Archives for May 29, 2017

The reason Comcast is bucking the cord-cutting trend

Comcast has grown market share each quarter since the X1 platform reached 30% penetration in 2015

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The first quarter of 2017 proved not to be a good one for media companies faced with the impact of cord cutting. But Comcast Corp. CMCSA,  is one company that may be well positioned to embrace the blow.

During the first quarter, subscriptions in the industry declined, according to Jefferies analysts led by Mike McCormack, and with new online live TV streaming platforms from Google’s GOOGL,  YouTube and Hulu — jointly owned by Comcast, 21st Century Fox Inc. FOXA, Walt Disney Co. DIS, and Time Warner Inc. TWX,  — the second quarter is likely to further investor concerns.

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“While the first quarter is traditionally a strong quarter for video, first quarter 2017 was anything but,” McCormack wrote in a note to clients. “Nevertheless, Comcast has proven remarkably resilient, and was the only major provider to add subscribers in the first quarter.” Comcast added 42,000 video subscribers in the first quarter.

The reason Comcast has been able to buck the trend is its X1 set-top box and platform.

X1 is Comcast’s “next-generation” cable set-top box that connects to the internet and has a more intuitive user interface.

Jefferies analysts estimate video churn — people cutting their subscriptions — has dropped more than 20 basis points in the last two years, with every 5% of incremental X1 penetration reducing churn by two to three basis points.

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Comcast’s X1 platform brings TV and the internet together for a unique entertainment and communications experience.

“Comcast’s versatile platform has driven higher engagement and a better user experience, while the integration of Netflix and YouTube should only further help churn,” McCormack wrote. “In our view, the higher retention separates Comcast from the rest of the video pack.

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“Notably, since X1 reached 30% penetration in the third quarter of 2015, the company has grown market share each quarter, cumulatively adding nearly 300,000 subscribers vs. an industry loss of about 425,000.”

Comcast shares have gained nearly 18% in the year to date and more than 30% over the last 12 months, while the S&P 500 index SPX, is up 8% in the year and more than 15% in the prior 12-month period.

Best Buy is capitalizing on troubles at Sears and HHGregg in one particular category

Best Buy shares soar after better-than-expected first-quarter earnings

best buy

Best Buy is seeing growth in appliances, and will bring more in-home services to customers this year

Best Buy Co Inc. attributed its better-than-expected quarter to mobile, gaming and improved overall sales trends.

Neil Saunders, managing director of GlobalData Retail, thinks it has more to do with the continuing troubles at Sears Holdings Corp. SHLD, While personal computing and mobile phones are “laggards in terms of growth,” appliances is an area where Best Buy BBY, is offsetting that softness.

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“The travails of Sears, which continues to lose sales at a rapid pace, is beneficial here; a difficulty we believe Best Buy can capitalize on thanks to its wide assortment and visibility in the market,” Saunders wrote in a Thursday note.

Best Buy reported first-quarter sales of $8.53 billion, up from $8.44 billion last year and ahead of the $8.28 billion FactSet consensus. Enterprise same-store sales rose 1.6%.

Best Buy shares closed Thursday up 21.5%.

On the Thursday morning earnings call, Best Buy Chief Executive Hubert Joly said appliances is one of the areas that the company is pursuing for growth. HHGregg Inc. HGGGQ, store closures are providing “some lift” in appliances and home theater. “And we’ll get a share of that, it’s about 200 stores, so about 20% overlap with our stores,” said Joly, according to a FactSet transcript.

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These two areas, along with a few other categories that Best Buy doesn’t participate in, are worth about $2 billion, he said.

Sears reported $4.3 billion in first-quarter sales on Thursday, down from $5.4 billion last year, though it beat the FactSet consensus of $4.1 billion. The FactSet consensus was based on just two estimates.

The struggling retailer said a domestic same-store sales decline of 12.4% was driven by a decrease in appliances, among other categories.

Sears shares are up nearly 26% in Thursday trading, though they’re down 25% for the past year.

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“For the balance of the year, we expect Best Buy to continue to perform at a high level across multiple categories, with appliances likely to be one of the bright spots given market dynamics,” said Charlie O’Shea, Moody’s lead retail analyst, in a Thursday comment.

“Potential performance pressure points were evident during the quarter, including delays in income tax refunds and HHGregg’s bankruptcy and still-ongoing liquidation; however, Best Buy successfully avoided the trap of chasing low quality/margin sales,” O’Shea said.

Best Buy was one of the first retailers to call the delayed IRS tax refunds a benefit, with others like Foot Locker Inc. FL, blaming the year’s “slow start” to the hold up.

“There is little doubt that the delayed arrival of tax refunds provided buoyancy to the electricals market later into this quarter,” said GlobalData’s Saunders. “However, from our customer survey data, it is evident that fewer people than last year purchased physical products with their refunds, and fewer of those opted to buy electricals. As such, we believe that the impact was helpful but somewhat limited.”

Best Buy’s Joly said that the domestic same-stores sales increase of 1.4% was, in part, driven by connected home, and the company plans to test and offer new products and services related to smart home products and their installation. Among them, Best Buy is rolling out an In-Home Advisory service nationwide this year.

“If the need of the customer is complex, if you are redoing your home theater, if your network needs to be improved, having these conversations in the home unlocks all sorts of discussions with customers,” Joly said. Best Buy has had Geek Squad agents and members of its Magnolia Design Centers team going to customers’ homes for years to help with computing and home theater issues, company executives said.

“[T]here is no revenue associated with an in-home adviser visit specifically,” said Joly. “Remember this is a free visit from an in-home adviser who’s going to come and help you… in your home. The revenue comes from what you would choose to purchase as a result of that visit, be it hardware or services.”

Earlier this month, Best Buy announced the new Best Buy Smart Home powered by private smart home services provider Vivint, which will start rolling out this summer. Customers at one of 400 stores will be able to consult with an expert on smart home products, and receive professional installation and monitoring.

GlobalData’s Saunders highlights the link Best Buy is making between good customer service and sales of these newer technologies.

“From our data, we see that there is an appetite among consumers to know more about this sort of technology and we believe Best Buy is in an ideal position to inform and engage,” he wrote.

Best Buy shares are up 91% for the last 12 months while the S&P 500 index SPX,   has gained 15.5% for the period.

Uber Quietly Drops Otto Truck Unit Name Following Trademark Spat

Otto

An Otto driverless truck at the Uber unit’s garage in San Francisco.

By Alan Ohnsman and Matt Drange

As Uber fights claims that it stole self-driving vehicle trade secrets from Alphabet Inc.’s Waymo, the rideshare giant quietly dropped the name for its driverless truck unit, “Otto.” The change was made last month in the wake of a trademark infringement dispute with a similarly named Canadian company that markets its own robotic vehicle technology.

Uber consolidated Otto’s activities under its Advanced Technologies Group, or Uber ATG, in April and “retired the Otto name,” it said without elaborating. The change came shortly after the dismissal of a trademark infringement suit brought by Kitchener, Ontario-based Otto Motors, a unit of Clearpath Robotics that makes autonomous vehicles for warehouses and industrial facilities.

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The suit was dismissed without prejudice in February. Spokespeople for both Clearpath and Uber confirmed the dispute over the Otto name had been resolved. Neither confirmed details of any potential settlement. Since last month, the ot.to website has redirected visitors to the Uber ATG homepage.

“We are continuing to operate under the OTTO brand, whereas Uber has recently announced on its website that it is retiring the OTTO name,” Otto Motors spokeswoman Meghan Hennessey said in a written statement to Forbes.

Uber paid $680 million for the tiny startup Ottomotto LLC, or Otto, in August 2016 which at the time had 90 employees and little more than a plan to develop and sell hardware and software kits to convert semi-trucks to drive themselves. Its co-founder Anthony Levandowski is the former Google engineer at the center of Waymo’s lawsuit against Uber and Otto that’s inching toward a trial later this year in a U.S. District Court in San Francisco.

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Uber recently informed officials at the California Department of Motor Vehicles of its decision. “Otto called us a few weeks ago and said they were changing their name,” DMV spokeswoman Jessica Gonzalez said, adding that the company did not inform officials of the trademark infringement dispute that preceded the change.

The DMV is reviewing whether Otto broke state law by operating automated trucks without permission. Otto contends that trucks tested in California with advanced safety technology are not operated without human control.

The name change was also news to David Kidd, a research scientist with the Insurance Institute for Highway Safety, an industry group that’s helping to shape nascent testing guidelines for self-driving vehicles in California and elsewhere. Kidd recently met with the Otto team, but said he was unaware of the unit’s new name until he was contacted by Forbes.

Prior to being purchased by Uber, Otto made a splash in May 2016 with video footage of a driverless Volvo semi rolling through Nevada. Otto drew even more attention in Oct. 2016 when it completed its first paid delivery, a shipment of Budweiser beer hauled through Colorado.

Waymo, created in December 2016 to commercialize Google’s self-driving vehicle system, sued Uber and Otto in late February, claiming Levandowski accessed an internal Google database and downloaded 14,000 technical documents. That occurred about six weeks before Levandowski resigned from Google, and then quickly created Otto.

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Although the federal judge in that case has ordered Uber and Levandowski to return the stolen materials to Waymo, that hasn’t happened. Uber says it doesn’t have the documents and Levandowski refuses to comply with the order, citing his Fifth Amendment right against self incrimination. On Thursday, the judge overseeing the case took Levandowski to task for submitting essentially useless information related to the documents at issue. While neither Uber nor Waymo dispute that Levandowski took technical documents from Google, Uber said it hasn’t used this information in its own autonomous technology R&D efforts and doesn’t possess the data.

Separate from self-driving truck operations, Uber stepped into the commercial-hauling business this month the creation of Uber Freight, a platform to connect independent truck operators with trucking companies to arrange shipments in much the same way its rideshare platform connects drivers and passengers.

Though the Otto name was formally dropped in April, Uber told Forbes it retained “Ottomotto LLC” for its carrier operations. The change was visible on the side of a pair of semis parked on Thursday at the Uber ATG San Francisco lot, formerly Otto’s headquarters.

An Uber ATG truck, parked outside the unit's garage in San Francisco on May 25, 2017.

Matt Drange/Forbes An Uber ATG truck, parked outside the unit’s garage in San Francisco on May 25, 2017.

Android Circuit: New Pixel 2 Details Leak, Galaxy S8 Killer Uncovered, Microsoft’s Android Ambitions

Taking a look back at seven days of news and headlines across the world of Android, this week’s Android Circuit includes hacking the Galaxy S8 Iris scanner, details on the new Google Pixel 2, leaked images of the Nokia 9, rumors of the Galaxy S8 Active, how OnePlus is catching up to Samsung, a review of the BlackBerry KeyOne, and Microsoft continuing to build its Android base.

Android Circuit is here to remind you of a few of the many things that have happened around Android in the last week (and you can find the weekly Apple news digest here).

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How To Beat The S8 Iris Scanner

Samsung has put a lot of stock in the security that comes with the Galaxy S8 handsets, with the iris scanner being a focus of the marketing. That makes the three-step process to defeat the scanner – an infra-red camera, a printer, and a contact lens – somewhat embarrassing. Ian Morris reports on the issue, including Samsung’s response:

“We are aware of the issue, but we would like to assure our customers that the iris scanning technology in the Galaxy S8 has been developed through rigorous testing to provide a high level of accuracy and prevent attempts to compromise its security, such as images of a person’s iris. If there is a potential vulnerability or the advent of a new method that challenges our efforts to ensure security at any time, we will respond as quickly as possible to resolve the issue.”

Google’s Pixel Will Change The World

Google’s hardware teams are set to release a number of projects this year that will alter the Android landscape, including an updated Google Home device, a virtual reality headset, and of course new Pixel handsets and tablets. Rob Price looks at the upcoming releases, including what could be the killer smartphone of 2017:

Google has confirmed it will be launching a second-generation Pixel (and the Pixel XL, its larger-screened sibling) in 2017. Major slated changes include an almost edge-to-edge screen (like the one found in the Samsung Galaxy S8 and rumoured to be a feature of the forthcoming iPhone 8), waterproofing, and boosted internal specs.

It’s also rumoured to ditch the headphone jack, like the iPhone 7 did in 2016 — a move that may prove controversial.

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HMD's Nokia 6 (photo: Ewan Spence)

Ewan Spence HMD’s Nokia 6 (photo: Ewan Spence)

Tiny Hints Of The Finnish Flagship

It might be stuck inside a blue box, it might not be parading the presumed curves that echo the Nokia N9 from many generations and it leaves many questions unanswered, but this week’s leak of HMD Global’s Nokia 9 handset is a tantalising look at a potential flagship. I’ve taken a closer look at the leak here:

There’s no clear image of the entire phone as it is safely enclosed in arguably the world’s ugliest blue case…

What we can see are the details around the camera – notably the dual-lens system, the LED flash, and 4K recording. The Nokia brand name is associated with powerful and accurate imaging hardware and software. How the Nokia 9 will compare to the likes of the Galaxy S8 and the iPhone 7 (or the soon to arrive Galaxy Note 8 phablet and Apple’s 2017 editions of the iPhone) remains to be seen and no doubt will be one of the key areas that reviewers will focus on.

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Just One Driverless Car Could Ease Traffic Jams

Article by: Laurie Winkless

New data suggests that the days of using variable speed limits to manage traffic could be over

I think you probably know by now that I’m not a fan of the hype the floats around driverless cars. Don’t get me wrong, I love the tech behind them, and I am genuinely excited about the impact they could have on tomorrow’s cities. That’s why I wrote about research from MIT that showed that driverless cars might not need traffic lights. And why I highlighted work from Duke University that explored how driverless cars could best communicate with pedestrians.

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But I am a natural-born skeptic. And as I pointed out in this article, many of the remaining questions this young industry faces have nothing to do with the tech at all. And in my book, I expressed concern that the benefits of driverless vehicles wouldn’t be felt until every car on the road is autonomous.

Well, on that point, I may just have been proven wrong!

Before we can understand why, we need to talk about why traffic jams form (and this bit features an excerpt from Science and the City)

Could the addition of just a few autonomous vehicles make us all better drivers? (AP Photo/Yorgos Karahalis)

We’ve all been stuck in a horrible city-center traffic jam, and found ourselves wondering how hard it can actually be to manage traffic. Well, it turns out, it’s very difficult indeed, and it requires a lot of mathematics.

Most of the time, traffic congestion occurs when vehicular density exceeds a critical threshold – in other words, when there are too many cars on not enough road. Or occasionally, there might be an accident or roadworks are to blame. But you’ve probably also witnessed a so-called ‘phantom traffic jam’ too, where for no discernible reason, traffic builds up and then eases. A number of years ago, a group of Japanese physicists rented a closed circular track to investigate what would happen to traffic flow in the absence of a bottleneck. In the now famous experiment, twenty-two volunteers in different cars were instructed to get up to 30kph (just under 20mph) and maintain that speed at a safe distance from the car in front. Very quickly, the system broke down, with some cars at a standstill while others sped up.

MSCI Boost May Give Pakistan Market $500 Million ‘Headache’

  • Brokers have limited capital for high-value trades: EFG-Hermes
  • Pakistan to be added to MSCI’s emerging market index on June 1

EFG-Hermes Holdings SAE expects Pakistani equities to be so popular with overseas funds this week that the country’s stock market could attract more money than it can handle the day before MSCI Inc. restores the nation to emerging-market status.

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As much as $500 million may gush into the nation’s equities on May 31, said Ali Khalpey, chief executive officer frontier markets at the Cairo-based investment bank. The single-day inflow, if it comes to pass, would compare with the $532 million Pakistan received in all of 2010. The benchmark KSE100 Index has risen 6.8 percent this month to a record.

“It’s a big number and there isn’t enough capacity in the system to handle the volume and value we expect,” Khalpey said. “We have worked with similar investors when Qatar and the United Arab Emirates were upgraded by MSCI. The flows won’t be staggered. Tracker funds have to execute on the day.”

Khalpey was in Karachi to open the EFG-Hermes’ office. Here are the highlights from his interview with Bloomberg News.

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What do you expect to happen on the day before the upgrade?

“It is a big event for Pakistan but I don’t think it is ready for it. Brokers are limited by the capital they have. They need to put up an average 20 percent margin on foreign trades. How many of them on aggregate can put $100 million cash?. Everyone is looking forward to it, but I’m not. It is going to be a massive headache.”

Will frontier investors abandon Pakistan?

“Pakistan has been a phenomenal market for years. Most frontier managers are aware of the index upgrade and won’t be fixated. My expectation is people will halve their weighting. Pakistan still has a good long-term story. Some people may sell down in this re-balance but I don’t think we will see them going to zero.”

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Which other markets will those funds head to?

“Argentina, Vietnam and Nigeria could be among the beneficiaries. A lot of people haven’t owned Nigeria, though there have been some reforms in the forex side. If you believe there are going to be structural reforms, Nigeria is a good place to have a look. Argentina and Vietnam have seen massive outperformance.”

What are EFG Hermes’ plans for Pakistan?

“The biggest change we’re going to bring is that we will be an institutional stock broker, which I think is the first in Pakistan without a sponsor. We tend to start with stockbroking, provide execution capacity and research. Once we have established that we do investment banking with partners. That’s our goal.”

Which other markets do you plan to enter?

“Kenya, Nigeria, Bangladesh and Vietnam are potential markets. It will be a combination of greenfield startups or acquisition of smaller businesses that we grow. We will be in Africa shortly, and in the next 18 months have our footprint in two countries.”