfolio size, if you plan to index, or have a core index holding like I do, then QQQ is the ETF to build with.

Here’s why in a couple pictures worth billions of dollars:

SPY vs QQQHere is the QQQ vs SPY and includes the “tech wreck” of 2000-2002. Even with a 70% drop initially, QQQ outperformed SPY since.

Here’s the past ten years:

QQQ vs SPYYou can see that the Powershares QQQ ETF outperforms the SPY 500 over really every extended time frame. The simple explanation for why is that QQQ is a newer index with less capital intensive companies. That is, they don’t have to invest as much as say manufacturers do in order to generate more profits. The QQQ companies are in general more scalable. Consider that large QQQ components Google (GOOG), Facebook (FB) and Microsoft (MSFT) can generate more revenue without really adding people, plant or equipment.

QQQ is what I call “lightly diversified” with a new economy focus. It is composed of nearly 60% technology stocks, but from many different sub sectors that serve various parts of the broader economy. It also includes about 20% consumer discretionary stocks, 11% health care stocks and 5% consumer staples.

While some might deride the technology weight as higher risk, I would ask, what type of company is PayPal (PYPL)? Tech or finance? Is Priceline (PCLN) a tech company or travel agency? What about Facebook? Is it tech, telecommunications, consumer discretionary or all of the above? According to the index makers, right now all three of those companies are tech.

And, just to make the point quickly, I’d note that dividend stock ETFs do not outperform QQQ either:

QQQ vs dividendsAn Asset Allocation Trade

Right now I believe the stock market is overvalued, per my Christmas Evening rant. Valuations across the board are historically high and dangerous.

ValuationsRight now, the PowerShares QQQ ETF is a hold. However, I have outlined three posts for members of Margin of Safety Investing where I’d be a buyer. I will share that chart for you today:

QQQRight now, I recommend selling SPY and VOO. Accumulate cash and look for a chance to allocate into a better index. I plan to go to 25% QQQ again someday, but am far below that now along with my stock portfolio and tactical ETFs around it. I currently hold about 25% cash.

Despite being around a quarter cash throughout 2017, I have returned about 40% in aggregate for managed accounts. I will share that chart on January 1st or 2nd.

I don’t believe that you don’t have to be fully invested and taking 100% of the stock market risk to make what the stock market makes. In fact, it’s my experience that you can hold cash and still outperform the S&P 500 regularly in my opinion. I talk about smart asset allocation and stock selection using methods I talk about in two free reports found here:

Here’s How I Beat The Market To Be A Top 10% Investor – Including 2 Special Reports

Through New Year’s Eve, “Margin of Safety Investing” will be available to new subscribers for only $365 per year. On January 1st, the rate rises to $499/year. I use access to multiple top research and analysis services, and a growing staff of analysts, combined with my “Core 4 Investing Method” and insights of 25+ years of experience, to find some of the best growth and dividend income opportunities with reduced risk. See my top-ranked history on TipRanks and read archived articles at MarketWatch where I was named “The World’s Next Great Investing Columnist.

Disclosure: I am/we are long QQQ.

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: I own a Registered Investment Advisor – https://BluemoundAssetManagement.com – however, publish separately from that entity for self-directed investors. Any information, opinions, research or thoughts presented are not specific advice as I do not have full knowledge of your circumstances. All investors ought to take special care to consider risk, as all investments carry the potential for loss. Consulting an investment advisor might be in your best interest before proceeding on any trade or investment.

Drones in 2017: The Good, the Bad, the Ugly

Drones in 2017: The Good, the Bad, the Ugly | Inc.com

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A Drone for Every Occassion

This year the drone industry experienced its first major buyout, its first life-saving innovation (blood delivery), and its first bankruptcy. From good, to bad, to ugly, check out the latest year in the drone industry.