Sprint and T-Mobile nearing merger agreement

T-Mobile and Sprint, respectively the third and fourth largest wireless carriers in the U.S., are nearing a merger agreement, undisclosed sources told Reuters Friday. A due diligence period would follow the finalization of the agreement’s terms, but the companies expect a deal by October, according to Reuters’ source.

In August, Reuters says, Sprint CEO Marcelo Claure said an announcement regarding merger talks would come in “the near future.”

The merger proposal would be the first one “with significant antitrust risk” to be submitted to the Federal Trade Commission since President Donald Trump took office, Reuters notes. The President was elected on a platform that included the deregulation of the business environment.

Mayoshi Son, the founder of Japanese venture capital firm SoftBank, which controls the Sprint Corporation, met with Trump in late December, just after the former tycoon won the election.

Son found Trump’s business policy potentially favorable for SoftBank, and promised to invest $50 billion in the U.S. economy and to create 50,000 jobs.

A merger proposal would evince Son’s confidence that the regulatory environment has become laxer since Sprint and T-Mobile abandoned a merger proposal in 2014 amidst pressure from the FTC.

Indeed, the FTC might be more receptive to a transformative merger in the telecom industry now than it was three years ago. Earlier this year, Reuters says, FTC Chairman Ajit Pai said “effective competition [exists] in the marketplace for mobile wireless services.” Thursday, the agency will vote on whether to submit Pai’s report on the state of competition in the wireless services market to the U.S. Congress, which requires such a report annually.

But, the terms of the new merger will likely be less advantageous for Son and Sprint than those reached in 2014. Under the previous deal, Sprint would have controlled the combined company, while T-Mobile’s parent company, Deutsche Telecom, would have become a minority shareholder.

Over the past three years, though, T-Mobile has outperformed Sprint. Accordingly, the terms of the new agreement will likely flip, Reuters’ source said. Deutsche Telecom and T-Mobile stockholders would own a majority of the combined enterprise, while SoftBank and the rest of Sprint’s shareholders would have a minority stake.

T-Mobile CEO John Legere, who took the reins in 2012 and has guided the company’s surge, will likely run the combined company.

The merged enterprise would have 130 million subscribers, Reuters notes, making it the United States’ third-largest wireless carrier, behind AT&T, which had 136.5 million subscribers as of July, and Verizon, which reported 147.2 million subscribers that same month.

Sprint’s market cap of approximately $34 billion, combined with T-Mobile’s $53 billion figure, would give the new company a value of around $87 billion. AT&T’s market cap is about $237 billion; Verizon’s exceeds $205 billion.

Sprint reported annual revenue of $33.3 billion for fiscal 2016, which ended March 31. T-Mobile posted $37.2 billion in annual revenue for calendar 2016. So, the combined company would likely generate over $70 billion annually.

Verizon posted consolidated revenues of $126 billion and wireless revenues of $89.2 billion in 2016. AT&T’s figure came in at $163 billion.

Analysts say the Sprint/T-Mobile merger provides ample opportunity to cut expenses as well.

In their bid for regulatory approval, the companies will likely emphasize that the combined company would create jobs by making investments in the development of 5G, the next generation of mobile internet connectivity.

But the merger will also precipitate layoffs as the new company consolidates its corporate structure, Roger Entner of Recon Analytics told Reuters.

According to Reuters, Sprint briefly pursued a merger with Charter Communications earlier this year.

The FTC continues to review another potential consolidation in the industry: AT&T’s proposed $85.4-billion acquisition of Time Warner.

Sprint shares jumped six percent Friday; T-Mobile stock rose 1.06 percent.

Toshiba board agrees to sell memory business to Bain-led group

Wednesday, the board of reeling technology giant Toshiba announced that it has approved the $18 billion sale of the company’s flash memory operation, Toshiba Memory Corporation (TMC), to a group of buyers that includes American venture capital firm Bain Capital, and a pair of government-owned Japanese organizations, the Innovation Network Corporation of Japan, the New York Times reports.

The Financial Times says the Japanese government’s involvement in the deal evinces the integrality of Toshiba’s success to the Japanese economy.

Toshiba is fighting to stay afloat after its nuclear power subsidiary, Westinghouse Electric Company, lost money on a number of ill-fated American nuclear projects. Westinghouse, which Toshiba acquired for $5.4 billion in Spring 2006, filed for bankruptcy protection in March.

Toshiba has entered survival mode, draining its cash reserves to remain operational. With the sale of TMC, the company is seeking to generate a short-term cash infusion that will facilitate a recovery.

According to the New York Times, Toshiba was in danger in March of being barred from the Tokyo Stock Exchange unless the company generated new capital.

Though Toshiba just created TMC in April, the company has been a major player in the flash memory sector since the inception of the technology.

A Toshiba engineer invented flash memory in 1980, and the company introduced the technology to the world in 1987. Since, Toshiba’s memory business has provided an integral revenue stream. Today, the company is the world’s second-largest producer of microchips, by volume, second only to South Korean competitor Samsung.

Flash memory is solid-state, meaning it stores data electronically rather than mechanically. Unlike RAM, another solid-state storage system, flash memory does not require power to preserve data, making it ideal for use in portable devices like digital cameras, video game consoles, smartphones, etc.

Even after the sale, Toshiba will likely maintain a significant amount of control over the business, though the buyers will take the lion’s share of the profits.

Toshiba has indicated plans to partner with Bain to create the special purpose company that will purchase TMC.

The new company—which Bain has dubbed Pangea, according to the Financial Timeshas received financial support from Apple, Dell, and others.

Analysts expect Toshiba to hold a minority stake in the new company, and to have considerable decision-making power.

The shareholder structure, the New York Times says, could allow Toshiba to maintain control of the new company’s operations. Buyers will get “a mix of regular shares, preferred shares — which normally do not carry voting rights — and bonds that could eventually be converted into shares.”

The sale awaits antitrust review and has attracted legal opposition from Western Digital, an American company that co-runs a joint microchip-production operation with Toshiba in Japan.

Western Digital claims that the partnership gives it a vested interest in Toshiba’s memory business and that Toshiba is not authorized to sell TMC without Western Digital’s approval. The American firm has initiated legal action to block the sale. The International Court of Arbitration is now reviewing the case.

Western Digital issued a statement Wednesday calling Toshiba’s pursuit of the selloff “troubling” and expressing confidence that the court would side with Western Digital.

Because the sale has yet to be finalized, the door remains open for Toshiba to negotiate with and field offers from other buyers.

A bidding war has been ongoing for the past several months.

Earlier this month, Taiwanese tech behemoth Foxconn, with the support of Apple, venture capital firm SoftBank and others, made a bid to buy TMC. The New York Times’ source says Foxconn offered a healthy sum, but that Japanese authorities feared selling to Foxconn would compromise the country’s leadership in the global technology market.

Western Digital been among TMC’s suitors.

Toshiba stock has dropped about 50 percent since April 2013. As of Thursday afternoon, shares are down 2.9 percent on the news.

Featured image via Wikimedia Commons

Markets rise as Irma weakens, North Korea anniversary passes without nuke test

Markets around the world are rising as Florida missed the worst of Irma this weekend, and as North Korea’s founding celebration, which took place Saturday, did not include a missile test, Reuters reports.

Irma hit the Florida keys Sunday as a Category 4 hurricane, then came into Miami, damaging several buildings and creating a storm surge that caused flooding in the downtown area of the city, The Wall Street Journal reports. The full extent of the damage remains unknown, as many of the hardest-hit areas are still inaccessible. The Journal points out that the National Weather Service expects severe conditions to persist in central and western Florida.

Irma continues to lose strength, The Washington Post notes. By Tuesday, experts expect it to weaken to a tropical depression. But, the storm remains capable of producing hurricane-force gusts, and will likely create a “life-threatening” storm surge, cautions the National Hurricane Center. A storm surge warning is in effect across much of the Atlantic and Gulf coasts.

The Post cites a National Weather Service tweet that says Irma’s storm surge produced record flooding in downtown Jacksonville Monday morning.

Nonetheless, Floridians caught something of a break over the weekend. On Friday, the Journal says, some models projected that the storm would hit Miami and east coast Florida head-on—instead, the storm turned toward the gulf coast.

“For now, we’re seeing a bit of a relief rally [in the market]. It does appear that the worst-case scenario for Florida has been evaded,” said Peter Cardillo, chief market economist at First Standard Financial in New York, per Reuters.

Meanwhile, North Korea tested no missiles over the weekend, though, according to the New York Times, leaders did hold a massive gala for the country’s nuclear scientists Saturday, in conjunction with national anniversary celebrations.

Last Sunday, North Korea successfully detonated its sixth nuclear bomb.

The MSCI AC World Equity Index, MIWD00000PUS, which tracks 2,400 stocks in 47 countries, according to Reuters, surged to a new high Monday morning, and as of 1:27 Eastern Monday. DXY, an index that compares the U.S. dollar to six other currencies, has jumped 33 cents (0.36 percent) since 11:59 p.m. Sunday. DXY is recovering after having hit a two-and-a-half-year low Friday.

Meanwhile, stock markets in Tokyo had their best session since June, according to Reuters. Relief about the situation in North Korea, as well as a weakening yen, spurred the surge.

In the U.S., shares are up one percent across Wall Street, Reuters says. As of 2:30 p.m. EST Monday, the DOW Jones Industrial Average has risen 260.19 points (1.19 percent) since it closed Friday. The S&P 500 has jumped 1.06 percent since Friday’s close, and now sits at 2487.67.

Demand for gold is falling, as investors are, according to Reuters, more inclined to assume risk given the relative stability of the U.S.’s relationship with North Korea and the relatively mild damage Irma wreaked upon Florida. As of 2:47 Eastern Monday, one troy ounce of gold is worth $1330.61, a decrease of $10.64 (0.8 percent).

Oil investments are falling out of favor as well, as the market frets over Irma’s and Harvey’s impacts on the supply of oil in the U.S., which Reuters says consumes more oil than any other nation.

“Brent crude oil futures for November delivery LCOc1 were down 66 cents [1.23 percent] at $53.12 a barrel, while benchmark U.S. West Texas Intermediate crude CLc1 declined by 33 cents [0.7 percent] to $47.15,” Reuters writes.

Jim Paulsen, chief investment strategist at the Leuthold Group in Minneapolis, said that a weaker dollar, along with lower interest rates, will provide more fuel to the U.S. economy in the near future.

“We are massively stimulating this economy that’s already doing pretty well,” he said. “That’s likely to accelerate an already-good economy even further the next 12 months.”

Featured image via Wikimedia Commons

Carpooling service Via closes investment round, plans U.S. and oversea expansion

Carpooling service Via just completed a funding round, the proceeds of which the company intends to use to expand its service in the U.S. and to establish a presence in Europe, TechCrunch reports. Via will begin London operations in the near future, and Paris service soon after.

The amount of the funding round remains undisclosed, but a source told TechCrunch the number was $250 million.

Prior to the investment round, Zirra estimated the company’s value between $450 million and $500 million, TechCrunch notes. Following the round, then, Via could be worth as much as $750 million.

Via provides carpool service to riders seeking a cheaper alternative to operations like Uber and Lyft. A single Via vehicle carries up to five passengers at a time, so customers can book rides for as little as $5 plus tax. An algorithm determines routes in real-time as customers request rides, so unlike conventional public transit systems, Via is not constrained by a preset schedule. The company’s website says the average wait time is five minutes.

Today, Via runs 24-hour service in its hometown of New York City and also operates in Washington, D.C. and Chicago. TechCrunch says the service gives about one million rides per month.

In addition to running its own operation, Via licenses its platform to other transportation companies, including Arriva—a subsidiary of German-based railway company Deutsche Bahn AG—which operates buses, trains, and other mass transit options across 14 countries in Europe, and Keolis, a subsidiary of France-based SNCF, which offers similar service worldwide.

Daimler AG, which owns Mercedes-Benz, led Via’s most recent funding round, and the two companies plan to intensify their partnership. In addition to its contribution to the funding round, Daimler will provide $50 million towards a joint venture project with Via.

The two companies have been collaborating for years, TechCrunch notes. In late 2015, Via joined forces with Mercedes-Benz Research and Development North America, Inc. to launch a pilot program in Orange County, CA, a suburb of Los Angeles. Mercedes provided Via with Metris passenger vans for that trial program.

Daimler and Mercedes will likely provide vehicles for Via’s European expansion as well. The partnership with Via will give Daimler a ready-made sales connection and will provide a platform through which Daimler can develop and test vehicles optimized for carpooling.

As tech-based transportation start-ups change the way consumers approach moving around, automakers are seeking the most efficient ways to adapt to the changes in the industry.

“One big question is, ‘what is the right vehicle?’” Via CTO and co-founder Oren Shoval told TechCrunch “There are the seating arrangements, how you connect the sensors, what kind of door it should have. This is a big piece of mobility.”

Shoval adds that the Via-Mercedes partnership will streamline and solidify Via’s service. “We also believe that the vehicles in the network, at the end of the day, it’s not just an app but a whole service that you are getting. It makes sense to have these things converge,” said Shoval.

Volker Mornhinweg, head of Mercedes-Benz Vans, echoed Shoval’s sentiment that the partnership would improve Via’s service, and added that the collaboration was important to Daimler’s long-term strategy in the changing transportation sector.

“Via is one of the most successful providers in the growing ride-sharing sector while Mercedes-Benz Vans has the perfect vehicles that are being continuously optimized for this job,” he said. “By deepening our cooperation with Via, we are thus taking the next logical step in the context of our strategy for the future and are expanding our range of new mobility services.”

Daimler launched Car2Go, which allows users to rent cars parked in various places around a city and then return those cars to one of many drop zones around town, in 2008. Now, Car2Go operates in 26 cities across North America, Europe and Asia, and serves 2.5 million registered members.

Daimler, in tandem with Audi and BMW, bought GPS mapping service Here in late 2015 and has independently acquired a number of ride-sharing companies, including Germany’s MyTaxi, the U.K.’s Hailo, and Taxibeat in Greece. All three of those services have merged under the MyTaxi umbrella since Daimler acquired them.

Featured Image via Wikimedia Commons

Chinese authorities crackdown on cryptocurrency ICOs

Monday, the Chinese government banned the practice of creating and selling new cryptocurrencies, Reuters reports

With the rise of Blockchain technology, initial coin offerings (ICOs)—which give investors the opportunity to buy newly-created cryptocurrencies—have gained popularity. In total, Reuters says, ICOs have raised $2.32 billion since the inception of the cryptocurrency market; $2.16 billion of that amount has come in 2017.

In China this year, 65 ICOs have raised a combined 2.62 billion yuan ($394.6-million) and attracted 105,000 investors, according to Reuters.

The value of Ethereum, the cryptocurrency in which most ICOs are transacted, has plummeted on the news. On Sunday, one Ethereum token was worth $349.93. Late Monday, that figure had fallen 14.3 percent to $299.72. As of 1:33 p.m. Eastern Tuesday, Ethereum has recovered slightly; the USD-Ethereum exchange rate sits at 307.56 to one.

The Bitcoin-USD exchange rate has dropped 5.9 percent since midnight Monday morning on China’s news. Late Sunday night, one bitcoin was worth $4,632.46. As of 1:39 Eastern Tuesday, the value of a single bitcoin token is $4,359.07.

The market capitalization of the cryptocurrency industry as a whole dropped 11.66 percent Monday, from $165.095 billion to $145.833 billion. Since midnight Tuesday morning, though, the industry’s market cap has gained 1.7 percent. As of 1:55 p.m. Eastern, the industry is worth $148.358 billion.

“The large price falls can be attributed to panic amongst traders and profit-taking,” said Cryptocompare founder Charles Hayter, per Reuters.

Indeed, China’s announcement had many investors across the internet predicting doom and gloom. A participant in one chatroom set up for an upcoming ICO said “the music has stopped” for the cryptocurrency boom, Reuters reports.

“Sell all your bitcoins now,” another advised, again per Reuters.

The organizer of the ICO to which the chatroom was dedicated, which was meant to launch a new cryptocurrency called SelfSell, has suspended the project.

Regulators around the world are struggling to understand cryptocurrency investment and the risks associated with it, said Zennon Kapron, director of the Shanghai-based financial technology consultancy Kapronasia, per Reuters.

Prior to China’s announcement, the U.S. Securities and Exchange Commission, as well as similar agencies in Singapore and Canada, warned that regulations would likely be needed to control the cryptocurrency market.

The lack of regulation governing cryptocurrency and investment in it is unprecedented. Blockchain, the backbone of cryptocurrency transactions, functions without a centralized overseer.

The nature of investment in cryptocurrency is also unconventional. When one contributes to a fundraiser for a traditional company, one generally receives a share in the company and/or a security. ICO investors, Reuters notes, receive neither.

Therefore, Reuters points out, an investment in a cryptocurrency is little more than a bet that demand for that currency will exceed supply, driving up value. It is a risky bet, considering the volatility of cryptocurrencies.

With risks to investors so high, government regulators are purportedly taking strides to protect their citizens. Cryptocurrency expert and Blockchain proponent Oliver Bussman said, per Reuters, that the lack of private financial advice firms in China obligates the government to be especially vigilant in protecting the finances of its constituents.

Of course, many would argue that it is an investor’s own responsibility to protect him/herself.

Despite some predictions that China’s move spells the beginning of the end of the cryptocurrency boom, many experts believe the regulatory shutdown is but a temporary measure designed to give the country’s government time to develop a strategy by which to handle cryptocurrencies.

“China, in many ways, is no different than the U.S. or Singapore in saying, ok, we need to push back on these for now until we figure out how to deal with them,” Kapron said, per Reuters, adding that he expected regulators in China to eventually ease the ICO ban.

Bussman says, per Reuters, that cryptocurrency technology is too revolutionary, too integral to the future of global economics, to be shutdown. Cryptocurrency, he says, has already worked itself into the fabric of modern investment.

“The initial coin offering is a new business model leveraging blockchain technology and it will remain. This is not the end of the ICO – absolutely not,” he said.

Featured Image via Flickr/BTC Keychain

Fox News will no longer broadcast in the UK

21st Century Fox announced Tuesday that it will pull Fox News from UK airwaves, The Guardian reports. The network’s final broadcast across the pond took place at 4:00 p.m. local time Tuesday.

A spokeswoman told The Guardian: “[Fox] has decided to cease providing a feed of Fox News Channel in the UK. Fox News is focused on the US market and designed for a US audience and, accordingly, it averages only a few thousand viewers across the day in the UK. We have concluded that it is not in our commercial interest to continue providing Fox News in the UK.”

21st Century Fox awaits British authorities’ approval of its bid to acquire Sky TV, the UK’s top pay television network. The US media giant already owns 39% of Sky and is seeking to acquire the remaining 61% in the £11.7 billion ($15.2 billion) deal.

Sources told The Guardian the decision to pull Fox News out of the UK was strictly economical and in no way related to the pending acquisition.

But, UK media regulators and lawmakers have raised concerns about the “corporate culture” of the network. According to CNN, the British Office of Communications (Ofcom), which was tasked with reviewing the proposed takeover, said following its review that the sexual harassment allegations against former Fox News chairman Roger Ailes and former anchor Bill O’Reilly, were “deeply disturbing,” and evinced “significant failings of the corporate culture.”

O’Reilly and Ailes both denied the allegations, CNN notes.

Ofcom found no evidence that senior management at Fox had been aware of the alleged misconduct prior to July 2016. CNN reports that 21st Century Fox management (namely, Rupert Murdoch and his sons Lachlan and James)  “pressured Ailes to resign,” which he did in July 2016.

In April, Fox and O’Reilly parted ways. “After a thorough and careful review of the allegations,” 21st Century Fox said in a statement per foxnews.com, “the company and Bill O’Reilly have agreed that Bill O’Reilly will not be returning to the Fox News Channel.”

Despite its concerns regarding the sexual harassment allegations, Ofcom concluded that 21st Century Fox qualified as a “fit and proper” holder of Sky. The regulatory agency did not deem further investigation of the network’s broadcasting practices necessary.

Still, British lawmakers and lobbyist groups are urging Karen Bradley, the UK’s Secretary of State for Digital, Culture, Media and Sport, to refer the Fox-Sky deal for additional review. In response to those petitions, Bradley’s office asked Ofcom to conduct further research. Friday, the office confirmed that it has received “additional advice” from Ofcom concerning the deal, Deadline reports.

“The Secretary of State will now carefully consider that advice before making her decision on referral on the basis of all the evidence before her, and will do so as soon as is reasonably practicable,” the office says, per Deadline.

Bradley said late last month that while she saw no reason to further review 21 Century Fox’s adequateness as a broadcaster, she was likely to refer the deal for review by the UK’s Competition and Markets Authority (CMA).

“Unless new evidence…changes my mind in coming weeks, the bid will therefore be referred for a Phase 2 review on at least one ground: media plurality,” Bradley told Parliament in mid-July, per Variety.

Deadline notes that CMA reviews can take up to six months. If the deal is not finalized by the end of this year, 21st Century Fox will pay Sky shareholders £170 million ($219 million).

Twenty-two million viewers across five European countries—the UK, Ireland, Italy, Germany and Austria—pay for Sky service,

The European Union has already approved the acquisition. UK authorities represent the final regulative hurdle before finalization.

If the deal dissolves, Fox will pay Sky an additional £200 million ($258 million).

Featured Image via Flickr/Johnny Silvercloud

Indonesia extradites xiu.com founder, China continues crack down on fugitives

Chinese authorities have extradited Ji Wenhong, founder of online clothing retailer xiu.com, from Indonesia to face smuggling charges, the AP reports via New York Daily News. Indonesian officials returned Ji to China Saturday.

Authorities accuse Ji of having designed a system by which his company illegally imported goods from Europe and the US. Allegedly, the company would order goods from foreign clothing sellers and have the products shipped to Hong Kong. Then, travelers would carry the goods to mainland China, disguising them as personal belongings so as to avoid import taxes.

The AP cites Chinese authorities as saying the products were worth 438 yen ($65.5 million). Ji, authorities say, neglected to report the true value of the goods.

Ji fled China for Indonesia in May 2016 following the initial smuggling charges. His extradition is the latest fruit of Operations Fox Hunt and Sky Net, two concerted efforts by the Chinese government to repatriate a number of fugitives.

The international law enforcement operations, which President Xi Jinping launched as part of a comprehensive crusade against corruption in the government, have achieved a certain degree of success despite the reluctance of countries like the US and Hong Kong to cooperate in sending fugitives back to China. That reluctance stems from suspicions surrounding China’s human rights practices and the fairness of the country’s judicial system.

According to an AsiaToday report republished by The Huffington Post, the Sky Net and Foxhunt sent 381 alleged criminals, accused of stealing a combined 1.24 billion yuan ($186 million) from the government, back to China in the first half of 2017.

Despite their aforementioned reluctance to send fugitives back to China, the United States government has agreed to do so in cases in which China can provide sufficient proof of a criminal’s wrongdoing.

“We continue to encourage China to provide strong evidence and intelligence to ensure that our law enforcement agencies can properly investigate and prosecute cases related to the alleged corruption,” US State Department spokeswoman Jen Psaki told Business Insider in March 2015.

In September 2015, the US extradited Yang Jinjun to China to face bribery and graft charges, according to Reuters.

In early June of this year, US authorities extradited Zhu Haiping, former general manager of Shenzen Yuwei Industry Corporation, to face charges of what the Chinese government calls “violations of personal rights,” per Reuters.

AsiaToday reports that Zhu had been living in the US for 18 years. Immigration officials detained him in January, according to Reuters.

Reuters cites China’s Ministry of Public Security as saying the extradition was the first result of a cross-border law enforcement cooperation agreement forged between Xi and U.S. President Donald Trump in early April at Trump’s estate at Mar-a-Lago, a Florida resort.

Zhu’s repatriation, the Ministry added, per Reuters, was a “major achievement,” and a “model example” of things to come as a result of the Xi-Trump agreement.

China, Reuters says, is pursuing the extradition of Gun Wengei, a billionaire living in New York whom Chinese authorities have accused of making corruption allegations against top Chinese political officials.

According to AsiaToday, the Chinese government expects to apprehend 300 more fugitives by the end of 2017. Skynet relies upon the collaborative effort of at least four agencies in the Chinese government: the Central Organization Department, the Supreme People’s Procuratorate, the Ministry of Public Security, and the People’s Bank of China, BusinessInsider says.

The People’s Bank, according to BusinessInsider, aims to locate and shut down bank accounts criminals use to harbor illicit funds.

“There is no longer safety zone for criminals on the planet. This is even more so due to the development of information and communication. The day when we don’t have to foxhunt will come soon,” said Wang Defu, executive of the Public Security Bureau of Chaoyang District in Beijing, of Skynet, per AsiaToday.

Xiu.com, the AP reports, has acknowledged that some members of the company are under investigation but did not mention Ji by name. The company said it is operating normally.

Featured Image via Pixabay

Icelandic airline WOW brings cheap transatlantic flights to four midwestern US cities

Icelandic budget airline WOW Air announced Wednesday that it will expand its service to four Midwestern US cities—St. Louis, Cleveland, Cincinnati, and Detroit—beginning in Spring 2018, USA Today reports.

WOW will run four flights a week between each city and the airline’s hub, Keflavik International Airport near Reykjavik, Iceland. One-way tickets will start at $99.99. Passengers will have the option of scheduling connecting flights from Reykjavik to any of 12 other cities in Europe, including Paris, Amsterdam, London, Berlin, Frankfurt, Copenhagen, and more. Connection itineraries originating in the US will start at $149.99

“Our unique opportunity is to use Iceland as a hub. We can then distribute the traffic to our main destinations in Europe,” said WOW Air founder and CEO Skúli Mogensen, per USA Today. “…That’s really the key. Instead of having a single point-to-point flight, we actually give you a very affordable flight to multiple destinations in Europe via Iceland.”

WOW already serves seven other cities in the US. In 2015, the airline began serving Boston and Baltimore/Washington (BWI). Later, it expanded its service on the east coast, adding flights in and out of Newark, NJ and Miami, FL, and made inroads on the west coast in LA and San Francisco.

Now, WOW is looking to establish a presence in the Midwest. Earlier this year, it announced plans to serve Pittsburgh and Chicago.

Some doubt whether there exists an adequate market for trans-Atlantic travel in WOW’s four newest cities. Morgensen, who says his company is “very excited about these cities,” expects low fares to spur demand.

“With those kind of prices, we have seen in other markets that we enter that we have stimulated the market significantly,” he said, adding: “We like the region. We think there’s opportunity there. We think it’s under-served.”

Indeed, competition is sparse. Though trans-Atlantic service in and out of Detroit is common, WOW will be the only airline to fly between St. Louis and Europe, according to USA Today. Moreover, only Delta flies between Cincinnati and Europe.

WOW will battle for the Cleveland market with fellow Icelandic airline Icelandair, which announced Cleveland-Reykjavik service Tuesday. According to USA Today, no commercial airplane has flown across the Atlantic from Cleveland Hopkins International Airport since 2009, when United, which was based out of CHIA until 2014, discontinued a flight from Cleveland to London Heathrow.

Like WOW, Icelandair will run four flights a week between Cleveland and Reykjavik, with connections available from Reykjavik to other destinations throughout Europe. Icelandair, though, will serve more than twice as many European destinations as WOW.

But, Mogensen is confident WOW’s low fares will give the company an edge over Icelandair and other competitors.

“We welcome competition from all airlines,” he said. “No other airline has offered as low fares as we have done over the Atlantic.”

For comparison, a one-way Icelandair ticket from Denver to Reykjavik costs upwards of $250. WOW’s one-ways to Iceland from the Midwest, as mentioned, will cost less than $100.

Icelandair plans to fly Boeing 757s in and out of Cleveland, while WOW intends to use the single-aisle Airbus A321.

Tickets for WOW flights out of its four new US service cities went on sale Wednesday. Detroit service will begin April 26, 2018; Cleveland flights will start on May 4, 2018; Cincinnati service will commence May 10, 2018, and St. Louis service will begin May 17, 2018.

Icelandair says its Cleveland service will begin May 2018, but has yet to provide specific dates.

Mogensen says WOW will make more announcements regarding expanded US service in the near future.

“We will continue to add destinations in the U.S. in the next weeks and as always offer the lowest fares.”

Featured image via Wikimedia Commons

China is using quantum cryptography to produce unhackable transmissions

China has proven itself able to use quantum cryptography to produce what are essentially unhackable transmissions.

A Chinese group of researchers called the Quantum Experiments at Space Scale project, or QUESS, launched a quantum cryptography satellite into orbit in August last year.

This satellite has enabled the QUESS project to send quantum-encrypted messages from earth to the satellite — a record-setting distance of 1200 kilometers.

What is quantum cryptography?

But what makes this particular kind of encryption preferable to regular encryption?

Right now, regular encryption is generally considered safe since our computer technology hasn’t reached that level of sophistication. But some scientists predict that when quantum computing does become fully developed, traditional methods of encryption will no longer suffice to keep information secret.

According to the theory, quantum computers will move beyond our current computers, which rely on mathematics. Quantum computers will rely on the physical properties of sub-atomic particles. That’s why they are looking into methods of quantum encryption, which will be able to stand up to attempts to decode transmissions using quantum computers.

The specific technology the QUESS project used is called quantum key distribution, or QKD. Quantum encrypted messages are encrypted using a key generated by sending a random stream of photons between two communicating users. This method of encryption is essentially unbreakable because the behavior of photons is largely random, and because photons cannot be observed without interfering with their behavior and alerting the communicating parties.

You can learn more about quantum cryptography here.

What does this mean for the future of computing?

Not only is quantum cryptography a safe method of communication, it is also a tremendously effective one which is able to handle massive amounts of information. In the future, China envisages a whole network of people using quantum satellites to communicate at unprecedented levels of safety and speed.

QKD will allow people to send secret messages as never before. But many people worry that quantum cryptography will prove a mixed blessing. It will make it harder to hack into encrypted messages, yes. But what if a government needs to decrypt information for purposes of national security? Friends and enemies alike will be protected in this coming age of computers.

Euro Reaches Two-Year Dollar High

Last Friday the euro strengthened to a two-year high against the dollar, raising 1.8 percent over the week and has gained 11 percent year to date. The euro was valued at $1.1680 on Friday as the highest settlement since Jan. 15, 2105. This raise comes a day after European Central Bank president Mario Draghi to press down comments in late June.

During a news conference on Thursday Draghi said that the central bank would continue its $60 billion a month asset-buying program until December as planned. Draghi also reported that policy makers would the discuss quantitative-easing program this autumn. This flux in value occurred as a response to his statements, which come after the European Central Bank president’s comment that the central bank may scale back its accommodative policies despite projected increases in the European economy.

While the increase does have an impact on priorities, the European Central Bank retains its emphasis on its stubbornly low inflation concerns. Trader’s response to Draghi’s impact on the euro was one of almost indifference, because no matter what the president said the European Central Bank would gradually lessen those higher euro purchases later in 2018, resulting in an eventual wind down.

In order to clarify this attitude, Omer Esiner, chief market analyst at Commonwealth Foreign Exchange, speculated that the increased euro value was more a representative of the dollar’s weaknesses as opposed to the euro’s strength. This circumstance arose due to the pressure the dollar faces around latest political headlines suggesting the continued intensity of the turmoil within the U.S. administration.

While the euro has increased, it is not as high as it used to be, being well below its long term average against the U.S. dollar of $1.21. This coupled with the fact that the euro is even further below its average in trade-weighted terms, the euro’s current strength does not warrant a large reaction from Draghi. Considering that the central bank is keen to taper its QE program, not only due to the reduced pool of assets for potential purchase, analysts suspect that it would take a further rise to $1.20 or more before the end of the year for the bank to abandon or significantly address its plans.

Returning to the relationship between the euro and the dollar, due to the focus of the dollar weakening being the cause for the euro’s strengthening, the key factor preventing a further euro rise will be a tighter U.S. policy. There are also expectations that the Federal Reserve will raise interest rates in December, and a further scale of four times in 2018 to compensate for the decreased dollar strength.

Looking at this from another angle, the ICE U.S. Dollar Index which compares the dollar against other currencies fell 0.5 percent to 93.85, its lowest level in more than a year, which is 8.2 percent lower than the start of the year. The British pound remained below the $1.30 level, but increasing slightly over the past week from $1.2973 to $1.2999.

Finally, the Canadian Dollar has also strengthened against the dollar as Canadian retail sales and inflation data came back stronger than anticipated. However, in the case of the Canadian dollar, its strength could face a threat in the housing market that would then bring it back down again.

While the euro is indeed strengthening, sentiment towards the euro has become very negative as of late, resulting in many clients attempting to short the euro/dollar relationship. This might result in a shift with the dollar becoming stronger in the future, as while better sentiments towards the Eurozone helps the euro, any uncertainty will be funneled back into the U.S. dollar and treasury bonds. As such, these relationships are always in flux, and therefore subject to change.

Featured Image via Flickr/Images Money

Bank of America Prepares Dublin as Brexit Backup Plan

Bank of America has decided to pick Dublin as its new base for its European Union operations amidst Britain’s Brexit preparations to leave the union. This is the first Wall street lender to pick Dublin, which is a prime location for a smaller location shift while still remaining within an E.U. sphere.

International banks are all planning to set up new subsidiaries in the E.U. to ensure a continuation of their operations to provide client services. These plans come at the behest of the possibility that their operations would stop should London lose its ability to operate across the E.U. when Britain leaves in March 2019. Amongst the possible locations for a new base of operations, both Frankfurt and Dublin have emerged as the current most appealing options for bank’s post-Brexit operations.

Bank of American leans towards Dublin on the basis of its 50 years’ operating in Ireland and engaging in the local community. However, the bank has not reported how many roles would be moved to or created in Dublin, which currently houses over 700 Bank of America staff and a fully licensed entity.

Instead, the bank has been confirmed reporting that some roles would move to other E.U. locations. This ensures Bank of America a wider spread and more flexible influence, while also diversifying its locations portfolio in case any similar issues rise again in the future in other countries of operations.

The Irish government welcomed the news, as it has been a keen to attract investment banks that could boost its economy. This transition also displays Ireland’s attractiveness as a location for investment, as well as the confidence in the government’s approach to securing Brexit-related activities.

While Bank of America is the first to declare Dublin as its new base of operations, it is not the only bank interested in establishing itself in the Irish capital. Barclays has been speaking with regulators regarding an extension of its activities in Dublin, in response to the July 14 deadline requiring details of banks’ Brexit arrangements and relevant details of their contingency plans being submitted to the Bank of England.

Other bankers such as Wall Street’s Citigroup Inc. and Morgan Stanley have both opted to move their base of operations to Frankfurt instead. Morgan Stanley is likely to follow similar intentions as Bank of America by spreading parts of their operations across the E.U., placing its asset management business in Dublin.

Regarding more specifics, Bank of America is extending its existing lease on its building in Dublin, while also beginning talks on two other office spaces in the city. These new office spaces would help Bank of America accommodate up to 1,000 employees, granting the company the ability and flexibility to add an additional 300 staff.

With the mass exodus of banks leaving Britain, it shows that the banks are leaving regardless of whether trade relations between Britain and the E.U. remain following a soft Brexit. These moves are more likely due to logistical reasoning that it is simply safer for business if the banks operate out of E.U. countries. However, these leaves Britain in a tight spot as many of its investment banking operations are abandoning its market, which gives greater importance to its national banks such as the Bank of England, as well as greater risk.

While Brexit will only occur at the earliest in just under two years, moving time excluded the banks are giving themselves a large amount of breathing space to allow themselves to fully settle and establish routine operations wherever they plan to set up. While this helps the banks ensure the continuation of the E.U. operations, new deals and locations will need to be negotiated regarding investment banking in Britain. These negotiations will likely proceed as we get closer to Brexit, when we have a much clearer image of the environment.

Featured Image via Flickr/Mike Mozart

IMF to lend Greece $1.8 Billion

The International Monetary Fund has resolved to bail Greece out yet again, Bloomberg reports. To be precise, the IMF has approved “in principle” a loan of up to $1.8 billion to Greece.

Just over two years have passed since Greece was unable to make a payment on a previous IMF loan. Greece has endured severe economic conditions since the 2008 financial crisis, but in recent years conditions have been improving.

The phrasing of the IMF’s approval may at first appear noncommittal. But the IMF’s website explains that “approval in principle” is in fact a regular IMF procedure which fell into disuse after the 1980s debt crisis.

Loans which have been approved “in principle” are conditional. They are contingent upon the country in question and its creditors coming to an agreement on debt relief. Thus approval in principle functions as a kind of escrow in the IMF’s debt relief negotiations.

The IMF contends that Greece’s current debt is unsustainable, and that substantial relief will be necessary to reduce the debt to a manageable level. Even if the IMF’s loan is approved, disbursement will not occur immediately. In the meantime, in order to continue with its economic recovery, Greece is in desperate need of debt relief from its creditors.

Frequently the IMF’s strategy is to dangle funding before creditors in order to motivate them to offer more generous terms to debtors. In this instance, IMF is asking that European creditors offer Greece lenience. Creditors might forgive some of Greece’s debt or offer more sustainable repayment terms. Under this compromise, both European creditors and the IMF would bear some of the burden of Greece’s unpayable debt.

Some of Greece’s creditors have proven recalcitrant. Germany, which will face elections in the fall, has refused so far to offer debt relief to Greece. Many German voters are staunchly opposed to offering relief to Greece.

But the IMF, too, is recalcitrant in its claim that significant debt relief will be necessary. Although programs undertaken to reduce Greece’s debt have had some success, reform alone will not be sufficient to pull Greece out of debt, IMF officials say. The IMF predicts that by 2030, despite the enactment of promised economic reforms, Greece’s debt will have risen to 150% of its GDP. At that point the trajectory of Greece’s debt would become explosive.

The IMF hopes that after the German election cycle has closed, it will be able to reach a compromise with Greece’s creditors and turn the loan’s approval in principle into approval in reality.

Chinese Courier ZTO Sued Over False IPO Listing

Chinese courier ZTO Express and those involved in its New York stock market listings have been sued by a U.S. pension fund. The fund alleges that ZTO exaggerated its profit margins to lure investors into its $1.4 billion initial public offering.

Morgan Stanley and Goldman Sachs Group Inc., which was responsible for ZTO’s IPO, are also named in the class-action lawsuit. The lawsuit has been filed in an Alabama state court by the city of Birmingham’s pension fund, and claims that both firms failed to do adequate due diligence.

ZTO’s listing was the largest U.S. listing in 2016 and has been the largest Chinese company since the corporate giant Alibaba Group Golding Ltd was valued at $25 billion in 2014. Despite this, ZTO shares closed on Thursday at $15.68, which was about 20 percent below its IPO price at $19.50.

This is not the first time an IPO has been seen to underperform according to its value listings based off of private funding. Similarly, both Snap and Blue Apron Holdings Inc. were overvalued, and saw a large drop in their stock prices soon after being opening to public investors. But the Shanghai based company is not submitting to this lawsuit without a fight.

A ZTO spokeswomen reported that the claims were baseless without merit, and therefore ZTO are willing and able to defend themselves against the supposed allegation. This may be difficult, as the Birmingham Retirement and Relief System argue that ZTO has issued “untrue statements” while failing to submit or purposely omitting vital information in its registration statement for its IPO listing.

The group further argues that ZTO has inflated its profit margins by removing specific low-margin segments of its business out of its financial statements, making the reported costs lower while the reported profits higher. ZTO did this by not reporting that they use a network system of partners that handle low level pickup and delivery services while the main core is handled by ZTO itself. While an important and vital part of their business, these peripheral courier services lower the percentage profit gained from its revenue stream.

Prior to ZTO’s IPO filings to the stock exchange, ZTO has reported operating profit margins of 15.4 percent in 2014 and 25.1 percent in 2015. Furthermore, in unaudited results for the quarter that ended in March but only published in May, ZTO posted a 48 percent jump in net income from year ago while having a 34 percent spike in revenue. While the increase in profit above the increase in revenue can be addressed by reduced costs or the use of its previous year funds, the lack of its lower profit margins better explains why the IPO listing value decreased despite such a large increase in profit and revenue.

This case differs from the overestimation of Snap and Blue Apron as those companies were not in as good financial health as reported, as well as lacking future growth plans that repelled public investors. In this case, ZTO supposedly doctored and tailored its image in order to attract more investors, and while it may have future growth plans that cater to investors, the disguised financial health could result in serious consequences. These consequences would affect both the company and its investors, with a lack of faith or results on the investors behalf could see them pull out, leaving the company’s financial standing pulled out from under it.

The lawsuit extends beyond only ZTO itself, but also to its underwriters including China Renaissance Securities, Citigroup, Credit Suisse, and J.P. Morgan. They have been included to ensure that no party involved in the false listing and advertisement of a company’s strength benefits from the circumstances, and therefore ideally preventing future problems of a similar nature.

Featured Image via Flickr/GotCredit

Two Leading Black Markets Abolished by U.S. and European Authorities

The two largest online black markets, AlphaBay and Hansa Market, have been shut down and their operators have been arrested, according to reports by the U.S. and European authorities on Thursday.

AlphaBay, what is considered to be the largest dark net market, was taken down in early July while its founder, Alexandre Cazes, a 25 years old Canadian man living in Bangkok was simultaneously arrested. However, Mr Cazes has been reported to have committed suicide in his jail cell soon after being arrested.

As soon as AlphaBay went down, a majority of its users and streamers transitioned to one of its largest competitors: Hansa Market. When dark nets shut down, their users typically switch to different markets in order to avoid any risk of arrest. This makes it very difficult to pinpoint who is involved, as well as prevent new sites forming, considering the desire of the users creating a market.

Fortunately, the Dutch national police force announced they had taken control of the black market site in June, and with the massive influx of new users, were able to gather identifying details on many of the users from AlphaBay. The Dutch have been monitoring the vendors that operate on these dark nets, as well as the customers, in order to better document those involved in the 50,000 transactions taken place.

While the Dutch were monitoring Hansa Market, two of its suspected operators were arrested in Germany in June. News of these arrests coupled with the closing of AlphaBay sent the users in the community into panic based on the reported joint operation. Postings on popular forums including Reddit were made to warn users to refrain from accessing the black markets.

Both AlphaBay and Hansa Market are successors to the first and most famous dark net black market, Silk Road, which authorities were able to access and shut down in October 2013. However, despite being more famous than its successors, it was much smaller considering the frontier developments black markets were facing. AlphaBay had grown into a business with 200,000 users and 40,000 vendors, which is estimated to be about 10 times larger than Silk Road at its peak.

Black market vendors have recently come under increased scrutiny because of their involvement in the sales and distribution of synthetic opioids, such as fentanyl, which plays a significant and central role in nationwide overdose epidemics. 122 vendors have been identified in being involved with fentanyl specifically, while Hansa Market had close to 1,800 vendors selling a much larger variety of drugs.

Dark net servers are only accessible through special browsers that disguise or hide the location and identity of both the user and the server. This makes it difficult for authorities to first locate the websites, and then identify the operators to shut the websites down. However, as black markets gain larger amounts of traffic, while the operator’s identity is still difficult to ascertain, the means of accessing the site become more plausible. While Cazes was the founder of AlphaBay, he was assisted by 10 operators who administered the site and resolved any disputes.

The AlphaBay shutdown involved six countries and Europol, led by the American authorities, while Hansa Market was led by the Dutch. Both efforts were coordinated under the code name Operation Bayonet. This is not the first time that U.S. and European authorities work together against online black markets.

Considering the history of dark nets, it is not unique that the next successors will rise and then be taken down just as quickly. When AlphaBay was still operating there were still multiple large competitors. Currently a site known as Dream Market has emerged to become the dominant black market.

Featured Image via Flickr/Chris Moore

Beijing Blocks WhatsApp Access in Mainland China

Chinese users have reported trouble regarding the use of WhatsApp instant messaging tool on Tuesday. Many suspect that Beijing is responsible for the issues that are arising as part of its latest regulations on internet use.

The issues included involved being unable to send or receive photos using the chat app, which is owned by Facebook, without the use of a VPN. Beijing has had previous issues regarding VPNs, and they have made multiple attempts to encourage telecoms to prevent individual access to VPNs. VPNs are used to bypass Beijing’s censorship program by rerouting internet traffic elsewhere, usually to a foreign IP address.

Beijing efforts to tighten internet security is motivated by their intentions to block any websites with information that could be critical of the Communist Party including YouTube, Twitter, and foreign news sites. While the information itself is not necessarily censored, access to the information is blocked preventing the information from being seen in mainland China. In response, many proxy websites that fulfill a similar function rise in order to provide the original site’s services without broadcasting any potential criticism.

The suspicions that Beijing is involved come at the results of a test conducted by the South China Morning Post on Tuesday afternoon. Two users registered with mainland Chinese mobile numbers were unable to send neither videos nor pictures to each other via WhatsApp. One of the users then tried to send both a video and a picture to an overseas number, which resulted in a failed transmission. The overseas user then sent a video and a picture to the mainland Chinese mobile user, and while the message did go through, all the Chinese user could see was a loading thumbnail that failed to fully load and display its message.

However, there were no problems when sending text messages to one another, which included media content as well, and all functions and services provided by WhatsApp were restored upon the use of a VPN. This suggests that there was some involvement that restricted messaging, and that these restrictions applied only to WhatsApp.

WhatsApp is one of the few messaging services available in mainland China that is foreign based. While not as popular as the local app WeChat, which acts as a more readily accessible and offers less noticeably regulated services, WhatsApp still fulfills a competitive niche thanks to its end-to-end encryption.

WeChat, which is owned by the dominant tech company Tencent, has been found to be censoring messages deemed sensitive by Beijing without notifying its users. While this does occur, the app is still popular because it does not require a VPN to function properly.

Users began noticing troubles with WhatsApp early in the morning on Tuesday, but found that other apps on their mobile devices, including WeChat, were functioning without issues. A member of a non-governmental labor welfare group in Shenzen mentioned regular use of WhatsApp for work based communication due to the security and privacy it provides. Instead of switching over to WeChat to communicate with his colleagues, the man refrained from contacting his colleagues at all, as WeChat and text messaging were not viably safe options.

Neither WhatsApp nor Facebook have made any statements regarding Chinese censorship. However, Facebook’s social networking site and its photo-sharing services provided by Instagram are both blocked in China and have been for a long while now. Other foreign based chat and media sharing apps that have been blocked in mainland China include Tokyo-based Line and Berlin-based Telegram.

If businesses wishing to penetrate Chinese markets want to be successful, then they need to take major considerations regarding the government’s regulations on especially foreign based companies. If they fail to do so, then any invest into the Chinese market will come up short as the services provided are at a larger than usual risk of being shut down or restricted.

Featured Image via Pixabay

Netflix Subscribers Surpass Target

Netflix Inc. has surpassed the expectations of Wall Street for its second quarter by adding 5.2 million new streaming customers. Netflix predicts further continued growth due to the momentum generated by foreign subscriptions, which overcame U.S. subscribers. As a result of its customer base growth, Netflix shares have increased by 10.4 percent on Monday.

Regarding shares more specifically, the streaming television innovator’s stocks rose $16.82 to $178.55 per share in after-hours trading. This is a new record for intraday trading that beats the previous record of $166.87 which was reached on June 8.

Netflix is anticipating that due to the influx of foreign subscribers the company will accomplish its first full-year profits for overseas markets. This is supported by the fact that the end of June was the first time that Netflix had more recorded subscribers from abroad than in the U.S., with 52.03 million foreign subscribers versus 51.92 million U.S. subscribers.

The second quarter is typically the slowest quarter of the year, however the introduction of the popular show “13 Reasons Why” and the latest season of “House of Cards” brought in a higher number of subscribers than what Netflix initially predicted.

According to Wall Street, Netflix was predicted to bring in 3.2 million new customers worldwide, which broken down was based on an estimate of 2.59 foreign subscribers and 631,000 U.S. subscribers. Instead, Netflix bested both estimates by accruing 4.14 million monthly foreign market subscribers , and a further 1.07 million subscribers domestically.

Netflix is hedging their bets that this growth will continue on for its third quarter, considering it usually is more successful than its second quarter, however Netflix has been known to make far too optimistic forecasts at times.

It is important to remember the expenses that Netflix pays to attract new customers: spending $6 billion a year on content in order to become the world’s top movie and TV streaming service despite facing a decrease in the rate of its U.S. customer growth. What helps is that a good portion of the costs go to customizing content for different countries and adding shows in various languages.

By tailoring to different regions, you adapt and serve the needs of the customer, instead of projecting what you believe the customer needs. However, by making new content accessible to different audiences, you are reaping more profits out of the same content, which requires less labor to offer in a different language than the show’s original production cost.

Based on the amount invested to deliver a large variety of content, Netflix has estimated negative free cash flow in the coming years as it continues to buy more content. The heavy costs help assert its place in the market amongst stiff competition from streaming video providers such as Amazon Inc.’s Prime Video and Alphabet Inc.’s YouTube. This shows that despite possibly overestimated customer growth, Netflix is maintaining a strict assessment of its financials to ensure that it can continue to provide its services.

Revenue rose by 32.3 percent to $2.79 billion in the second quarter, with the net income rising to $65.6 million, or 15 cents a share, from $40.8 million, or 9 cents a share, from a year earlier. While this falls just short of the anticipated 16 cents a share, this is still a monumental growth.

Investors are willing to tolerate the exuberant spending as long as it is compensated by such a booming customer growth, as the trade-off did results in 2 million subscriber surplus. This goes to show that if companies have well-established future plans and a good financial health, then investors are willing to hurt a little now for better profits in the future. This is something that Snap Inc. and Blue Apron Holdings Inc. can learn as an example to ensure stocks are not overpriced.

Uber-Yandex Ride-Sharing Merger in Russia

Uber and Yandex have agreed to a merger of their ride-sharing businesses in Russia and five eastern European markets with Yandex. This is the second withdrawal on Uber’s global presence since their exit from China a year ago. Yandex, which is essentially the “Google of Russia,” will be the leading partner in this newly established company.

Yandex and Uber both stated that they will join together in Russia, Armenia, Azerbaijan, Belarus, Georgia, and Kazakhstan through a new company operating in 123 cities. Uber will invest $225 million into the company, owning 36.6 percent of the company. Yandex on the other hand will be investing $100 million into the new company, but owning 59.3 percent of the company. The remaining 4.1 percent will be held by employees according to a fully diluted basis.

Uber will also be contributing its UberEATS food delivery business into the merger venture, which will act under the joint company in the 6 previously mentioned countries. Despite Uber’s influence as a global ride-sharing company, Yandex holds a more dominant position in the specified regions, providing services including Web search, maps and mobile navigation in the region.

Uber’s position has significantly weakened as more competition has developed as well as the scandals resulting in Uber CEO Travis Kalanick resigning from his position. Instead of trying to adapt and dominate each market around the world, Uber is better off allying itself with local players that dominate their fields to compensate for the over encompassing regulations that Uber was originally responsible for upholding. This does not absolve Uber of ensuring their drivers and riders are protected and fairly treated, but instead of controlling the specific regulations, Uber will be in charge of supervising that the proper regulations are being managed by its partner companies.

While some may view the ratio between what Uber is investing and the percentage of ownership of the new company they are receiving is unfair, but it is in fact beneficial for Uber in the long run. The partner company is responsible for everything beside operations, and all Uber has to focus on in these new developments are the operations themselves. Uber in fact saves on logistics costs, and grant themselves a powerful platform to spread its services throughout regions that are otherwise impenetrable by foreign businesses. While Uber’s position within the new company is up to the discretion of Yandex, 36.6 percent is not an insignificant portion that does provide Uber with some leeway.

In this relationship, Yandex will be controlling the direction of the proverbial ship that is the new company, and it is up to Yandex that the environment either maintains a status quo or proves beneficial for the new company, so that it can continue its operations. UberEATS is a helpful tool in ensuring that even when the drivers are not working with riders, they are still maintaining a revenue stream through food delivery.

It will be interesting to see if more countries follow suit in establishing a merger with Uber. Local companies can use Uber as proof of a powerful global business partner, further establishing and improving the local company’s reputation. As long as rates are competitive, the ride-sharing and food delivery components that Uber provides can act as free publicity and a fairly dependable revenue stream.

One thing to keep in mind are the recent news involving Uber, and whether establishing a partner relationship will in fact diminish the partner company’s reputation, as one interpretation is that through partnership the company in fact condones the behavior exhibited by Uber drivers and the reaction to criticism.

Considering the increase in ride-sharing companies even within the U.S., maybe Uber will consider new mergers with local companies, should mergers become an established business practice that’s proves profitable for Uber.

France Plans to Be Rid of Fossil Fuel Powered Vehicles by 2040

Amidst a flurry of commitments by carmakers and governments around the globe to increasingly adopt hybrids and fully electric vehicles, France announced Thursday that it plans to end the sale of automobiles powered by gas and diesel by 2040. The average lifespan of a fossil fuel powered automobile is 15 years, so such vehicles could disappear from French roads by 2055.

The plan is part of France’s multi-faceted effort to fulfill its responsibilities under the Paris Agreement, a concerted effort amongst many United Nations members to reduce greenhouse gas emissions and combat climate change. France will also aim to stop using coal to produce electricity by 2022.

As of today, 153 of the UN’s 193 members have ratified the agreement. President Donald Trump withdrew the United States from the pact in late May.

India and Norway, who also signed the agreement, have made plans bolder than France’s to rid their countries of traditional cars. Norway will sell electric automobiles exclusively by 2025; India will do so by 2020.

Germany, another Paris Agreement participant and a member of the International Zero Emission vehicle alliance, will require all newly registered vehicles to be emissions free beginning in 2030. As part of its Paris Agreement efforts, it will strive to reduce carbon dioxide production by 80-95% by 2050.

Wednesday, Swedish automaker Volvo pledged to stop producing cars powered solely by fossil fuels by 2019. Other auto manufacturers around the world are expected to make similar resolutions in the near future.

Neither of France’s two biggest car manufacturers, the PSA Group and Renault, reacted to Thursday’s announcement, which is expected to compel both companies to begin allocating increased resources to the production of electric cars.

Renault has already taken strides into the electric car market. In 2011, the company began producing one of the world’s first fully electric cars, the compact Zoe. Today, Renault offers five electric vehicles, three of which are one hundred percent electric, two of which are hybrids. The Zoe is the best-selling one hundred percent electric car in Europe, and its popularity is increasing. In the first half of 2017, Renault sold 17,000 Zoe’s, almost as many as it sold in all of 2016.

France’s announcement, along with the similar moves by Norway, India, and Volvo, should trigger an influx of funds into the clean energy transportation sector, as investors look to capitalize on the trajectory of the market. However, if France fails to support its ambition with effective incentives and regulations, the plan could fail.

In addition to offering incentives and imposing regulations, France will have to build an infrastructure to accommodate electric cars. For one thing, charging stations will need to be erected alongside and eventually in place of gas stations.

The statement Thursday did not detail the strategies by which the French government will implement its plan.

“It’s great to have a vision,” said Greg Archer, director of clean vehicles at advocacy group Transport & Environment. “We have to now see the policies put in place to deliver on that vision.”

The number of government and private companies making efforts to reduce their environmental footprints is encouraging. In fact, the 2015 Paris Agreement may be the most important step ever taken toward widespread international cooperation to take better care of the planet.

But as bold as the promises being made are, it remains to be seen how effectively and efficiently they can be implemented. Germany has admitted it will fall short in its effort to produce 1 million electric vehicles (mostly hybrids, presumably) by 2020. Tesla, Inc. has encountered roadblocks as it ramps up production to meet increasing demand.

“It’s a very difficult objective,” France’s environment minister, Nicolas Hulot, said in regard to Thursday’s announcement. “But the solutions are there.”

Archer says France is “absolutely” moving in the “right direction.”

The question, of course, is how far they can and will go.

Featured image via Wikimedia Commons.

US Lifts Laptop Ban for Emirates and Turkish Airlines

Emirates and Turkish Airlines have both reported that the U.S. ban on carry-on laptops has been lifted, and will no longer apply to passengers traveling to the U.S. using either of the two airlines. The ban has been in practice since March, forbidding passengers from bringing on laptops or any other electronic carry-on luggage larger than a standard sized smartphone to and from eight mostly Muslim nations. The ban was introduced out of fear of bombs being concealed within the devices.

Emirates, whose main flight path flies from to the U.S. from its Dubai hub, has been working with U.S. authorities to ascertain and meet new security rules and standards. Turkish Airlines have it was also now allowing passengers traveling to the U.S. to take their laptops onboard, suggesting that they too have managed to address the new security requirements that the U.S. is pushing. The two airlines join Etihad, another airline that had the ban lifted on Sunday for its flights from Abu Dhabi.

Dubai, Istanbul and Abu Dhabi airlines have all reported to placing tighter security checks in place prior to boarding, to ensure that the qualifications are met. The new liberties have been put into effect since yesterday, applying to all flights to the U.S. within their respective airlines. Emirates thanked its customers for their patience and understanding as the new agreements were made and put in place. Currently, Qatar, Morocco, Jordan, Egypt, Saudi Arabia and Kuwait are still waiting to have the ban lifted, presumably under the conditions of the new security measures being implemented. However, Saudi, the flagship carrier for Saudi Arabia, has stated that passengers will be able to take electronics as carry-on luggage on U.S. flights from 19 July, suggesting that they are the next airlines to adapt their security measures to U.S. standards.

The effect these changes have of passengers have yet to be clarified, specifically whether passengers will need to account for more time due to security checks. While the specifics changes have not been made public, Norman Shanks, an aviation security expert, has stated that U.S. security testing is not only limited to equipment but procedure as well. The tests would evaluate how strict the security checks are, and how the staff carries out their procedures. Increase vigilance on behalf of all security personnel is to be expected, which will increase security waiting times, especially during high traffic times.

These new security changes are not only applicable to countries that have been subject to the laptop ban, but have been asked and will apply to 105 countries with flights travelling to the U.S. The new measures are expected to include enhancing screening as well as more thorough vetting of passengers, and the wider use of bomb-sniffer dogs. The U.K. has reported that the added security measures should be less difficult to implement considering that U.K. airport security is already strict when compared globally.

Turkish media has reported that both U.S. and U.K. officials have visited Turkey’s main international airport on Tuesday, which coincides with Turkey’s recent use of sophisticated imaging devices for passenger screening. While the U.S. laptop ban has been lifted, the U.K. also sanctioned similar rules to the U.S. ban on electronic devices larger than smartphones as carry-on luggage. The U.K. has not yet lifted their ban, but Turkish Airlines have reported their expectations that the ban will be soon lifted.

These travel bans have a large impact not only on relations between countries, with consequences that reach further than increased security measures. One key aspect is how business is affected by these bans. Not being able to bring and use a laptop on long trans-continental flights wastes potentially productive time. Simultaneously laptops in checked in luggage is more vulnerable to theft, which can potentially be devastating through an increase in corporate espionage and the selling of trade secrets. The increased security measures are a necessary evil that ensures that business can continue smoothly and diplomatically.

Smuggled Iraqi Artifacts Forfeited by Hobby Lobby

Hobby Lobby has agreed to forfeit 5,500 artifacts that the company illegally imported in the U.S. from Iraq. Labeling the packages that made their way from Israel and the United Arab Emirates to retail outlets owned by Hobby Lobby as tile samples, Hobby Lobby was hoping to avoid the artifacts from being revealed.  Thanks to a civil complaint, federal prosecutors were able to identify the packages for what they really were: ancient clay cuneiform tablets.

Hobby Lobby is a retail outlet that sells arts and crafts supplies run by Christian evangelical owners who have long maintained an interest in the biblical Middle East. The company, or rather the owners, began to assemble a collection of cultural artifacts from the Fertile Crescent in 2009. Hobby Lobby sent its president and an antiquities consultant to the United Arab Emirates to inspect a large number of cuneiform tablets. These tablets are traditional clay slabs originating in Mesopotamia thousands of years ago, often depicted with wedge-shaped writing.

Despite being given plenty of warning that the artifacts might have been looted from historical sites in Iraq by an expert on cultural property law and that failing to determine their heritage could break the law, Hobby Lobby struck a deal and purchased more than 5,500 tablets. Hobby Lobby ended up paying $1.6 million in December 2010 to an unnamed dealer.

According to prosecutors, Hobby Lobby reported that the transaction in 2010 was fraught with red flags. The company received conflicting information about the origin of the pieces, and its representatives never met or spoke with the dealer who supposedly owned them. Instead, working with a second dealer, Hobby Lobby wired payments to seven separate personal bank accounts. Upon completing this task, the first dealer shipped the items marked as clay or ceramic tiles to three Hobby Lobby sites in Oklahoma. The country of origins on all three packages were falsely labeled as coming from Turkey.

In addition to the complaint, prosecutors filed a stipulation of settlement with Hobby Lobby requiring them to return all artifacts pieces while also paying a fine of $3 million dollars to the government in order to resolve the civil action. Hobby Lobby has also been ordered to adopt better internal policies to govern its importation of cultural items, while also hiring qualified customs brokers and advisers. Finally, Hobby Lobby is required to submit quarterly reports to the U.S. attorney’s office detailing any future antiquity purchases within the next 18 months.

An online notification will be posted giving the original owners of the pieces 60 days to claim the artifacts, and the Iraqi government can then submit a claim should no claim be posted or not all artifacts are claimed.

Hobby Lobby’s collection of artifacts and historical Bibles are consistent with the religious climate within the company, and that their intentions were to share the tablets with museums and public institutions. Hobby Lobby response to the smuggling allegations was that they were new to the acquiring antiquities, find the acquisition process far more complex.

Hobby Lobby’s action is not new, and in fact, they have spent years undertaking numerous efforts to promote evangelical Christianity through the use of media and their store outlets. In 2014, Hobby Lobby was the defendant in a case regarding paying insurance coverage of contraception. Hobby Lobby won with a ruling that family-owned corporations could not be forced to pay insurance coverage under the Affordable Care Act if it violated a federal law protecting religious freedom.

Supporters of Hobby Lobby or the company itself may respond to the forfeiting of the artifacts as a violation of their religious freedom. It is in cases like these that granting companies religious protections difficult, as the lines blur as to whether the actions of the family represent the actions of the company and vice versa. There is a possibility for this situation to be taken advantage of, considering that stolen artifacts can provide a great amount of profit. Hopefully, Hobby Lobby learns from its mistakes and does not attempt to illegally import potentially stolen artifacts again.