NEW YORK (Reuters) – Stock index provider MSCI said on Thursday it extended its review of how to treat stocks with unequal voting rights and expects to make a decision by the end of October.
FILE PHOTO: The MSCI logo is seen in this June 20, 2017 illustration photo. REUTERS/Thomas White/Illustration/File Photo
That decision, which could affect dozens of stocks around the world, including technology heavyweights Facebook and Google parent Alphabet, had been expected by Thursday.
But MSCI said in a statement that it “determined that it is appropriate to give further consideration to the full breadth of views expressed by the investment community before announcing a final conclusion.”
MSCI has been considering a plan to reduce the influence within its indexes of stocks that have share structures with unequal voting rights. Such a move could have resulted in portfolio managers selling their shares to rebalance their holdings.
More than $660 billion in passively managed funds track MSCI indexes around the world, according to Lipper data.
Uneven voting structures has been a hot corporate governance topic, especially as a number of newly listed U.S. technology firms, such as Snap Inc and Dropbox Inc, have listed shares that retain lopsided decision-making power with insiders.
Last year, S&P Dow Jones Indices started excluding companies with multiple classes of shares from the S&P 500 and other indexes, although it did not apply the rule to existing index components, including Alphabet and Berkshire Hathaway Inc.
FTSE Russell implemented a similar rule last July, requiring new constituents of its indexes to have at least 5 percent of their voting rights in the hands of public shareholders, while giving a five-year grace period to existing constituents that do not meet the threshold.
The MSCI proposal, made in January, has not been universally welcomed.
BlackRock Inc, the world’s largest asset manager, in April said securities regulators, not index providers, should set international standards for shareholder voting rights. It said MSCI’s proposal could distort markets.
Reporting by Lewis Krauskopf and Noel Randewich; editing by Bill Berkrot
Micron Technology (Nasdaq: MU) is set to release earnings on Wednesday, June 20 after the market close. Micron has been on an incredible run over the last two years with the stock gaining over 400%, but the sentiment toward the stock is a little concerning.
The rally in Micron has certainly been warranted. The company has seen its earnings grow by an average of 31 percent per year over the last three years with the last quarter showing growth of 213 percent. Analysts expect the earnings to grow by 133 percent for the current year.
Sales have also been growing, but not as fast as the earnings. The average sales growth over the last three years has been 13 percent and the most recent quarterly report showed growth of 58 percent.
The company sports a return on equity of 36.8 percent and a profit margin of 28.6 percent. All of these stats are impressive and thus the reason the rally is justified.
As far as past earnings reports, the company has a history of beating expectations. Each of the last four earnings reports has beaten consensus estimates anywhere from 3.3 percent to as much as 10.9 percent. The current consensus is for EPS of $3.12.
This is the beginning of why there are concerns heading in to the report. The consensus EPS number was $2.85 only 30 days ago, meaning that analysts have ramped up their expectations by 9.5 percent in the last 30 days. That is a sign of increasing optimism and it means the bar has been raised considerably.
In addition to ramped up expectations for the earnings report, the short interest ratio and the overall analysts’ ratings show excessive optimism as well. The short interest ratio is a meager 1.14 currently and that is after short interest rose from 57.8 million shares to 60.3 million in the past month. Even with the increase in short interest, it would only take short sellers a little over one day of average volume to cover their positions.
As far as the analyst ratings, there are currently 30 analysts following the company and 27 of them have the stock rated as a “buy”. The other three have the stock rated as a “hold”.
Between the jump in the EPS estimate, the low short interest ratio, and the analyst ratings, the optimism toward Micron is excessively bullish. When the sentiment is this bullishly skewed, it is almost impossible for the company to beat estimates by a wide enough margin to spur a post-earnings rally. If recent history tells us anything, the company will likely beat the EPS estimate. But with the sentiment being so bullish, beating the EPS estimate doesn’t mean the stock will jump.
In addition to the extreme bullish sentiment, the pattern in the chart is eerily similar to the company’s last earnings report. The blue circle on the chart shows the pattern while the arrow points to big drop that occurred the day after the earnings report in March. You can see how the stock ramped up to a new high, dropped a little, and rallied again before the earnings report. Then the stock dropped almost 20 percent in the two weeks following the report.
The current pattern shows a similar rally throughout May, dropping slightly, and then rallying for a week or so. The stock has dropped in recent days as it has been caught up in some of the tariff battle exchanges between the U.S. and China. But the tariffs will not have any impact on Wednesday’s report.
The bottom line is this—it is going to be very difficult for Micron to beat estimates by enough of a margin to drive the stock up immediately given all of the optimism toward the stock. The company’s fundamental performance and price action are really good, so shorting the stock wouldn’t be wise.
I like the idea of waiting until after the earnings report and then waiting a week or two to buy the stock at a better price. After the pullback from the last earnings report, the 10-week RSI dipped below the 50 level for only the third time in the last two years. If we see the same thing happen this time, I would look to buy Micron. All three times the 10-week RSI dipped below 50 in the last two years, it presented a great buying point in the stock.
Disclosure:I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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.
NEW YORK (Reuters) – Mellanox Technologies Ltd, a chipmaker based in Israel and the United States, has picked three directors to join its board as part of a settlement with activist investor Starboard Value LP, sources familiar with the matter said on Tuesday.
FILE PHOTO: The logo of Mellanox Technologies is seen at the company’s headquarters in Yokneam, in northern Israel July 26, 2016. Picture taken July 26, 2016. REUTERS/Ronen Zvulun
Mellanox is planning to add two directors from Starboard’s proposed nominees including Greg Waters, the chief executive officer of semiconductor company Integrated Device Technology Inc and Jon Olson, a former chief financial officer at programmable chipmaker Xilinx Inc, three sources said asking not to be named because the matter is private.
The company and the activist have mutually agreed on adding another independent director, Jack Lazar, a former chief financial officer at camera maker GoPro Inc, the sources added.
Mellanox could announce these board appointments as early as Tuesday. It will not expand its 11-person board so these new directors will replace sitting directors, but it was not clear who will leave.
As part of the settlement, Starboard may appoint a direct representative to the board at a later date if the company does not reach certain operating metrics, the sources said.
Mellanox declined to comment and Starboard could not be reached for comment.
Reuters previously reported that Mellanox was nearing a deal with Starboard.
Reporting by Liana B. Baker in New York; Editing by Lisa Shumaker
TOKYO (Reuters) – Barely six months after inaugurating a tiny software-coding boot camp in a basement in Tokyo, Silicon Valley transplant Kani Munidasa stood before some of Japan’s top business leaders in February with a warning: software was threatening their future.
Students attend Code Chrysalis, a software-coding boot camp, at a basement room in Tokyo, Japan, May 23 2018. REUTERS/Toru Hanai
A Sri Lankan native with a Japanese mother and wife, Munidasa was speaking at the invitation of Nobuyuki Idei, a former chief executive of Sony Corp.
Idei had offered to become an adviser to the boot camp, called Code Chrysalis, whose mission of bringing Japan’s software engineering up to global standards and helping its companies transform aligned with his own.
“Idei-san told me, ‘Tell it as it is; don’t sugar-coat anything. They need to hear that change has to happen,’” Munidasa said, recalling how he showed up at the executives’ meeting in a T-shirt and hoodie.
Long known as a “monozukuri” – or manufacturing – powerhouse, Japan is in danger of getting left behind as artificial intelligence, robotics, and machine learning sweep through industries from cars to banking, Idei and others say.Japanese companies have traditionally treated software as a means to cut costs rather than add value, and code-writers as second-class citizens. Entry-level software engineers in Japan make about $40,000 on average – less than half their U.S. counterparts.
Programs like Code Chrysalis are trying to change that by injecting Silicon Valley training methods into Japan’s slow-to-change corporate culture.
Coding, “soft skills” like public speaking and even physical fitness are all on the agenda. Since Code Chrysalis opened last July, a dozen students have graduated from its 12-week course, with six more in the pipeline. The camp currently accepts up to eight applicants per session.
For the students, the benefits are clear: their salaries increased by an average of nearly 80 percent after graduation, according to Code Chrysalis.
Japanese companies are desperate for skilled developers, with top IT recruiter Computer Futures seeing 2.3 job openings for every applicant so far this year, and most positions being filled by foreigners.
Educators and industry leaders hope programs such as Code Chrysalis will be transformative for Japan.
“Even if the numbers are small, I think (Code Chrysalis) can have a big impact,” Idei told Reuters, noting that Japan had focused too much on “physical goods” in the post-Internet age.
A student at Code Chrysalis, a software-coding boot camp, is reflected in a laptop in a basement room in Tokyo, Japan, May 23 2018. REUTERS/Toru Hanai
“The United States has Google, Apple, Facebook, Amazon,” said Idei, now CEO of his consultancy, Quantum Leaps. “China’s got Baidu, Alibaba and Tencent. Japan doesn’t have a single platform company. That’s the No. 1 difference.”
A TEXTBOOK PROBLEM
Japan’s English-language education, notoriously focused on standardized testing, has hindered the development of good programmers, industry insiders say.
Without a good grasp of the language, programmers are always a step behind, waiting for translations to access cutting-edge tools and methods.
Toyota is making English the common language for the 1,000 software engineers it plans to employ at a new automated-driving unit launching in Tokyo next month.
James Kuffner, CEO of the unit, Toyota Research Institute-Advanced Development (TRI-AD), said Japan’s computer science education was also overly based on textbook learning.
Recalling the “horrible and boring” lectures he sat through at the prestigious University of Tokyo as a post-doctoral research fellow in 1999, Kuffner said the classes did little to prepare students for the real world. Coding boot camps are a step in the right direction, he said.
“I want to figure out a way to fix the education system because it’s also important for our company,” said Kuffner, who still serves as an adjunct associate professor at Carnegie Mellon’s Robotics Institute. “I would love to make a university where (everything) you did was project-based.”
Slideshow (6 Images)
REBOOTING THE SYSTEM
Munidasa and his co-founder, Yan Fan, tailored their course around project-based learning, teaching exclusively in English.
Just one other English-language coding boot camp exists in Japan, run by French chain Le Wagon since late 2016, with 75 graduates so far. That program, which costs 790,000 yen ($7,200) for a nine-week course, targets beginners looking for a job in software development, who want to freelance, or who are launching their own start-ups.
“The positioning is very different because we work with beginners to bring them to a junior-developer level,” said Paul Gaumer, co-founder of Le Wagon Japan.
Munidasa and Fan’s program, which is aimed at higher-level training, has so far rejected nearly 80 percent of applicants, some of whom couldn’t meet the English requirement. To help, they added a four-week English-communication course.
During Code Chrysalis’ 1.03 million yen ($9,390), full-time course, students learn to become “full-stack” engineers, covering servers, user interfaces, and everything in between.
Beyond coding, they get unconventional instruction: voice training from an opera singer, squats challenges, and assignments requiring intense teamwork.
Code Chrysalis has already caught the attention of some big Japanese firms, including information technology giant NTT Data.
Its applied software engineering center is using Code Chrysalis for part of its training and has placed an engineer in the current cohort.
“Our customers are increasingly looking for faster and cheaper software development, and we need to be able to meet those demands,” said human resources manager Kotaro Kimura. Masataka Shintoku, an engineer in NTT Data’s sales and planning group who found Code Chrysalis on his own and graduated in March, says he’s already putting his new skills to work.
“I’m now able to create an app on my own and show prospective clients what we can do,” he said.
Kuffner said he hopes to emulate the storied Toyota Production System to create the software world’s “best process for writing bug-free software” as automated cars incorporate millions of lines of code.
“Japanese people are hard-working, very dedicated,” he said. “I have no question in my mind that with the right training they could be some of the best software engineers in the world.”
Reporting by Chang-Ran Kim; Editing by Gerry Doyle
The FTC today announced that a group of people who had run a get-rich-quick-on-Amazon scheme have agreed to pay $102 million in fines and restitution. The people, operating under different names in Nevada and Massachusetts got people to pay from $995 to as much as $35,000 for “secrets” that were supposed to let them make big money on Amazon’s marketplace, although they had no real connection with Amazon at all.
According to the FTC, the people behind the scheme had taken their victims for at least $36.1 million, and possibly significantly more.
But we’re not talking about sophisticated corporations or businesses advertising without control over those who fake traffic and ad views. The subjects of this scheme were people who desperately wanted to get ahead and were taken by well-faked stories about how much the founders had made and come-ons pretending to have expertise they lacked.
If you’ve ever thought of getting into online reselling and marketing or otherwise trying to build a side business to start, pay attention. There are lots of people out there who want your money and whose claim to fame is really selling virtual snake oil.
The FTC alleged in a complaint in March that Christopher Bower, Adam Bower, and Jody Marshall were doing business as a number of companies: AWS, LLC; FBA Distributors; FBA Stores; Info Pros; and Online Auction Learning Center, whether in Nevada, Massachusetts, or both. Here’s the core set of charges:
Defendants prey on consumers who seek the American dream of starting a new business. Defendants lure consumers into purchasing expensive business opportunities with purported “secrets for making money on Amazon.” They represent that purchasers are likely to “create financial freedom” and earn thousands of dollars a month by implementing Defendants’ “systems for success on Amazon.” Contrary to Defendants’ promises, most, if not virtually all, purchasers do not earn the advertised income. Moreover, many elements of Defendants’ “system” violate Amazon.com Inc.’s policies. As a result, purchasers who deploy Defendants’ “system” often experience problems with their Amazon stores, including suspension and the loss of their ability to sell on Amazon.com.
The details are worse. The $995 package was for a three-day workshop, videos, and webinars for “tips, tricks, and techniques.” The top package, $34,995, included 16 one-on-one coaching sessions as well as additional videos and webinars. The contents of the coaching sessions were apparently largely what was delivered in online, video, and webinar sessions.
If you a little prowling around online, you find things like a WordPress-hosted blog that claimed these people were legitimate. Uh, yeah. You can also see a Massachusetts Better Business Bureau post stating that Online Auction Learning Center would not respond to BBB questions about their business claims and that the company was now out of business.
The three defendants did not admit to any criminal charges but agreed to pay the walloping fine and to a permanent restraining order keeping them from making any earnings claims unless they can prove them and from misrepresenting anything material to consumers about a product or service.
There are scoundrels everywhere, looking to part you from your hard-earned cash. Here are some things to consider the next time you see a business “opportunity”:
If something sounds too good to be true — in this case, for example, spending 30 to 60 minutes a day to make an “extra $5,000 to $10,000 a month” — then it is. Not it probably is. It is. Success in business is hard work.
Anyone who has really succeed has details they can share and prove.
They should be able to show success in business beyond selling systems on how to make money. Don’t take someone’s word for it. There should always be public records or information for insight. If someone claims to have made a bundle in real estate, then there have to be details showing ownership of property.
Do some research and find others who have done this before and ask how they’ve done. Don’t settle for references the people touting the opportunity offer.
Recognize that building a business takes time. Don’t expect shortcuts that are illusory.
Being an entrepreneur is hard. That is pretty much a universal truth. But it becomes exponentially harder when you operate under false assumptions, outdated conventions, and myths that are no longer true.
I graduated with my MBA in 1997 and almost immediately got involved in startups and venture capital. For the last 21 years, I’ve worked with, mentored, invested in, and been pitched by thousands of entrepreneurs. It pains me to see them undermine their potential by relying on outdated assumptions, and ultimately fail because they believed a lie.
So without further ado, here are seven things entrepreneurs tell themselves, all of which I “learned” in business school, that simply aren’t true today.
1. Entrepreneurship is a black box, unknowable and mysterious.
When I was in school and wanted to study entrepreneurship, I was literally handed biographies of Lee Iacocca and Benjamin Franklin. Because entrepreneurship was a nascent field of academia, the only way to teach best practices was through case study. Then along came Steve Blank, Bill Aulet, and Eric Reis, and they showed that entrepreneurship is neither a black art nor an unknowable science. These luminaries used hundreds of dot-com startups to map the path to startup success. That path is generally referred to as the Lean Startup method.
2. You need money to start a business.
When I was in school, investors were always a founder’s first stop. Without a commitment of $2 million, most startups in 1997 wouldn’t get started. Today, the cost to launch has dropped from $2 million to below $2,000. So don’t start with investors–start with your own money. Build a prototype, get that prototype to early adopters, and use what you learn to grow the business. Bring in money from friends and family if you need to. Crowdsource if you need to. Venture capital today is focused on taking businesses to scale, and VCs only invest millions after you’ve reached product market fit.
3. You must write a business plan.
Business plans are dead. Business planning is alive and well. Two decades ago, I was taught to plan everything in advance, write a perfect business plan, and only then go out into the world. This couldn’t be further from the truth. The Lean Startup movement, which entered our zeitgeist around 2008, teaches that to be successful, entrepreneurs must “get out of the building” and engage in customer discovery.
Today, you must take your idea to market, and develop it through iteration and customer interaction. Startup founders who obsess over a detailed business plan prior to launch are missing the point. The best written business plans don’t survive first contact with users. Startups are living things; business plans are static. Today, it is better to launch early and iterate often. A lean canvas beats a business plan.
4. Keep your ideas to yourself.
Speaking of ideas, I was taught never to share my startup idea for fear it would be stolen. While there are a handful of such idea-theft incidents, there are literally tens of thousands of startups that benefit from early customer interaction. Today, having a big idea is only the start; the focus is on the execution. You have to show traction, and that requires exposing your opportunity to the feedback of others.
5. It is all about who you know.
In business school, a lot of emphasis was placed on networking. We were told that to get ahead we needed to have a network to leverage. We simply couldn’t succeed without some gatekeeper inviting us in.
Today, networks are still important, but they’re not the most important thing. Access to early adopters lets you generate insights and revenue and show your solution satisfies an unmet market need–all without “knowing” someone. Further, sites like Angellist and LinkedIn provide viable channels to those outside your direct network.
6. Fake it until you make it.
In school, I was told to pretend I knew what I was doing. The thinking was that being honest in my naivete would lead to negative outcomes. But faking is dishonest and stressful. By all means, project confidence in your abilities. But don’t stretch the truth–it will only hurt you in the long run.
I always tell the startup founders I mentor that they can fake it when it comes to confidence, but never when it comes to knowledge. The former is necessary (or no one will try your solution); the latter is unsustainable.
7. Investors always come first.
As mentioned above, entrepreneurs should chase customers, not investors. Investors are only interested once you have shown your solution works–once you have shown the dogs will eat the dog food, and you have a viable, scalable business.
Madhvi Mavadiya,Contributor Opinions expressed by Forbes Contributors are their own.
Photo Credit: Shutterstock
Days before the second anniversary of the EU Referendum vote, UK International Trade Secretary Dr Liam Fox launched an initiative that aims to bring together academics, experts and businesses and in turn, attract investment into the fintech sector.
This came after Prime Minister Theresa May’s announcement that more than 1,600 jobs will be created in addition to the £2.3 billion ($3bn) of private investment into the technology industry as a whole, as an attempt to showcase the UK as the best country in the world to run tech.
Dr Liam Fox MP said: “The UK is a world leader in the FinTech sector, thanks to our highly-skilled and creative workforce, fair regulatory system and ease of doing business.”
He continued: “The sector has already attracted £1.8 billion ($2.4bn) worth of investment in 2017 – a 153% increase on the previous year and as an international economic department, DIT [Department for International Trade] is putting technology and innovation at the heart of the UK’s global growth.”
So, has Brexit increased or decreased investment into UK fintech and is the UK government being forced to channel the country’s own cash into the financial and technology industries after a lack of funding from other countries?
In March 2017, the aftermath, or afterglow, of the decision to leave the European Union started to occur with Deutsche Bank announcing that it would be committing to a new office in London. Ahead of the Article 50 trigger date, this decision was particularly poignant during a time in which many financial institutions were contemplating moving out of the UK.
Rumored to have entered into a 25 year lease on a new building, the German bank’s UK CEO Garth Ritchie said at the time that this plan “underlines the bank’s commitment to the City of London”. This was thought to be the first of many other traditional banks setting up in the UK capital and in turn, minimize the impact Brexit will have on London fintech.
Not surprisingly, the role requires a lot of experience in various aspects of aerospace, mechanical and materials engineering.
For example, does your work experience include “exposure to advanced NDE methods such as phased array ultrasonics, eddy current arrays and digital radiography?” Mine sure doesn’t, but if you’ve got those words on your resume (or even know what they mean) then perhaps you’re the person that can take us to Mars.
The role also requires some background leading a team and a little technical drafting experience, but there’s one and only one “additional requirement” listed in the job description and it’s a doozy:
“Must be available to work long hours and weekends as needed.”
In other words, those with a life need not apply. Applying to build Elon Musk’s Mars rocket means your soul belongs to Elon.
Or from a less cynical standpoint, you will be devoting your being to the mission of making humans a multi-planetary species.
That sounds a little better.
This kind of requirement in a job listing isn’t actually that unusual, but kudos to SpaceX for being upfront about it. And it also helps the company attract the kind of motivated and mission-driven people it wants for its team. Transparency is a win-win here.
So if you have no life or are comfortable giving your life over to the future of a Martian sub-species, apply now.
WASHINGTON (Reuters) – Wireless companies Sprint Corp and T-Mobile US Inc have informed the Federal Communications Commission that they will formally file an application asking for approval to merge on Monday, according to a document seen by Reuters.
A smartphones with Sprint logo are seen in front of a screen projection of T-mobile logo, in this picture illustration taken April 30, 2018. REUTERS/Dado Ruvic/Illustration
The document, which was filed to the FCC on Thursday, also requests a protective order that would shield sensitive corporate information from public view.
The two companies, which are the third- and fourth-largest wireless carries, agreed to a $26 billion all-stock deal in April that they said would create thousands of jobs and help the United States beat China to creating the next generation mobile network.
Two areas of potential regulatory concern focus on the companies’ large market share for prepaid and wholesale customers.
Neither Sprint nor T-Mobile immediately responded to a request for comment.
Reporting by David Shepardson; Writing by Diane Bartz; Editing by Dan Grebler
(Reuters) – Etsy Inc on Thursday raised its full-year revenue growth forecast, boosted by an increase in its transaction fee for sellers, sending shares of the company surging 35 percent to a record high.
FILE PHOTO – A sign advertising the online seller Etsy Inc. is seen outside the Nasdaq market site in Times Square following Etsy’s initial public offering (IPO) on the Nasdaq in New York April 16, 2015. REUTERS/Mike Segar/File Photo
The share jump pushed up the company’s market cap by $1.4 billion.
The site for handmade goods, which struggled after its initial public offering in 2015, began its turnaround effort after board member and former eBay executive Josh Silverman took charge as chief executive officer in May last year after ex-CEO Chad Dickerson stepped down.
Silverman came to Etsy amid concerns about slowing growth, poor functionality of the company’s website and the specter of competition from Amazon.com Inc, which launched a marketplace for handmade goods in 2015.
The company now expects revenue growth of 32 percent to 34 percent in 2018, up from its previous forecast of 22 percent to 24 percent. It also raised the higher end of its gross merchandise sales growth range.
Etsy’s share movement was in contrast to arts and crafts specialty retailer Michaels Cos Inc, which dropped 15 percent after it expected flat comparable sales in the second quarter and comparable sales growth of up to 1.5 percent in fiscal 2018.
Etsy, however has beaten average analysts’ estimates in every quarter since Silverman’s appointment to the helm. It missed estimates in the four quarters prior to his arrival.
The company’s shares have more than doubled in the last 12 months.
“Etsy management has improved its merchandising, which in turn has led to stronger merchant sales. As Etsy is doing more for the merchants, Etsy is able to charge more, especially since the fees were relatively cheaper than competitors,” analyst Ronald Bookbinder of IFS Securities said.
Etsy said it would increase the transaction fee it charges when a seller makes a sale to 5 percent from 3.5 percent. The new fee would apply to the cost of shipping.
The company said it plans to increase direct marketing spending by at least 40 percent in 2018 and revamp community platforms.
Etsy has shifted its focus to areas that are showing the most growth for the handmade marketplace, particularly on its core e-commerce site.
The company has improved its website’s search function and uses artificial intelligence to provide better product recommendations for customers. In 2017 the company also ran holiday promotions for the first time.
“They took that really good business model and fine tuned the engine and now they have got that engine firing on all cylinders,” D.A. Davidson & Co. analyst Tom Forte said.
Reporting by Arjun Panchadar in Bengaluru; Editing by Bernard Orr and Shounak Dasgupta