TAIPEI (Reuters) – Foxconn posted second-quarter net profit well below expectations as a rise in component costs and unsold inventory weighed on the performance of the Apple supplier and world’s top contract electronics maker, analysts said.
FILE PHOTO: A shovel and FoxConn logo are seen before the arrival of U.S. President Donald Trump as he participates in the Foxconn Technology Group groundbreaking ceremony for its LCD manufacturing campus, in Mount Pleasant, Wisconsin, U.S., June 28, 2018. REUTERS/Darren Hauck/File Photo
The company, formally known as Hon Hai Precision Industry Co Ltd, reported net profit of T$17.49 billion ($567.25 million) late on Monday, 20 percent short of analyst expectations and slightly below the year-earlier results. Foxconn shares fell more than 3 percent on Tuesday.
Analysts said the results reflected concerns about a loss of momentum in global smartphone sales. Last week, Foxconn unit FIH Mobile Ltd posted a wider first-half loss and acknowledged that it faced a high risk of saturation in the smartphone market.
Foxconn’s results showed that its gross margin narrowed in the second-quarter in part owing to the cost of carrying unsold inventory of the iPhone X. Overall global smartphone shipments fell 3 percent to 350 million units in the April-June quarter compared with a year earlier, market research firm Strategy Analytics says.
However, Vincent Chen, an analyst at Yuanta Research, predicted a brighter outlook projected by Apple would benefit Foxconn and boost its margins in the third quarter.
Apple has forecast above-consensus revenue for later in the year, when it typically launches new iPhone models. Reports suggest these models will use OLED screens, which can display colors more vividly.
“We expect Hon Hai to be the main assembler of OLED version new iPhones and we believe the OLED iPhone model will see better demand in 2H18F,” Chen said in a research note.
The company’s report also illustrates its moves to diversify by pushing into new areas such as display screens – it bought Sharp Corp earlier this year – autonomous car startups and investments in cancer research.
Still, Foxconn earns most of its profits from manufacturing smartphones for Apple and other brands and from Foxconn Industrial Internet, a unit that makes networking equipment and smartphone casings, among other things.
“Investment in factory automation and component price hikes capped gross margin,” said Fubon Research analyst Arthur Liao.
Foxconn’s operating costs jumped 18.8 percent in the quarter.
Liao noted that Foxconn absorbed some expenses related to the Sharp acquisition this quarter, as well as development costs from setting up a factory in the United States, and taking Foxconn Industrial public in June.
Additional reporting by Chyen Yee Lee in Singapore and Yimou Lee in Taipei; Editing by Sayantani Ghosh and Neil Fullick
HANOI (Reuters) – VinFast Trading and Production LLC has signed two contracts with Siemens Vietnam, a unit of Siemens AG, for the supply of technology and components to manufacture electric buses in the Southeast Asian country.
The headquarters of Siemens AG is seen before the company’s annual news conference in Munich, Germany, November 9, 2017. REUTERS/Michael Dalder
VinFast, a unit of Vietnam’s biggest private conglomerate, Vingroup JSC, said on Monday the deals will enable it to launch the first electric bus by the end of 2019.
“Electric buses are an essential element of sustainable urban public transportation systems,” Siemens Vietnam President and CEO Pham Thai Lai said in the statement.
VinFast will also produce electric motorcycles, electric cars and gasoline cars from its $1.5-billion factory being built in Haiphong City, it said.
In June, General Motors Co agreed to transfer its Vietnamese operation to VinFast, which will also exclusively distribute GM’s Chevrolet cars in Vietnam.
A number of tech companies excised the rantings and ravings of Alex Jones, a pundit known for promulgating deranged conspiracy theories, from their digital repositories this past week.
On his website, InfoWars, Jones has been known to push baseless, detestable claims; for example, that the Sandy Hook massacre was a hoax and the September 11th attacks were orchestrated by the government. Fed up with Jones’ antics, Apple, Facebook, Spotify, and YouTube—with the notable exception of Twitter—corked his megaphone.
Add this confrontation to the longstanding tug-of-war between free speech and censorship on the web. One of my favorite contributions to this dialogue was supplied last year by Matthew Prince, CEO and cofounder of Cloudflare, a startup offering services that improve website performance and security. By policy, Prince’s firm chooses to protect all comers, whether that’s the webpage of an ecommerce startup or a black market site. Cloudflare has long maintained that policing the Internet is a job for, well, the police—not for itself.
Until Prince broke his own rule. As the CEO described it in a blog post, one day he felt a customer crossed the line. TheDaily Stormer, a neo-Nazi sympathizing site, said that Prince’s company was a secret supporter of its ideology. That went too far—and to prove the point, Prince gave the site the boot.
“Now, having made that decision, let me explain why it’s so dangerous,” Prince wrote. “Without a clear framework as a guide for content regulation, a small number of companies will largely determine what can and cannot be online.”
Subverting his own decision, Prince continued: “Law enforcement, legislators, and courts have the political legitimacy and predictability to make decisions on what content should be restricted. Companies should not.”
I don’t have an easy answer for these predicaments. But as I considered Facebook’s move, the words of the company’s parting security chief, Alex Stamos, rang in my ears. “We need to be willing to pick sides when there are clear moral or humanitarian issues,” he said in March, part of a letter addressed to Facebook that leaked publicly. “And we need to be open, honest and transparent about our challenges and what we are doing to fix them.”
Amen to that. What do you make of this debate, dear reader? I would like to hear from you. What is the right course of action for these companies? Is Twitter CEO Jack Dorsey in the right for keeping Jones afloat, or not?
Welcome to the Cyber Saturday edition of Data Sheet, Fortune’s daily tech newsletter. Fortune reporter Robert Hackett here. You may reach Robert Hackett via Twitter, Cryptocat, Jabber (see OTR fingerprint on my about.me), PGP encrypted email (see public key on my Keybase.io), Wickr, Signal, or however you (securely) prefer. Feedback welcome.
Absurdly Driven looks at the world of business with a skeptical eye and a firmly rooted tongue in cheek.
We waft about our lives absorbed in our fascinating selves and assuming so much about others.
We don’t really have much time for others, do we?
There’s so much to do and so much to post to Facebook.
Yet here’s the story of an Ohio student called Mackenzie Mauller. This week, she described a simple day when she pulled up at a Starbucks drive-thru.
Yesterday I bought coffee for the lady behind me at Starbucks.. later in the day I found this is my mailbox. Small acts can make a big difference folks, spread some kindness.
Paying it forward can mean paying it backward, you see.
The letter she received told a story she could have never expected.
Thank you for the coffee! I rarely go to Starbucks and treat myself, but the last couple of months have been a bit of a struggle. My father just passed away and he was also my babysitter. My family and my children have had a really hard time. This morning my babysitter called off sick and I had to take the day off work. I decided to buy my kids breakfast and get myself coffee with total guilt because I am going to become a stay-at-home mom for awhile.
The words total guilt were underlined.
The mom continued:
Since I was not planning on going this route in my life, I was not emotionally and financially prepared to quit working. I cried when I found out you were so sweet to buy my coffee and thrilled to see you in a couple houses down from where I live. I felt it necessary to know that what you did for me was more than just a coffee. It was something that turned my whole day around, put tears in my eyes and a smile on my face and I feel so grateful.
More than just a coffee.
Because we have a lot of assumptive talent, we have no idea what others may be going through.
Faces reveal and mask in equal measure.
Sometimes, a gesture this simple can have a strong and lasting effect, and the mom felt it necessary that Mauller know the effect her gesture had had.
I asked Mauller, who’s studying flight technology at Kent State University, what made her do what she did.
“There wasn’t much thought behind it,” she told me. “I just felt like doing something nice.”
She also told me she’s offered to babysit for Mauller.
“She has a babysitter, but if she needs someone I told her I could,” she said.
Mauller’s tweet went, as they say in today’s world. viral. Principally, I suspect, because simple, generous humanity is in rather short supply in our currently fractious world.
Mauller told the mom — Nicole Clawson — about the story now having been enjoyed by hundreds of thousands of people.
This has been such a great learning opportunity for them, on how to treat others, no matter what. They are excited to pay it forward, and treat others with kindness and selflessness.
Oh, I know the business world isn’t built on the twin rocks of kindness and selflessness.
But perhaps if these elements were a little more prominent, more people would enjoy their jobs and even be more productive.
It’s a thought, isn’t it?
Yesterday I bought coffee for the lady behind me at Starbucks.. later in the day I found this is my mailbox. Small acts can make a big difference folks, spread some kindness. pic.twitter.com/awNi4LSGJq
First built at SoundCloud in 2012, Prometheus became a standalone open-source project and joined the CNCF in 2016 as the second hosted project, after Kubernetes. This systems and service monitoring system collects metrics from configured targets at given intervals, evaluates rule expressions, displays the results, and can trigger alerts if some condition is observed to be true. When used with Kubernetes Prometheus supports service discovery and monitoring of dynamically scheduled services. It’s licensed under theApache 2.
Prometheus boasts the following features.
A multi-dimensional data model with time series data identified by metric name and key/value pairs
Targets are discovered via service discovery or static configuration
Multiple modes of graphing and dashboarding support
This sounds complex, but as Frederic Branczyk, a Red Hat Principal Software Engineer, wrote in a blog posting, “Prometheus is easy to set up as a single, statically linked binary that can be downloaded and started with a single command. In tandem with this simplicity, it scales to hundreds of thousands of samples per second ingested on modern commodity hardware. Prometheus’ architecture is well suited for dynamic environments in which containers start and stop frequently, instead of requiring manual re-configuration. We specifically re-implemented the time-series database to accommodate high churn use cases with short lived time-series, while retaining and improving query latency and resource usage.”
In short, Prometheus is a powerful, open-source system for collecting server metrics. It then stores them in a searchable database. With a highly dimensional data model, you can run queries to slice and dice a collected series of data to generate ad-hoc graphs, tables, and alerts, You can also integrate Prometheus allows with third-party data exporters, such as for Docker, HAProxy, and StatsD.
Branczyk continued, “Nearly as important as the software itself is Prometheus’ low barrier to entry into monitoring, helping to define a new era of monitoring culture. Multiple books have been written by both users as well as maintainers of Prometheus highlighting this shift towards usability, and even the new Google SRE workbook uses Prometheus in its example queries and alerts.” Chris Aniszczyk, CNCF’s COO added, “Since its inception in 2012, Prometheus has grown to become one of the top open-source monitoring tools of choice for enterprises building modern cloud native applications.”
Since Prometheus became a CNCF incubation program, its developers have completely rewritten its storage back-end to support high churn and been made more stable. The Prometheus team has also started a documentation push to make it easier to adopt.
“Since becoming part of CNCF, Prometheus has become an incremental piece in modern infrastructure stacks and helped shape the way organizations monitor critical applications,” said Julius Volz, Co-founder of the Prometheus project. “We are incredibly proud to have Prometheus graduate, and we look forward to working with CNCF to sustain and grow our community.”
The tiny, portable credit card readers you use to pay at farmer’s markets, bake sales, and smoothie shops are convenient for consumers and merchants alike. But while more and more transactions are passing through them, devices from four of the leading companies in the space—Square, SumUp, iZettle, and PayPal—turn out to have a variety of concerning security flaws.
Leigh-Anne Galloway and Tim Yunusov from the security firm Positive Technologies looked at seven mobile point of sale devices in all. What they found wasn’t pretty: bugs that allowed them to manipulate commands using Bluetooth or mobile apps, modify payment amounts in magstripe swipe transactions, and even gain full remote control of a point of sale device.
“The very simple question that we had was how much security can be embedded in a device that costs less than $50?” Galloway says. “With that in mind we started off quite small by looking at two vendors and two card readers, but it quickly grew to become a much bigger project.”
All four manufacturers are addressing the issue, and not all models were vulnerable to all of the bugs. The researchers are presenting their findings Thursday at the Black Hat security conference.
The researchers found that they could exploit bugs in Bluetooth and mobile app connectivity to the devices to intercept transactions or modify commands. The flaws could allow an attacker to disable chip-based transactions, forcing customers to use a less secure magstrip swipe, and making it easier to steal data and clone customer cards.
Alternatively, a rogue merchant could make the mPOS device appear to decline a transaction to get a user to repeat it multiple times, or to change the total of a magstripe transaction up to the $50,000 limit. By intercepting the traffic and clandestinely modifying the value of the payment, an attacker could get a customer to approve a normal-looking transaction that is really worth much more. In these types of frauds, customers rely on their banks and credit card issuers to insure their losses, but magstripe is a deprecated protocol, and businesses who continue to use it now hold the liability.
The researchers also reported issues with firmware validation and downgrading that could allow an attacker to install old or tainted firmware versions, further exposing the devices.
The researchers found that in the Miura M010 Reader, which Square and Paypal formerly sold as a third-party device, they could exploit connectivity flaws to gain full remote code execution and file system access in the reader. Galloway notes that a third-party attacker might particularly want to use this control to change the mode of a PIN pad from encrypted to plaintext, known as “command mode,” to observe and collect customer PIN numbers.
The researchers evaluated accounts and devices used in the US and European regions, since they’re configured differently in each place. And while all of the terminals the researchers tested contained at least some vulnerabilities, the worst of it was limited to just a few of them.
“The Miura M010 Reader is a third-party credit card chip reader that we initially offered as a stopgap and today is used by only a few hundred Square sellers. As soon as we became aware of a vulnerability affecting the Miura Reader, we accelerated existing plans to drop support for the M010 Reader,” a Square spokesperson told WIRED. “Today it is no longer possible to use the Miura Reader on the Square ecosystem.”
“SumUp can confirm that there has never been any fraud attempted through its terminals using the magnetic stripe-based method outlined in this report,” said a SumUp spokesperson. “All the same, as soon as the researchers contacted us, our team successfully removed any possibility of such an attempt at fraud in the future.”
“We recognize the important role that researchers and our user community play in helping to keep PayPal secure,” a spokesperson said in a statement. “PayPal’s systems were not impacted and our teams have remediated the issues.”
iZettle did not return a request from WIRED for comment, but the researchers say that the company is remediating its bugs as well.
Galloway and Yunusov were happy with the proactive response from vendors. They hope, though, that their findings will raise awareness about the broader issue of making security a development priority for low cost embedded devices.
“The kind of issues we see with this market base you can see applying more broadly to IoT,” Galloway says. “With something like a card reader you would have an expectation of a certain level of security as a consumer or a business owner. But many of these companies haven’t been around for that long and the products themselves aren’t very mature. Security isn’t necessarily going to be embedded into the development process.”
I started my “portable” computer life with a 22-pound KayPro II in 1982. Since then, I’ve used IBM and Lenovo ThinkPads, Compaq luggables, Nec Ultralites, Dell XPS 13s, the list goes on and on. These days, my laptop of choice is the Google Pixelbook.
At a starting price of $999, this is not a Chromebook for everyone. But, if you want to make the most not just from Chrome OS, but from Android and Linux as well, it’s your Chromebook.
At a minimum the Pixelbook comes with a 1.2GHz 7th gen Intel Core 7Y57 processor, 256GB of SSD storage, and 8GB of RAM. Unlike the others, the Pixelbook comes not with a 100GB free Google Drive storage for two years, but 1TB of free storage for two years. That’s a value of almost $240 alone.
The Pixelbook also has Google Assistant, built-in. You can get to it via its own dedicated button on the Pixelbook’s keyboard or by simply saying “OK Google.” It’s context sensitive, so it will open with search results for what you already have on screen.
This luxury-model Chromebook comes with a pair of USB-C ports. One of these, however, is used to power the system up. For Wi-Fi, it uses 802.11ac.
With a battery life of about 10 hours, it won’t last long as some of the others, but then you can do a lot more with it. On my high-end model, I’ve had over 100 tabs open, while running Android and Linux applications.
You sure wouldn’t want to give this Pixelbook to an elementary student, but an advanced high-school or college student would be another matter. The Pixelbook is meant for power users and developers, if that describes your daughter or son, then get them this one. You’ll be glad you did.
NEW YORK (Reuters) – Elon Musk’s suggestion on Tuesday that he would like to take Tesla Inc private may provide something the electric car maker needs: a little debt relief.
FILE PHOTO: Tesla Motors Inc Chief Executive Elon Musk pauses during a news conference in Tokyo September 8, 2014. REUTERS/Toru Hanai/File Photo
The 11 percent jump in Tesla’s stock price following Musk’s public musings on possibly buying the company from existing shareholders drove $2.3 billion of convertible debt past the level at which investors can swap them for stock at a profit.
Tesla shares ended the day at $379.57, within reach of their all-time high and more than 5 percent above the bonds’ conversion price of $359.8676.
“This is great news for any bondholder any way you spin it,” said Ross Gerber, chief executive of Gerber Kawasaki Wealth and Investment Management who owns both the convertibles and the stock.
“Most of these bonds are convertible notes, so we can choose to convert into stock at a huge profit,” he said. “This is a boon for any bondholder at Tesla, because most of the bonds are convertible notes.”
Convertibles give bondholders the right to trade their debt for equity after shares rise over a certain set price.
The $2.3 billion in debt that investors can now take in equity rather than cash removes pressure from the cash-strapped company which has about $9.5 billion in long-term debt, according to its latest financial statements.
After first issuing a tweet that he was mulling the idea of taking Tesla private, Musk on Tuesday said in a letter to employees that he would prefer to run Tesla as a private company to allow it to operate away from the attention it receives due to its notoriously volatile stock price.
While no final decision has been made, he suggested a buyout price of $420 per share.
Investors like billionaire George Soros now have the option to take advantage of Tesla’s recovering share price, as the company’s $920 million convertible bond due in March 2019 passed its $359.8676 conversion rate.
Soros Fund Management LLC took a $35 million stake in the 2019 Tesla convertible bonds in May of 2018.
The company’s $1.38 billion convertible bond due in March 2021 also passed the same conversion rate.
The convertibles have oscillated between being in and out of the money several times over the last year.
They first rose above the conversion price in June 2017 and Tesla’s stock price hit a record high of $389.61 in September last year. The stock then plunged to as low as $244.59 in April as the company struggled to meet production targets for its Model 3 sedan and Moody’s Investors Service cut Tesla’s credit rating deep into junk-bond territory.
Tesla on Aug. 1 reported that it had ended the second quarter with $2.78 billion in cash after spending $610 million in capital expenses, while its negative free cash flow narrowed.
Tesla has been burning through cash as manufacturing problems have thwarted its ability to meet production targets for its Model 3 sedan.
The company also has a $1.8 billion high-yield bonds, which rose to 92 cents on the dollar on Tuesday, up half a cent and the highest since mid-June. Following the Moody’s downgrade, the bond had fallen to as low as 86.25 cents on the dollar. It now yields 6.75 percent versus more than 7.7 percent in early April.
Reporting by Kate Duguid; Editing by Dan Burns and Clive McKeef
SAN FRANCISCO (Reuters) – Chief Executive Elon Musk said on Tuesday he is considering taking Tesla Inc private in what would be the largest deal of its type, moving the electric car maker out of the glare of Wall Street as it goes through a period of rapid growth under tight financial constraints.
“Am considering taking Tesla private at $420. Funding secured,” Musk said on Twitter bit.ly/2Om3gn3. At $420 per share, a deal would be worth $72 billion overall.
In a letter to Tesla employees published more than an hour later on the company’s blog here, Musk explained that going private would be “the best path forward.” Such a move – over which no final decision had been made – would let Tesla “operate at its best, free from as much distraction and short-term thinking as possible,” he wrote.
Tesla shares closed up 11 percent at $379.57, slightly below their all-time high.
Asked on Twitter whether Musk would continue to be CEO under such a scenario, he replied there would be “no change.”
Musk has been under intense pressure this year to turn his money-losing, debt-laden company into a profitable higher-volume manufacturer, a prospect that has sent Tesla’s valuation higher than that of General Motors Co.
The company is still working its way out of what Musk called “production hell” at its home factory in Fremont, California, where a series of manufacturing challenges delayed the ramp-up of production of its new Model 3 sedan, on which the company’s profitability rests.
The Silicon Valley company faces a make-or-break moment in its eight-year history as a public company as competition from European automakers is poised to intensify with new electric vehicles from Audi and Jaguar, with more rivals to follow suit next year.
Meanwhile, Tesla has announced plans to build a factory in Shanghai, China, and another in Europe, but details are scarce and funding unknown.
Going private is one way to avoid close scrutiny by the public market as Musk and the company face those challenges. Musk has feuded publicly with regulators, critics, short sellers and reporters, and some analysts suggested that less transparency would be welcomed by Musk.
“Musk does not want to run a public company,” said Gene Munster of Loup Ventures, as Tesla’s ambitious mission makes it “difficult to accommodate investors’ quarterly expectations.”
Musk owns nearly 20 percent of the company. He said in his letter to employees he did not seek to expand his ownership.
A price of $420 per share would represent a nearly 23 percent premium to Tesla’s closing price on Monday, which gave the company a market value of about $58 billion.
In his letter, Musk suggested a choice for shareholders of selling their shares for $420 each or remaining investors in a private Tesla. He said he hoped all current investors would remain were the company to go private.
He made no mention in his tweets nor his letter where the funding for a deal would come from, and the letter did not discuss funding for the plan.
Like any other investor, Musk is beholden to securities laws and several securities attorneys told Reuters he potentially could face lawsuits if it was proven he did not have secure financing at the time of his tweet.
If Musk were to succeed in taking Tesla private, it would be the largest leveraged buyout of all time, beating the record set by the $45 billion deal for Texas power utility Energy Future Holdings, which ended in bankruptcy in 2014.
Raising both the debt and equity required for such a deal would be a challenge. Many major Wall Street bankers contacted by Reuters said on condition of anonymity they were not aware of Musk’s plans ahead of his tweets, and several expressed skepticism that a leveraged buyout of Tesla could be financed given the company’s negative cash flow.
“It’s unfathomable to me that anyone would finance the acquisition of such a liability-laden company that is losing so much money and have massive capex requirements going forward,” said Mark Spiegel, portfolio manager of hedge fund Stanphyl Capital Partners, who holds a short position in Tesla and has been a vocal critic of Musk on Twitter.
FILE PHOTO: Elon Musk listens at a press conference following the first launch of a SpaceX Falcon Heavy rocket at the Kennedy Space Center in Cape Canaveral, Florida, U.S., February 6, 2018. REUTERS/Joe Skipper/File Photo
The most obvious equity partners for Musk would be a sovereign wealth fund such as Saudi Arabia’s Public Investment Fund (PIF) or major technology investment funds such as SoftBank Group Corp’s Vision Fund, bankers said.
China’s Tencent Holdings, which took a 5 percent stake in Tesla last year, is another possible partner.
Such foreign sources of capital would be subject to scrutiny by the Committee on Foreign Investment in the United States (CFIUS), which looks closely at deals for potential national security risks.
Earlier on Tuesday, a source familiar with the matter said Saudi Arabia’s PIF had bought a minority stake of just below 5 percent in Tesla.
The U.S. Securities and Exchange Commission declined to comment on Musk’s tweet, but the agency allows companies to use social media outlets like Twitter to announce key information in compliance with its fair disclosure rules if investors are alerted about which social media outlets will be used.
Tesla alerted investors in a 2013 SEC filing that they should follow Musk’s Twitter feed for “additional information” about the company. There is no reference to Musk’s Twitter account on the company’s investor relation page under “investor communication,” although Tesla’s Twitter feed is included.
In his letter to employees, Musk wrote that, “as the most shorted stock in the history of the stock market, being public means that there are large numbers of people who have the incentive to attack the company.”
A short squeeze is a trading scenario that occurs from time to time in heavily shorted stocks, when bearish traders are forced to buy shares to avoid big losses – something that ends up pushing the stock only higher.
Short interest in Tesla on Tuesday stood at nearly $13 billion, according to S3 Partners, a financial analytics firm.
FILE PHOTO: A Tesla sales and service center is shown in Costa Mesa, California, U.S. June 28, 2018. REUTERS/Mike Blake
Reporting by Sonam Rai in Bengaluru, Alexandria Sage in San Francisco, Carl O’Donnell, Liana Baker, David Randall in New York and Pete Schroeder in Washington; editing by Saumyadeb Chakrabarty, Bill Rigby and Chris Reese