Category Archives: Cloud Computing

The Sound of a Cyber Bubble Popping

The cryptocurrency market is in a meltdown. Bitcoin prices are down nearly 60% from their December highs, and major banks are cutting off credit card access to crypto exchanges—no surprise in the wake of a mania that saw everyone and their dog sharing hot crypto tips.

Meanwhile, the cyber-security industry is experiencing its own bubble bursting, albeit in much less dramatic fashion. As Reuters reported last month, investors are at last acknowledging the obvious: There are too many VC-bloated start-ups chasing too few clients, while unicorns are morphing into zombies struggling to find an IPO or other exit.

This situation may explain a recent flurry of press releases from cyber firms like Tenable, Cylance and Duo. The releases tout revenue growth and appear intended to assure anyone who will listen that “hey, we’re surviving the cyber shake-out just fine thank you very much.”

It’s hard to say for now which firms will be left standing at the end of 2018 but, for now, it’s clear the peak of the cyber-boom, when VCs would shower money on any company with blinky lights, is over. The investor uncertainty, though, is just one part of the cyber story. There’s also the more important question of whether all these companies have helped harden the country against hacking, and the answer appears to be yes.

Based on recent conversations with ordinary executives, I’ve found cyber-literary has shot up. While hackers are still getting through (they always will), managers and general counsels are finally attuned to the threat and doing something about it.

This change is also trickling down to more humble enterprises. I met a company this week called CyberSight, which offers free and low-cost ransomware protection to the likes of small businesses and county governments, and many of them are actually implementing it. This is a welcome change from a year ago when too many companies blew off cyber defense as an exotic affair they didn’t need.

So let’s celebrate cyber victories where we can find them. Finally, returning to crypto, don’t forget it’s tax time—if you bought or sold, here’s a plain English Q&A to get you through. Have a great weekend.

Jeff John Roberts

@jeffjohnroberts

[email protected]

Welcome to the Cyber Saturday edition of Data Sheet, Fortune’s daily tech newsletter. You may reach Robert Hackett via Twitter, Cryptocat, Jabber (see OTR fingerprint on my about.me), PGP encrypted email (see public key on my Keybase.io), Wickr, Signal, or however you (securely) prefer. Feedback welcome.

THREATS

Bye-bye little bots: Twitter users are losing tens of thousands of followers in the wake of a searing report about a “follower factory” that let people inflate their social media popularity with the help of bots, many of which were crafted by means of identity theft. A Twitter board member was among those who lost followers in the purge.

Apple and the FBI, it’s complicated: In the wake of a 2016 terrorist attack, media outlets (including Fortune) reported on bad blood between Apple and law enforcement over the iPhone maker’s encryption polices. Today, the two sides still don’t see eye-to-eye but are in many ways more friendly than you think.

Looming specter of Spectre: Sure enough, those scary Spectre and Meltdown viruses may be coming to a chip near you. Researchers have already found 130 malware samples that appear to have been built in order to exploit the worldwide chip vulnerabilities disclosed in January.

Netflix and Phish: When you have 118 million subscribers, many of them addicted to binge-watching, your service will be a popular target for scammers. A fake Netflix subscription email is making the rounds (again), threatening to cancel Netflix customers’ accounts if they don’t supply their credit card number. One guess what happens if you click.

Hey Hawaii, good call on canning that button pusher who kept confusing drills with real life. 

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ACCESS GRANTED

The robbery caper began in a Ruby Tuesday’s restaurant in Times Square, where Meza met his victim, who had earlier disclosed he was an early investor in Ethereum. The cryptocurrency was once worth pennies but last year soared to over $1,000.

— If you’re going to rob someone at gunpoint for their crypto-currency, for heaven’s sake, don’t transfer the funds to a popular exchange in your own name. Fortune obtained exclusive details about a crazy crypto heist in New York.

ONE MORE THING

Obligatory SuperBowl tidbit: Jeopardy host Alex Trebek chided his contestants over their complete and utter ignorance of football, a topic that regularly pops up in the weeks before the gig game. The show then trolled the players with a tweet, saying “Our contestants answered as many clues in this category as the @Browns had wins this season.”

Kim Kardashian Is Sending Valentine's Gifts to All Her Haters–and It'll Probably Be Good for Her Career

It’s the month of manufactured love. February 14th, Valentines’s Day is a chance to send those you love something special. But for Kim Kardashian, it’s also a chance to send her haters some love.

The social media celebrity and entrepreneur is sending a long list of celebs who don’t like her a gift–her new perfume. While it’s unclear whether her goal is to make amends or fan the flames of hate, it begs the question: Should we try to make up with our professional enemies?

In your career, your network is your net worth.

We all have former colleagues or bosses we dislike. But when it comes to our careers, it’s a small world. You never know when you’ll need a reference from someone you used to work with. Or perhaps the person now works at a company you’d love to work for. Burning bridges is the worst thing to do if you want to have a successful career. Having a strong network, filled with people you can tap when needed is an asset these days. Which means, you may just want to swallow your pride and make amends with those from your past that could be of value some day.

These 4 words go a long way: “Hey, can we chat?”

Reaching out on a social media platform like LinkedIn is a great start. Asking the person to connect will give you a sign as to whether he or she might even be open to a conversation. If your connection request is accepted, you can then send a note asking to catch up by phone or over coffee. When you speak, you should focus on keeping the conversation positive and trying to restore the trust and respect needed to move forward. A great thing to keep in mind is everyone has a professional strength. If you can identify what the person’s strength is, you can target the conversation around it. An example might be:

“I see you are working at XYZ in marketing now. You were always good at social media. What are some of the things you are working on now that excite you?” 

By engaging in a conversation around what your colleague enjoys, it will put the person at ease and make the conversation flow better.

If you get called out, own it.

Lastly, if the person actually asks you why you are trying to re-establish a connection, be honest. It’s okay to say,

“I realize our relationship wasn’t as good as it could be in the past. I’m trying to improve how I network and support my colleagues. I’m sorry if my past interactions with you weren’t as positive as they could be. I’m trying to make amends and hope you will consider re-establishing our relationship.” 

It’s harder for someone to dismiss you when you’re being accountable for your past actions. But, if they do, chalk it up as experience and move on. At least you tried…

Insurers gingerly test bitcoin business with heist policies

NEW YORK(Reuters) – Major global insurers are starting to offer protection against cryptocurrency theft, willing to tackle daunting challenges it brings rather than miss out on this volatile and loosely regulated, but rapidly growing business.

So far only a few insurers sell such insurance, including XL Catlin, Chubb, and Mitsui Sumitomo Insurance . Yet several others told Reuters they are looking into theft coverage for companies that handle digital currencies like bitcoin and ether, which trade between anonymous parties.

Such efforts so far have garnered little attention, but the emergence of an insurance market marks an important step for the nascent industry’s mainstream recognition.

The risks are clear: digital currency investors have already lost billions from dozens of cryptocurrency hacks, technical errors and fraud. Many hacked exchanges later shuttered.

On Friday, Tokyo-based exchange Coincheck became the latest casualty, reporting a loss of around $534 million worth of coins to hackers.

For insurers the challenge is how to cover those risks for customers they know little about, who use technology few understand and represent a young industry that lacks troves of data insurers usually rely on in designing and pricing coverage.

Christopher Liu, who heads American International Group Inc’s North American cyber insurance practice for financial institutions, said the answer is to find an established business with a similar risk profile and try to adapt what works there.

“It’s sort of akin to a digital armored car service,“ he said about cryptocurrency firms. ”If there is a problem – like an accident or a robbery – that’s going to be the accumulation of all these exposures.” Liu says AIG began researching cryptocurrency theft coverage in 2014 and has written a few such policies, but remains in an “exploratory phase.”

Greg Bangs, head of XL Catlin’s North America crime coverage underwriting recounts how the firm had to become its own expert on the new technology by talking to key players and potential clients before developing bitcoin theft insurance.

“The first challenge for us was to figure out if there was a product here.” XL Catlin now offers annual crime coverage of up to $25 million per incident, Bangs said.

SHADY COMPANIES

Knowing the customer also takes on special importance.

Jackie Quintal, who advises financial institutions for insurance broker Aon Plc, said part of her job is to tell legitimate digital currency companies from shady ones, something that often gets cleared up even before an insurer gets involved.

“If someone is hesitant to provide information and they don’t have answers to compliance questions, they tend to disappear on their own,” she said.

Still, insurers spend more time than usual scrutinizing everything from security and storage procedures, the scale of their operations, to the people involved – a process that can take several months.

“Some bitcoin exchanges and wallets weren’t anticipating the level of underwriting and due diligence that they undergo when they approach the market,” said Matt Prevost, who heads Chubb’s North American Cyber Product Line.

Insurers like Chubb are betting that cryptocurrencies will gain wider recognition even if the new business now represents only a tiny sliver of the global $720 billion per year commercial insurance business.

Digital coin sales raised more than $5 billion across nearly 800 deals in 2017, according to venture capital data provider CB Insights. There are no estimates yet how much of that has been insured or of total premiums collected.

COOL ON “HOT STORAGE”

Many insurers remain wary of the new business. Some, like Great American Insurance Group, an American Financial Group Inc unit, offer protection from employee theft to companies that accept bitcoin payments, but avoid outside risks, such as hacking. The company added the coverage to its standard employee theft policy in 2014.

Others will avoid coverage for coins kept online, or in “hot storage,” because of high risk of hacking and will only cover offline “cold storage,” which is also generally preferred by cryptocurrency companies. (Graphic:tmsnrt.rs/2DNRkFu)

Coinbase, a leading cryptocurrency exchange available in 32 countries, says on its website it holds less than 2 percent of customer funds online and that those funds are insured.

Lloyd’s of London, the world’s largest insurance marketplace, was providing insurance to the exchange, according to a person familiar with the matter. Reuters could not determine the terms or the scope of the coverage and a Lloyd’s spokesman declined to discuss Coinbase.

He said that member companies have written a small number of policies for cryptocurrencies in recent years and Lloyd’s was requiring members to proceed with caution and use additional scrutiny of cryptocurrency companies.

Some insurers are not yet convinced the cryptocurrency business is large enough for premiums to cover possible losses.

“We’re looking at it, but does it make sense to offer a market for that?” said Frank Scheckton, President of Great American’s Fidelity Crime Division.

Right now, costs act as a deterrent for small firms and startups, said Ty Sagalow, chief executive of Innovation Insurance Group LLC, which has been developing coverage for cryptocurrency companies since 2013.

“It’s an expensive product that many companies can’t afford,” he said.

Annual premiums for $10 million in theft coverage would typically run at about $200,000, or 2 percent of the limit, insurance experts say. That compares with about 1 percent or less for traditional financial clients, depending on the company, loss history and other factors.

Currency volatility is another concern. While coverage limits shield insurers from wild swings, the impact for clients can be dramatic. For example, a $10 million policy signed in January 2017 would cover 10,957 bitcoins at the time, but only 923 if a hack happened a year later.

Cameron Winklevoss, co-founder of Gemini, a cryptocurrency exchange and custodian, argues insurance should not be an investor’s primary concern.

As a registered New York trust company, Gemini carries state-mandated insurance against employee theft, computer fraud, and fund transfer fraud, but has no coverage for hacking, Winklevoss, who founded the firm with his twin brother Tyler, said.

“The key is to look for regulatory oversight that ensures that an exchange is doing what it should be doing so that it doesn’t get to the point where you have to fall back on an insurance policy,” he told Reuters.

However, Henry Sanderson, who oversees cyber and technology coverage for Safeonline LLP, a Lloyd’s broker, argues cryptocurrency insurance can help the young industry mature while creating new business for insurers.

This whole space is maturing and growing,” he said. “If we don’t embrace it now, it’s a missed opportunity for insurers.”

Reporting by Suzanne Barlyn; Additional reporting by Carolyn Cohn in London, Noor Zainab Hussain in Bengaluru and Anna Irrera in New York; Editing by Tomasz Janowski

Google's G Suite is no Microsoft killer, but still winning converts

SAN FRANCISCO (Reuters) – Alphabet Inc’s Google has struggled for years to get big businesses to embrace G Suite, its hip alternative to Microsoft Office.

Microsoft Corp dominates the $15-billion market for business productivity tools for a reason: Its longstanding product is reliable and IT managers have little incentive to gamble on something new.

Still, Google has made inroads by throwing more resources at this lucrative market and finally listening to its business customers. Since Google got serious about developing features for major enterprises two years ago, the number of organizations paying for G Suite has doubled to more than 4 million, a new figure expected to be highlighted in Alphabet’s earnings announcement Thursday.

Most of those customers are small and medium-sized companies. But some big names have signed on too. Verizon Communications Inc, Nielsen Holdings Plc and Colgate-Palmolive Co alone have brought about 250,000 workers to G Suite over the past 15 months, according to the companies. Other big firms are now giving it a serious look, said Jeffrey Mann, an analyst at research firm Gartner.

“I have been talking to traditionally conservative companies in government, aerospace, financial services” that are considering buying G Suite, Mann said. “That would not have happened two years ago.”

G Suite may never be an Office killer. Just 15 companies listed in the S&P 500 currently have Google’s business tools, according to a review of public email server data by Reuters. Its $1.3 billion in G Suite sales ranked a distant No. 2 behind Office’s $13.8 billion, according to 2016 data from Gartner.

But Mann and other analysts say that second place is not a bad spot. Smartphones and artificial intelligence have opened up new opportunities for Google to get on the radar of corporate IT departments even if it never tops Microsoft, they said. A robust G Suite is a cornerstone of Google’s efforts to diversify revenue, which overwhelmingly comes from online ad sales.

At a minimum, Google is loosening loyalty to Microsoft at a time when the Redmond, Washington-based giant also faces competition from startups such as chat service Slack that offer specialized online business tools. Google’s low-cost, subscription-based G Suite has also pushed Microsoft to adopt a similar strategy with Office 365, an online version of its popular software.

Okta Inc, a leading provider of security software, said G Suite usage among its nearly 4,000 customers rose 49 percent year-over-year in the 12 months ended Oct 31, compared to 40 percent growth for Office 365.

G Suite’s enterprise focus “is paying off,” Okta said in a report last month. Yet Office 365 remains the most popular service among Okta’s customers, hundreds of which are larger enterprises.

Among companies listed on the broader S&P 1500 index, 11.5 percent moved to Office 365 in the last two years, according to an email records review by investment firm Winton Group Ltd. That outpaced G Suite, which saw 6.8 percent of those firms come its way, including technology, industrial, entertainment and retail companies.

“They are putting people in place, but there’s still a lot of work for Google to begin growing their business in those larger accounts,” said TJ Keitt, a workplace software analyst at Forrester Research.

NEW FOCUS

Schools and startups had been Google’s top business suite users since the package debuted in 2006. They liked the low prices and collaborative features such as the ability for multiple users to edit a single document simultaneously.

By 2012, Google sought bigger, more profitable clients. But it offered minimal handholding, leading companies to doubt its long-term interest. That changed in 2016 when Google brought in new leaders and rebranded its business apps as G Suite.

Non-paying users of Gmail, Docs and other productivity tools still make up the lion’s share of Google clients. But its priorities are clear. About 80 percent of nearly 250 new G Suite features introduced last year, including an automated tool for redacting sensitive data from files, were primarily aimed at paying enterprises, according to Google.

Prabhakar Raghavan, a vice president overseeing G Suite, told Reuters that Alphabet’s board decided to “bet big” on the enterprise sales effort and cleared his unit to spend freely.

“It’s no longer one employee at a small startup administering us,” Raghavan said. “These are demanding chief information officers. They are not going to come on a website and click a ‘buy’ button.”

He said Google engineers meet regularly with corporate executives and rely on business customers to test features.

Close interaction with Nielsen, for example, led Google to add corporate templates in Docs and put third-party content embedding into its internal web page builder Sites, the companies said.

More recently, Google said it postponed the launch of new search technology for businesses to add complex filtering that large customers requested.

“The focus isn’t any longer, ‘We’re Google. We know what’s best for you,’” Mitch Greenwald, managing partner at G Suite sales partner Cloudbakers, said of the new attitude.

Still, Raghavan acknowledged the difficulty of getting IT pros to break up with Microsoft.

“Undeniably, there is an incumbency, a legacy of organizations growing up using Microsoft” to just stick with it, Raghavan said. “There’s a retraining that needs to go on.”

Google can win on price. At $25-per-user monthly for a major enterprise, it is $10-a-head cheaper than Microsoft Office’s top list price.

Demographics have helped too. Young adult workers who used Gmail and Google Docs growing up are natural business adopters. Last month Google announced a new paid version of G Suite aimed at the workforces of universities and schools.

“There’s people who have gone through their entire college career with G Suite and now have to learn Office,” said Mark Sami, vice president at tech consulting firm SPR, which helps businesses install Microsoft software.

If Microsoft is worried, it is not saying. Microsoft spokespeople declined to discuss G Suite’s growth, saying instead that Office continues to attract users. Business sales of Office 365 surged more than 40 percent in each of Microsoft’s last three quarters compared to year-earlier periods, accounting for most of the more than $7 billion in quarterly Office-related revenue.

Both Microsoft and Google have sought to allay clients’ privacy concerns, certifying that data remains in customers’ control and will not be used for advertising.

“That barrier has been taken away for most organizations,” SPR’s Sami said.

Google’s enterprise unit, meanwhile, has gone on a hiring binge, opening its own campus in Sunnyvale, California. It is yet another sign of its commitment to G Suite, analysts said.

“To show that there’s more and more features being released, that ups the ante in the pot,” Gartner analyst Craig Roth said. “They are less and less likely to walk away from this.”

Reporting by Paresh Dave; Editing by Marla Dickerson

China's Leshi Internet flags $1.8 billion loss for 2017, citing LeEco cash crunch

HONG KONG (Reuters) – Chinese video-streaming firm Leshi Internet Information & Technology said it expects a net loss of 11.6 billion yuan ($1.83 billion) for 2017, citing a cash crunch at embattled technology conglomerate LeEco that hurt its revenues.

Leshi had reported a profit of 554.8 million yuan in 2016.

It was once the main listed unit of LeEco which was founded by Jia Yueting. Last year, property developer Sunac China became Leshi’s second-largest shareholder and Jia subsequently resigned as chairman and CEO from the company but remains its largest shareholder.

Leshi is trying to recover debt owed by Jia. It said last week it is seeking equity stakes in the car businesses of Jia for debt owed by him and his companies amounting to as much as 7.5 billion yuan ($1.17 billion).

Leshi flagged the expected loss for 2017 in a statement to the Shenzhen stock exchange on Tuesday evening.

The announcement sent Leshi’s shares plunging by the daily limit of 10 percent on Wednesday, the sixth consecutive day they have tumbled the maximum allowed since resuming trading a week ago following a 9-month suspension.

(This version of the story corrects fifth paragraph to show announcement was made to Shenzhen stock exchange, not Hong Kong stock exchange)

Reporting by Sijia Jiang; Editing by Anne Marie Roantree and Muralikumar Anantharaman

The #1 Lesson Cryptocurrency Investors Can Learn from the Dot-com Bubble

Life as we once knew it drastically changed in the mid-90s. The Internet’s popularity was on the rise, and many savvy businesses and companies saw the potential of a hyper-connected, digital world. This lead to the dot-com bubble–a sharp rise, and fall, in stock prices that was fueled by investments in Internet-based companies.

With experts predicting we are now in a cryptocurrency bubble, it seems as if history is at risk of repeating itself.  

While we’ve moved far past the early stages of Internet start-ups and e-commerce companies, digital is continuing to change our everyday lives–from how we work, live, and play to the future of money itself. Interest in cryptocurrency, similar to the frenzy we saw in the early days of the dot-com bubble, is reaching a crescendo–yet many experts are already predicting its demise.

Warren Buffet has gone on the record saying that crypto will come to a bad ending. Jamie Dimon, J.P. Morgan’s CEO, called Bitcoin a fraud before later admitting that he regretted making that statement.

Meanwhile, other big-name investors and companies are going out of their way to invest in crypto–from Richard Branson to Microsoft .

But are the naysayers right? Are we headed toward a catastrophic implosion of dot-com level proportions?

Yes, the crypto market is volatile. There are too many unknowns to be certain, but if we look at the histories of companies like Amazon, eBay, Priceline, and Shutterfly, then maybe we can gain some clarity.

These e-commerce companies were born during the dot-com era, and they weathered the storm and emerged as some of the most successful and stable companies in history. The dot-com crash didn’t destroy the concept of e-commerce or the fact that consumers want to buy airline tickets, antiques, or pet food online–there was simply a gold rush in the early development stages. Once the dust settled, however, the strong survived.  

Don’t call it a comeback

In the end, the dot-com bubble was a movement. Smart investors saw the future of digital-based commerce and, as they invested, the movement snowballed into madness. Many of the companies that popped up during that time were run by people who were in over their heads, or they didn’t have the technology to keep up with the demand. When the crash happened, it thinned the herd.

Mona El Isa, the chief executive and co-founder of Melonport, summed this notion up at a recent TechCrunch conference when she said, “The dot-com bubble was messy, but if we look at some of the largest companies that exist today they are a result of the dot-com bubble and they are part of our everyday lives.”

Which leads us back to what we’re seeing with cryptocurrency today. Even if this bubble bursts, the concept of digital currency will not go away. It may wipe out 90% of today’s existing startup currencies, but the strong will survive. Companies, like Kodak, who try to create a currency without providing real customer value may see efforts go to waste. And this will pave the way for the Amazon of cryptocurrency to make its mark on the world.

To further the power of this movement, it’s important to remember that cryptocurrency isn’t a company. It doesn’t have shareholders. It isn’t VC-backed. Which means this movement extends beyond any other economic bubble we’ve seen–it’s happening in an arena that’s removed from the stock markets. So, when, and if, the bubble bursts, it won’t go quietly into that good night. The parameters may change drastically from what we are seeing today, but digital currency–in one form or another–is the future.

How to invest in a movement

So, if cryptocurrency is the future–how do you invest? From a business standpoint, it’s important to look at crypto through a risk-management lens. Business leaders and board members should be learning everything they can about this new trend so they can determine how, where, and why it might affect or fit into the business. Is there a way to offer customers value through cryptocurrency? Is the time right to execute? Is there a long-term strategy in place that will take advantage of the crypto movement when the stormy waters calm down?

These are the types of questions you need to consider. Do what’s best for your business and what’s best for your customer. As with any digital movement, you need to be aware of the trends and aware of how it could change your business. This is the only way to defend your company from possible disruption.

Final word

For anyone who is considering investing in cryptocurrency, it’s important to remember that this is a long-term movement. Our world is becoming increasingly smaller and more reliant on digital means–currency transformation is inevitable.

It’s the smart investors who understand that this isn’t a fragile economic trend. Digital currency will continue to adapt and change over the next few years–and the companies and entrepreneurs who pay close attention now will have the best chance at deftly navigating the troubled waters.

Apple's Earnings: What I See Looming On The Horizon

Apple’s (AAPL) long awaited fiscal 1Q18 is now just around the corner.

The company will report the results of the quarter on February 1st, after the closing bell. The Street is anticipating revenues of $86.75 billion, a YOY increase of about 11% that would nearly match last quarter’s top line growth rate. EPS estimates of $3.81 would represent Apple’s largest earnings number on record, although it is unclear to me if any of the estimated $38 billion in tax payments from cash repatriation would impact the bottom line already this quarter (Apple reports earnings results in GAAP terms only).

Credit: Digital Trends

Phones, phones, phones

As I have argued recently, “performance of the iPhone X may help to set the course for the rest of the year in terms of financial results expectations and stock sentiment.” This being the first full quarter following the model’s introduction in early November 2017, I believe all eyes will be on smartphone sales this week. If the iPhone X sputters, as a few sell-side analysts have been predicting, the stock could face headwinds in the near term.

The graphs below might help to support these short-term concerns. Activation of new smartphone models introduced in calendar years 2016 (iPhone 7 and 7 Plus) and 2017 (iPhone 8, 8 Plus and X) accounted for roughly 16% and 14% of all iPhones activated by the end of each respective holiday quarter.

But because the iPhone X was not released until November 2017, the adoption of newly-introduced devices, including models 8 and 8 Plus, happened much more slowly this past year. Most iPhone sales, at least in the first half of fiscal 1Q18, seem to have come from older models – understanding that activation does not equal sales, yet the data seems very telling to me.

Source: DM Martins Research, using data from Mixpanel

Exiting the quarter, the iPhone X appears to be performing well in terms of activation, surpassing the iPhone 8 and 8 Plus in popularity. So if softness in smartphone sales is confirmed in fiscal 1Q18, I find it more likely to be reflective of product launch timing than indicative of a weak super cycle.

But it’s not all about phones

Although the iPhone super-cycle is a key pillar of many Apple bulls’ investment theses, the story does not end there. I see Apple well positioned to benefit from increasing consumer sentiment (see graph below) and discretionary spending activity across its product and service portfolio.

Source: CCI historical data from OECD

Back in November, I discussed how “Apple has been one of the few winners coming out of the undergoing (laptop and desktop) consolidation.” Last quarter, Mac revenue growth shot up to about 25% YOY. Fiscal 1Q17 saw an improvement (see graph below), suggesting fiscal 1Q18 will face slightly stronger comps this time. Still, I anticipate both units sold and ASP to come in on the healthy side this quarter, particularly as Apple expands its product offering across multiple price points from the low-end Mac Mini ($499) to the recently-released iMac Pro ($5,000).

Source: DM Martins Research, using data from company reports

Elsewhere, I have no reason to believe that Apple’s Services segment will see a dip in its growth pace. The company continues to be well on track to double the division’s revenues between 2016 and 2020. Helping to support this mission is what appears to be a recovering Chinese market, which finally showed signs of having a pulse last quarter. As the installed base in the country returns to growth, the lagging effect on Services revenues is likely to follow.

Possible short-term risks, bullishness intact

All factors taken into account, I continue to believe AAPL will perform very well in the long term. The company is riding the tailwinds of an increasingly robust global economy, and a pickup in consumer discretionary purchases is likely to benefit the tech company. It does not hurt that (1) cash repatriation should further support the stock through increased investments, a potential bump in dividend payments and share repurchases, and (2) the stock still seems de-risked enough to me, trading at a forward P/E of only 14.9x and PEG of 1.7x (see graph below).

Chart

AAPL PE Ratio (Forward) data by YCharts

For now, I remain an AAPL holder, and find it unlikely that I will dispose of my shares any time soon. If short-term weakness related to iPhones in fact materializes, I believe a potential hit that the stock might take would be an opportunity for investors to accumulate shares on the dip.

Disclosure: I am/we are long AAPL.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Don't Quit Your PR Program Unless You've Considered These 3 Things

Whether you are looking to gain awareness, improve SEO, or increase sales, having great exposure can help you get there. But PR is not a band-aid for an overarching business problem–nor is it a get rich fast technique.

A great PR strategy can take many years to build. Over the years, I’ve seen many companies start their efforts, only to stop before they’ve given the program enough time to develop. I’ve heard dozens of marketers and founders explain that they quit their PR efforts after their pitch didn’t get picked up by enough outlets in the first few week. Gaining great coverage takes time, pitch optimization, and persistence.

Often times, if a brand could have taken a step back after a rejected story to tweak their angle and try again, the second story they pitch could have been widely successful. Here’s why you shouldn’t throw in the towel for your PR outreach just yet:

1. Relationships take time to build.

Imagine you are at a party. You immediately start talking about you, your business, and your news. Very quickly, many people will not want to talk with you.

The same holds true when you’re building relationships with the media. It takes time to get to know a reporter and what they are writing about and then creating relevant pitches that are helpful to them. When you build trust and rapport with reporters, they’ll be more likely to open your emails, which is the first step to gaining great coverage.

You can build a better relationship with reporters by becoming well versed with their past writings and looking for opportunities to tell them stories of interest. Take a look through their Twitter accounts and personal websites to learn more about what they’re covering and the news that is important to them.

When you reach out to a reporter for the first time, show them that you are knowledgeable about their area of coverage and that your story fits their angle. When we reach out to reporters we make sure to spend time reading their past work to ensure our pitch is the right fit for their area of expertise.  It can be easy to burn a press bridge simply by not personalizing an email enough–take your time, do your research, and get to know reporters for the long term. Slow and steady wins the race.

2. SEO is a long-term game.

When you receive a press mention, you’ll likely see a spike in traffic on the day it’s published–but don’t discount the future traffic. If you are a mattress company and you get listed as “The Best Mattresses Ever Made,” you’ll benefit from both the spike and also later from people who are searching for mattresses and come across the article. Traffic from press articles should be monitored for months to come, even after publication.

An authoritative link will not only drive traffic, but will also help your website in the search engine rankings. This boost will not happen instantly. With time and relevant inbound links, you’ll see not just your referral traffic grow, but also your organic search traffic from Google.

3. Press takes commitment–and a bit of luck.

It takes a while to learn about the best way to pitch your product. Each time you pitch, you’ll learn more about what copy and message resonates with reporters.

If you’re not seeing any success, it does not mean you don’t have an interesting story. It might mean you are pitching to the wrong reporters, your email subject line needs work, or you simply didn’t follow up.

By tracking your emails with a tool like SideKick or Yesware, you’ll be better able to see who is opening your mails, what they’re clicking on, and how many times they went back to the email. You can use this data to refine your pitch the next time. With the media always changing, it also takes a bit of luck to pitch at the right time to the right reporter with the right story.

Pitching takes a strong backbone and you’ll get a lot of rejections. If you haven’t had success yet, keep trying. And if you’ve been pitching for months with still no results, it might be time to call in a PR pro to help you optimize your pitch and press kit.

If you’re looking to reap the benefits of the press, start early, optimize often, and plan your strategy for the long haul. This time next year, you’ll be glad you stuck with it.

Down Syndrome Charity Dumps LuLaRoe After Shocking Video

LuLaRoe is no stranger to controversy. But the multilevel marketing women’s clothing company has really stepped in it after a battle with the National Down Syndrome Society (NDSS) over a shocking video that mocked the disabled. Attempts to spin the controversy are challenging at best.

The company faced significant bad press during 2017, whether for changing return policies to the detriment of independent sales agents, trying to force a critical blogger to divulge sources, or reportedly using an artist’s designs without payment or permission.

A lawsuit last October alleged that the business structure was an illegal pyramid scheme. And founders and owners Mark and DeAnne Stidham have been accused of blaming the independent salespeople for problems that might have been the company’s.

This latest tussle is particularly ugly. For some time, LuLaRoe has been an official supporter of NDSS as DeAnne Stidham, who had a grandchild with the condition. Even that has some questions tied to it, as one promotion that tied a $1 donation for sales of two different special items would be more than offset by increased costs to the salespeople.

The latest situation came about when an independent sales agent mocked people with special needs, as reported by KXTV television, in a video posted to YouTube. The specific remark starts at about 55 seconds in.

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NDSS posted on Facebook about the incident. The organization had received an apology, but apparently told LuLaRoe that it would not maintain relationships with the company unless the seller was terminated, which did not happen. Here is what NDSS posted on Friday evening:

Within the last 24 hours, it has come to the attention of the National Down Syndrome Society that an online video by a LuLaRoe independent retailer, which mocks a person with a disability, was posted on YouTube. This video is unacceptable and further perpetuates the stigmas we work to fight and end each and every day at NDSS.

While we appreciate the apology from this individual and the previous support from LuLaRoe, we must uphold our mission statement, and end our partnership and any further programming with LuLaRoe immediately.

LuLaRoe posted a response three hours later that said, in part, the following:

We are deeply saddened and disappointed to announce our decision to end our relationship with the National Down Syndrome Society. Our company and the Independent Fashion Retailers have embraced the NDSS and its important work, and have enthusiastically supported the organization’s efforts over the past year.

Regrettably, a LuLaRoe Independent Fashion Retailer exhibited unacceptable and insensitive behavior during a live sale, which understandably offended viewers as well as everyone at LuLaRoe. His bad judgment in no way represents the beliefs and character of LuLaRoe or Independent Fashion Retailers.

Immediately after his sale, the Retailer posted an apology. He also reached out to NDSS and said he and his wife have agreed to use the incident as a learning experience and expressed his intention to focus his business on support for the organization and its cause.

After speaking with the Retailer at great length, we believe his apology is sincere and accepted his assurance that this type of behavior would never happen again. We are also using this unfortunate incident as an opportunity to redouble our sensitivity and tolerance training efforts and policies for Independent Fashion Retailers.

Unfortunately, NDSS leadership is unwilling to accept the Retailer’s apology and has informed us that unless we terminate his contract with LuLaRoe, the organization will no longer associate with us. We do not believe the most productive response to his actions, which he has fully apologized for, is to close his business and threaten his ability to provide for his family.

Trying to decide who is “right” can be difficult. LuLaRoe claims that an apology that it thought was sincere should have been enough. At the same time, it would seem that NDSS would be the party to decide whether the apology was adequate, as its cause was the one injured and it has doubtlessly faced analogous situations over the years. Words of contrition in uncomfortable cases often are the result of people trying to avoid the consequences of their actions. Would NDSS essentially support the idea that everyone had one free pass to mock people with Down Syndrome? At a time when there seems to be zero tolerance for sexual harassment, why wouldn’t other concerns receive the same degree of respect?

Aside from those considerations, however, LuLaRoe handled the situation badly in three ways. When you employ independent people as agents of your company, you have tied yourself to them and their actions. By decided that “education” had already been achieved, LuLaRoe effectively handed itself a pass on the issue.

Not only did LuLaRoe forgive itself, it compounded that action by blaming NDSS through its choice of words. By saying, “Unfortunately, NDSS leadership is unwilling to accept the Retailer’s apology,” the company shifted responsibility to the organization by implying that NDSS was unreasonable in its approach.

Finally, the company’s navigation of cause marketing is problematic. To partner with an organization and gain some marketing advantage requires the following:

  • Your company’s values or interests should have an organic connection to the cause.
  • You need to understand the requirements and implications of partnering with an organization.
  • To be sincere, you then have to not only support the organization and cause, but meet the requirements going forward.

LuLaRoe should have identified any difference in philosophy with the organization before pledging support, no matter how much its founders believed in the cause. Had it done so, it would have known in advance the necessary course of action should a conflict arise and then known whether or not it could live with the conditions.

The seller in question may have been sincere in having learned a lesson, but NDSS had its own need to see that disrespect carried a penalty beyond momentary embarrassment. Ultimately, it is LuLaRoe’s fault for not having asked the right questions and then deciding that the organization should change its philosophy to accommodate the company’s.

Dollar Falls After Mixed Signals From Trump Administration

Disappointing US GDP and contradictory comments on currency strength at Davos burden dollar

The USD depreciated against majors as soft Q4 GDP numbers on Friday and mixed comments on the desired strength and weakness of the currency made at the World Economic Forum in Davos put downward pressure on the greenback. The Trump administration is pushing its tough stance on trade, but tried to soften the tone in an effort to be more inclusive. Economic fundamentals and monetary policy have been supportive of the currency, but political lack of stability has hurt the buck. Next week the market will focus on the U.S. Federal Reserve and the U.S. non farm payrolls (NFP).

  • US President Trump to deliver his first State of the Union Address
  • Fed anticipated to keep rates on hold at 1.25-1.50 percent
  • US forecasted to have added 184,000 jobs in January

Dollar Confused Ahead of US Jobs Report and Fed Statement

The EUR/USD gained 1.73 percent in the last five days. The single currency is trading at 1.2426 after contradictory statements from the Trump administration confused markets. Secretary of the Treasury Steve Mnuchin said on Wednesday that the weaker dollar was good for the US in relation to trade. The USD retreated and the EUR touched three year highs. Next day President Trump said the he ultimately wants to see a strong dollar as the currency is a reflection of the strength of the economy. The USD recovered some ground versus the EUR, but the damage had already been done and the EUR advanced 0.27 percent on Friday.

The first estimate for US GDP for the fourth quarter was released and it was short of expectations at 2.6 percent. The forecast the market was looking for was 3.0 percent, but given its the advanced estimate there will be two more released that could see the final GDP figure higher in the following months.

The EUR has been rising despite the words from European Central Bank (ECB) President Mario Draghi. The central bank kept its rate and massive quantitative easing program untouched. Draghi made sure to mention that stimulus would remain for as long as needed, but had to concede there were few chances it will change interest rates. The ECB President made a comment warning about using verbal intervention to talk down a currency when asked about the Davos statement from Mnuchin.

US President Trump will deliver its first Sate of the Union address on Tuesday, January 30, at 9:00 pm EST. Failing to avoid a government shutdown Trump will focus on the positives during his first year. His achievements in passing legislation came late in 2017 but he is sure to mention the tax reform bill. The stock market record breaking pace and overall strength of the economy while inherited will also be mentioned with the infrastructure plan something to look for in the immediate future. The USD got a Trump bump in late 2016 when just after winning the elections

The U.S. non farm payrolls (NFP) will be published on Friday, February 2 at 8:30 am EST. Economists are expecting the US to add 184,000 positions in January. Last month’s report came in lower than expected but the saving grace for the USD was that hourly wages grew 0.3 percent as expected. There are similar gains forecasted for January wages with a special emphasis on inflationary data as the Fed ponders what to do with stagnant wages despite a strong job component.

The USD/CAD lost 1.38 percent during the week. The currency pair is trading at 1.2323 with a weaker greenback sliding against a stronger loonie. The Bank of Canada (BoC) lifted its benchmark rate 25 basis points earlier in the month and Friday’s release of Canadian inflation coming in even lower than expected at -0.4 percent and validates the slowing inflationary rise view from the central bank.

The uncertain future of NAFTA had previously sapped the loonie from any positive impact from the interest rate hike, but comments this week about the importance trade by the Trump administration have lessened the anxiety about the trade deal. While the US representatives were sure to mention America first, even Trump conceded that America is not alone. The March deadline is fast approaching and negotiations have little to show for it. Elections in Mexico and the United States will make the trade deal a heavy politicized item in 2018. The biggest surprise at Davos from the White House was the apparent softening of their hard line on the Trans Pacific Pact (TPP). The now 11 nation deal was one of the first casualties of the administration and the remaining members agreed to go ahead without the US this week.

Oil prices have been boosted by the weak US dollar and encouraging signs that the global demand for energy is on the rise. The Organization of the Petroleum Exporting Countries (OPEC) production cut agreement was instrumental in stopping the free fall of crude. US shale producers were predicted to have ramped up their supply by now, but weather and other factors have stood in their way. The main risk for crude is a sudden revival of the US dollar that could trigger a sell-off in commodities with investors looking to book profits at current three level highs.

Market events to watch this week:

Tuesday, January 30
10:00am USD CB Consumer Confidence
10:30am GBP BOE Gov Carney Speaks
7:30pm AUD CPI q/q
9:00pm USD President Trump Speaks
Wednesday, January 31
8:15am USD ADP Non-Farm Employment Change
8:30am CAD GDP m/m
10:30am USD Crude Oil Inventories
2:00pm USD FOMC Statement
2:00pm USD Federal Funds Rate
Thursday, February 1
4:30am GBP Manufacturing PMI
10:00am USD ISM Manufacturing PMI
Friday, February 2
4:30am GBP Construction PMI

*All times EST