Tesla lost nearly $8 billion in shareholder value this week and its board should be ashamed

Over the last five days, Tesla shareholders watched the value of their stock decline by roughly 16 percent and saw nearly $8 billion in value erased, as the company’s celebrity chief executive, Elon Musk, had what amounts to a very public breakdown.

However, Musk is not the only person responsible for the collapse of Tesla’s stock price. As The New York Times article which precipitated the latest slide in Tesla’s value on the public markets makes clear, the company’s board is also to blame.

For months, Musk has been showing signs of strain (generously speaking), and has been accused of making questionable decisions to drive growth and stifle criticism or dissent at the revolutionary electric vehicle company he founded.

During that time, as Shira Ovide notes in her piece from Bloomberg, Tesla’s board (primarily composed of Musk’s friends, relatives and initial investors) took no public steps to control or manage the situation.

Privately and on background the board (or certain members) expressed concern over Musk’s recent behavior, drug use (both medicinal and recreational) and Twitter habits.

Those concerns should have been aired at the board level and the company’s directors should have exercised their ability to manage the mercurial Musk as his public actions became increasingly unmoored.

Something could have happened after the disastrous earnings call with analysts. It could have happened around the time of the strange active shooter allegations that were made against a Tesla whistleblower. It could have happened after Musk called a diver involved in the rescue of trapped and starving children a “pedo.”

At any of those moments the board could have stepped in and demanded that Musk face the consequences for actions that cost his company billions of dollars. They did not, and now Tesla’s position is more precarious than ever.

The Securities and Exchange Commission is investigating Musk for his public statements around privatization plans for Tesla that may or may not have been real.

It’s another distraction for the company’s chief executive at a time when he is already under tremendous pressure to meet production targets for the company’s troubled Model 3 rollout (even as it begins to hit its targets).

The problem is that Musk’s cult of personality is so intertwined with Tesla’s corporate identity, there’s a fear that as Musk goes so goes Tesla. That’s no way to run a business, and it’s no way to ensure long-term value for shareholders (either as a public or private company).

Ultimately the board at Tesla needs to step in and take a more active role in overseeing the company, before the next decision they find themselves confronted with is the company’s liquidation.

Cisco’s $2.35 billion Duo acquisition front and center at earnings call

When Cisco bought Ann Arbor, Michigan security company, Duo for a whopping $2.35 billion earlier this month, it showed the growing value of security and security startups in the view of traditional tech companies like Cisco.

In yesterday’s earnings report, even before the ink had dried on the Duo acquisition contract, Cisco was reporting that its security business grew 12 percent year over year to $627 million. Given those numbers, the acquisition was top of mind in CEO Chuck Robbins’ comments to analysts.

“We recently announced our intent to acquire Duo Security to extend our intent-based networking portfolio into multi- cloud environments. Duo’s SaaS delivered solution will expand our cloud security capabilities to help enable any user on any device to securely connect to any application on any network,” he told analysts.

Indeed, security is going to continue to take center stage moving forward. “Security continues to be our customers number one concern and it is a top priority for us. Our strategy is to simplify and increase security efficacy through an architectural approach with products that work together and share analytics and actionable threat intelligence,” Robbins said.

That fits neatly with the Duo acquisition, whose guiding philosophy has been to simplify security. It is perhaps best known for its two-factor authentication tool. Often companies send a text with a code number to your phone after you change a password to prove it’s you, but even that method has proven vulnerable to attack.

What Duo does is send a message through its app to your phone asking if you are trying to sign on. You can approve if it’s you or deny if it’s not, and if you can’t get the message for some reason you can call instead to get approval. It can also verify the health of the app before granting access to a user. It’s a fairly painless and secure way to implement two-factor authentication, while making sure employees keep their software up-to-date.

Duo Approve/Deny tool in action on smartphone.

While Cisco’s security revenue accounted for a fraction of the company’s overall $12.8 billion for the quarter, the company clearly sees security as an area that could continue to grow.

Cisco hasn’t been shy about using its substantial cash holdings to expand in areas like security beyond pure networking hardware to provide a more diverse recurring revenue stream. The company currently has over $54 billion in cash on hand, according to Y Charts.

Cisco spent a fair amount money on Duo, which according to reports has $100 million in annual recurring revenue, a number that is expected to continue to grow substantially. It had raised over $121 million in venture investment since inception. In its last funding round in September 2017, the company raised $70 million on a valuation of $1.19 billion.

The acquisition price ended up more than doubling that valuation. That could be because it’s a security company with recurring revenue, and Cisco clearly wanted it badly as another piece in its security solutions portfolio, one it hopes can help keep pushing that security revenue needle ever higher.

Chinese internet giant Tencent suffers a rare profit drop

Tencent, Asia’s most valuable tech firm, delivered a surprise drop in profit on account of lower investment gains.

The firm recorded strong growth with revenue up 30 percent year-on-year to reach 73.7 billion RMB ($10.7 billion) in Q2 2018. But net profit slipped by two percent annually to reach 17.9 billion RMB, or around $2.6 billion.

That breaks a growth streak that stretches back more than a decade and, more crucially, it comes at a time of relative crisis for Tencent . The company became Asia’s first $500 billion tech business last November, but it has endured a torrid 2018 with its share price slipping more than 25 percent since a January highcontroversy around a banned game knocked it down further this week.

Gaming has always been Tencent’s strongest point — it helped the firm log a 60 percent profit jump in the previous quarter — but there are concerns.

Sources told Bloomberg that there has been a freeze in awarding game licenses in China as part of changing within the agency that approves them. That’s impacted mobile, PC and console and it has particularly rattled Tencent, which is one of the major players.

Not only did China clamp down on popular title Monster Hunt, but Tencent still doesn’t have approval to bring PUBG or Fortnite to PC in China, and its financial results show some slowing. Its PC gaming business recorded a five percent yearly drop to 12.9 billion RMB. The smartphone games business — which includes smash hits PUBG and Fortnite — posted 19 percent year-on-year growth to hit sales of 17.6 billion RMB, but that was done 19 percent on that previous blockbuster quarter.

“In China, DAU for our smartphone games grew at a double-digit rate year-on-year, but monetization per user declined as users shifted time to non-monetised tactical tournament games,” Tencent said in a filing.

The company has vowed to “reinvigorate” the mobile games until through a mix of more monetizing, deeper engagement and widening its selection on the market. The firm also said it will push its successful China games overseas, presumably into other parts of Asia where Tencent has seen traction and revenue before.

Those strategies will take some time to generate results, but for now the company said it is happy with user engagement, and particularly the daily gamer numbers.

That hasn’t impressed investors, who sent the stock price lower following the announcement of these financials.

Twilio came ahead of expectations and the stock is going nuts

Twilio today reported a positive quarter that brought it to profitability — on an adjusted basis — ahead of schedule for Wall Street, sending the stock soaring 16% in extended hours after the release came out.

While according to traditional accounting principles Twilio still lost money (this usually includes stock-based compensation, a key component of compensation packages), the company is still showing that it has the capability of being profitable. Born as a go-to tool for startups and larger companies to handle their text- and telephone-related operations, Twilio was among a wave of IPOs in 2016 that has more or less continued into this year. The company’s stock has more than doubled in the past year, and is up nearly 170% this year alone. Twilio also brought in revenue ahead of Wall Street expectations.

Still, as a services business, Twilio has to show that it can continue to scale its business while absorbing the cost of the infrastructure required and acquire new customers. It also has to ensure that those customers aren’t leaving, or at least that it’s bringing on enough new developers more quickly than they are leaving. Larger enterprises, as a result, can be more attractive because they’re more predictable and can lead to bigger buckets of revenue for the company — and, well, most larger companies still need communications support in some way still today.

On an adjusted basis, Twilio said it earned 3 cents per share, ahead of the loss of 5 cents that analysts were expecting. It said it brought in $147.8 million in revenue compared to $131.1 million analysts were expecting, so it’s a beat on both lines, and more importantly shows that Twilio may be able to morph its toolkit into a mainline business that can end up as the backbone of any company’s communication with their customers or users.

The greedy ways Apple got to $1 trillion

For being the richest company ever with $243 billion in cash, Apple sure cuts corners in the stingiest ways. The hardware giant became the first trillion-dollar company week. Yet it’s tough to reconcile Apple earning $11 billion in profit per quarter with it still screwing us over on cords and keyboards. The “it just works” philosophy has slipped through the cracks of the money-printing machine. It’s not that Apple couldn’t afford to fix the problems, it’s just ensnared in hubris such that it doesn’t see them as important.

We still turn to Apple because it makes the best core products. But the edges of the customer experience have frayed like the wires of a Lightning cable. The key to Apple’s fortune is obviously selling high margin iPhones, not these ways it nickels and dimes us. But the company has an opportunity to raise its standards after this milestone, and win back the faith that could push it to a $2 trillion market cap.

1. Frayed Charging Cables

Apple gives you that tingly feeling in the worst way. Can it not build Lightning cables and MacBook chargers a little sturdier? If you avoid losing one long enough to put in some serious use, it inevitably ends up splittling where the cord meets your iPhone or exits the laptop power supply. Whether it’s wrapping them in electrical tape or the spring of a retractable pen, people have come up with all sorts of Macgyver methods to make their Apple chargers last. It got so bad that Apple was sued into offering a MacBook charger replacement program, but that expired years ago. If these are what allow us to play with the fancy devices it invents, shouldn’t they get the same quality of industrial design?

Image via Sophia Cannon

2. Buried iTunes Subscriptions Cancellation

Want to cancel your Apple Music subscription or some other service you got roped into with a free trial? It’s SUPER easy. First, click the totally unlabeled and generic circle with a blotch in it that’s supposed to be a profile picture icon. You should see a “Manage Subscriptions” option…but you don’t. Instead, you’ll have to know to tap “View Apple ID”. Once you auth in with the same face or thumbprint that opened your phone in the first place you’ll find the option to cut them off. And as thank you for this convenience, you’ll get to pay 30 percent extra on some subscriptions if you pay through Apple. It’s clearly exploitative dark pattern design.

3. Keyboard Claptrap

The MacBook keyboard is the on-ramp to the information superhighway, yet a single grain of sand can cause a pile up. Renowned Apple pundit John Gruber called it “one of the biggest design screwups in Apple history”. The new butterfly key design Apple rolled out in 2016 can get jammed by dust, requiring a lengthy disassembly process often requiring a professional to fix. Suddenly your work grinds to a halt. Apple wouldn’t always cover this repair, even under warranty. It took a lawsuit and tons of public backlash for Apple to offer free fixes, and that still typically leaves you without a laptop for a few days. I’m typing this article on a cracked-screen 2013 MacBook Pro because I refuse to upgrade until they make the keyboard design more resilient.

4. Killing Affiliate Fees Blogs Rely On

Apple benefits from a legion of blogs obsessing over its hardware and software, hyping up everything it sells. Just this week it returned that favor by announcing it will cut off one of their core sources of revenue. Websites would previously earn a 7 percent commission from Apple in exchange for affiliate link clicks leading to purchases on the App Store. But over the past few years, Apple has begun to sell ads inside the App Store too, competing for advertisers with those external blogs. It’s also built up its own editorial team that curates what’s featured, and apparently doesn’t want competition in being a king-maker. So in October Apple is shutting down the affiliate program that app review sites like TouchArcade and AppShopper depend on, potentially spelling their doom.

5. Dongle Hell

What’s the opposite of “it just works”? Paying extra to lug around a slew of gangly cord connectors you need just to plug things into your laptop or phone. Dongles are the emblem of Apple’s abandonment of the user experience. A Thunderbolt 2 to Thunderbolt 3 dongle runs $50 while it will cost you $9 to plug in any pair of headphones from the past half-century once you’ve inevitably lost the Lightning dongle you’re allocated. Apple loves pushing us towards its vision of tomorrow, like Bluetooth headphones (that it sells) and USB-C fast-chargers (that it sells). But ditching headphone jacks and old school USB ports makes Apple’s latest devices incompatible with sanity. Even its own commercial shows musician Grimes struggling with her dongles. Sorry you can’t pass me the aux cord. I’m from the future.

Image via Notebookcheck

[Featured Image via Instructibles]

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Apple Pay Coming to Germany, Also Set to Launch at CVS and 7-11 Later This Year

During today’s earnings call for the third quarter of 2018, Apple CEO Tim Cook said that Apple plans to bring Apple Pay to Germany later this year.

Apple Pay support in Germany has been rumored for some time now as Apple has been working to establish deals over fees and other factors with German banks.



Apple did not provide details on exactly when Apple Pay will launch in Germany, but it could come potentially with the debut of iOS 12 in September.

In addition to announcing Apple Pay’s upcoming German launch, Cook also said that Apple Pay will be rolling out at CVS drug stores and 7-11 convenience stores in the United States later in the year.

There were upwards of 1 billion Apple Pay transactions in the third quarter of 2018, triple the amount from the year ago with growth accelerating from the March quarter. Cook said that in Q3 2018, there were more Apple Pay transactions than Square transactions, and more mobile transactions than PayPal.

Apple Pay is now available in more than 20 countries, including United States, the United Kingdom, Australia, Canada, Singapore, Switzerland, Hong Kong, France, Russia, China, Japan, New Zealand, Spain, Taiwan, Ireland, Italy, Denmark, Finland, Sweden, UAE, Brazil, Ukraine, Norway, and Poland.

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