Should Retirees Really Try To Live Off Of The Dividend Income?

Many retirees express the desire to “live off of the income”. They want to create a portfolio that provides enough income and income growth to fund retirement needs, without the need of selling shares. Obviously, if a retiree wanted to spend 4.5% of total portfolio value, they would need a total portfolio yield of 4.5%. They would also need some income growth if they want to adjust spending needs in line with inflation.

A dividend growth investor might be more than challenged to create a portfolio that generates a 4% plus yield. If we look at the US High Yield Dividend Growth indices, we see yields in the range of 3%. From the Schwab website, here are the yield details for the Schwab U.S. Dividend Equity Fund (SCHD).

And here is the yield offered for Vanguard’s higher-yield offering, from the Vanguard site, for the Vanguard High Yield Dividend Fund (VYM).

Of course, the two fund companies apply some quality screens in the attempt to find more sustainable income and income growth. As I have suggested in the past, it might be worthwhile for investors to check the indices to see if their companies have passed the dividend health screens. We can have a look or cross reference against professional analysis at no cost. As is often written, we, Indexers and Index skimmers, are freeloaders.

Here are the top 10 holdings from SCHD:

And here are the top 10 holdings from VYM:

You can go down the list of top holdings into the top 20 and top 30, and you’ll see that the funds have considerable overlap. I doubt that there will or be little difference between the two fund offerings over time. Courtesy of portfoliovisualizer.com, here’s the comparison of VYM as Portfolio 1 vs. SCHD as Portfolio 2. The time period is the inception date of SCHD from November of 2011 to end of August 2016. We see a slight edge of VYM due to some slightly lesser volatility and drawdown. The Sortino ratio (risk adjusted returns are slightly higher). Of course, past performance does not guarantee future returns. Past dividend payments and dividend growth are not guaranteed to repeat.

We see though that the historical income is slightly higher for VYM over SCHD. The following chart represents the income with dividend reinvestment – accumulation stage:

The starting yield for VYM in 2012 was 3.57%. The starting yield in 2012 for SCHD was 3.13%, according to portfolio visualizer. The next chart shows the income without dividend reinvestment – the decumulation or retirement funding stage:

There would have been no need for a retiree to stretch for yield to get the portfolio to an initial 4% or 4% plus yield. The Portfolio grew into the 4% yield quite quickly. That is the magic of dividend growth when things are working to your favour. In 2014, VYM was already delivering a 4.2% yield on cost. SCHD was at 4% yield on cost. In 2016, both funds are approaching 5%. That retiree is getting some incredible raises. That retiree can spend more or collect a cash pile if the income is surpassing spending needs. Heck, they can take the surplus and reinvest the income into those higher-yielding dividend payers.

If, in 2012, that retiree wanted to spend at 4% of portfolio value, he or she would have only needed a very modest cash pile or bond component. As an example on a $ 1,000,000 portfolio with a $ 40,000 spending need (4% spend rate), that retiree would only have needed just over $ 4,000 of cash or bond sales. A $ 10,000 cash pile would have been more than enough to cover the $ 4,000 dividend income shortfall in 2012 and $ 1,100 shortfall in 2013.

Now I am not suggesting for a moment that a retiree enter retirement with only a 1% cash or bond component. From my observations, most retirees appear to hold a very considerable cash and bond component. The above scenario is during a more than favourable start date for a retiree. There has been no major market correction or recession, and there has been considerable stability in the dividend payers that have consistently increased their dividends over time. Retirees have to prepare for the times of stress when the portfolio value and portfolio income might face incredible challenges.

Here’s VYM from January of 2007 through to the end of 2016. We are displaying the income without dividend reinvestment.

The initial yield in 2007 was not quite as generous as present, at 2.7%. It fell to 2.1% in 2010. We did not have dividend growth; we had dividend distress and falling income. It did then recover and increase to 4.1% in 2015. In the above scenario, a retiree would have had to fund up to $ 19,000 in 2010 from non dividend sources. The cumulative cash shortfall from 2007 to end of 2014 is $ 97,700. Now keep in mind, that the market meltdown of 2008-2009 was a major market correction with the S&P 500 falling by 52% according to portfolio visualizer. We may or may not get another market correction of severe proportions. All said, we should prepare for worst case scenarios.

Also, it’s possible that an investor in 2007 might have constructed their portfolio had they avoided the hardest hit companies that were largely housed in the financial sector. That investor might have experienced consistent dividend growth through the recession and we would see more of the income growth scenario displayed in the first income chart for VYM and SCHD for the 2012 to 2016 period. On retirees searching for stability, here’s my recent article The Lowest Volatility Sectors For Retirees.

My readers will know that I appreciate the historical success of adding some bonds and more specifically longer-dated treasuries (TLT) to help in those periods of stress. Here’s how TLT performed in the recession from January of 2008 through the end of 2010.

We see the desired inverse relationship between the stocks and bonds, with the bonds offering price appreciation capital gains opportunity. That retiree could have sold TLT units to plug the income shortfall. Keep in mind that past inverse relationship does not guarantee a future inverse relationship.

And once again, if a retiree has created a portfolio that is delivering dividend growth year over year, the unit harvesting or share harvesting needs decrease every year as the dividend can potentially grow to eventually cover all spending needs. We will use Kimberly-Clark (KMB) as a portfolio proxy. The company is well, a staple within the Consumers Staple (XLP) sector.

Here’s KMB benchmarked against VYM for income for the period of 2007 through to the end of 2011, a five-year period, based on a starting portfolio value of $ 1,000,000. KMB is Portfolio 1. VYM is Portfolio 2.

KMB started the period with a yield of 3.1% and grew that yield to 4.1% in 2011. Even if a retiree held no bonds or cash, this is what the share harvesting scenario would have looked like. For this model, the retiree will be harvesting 4% of portfolio total value. For this example, we will not adjust for inflation. As a backdrop, here’s the dividend history as per the F.A.S.T. Graphs site. For the funding scenario from 2007 to end of 2010, I will use the dividends as per F.A.S.T. Graphs and for share price harvesting. I have used the historical share prices as per Nasdaq. The portfolio begins with a hypothetical $ 1,000,000 and hence 15,338 shares.

Year Dividends Share Harvesting $ Shares sold Share count
Initial 15338
2007 $ 32516 $ 7484 (66) 113 15225
2008 $ 35322 $ 4678 (67) 70 15155
2009 $ 36372 $ 3628 (50) 73 15082
2010 $ 39816 $ 184 (61) 3 15079
2011 $ 42221 0 0 15079

As we can see, the share harvesting did not damage income. In fact, the actual dividend income increased each year even with the share count reduction, courtesy of that dividend growth of course. The number in parenthesis in the shares sold column represents the share price for that share harvesting. Shares were sold in the week preceding the beginning of the next calendar year.

Modest share harvesting does not have to decrease portfolio income. With that realization a retiree would not have to necessarily skip over the Kimberly-Clarks of the world just because the company or basket of companies does not meet current income needs. That retiree might be able to add companies of higher quality and stability but with lesser current yields.

Perhaps there is an unwarranted fear of share harvesting? If a retiree can potentially build a higher-quality portfolio by allowing for lesser yields, that share harvesting need would potentially decrease retirement funding risks, not increase risks.

Seeking Alpha author Eric Landis started a series on creating a 4% plus current income portfolio in today’s environment. You’ll find the first article in that series in Yes, You Can Still Build A 4% Yielding Portfolio In Today’s Environment. You can follow that series and see that the portfolio has already experienced dividend disruptions and portfolio dividend growth has stalled out of the gate. And today’s environment might be qualified as a rip-roaring bull market.

I welcome your comments. Thanks for reading. And always please know and invest within your risk tolerance level. Always know and understand all tax implications and consequences.

Happy investing.

Dale

Disclosure: I am/we are long BCE, TU, TRP, ENB, BNS, TD, RY, AAPL, BLK, BRK.B, JNJ, PEP, CL, MMM, MDT, ABT, LOW, NKE, CVS, WBA, UTX, QCOM, TXN, MSFT.

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.

Additional disclosure: Dale Roberts is an Investment Funds Advisor at Tangerine Investment Funds Limited a subsidiary of Tangerine Bank, wholly owned by Scotia Bank; he is not licensed to provide professional advice on stocks. The opinions expressed herein are Dale Roberts’ personal opinions relating to his experience as an investor and are not those of Tangerine Bank or its subsidiaries and/or affiliates. This article is for information purposes only and does not constitute investment advice or an offer or the solicitation of an offer to buy or sell any securities. Past performance is not a guarantee and may not be repeated. Investment strategies are not suitable for everyone and you should always conduct your own research or speak to a financial advisor.

Tech

Why Facebook Is So Slow to Recognize Its Faults

Years of limited oversight and unchecked growth have turned Facebook into a force with incredible power over the lives of its two billion users. But the social network has also produced unintended social consequences — and they’re starting to catch up with it:

— House and Senate panels investigating Russian interference in the 2016 elections have invited Facebook — along with Google and Twitter — to testify this fall. Facebook just agreed to give congressional investigators 3,000 political ads purchased by Russian-backed entities, and announced new disclosure policies for political advertising

— Facebook belatedly acknowledged its role purveying false news to its users during the 2016 campaign and announced new measures to curb it. Founder and CEO Mark Zuckerberg even just apologized — more than 10 months after the fact — for calling the idea that Facebook might have influenced the election “pretty crazy.”

— The company has taken flak for a live video feature that was quickly used to broadcast violent crime and suicides; for removing an iconic Vietnam War photo for “child pornography” and then backtracking; and for allegedly putting its thumb on a feature that ranked trending news stories.

Facebook is behind the curve in understanding that “what happens in their system has profound consequences in the real world,” said Fordham University media-studies professor Paul Levinson. The company’s knee-jerk response has often been “none of your business” when confronted about these consequences, he said.

HANDS-OFF FACEBOOK

When such issues arise, Facebook generally restricts itself to bland assertions that its policies prohibit misuse of its platform and that it’s difficult to catch everyone who tries to abuse its platform. When pressed, it tends to acknowledge some problems, offer a few narrowly tailored fixes — and move on.

But there is a larger question the company hasn’t addressed direction: Has Facebook has taken sufficient care to build policies and systems that are resistant to abuse?

Facebook declined to address the subject on the record, although it pointed to earlier public statements in which Zuckerberg described how he wants Facebook to be a force for good in the world. The company also recently launched a blog called “Hard Questions” that attempts to address its governance issues in more depth.

But Sheryl Sandberg, the company’s No. 2 executive, has suggested that Facebook has work to do on this front. In a recent apology , she wrote that Facebook “never intended or anticipated” that people could use its automated advertising to target ads at “Jew haters” — that is, users who expressed anti-Semitic views in the Facebook profiles.

That, she wrote, “is on us. And we did not find it ourselves — and that is also on us.”

MOVING FAST, STILL BREAKING THINGS

Facebook’s often unresponsive response to crisis may not work much longer for a company that sometimes still seems to hew to its now-abandoned slogan — “move fast and break things.”

Facebook has so far enjoyed seemingly unstoppable growth in users, revenue and its stock price. But along the way, it has also pushed new features on to users even when they protested, targeted ads at them based on a plethora of carefully collected personal details, and even engaged in behavioral experiments that seek to influence their mood.

How it got here has to do with its exceptionalist company culture, a hands-off approach that values free speech over monitoring what its users post, and the fact that no matter how many people it hires, it will always have what amounts to a skeleton crew to deal with its huge user base.

“There’s a general arrogance — they know what’s right, they know what’s best, we know how to make better for you so just let us do it,” said Notre Dame business professor Timothy Carone, who added that this is true of Silicon Valley giants in general. “They need to take a step down and acknowledge that they really don’t have all the answers.”

MARKET INCENTIVES AND SOLUTIONS

Facebook depends on signing up as many users as possible — and pulling in as many advertising dollars as possible — to run its business. Its systems for signing up and for buying ads are both highly automated, a fact that makes the company both efficient and highly profitable.

In the first six months of 2017, Facebook pulled in sales of more than $ 17 billion and reported a profit of almost $ 7 billion.

It also helps explain not only why Facebook can seem so disengaged from its controversies, but also why it’s vulnerable in the first place, said David Gerzof Richard, a communications professor at Emerson College.

Russia, for instance, was able to exploit “the capitalist nature of what motivates Facebook,” Gerzof Richard said. If the company was truly focused on the “content, message and quality of ads,” he said, “there would be a very different platform for how you buy and place ads on Facebook.”

SOCIAL HACKING

Gerzof Richard thinks Facebook should view the “social hacking” of its platform — that is, the unintended uses that spring from human nature — much the way it has looks at technological challenges such as spam and data breaches.

Facebook already gives out “bug bounties” — that is, prizes for people who find technical flaws in its platform. Why not do the same for oversights that allow social hacks of its ad system, user newsfeeds and the like?

“We as a species are very, very inventive,” Gerzof Richard said. “You give someone a power tool and they will figure out ways to use it that the maker has never intended.”

–The Associated Press

Tech

Security firm finds some Macs vulnerable to 'firmware' attacks

(Reuters) – Since 2015, Apple Inc (AAPL.O) has tried to protect its Mac line of computers from a form of hacking that is extremely hard to detect, but it has not been entirely successful in getting the fixes to its customers, according to research released on Friday by Duo Security.

Duo examined what is known as firmware in the Mac computers. Firmware is an in-built kind of software that is even more basic than an operating system like Microsoft Windows or macOS.

When a computer is first powered on — before the operating system has even booted up — firmware checks to make sure that basic components like a hard disk and processor are present and tells them what to do. That makes malicious code hiding in it hard to spot.

In most cases, firmware is a hassle to update with the latest security patches. Updates have to be carried out separately from the operating system updates that are more commonplace.

In 2015, Apple started bundling firmware updates along with operating system updates for Mac machines in an effort to ensure firmware on them stayed up to date.

But Duo surveyed 73,000 Mac computers operating in the real world and found that 4.2 percent of them were not running the firmware they should have been based on their operating system. In some models – such as the 21.5-inch iMac released in late 2015 – 43 percent of machines had out-of-date firmware.

That left many Macs open to hacks like the “Thunderstrike” attack, where hackers can control a Mac after plugging an Ethernet adapter into the machine’s so-called thunderbolt port.

Paradoxically, it was only possible to find the potentially vulnerable machines because Apple is the only computer maker that has sought to make firmware updates part of its regular software updates, making it both more trackable and the best in the industry for firmware updates, Rich Smith, director of research and development at Duo, told Reuters in an interview.

Duo said that it had informed Apple of its findings before making them public on Friday. In a statement, Apple said it was aware of the issue and is moving to address it.

”Apple continues to work diligently in the area of firmware security, and we’re always exploring ways to make our systems even more secure,“ the company said in a statement. ”In order to provide a safer and more secure experience in this area, macOS High Sierra automatically validates Mac firmware weekly.”

Reporting by Stephen Nellis; Editing by Leslie Adler

Our Standards:The Thomson Reuters Trust Principles.

Tech

Twitter suspends Russia-linked accounts, but U.S. senator says response inadequate

WASHINGTON/SAN FRANCISCO (Reuters) – Twitter (TWTR.N) said on Thursday it had suspended about 200 Russian-linked accounts as it probes online efforts to meddle with the 2016 U.S. election, but an influential Democratic senator slammed its steps as insufficient.

Senator Mark Warner, the top Democrat on the Senate Intelligence Committee, summoned Twitter officials to testify behind closed doors on Thursday as part of broad investigation of Russian influence in the 2016 presidential election. Facebook (FB.O) faced a similar grilling earlier this month.

Lawmakers in both parties suspect social networks may have played a big role in Moscow’s attempts to spread propaganda, sow political discord in the United States and help elect President Donald Trump. Moscow denies any such activity, and Trump has denied any collusion.

Twitter also briefed the House of Representatives Intelligence Committee on Thursday.

Warner said Twitter officials had not answered many questions about Russian use of the platform and that it was still subject to foreign manipulation.

The company’s presentation to the Intelligence Committee “showed an enormous lack of understanding from the Twitter team of how serious this issue is,” Warner said. He took particular umbrage at what he said was Twitter’s decision to largely confine its review to accounts linked to fake profiles already spotted by Facebook.

Twitter said it had identified and removed 22 accounts directly linked to about 500 fake Facebook pages or profiles tied to Russia and that it unearthed an additional 179 accounts that were otherwise related.

Twitter declined to comment when asked about Warner’s comments.

In addition to the private testimony by its officials, the company published a public blog post Thursday with its most detailed discussion to date of the steps it was taking to combat propaganda.

Warner in remarks to reporters called Twitter’s statements “deeply disappointing” and “inadequate on almost every level.”

The comments signaled that the congressional investigations into Russia’s use of social media platforms would not ease up. Twitter, Facebook and other Internet companies including Alphabet Inc’s Google (GOOGL.O) are facing a steady stream of criticism as more information emerges about manipulation of their platforms during the 2016 election campaign.

Users, lawmakers and technology analysts have long criticized Twitter as too lax in policing fake or abusive accounts. Unlike Facebook, Twitter allows both anonymous accounts and automated accounts, or bots, making it far more difficult to police the service.

On Thursday, researchers at Oxford University published a study concluding that Twitter bots disseminated misinformation and propaganda at a higher rate in U.S. battleground states than in noncompetitive states during a 10-day period around Election Day in November.

San Francisco-based Twitter said Russian media outlet Russia Today, which is close to the Kremlin, had spent $ 274,100 on Twitter advertisements and promoted 1,823 tweets potentially aimed at the U.S. market.

Those ad buys alone topped the $ 100,000 that Facebook this month linked to a Russian propaganda operation during the 2016 election cycle, a revelation that prompted calls from some Democrats for new disclosure rules for online political ads.

Representative Adam Schiff, the top Democrat on the House Intelligence Committee, was more tempered in his assessment of Twitter’s briefing, saying in a statement that the firm expressed a desire to work cooperatively with investigators and conduct additional analyses.

‘LOW-QUALITY TWEETS’

Twitter announced new measures to toughen restrictions on suspect spammers, for example by reducing the time that suspicious accounts stay visible during company investigations.

To thwart abuse via applications interacting with Twitter, the company said it had suspended 117,000 apps since June that had been responsible for 1.5 billion “low-quality” tweets this year.

Twitter said it wanted to strengthen disclosure rules on political advertising, as Facebook has just done.

Warner is leading efforts to introduce legislation requiring internet platforms to reveal who is purchasing online political ads, which would bring them in line with rules governing ads on radio or television.

He told reporters on Thursday he did not have a Republican co-sponsor for a draft measure he was circulating he was confident there would be bipartisan interest.

Reporting by Dustin Volz and Joseph Menn; Additional reporting by Patricia Zengerle; Editing by Jonathan Weber and Cynthia Osterman

Our Standards:The Thomson Reuters Trust Principles.

Tech

Upstart fund to launch 'future car' ETF in Canada

TORONTO (Reuters) – A Canadian investment fund will launch the world’s first “future car” exchange-traded fund on Friday, giving investors one-stop access to companies involved in electric, autonomous and connected car supply chains, senior fund executives said.

The Evolve Funds Automobile Innovation Index ETF includes Tesla Inc and other automakers spending heavily on self-driving ambitions as well as battery makers, semiconductor companies and other players to help investors trade on the major changes affecting the automotive industry.

“Five years ago we didn’t have the blind-spot checker, the lane assist, and now you’ve got parking assist; technology has been getting integrated into vehicles to make them safer, it’s just going to intensify,” Evolve Funds Group Inc CEO Raj Lala said in a phone interview.

The 32 equally-weighted stocks that make up the fund’s initial cohort also includes suppliers such as Delphi Automotive Plc and Visteon Corp, semiconductor companies Cirrus Logic Inc, Infineon Technologies AG and Nvidia Corp, hydrogen fuel cell company Plug Power Inc and industrial battery maker EnerSys.

“We’re not trying to pick the one or two winners,” said Elliot Johnson, Evolve’s chief operating officer. “We wanted to make sure we’re making a bet that’s broad, but also specific to the activities that are going on.”

Many of the stocks included have jumped sharply over the last year as the portion of cars with internet connectivity jumps, China and others plan to ban cars than only run on gasoline or diesel, and ridesharing increases in popularity.

“That suggested to us that there’s a lot of investor appetite out there searching for ways to express their belief in the theme,” Johnson said.

Evolve Funds worked with German index provider Solactive AG to create the passively traded model, which will have hedged and unhedged versions priced in Canadian dollars. A U.S.-dollar denominated version will follow within several weeks.

The fund choose the five automakers with the highest research and development to sales ratio, which include Ford Motor Co, General Motors Co, Tesla Inc and Volkswagen AG (VOWG_p.DE).

The ETF is the third instrument Evolve has launched, days after launching cybersecurity and gender diversity products. The fund is also seeking Canadian regulatory approval for one to track bitcoin.

Reporting by Alastair Sharp; Editing by David Gregorio

Our Standards:The Thomson Reuters Trust Principles.

Tech

Exclusive: Royal Bank of Canada using blockchain for U.S./Canada payments – executive

TORONTO (Reuters) – Royal Bank of Canada (RY.TO) is experimenting with blockchain to help move payments between its U.S. and Canadian banks, one of the bank’s senior executives told Reuters on Thursday.

Martin Wildberger, RBC’s executive vice president for innovation and technology, said use of distributed ledger technology, or DLT, would improve the speed of payments, reduce complexity and lower costs.

The bank developed the system over the past six months at an RBC blockchain technology center in Toronto, deploying software developed by a cross-industry open-source blockchain consortium known as Hyperledger.

The technology was integrated into RBC’s existing systems several weeks ago as a “shadow” to RBC’s primary ledger, letting the bank monitor payments in real-time as they travel between the United States and Canada, he said.

“We wanted to set it up as a shadow ledger so that we can demonstrate our leadership in exploiting that technology while at the same time recognizing that the technology is still early in its adoption phase,” Wildberger said.

Blockchain emerged in 2009 as the system underpinning the cryptocurrency bitcoin, allowing people to quickly and anonymously exchange electronic currency. It is a shared ledger of transactions maintained by a network of computers rather than a central authority.

Investors have since put billions of dollars into developing blockchain, betting the technology could make banking operations faster, more efficient and more transparent.

Although concerns remain about the legitimacy of bitcoin, which JP Morgan (JP.N) Chief Executive Jamie Dimon described as a fraud earlier this month, the credibility of the blockchain technology itself has increased.

A growing number of senior bankers have said they believe it will eventually revolutionize the way payments are made across the industry, reducing complexity and costs of back-office processes.

“Everybody recognizes blockchain will be transformative and critical,” said Wildberger. “At the same point in time, I think everybody recognizes these are early days.”

RBC is looking to use blockchain to improve its rewards and loyalty offers and trade finance capabilities, he said.

Canada’s central bank said in May that it had decided against using blockchain to provide the underlying infrastructure for the country’s interbank payment system after a year-long investigation, saying “too many hurdles” had to be overcome to make the approach viable.

Reporting by Matt Scuffham; Editing by Jim Finkle

Our Standards:The Thomson Reuters Trust Principles.

Tech

SK Hynix set to invest in Toshiba chip unit, details consortium's plans

SEOUL (Reuters) – South Korea’s SK Hynix Inc said on Wednesday its board had approved its participation in a Bain Capital-led consortium that plans to purchase Toshiba Corp’s memory chip unit for 2 trillion yen ($ 17.7 billion).

SK Hynix said in a statement it will invest 395 billion yen, part of which will be in convertible bonds that could allow it to take an equity stake of up to 15 percent in the future.

Toshiba’s board agreed last week to sell the unit, the world’s second biggest producer of NAND chips, to the Bain group. However, the signing has been delayed because consortium member Apple Inc demanded new terms on chip supply in return for funding, sources familiar with the matter have said.

A Toshiba spokesman said the firm was aiming for a signed deal as soon as possible.

One person with knowledge of the deal, who declined to be identified due to the sensitivity of the matter, said that he did not expect the deal to be signed on Wednesday.

The Bain-led consortium will hold 49.9 percent of the voting rights in the chip unit, while Toshiba will hold 40.2 percent and Japan’s Hoya Corp, a medical technology firm that also makes parts for chip devices, will own 9.9 percent, the statement said.

Consortium members Apple, Dell Inc, Seagate Technology Plc and Kingston Technology, will invest in the form of non-convertible preferred shares, it said.

Pressure from the Japanese government, changing alliances among suitors and a slew of revised bids has drawn out the auction over nine months – heightening the risk that the deal may not close before the end of Japan’s financial year in March as regulatory reviews usually take at least six months.

If the deal does not close before then, Toshiba – hurt by liabilities at is now bankrupt nuclear unit Westinghouse – is likely to end a second consecutive year in negative net worth, putting pressure on the Tokyo Stock Exchange to strip it of its listing status.

The sale also faces legal challenges from Western Digital, Toshiba’s chip venture partner and rejected suitor, which is seeking an injunction to block any deal that does not have its consent.

Western Digital, one of world’s leading makers of hard disk drives, paid some $ 16 billion last year to acquire SanDisk, Toshiba’s chip joint venture partner since 2000. It sees chips as a key pillar of growth and is desperate to keep the business out of the hands of rival chipmakers.

Toshiba has said the sale would improve its shareholders’ equity by 740 billion yen ($ 6.6 billion).

Reporting by Joyce Lee and Hyunjoo Jin; Additional reporting by Makiko Yamazaki; Editing by Edwina Gibbs

Our Standards:The Thomson Reuters Trust Principles.

Tech

​Mirantis launches multi-cloud Kubernetes with AWS Support

Kubernetes is continuing to become the default container orchestration program. The latest proof of this is Mirantis making it easier than ever to manage hybrid clouds across Amazon Web Services (AWS), OpenStack, and bare metal with Kubernetes in the latest version of its Mirantis Cloud Platform (MCP). With Kubernetes-enabled MCP, it can manage multi-cloud self-service Kubernetes clusters through its new Containers-as-a-Service (CaaS) functionality.

Specifically, MCP CaaS supports Kubernetes on private OpenStack clouds, public AWS clouds, or both. Mirantis, best known as an top-notch OpenStack consulting company, also promises it will soon support additional public cloud options. It is thought that these will be Microsoft Azure and Google Cloud.

Like all other MCP components, this new CaaS offering uses the DriveTrain lifecycle management (LCM). This is an an open-source, model-based configuration, deployment and lifecycle management toolchain. It’s designed for continuous integration and delivery (CI/CD). In MCP, it enables enterprises to standardize on Kubernetes.

The company has also upgraded DriveTrain with this MCP release. Besides supporting Kubernetes, DriveTrain enables new upgrades to OpenStack Ocata and OpenContrail, software-defined networks (SDN).

This release also includes enhancements to StackLight. This is Mirantis’s open-source consolidated control center for operations automation and distributed logging, monitoring and alerting, its toolchain for Lifecycle Management (LCM).

StackLight now includes a new DevOps portal that provides an overview of the MCP environment. Mirantis claims, this new aggregated toolset significantly reduces the complexity of Day 2 cloud operations through services and dashboards around a high degree of automation, availability statistics, resource utilization, capacity utilization, continuous testing, logs, metrics, and notifications.

The newly released MCP also includes an easy-to-use, web-based interface for managing Kubernetes clusters. This makes it simpler for developers to quickly create and control their own Kubernete-controlled containers.

“With many new open source tools constantly being introduced into the vibrant container ecosystem every month, CaaS platforms are becoming increasingly complex to operate,” said Boris Renski, Mirantis CMO and co-founder. “Building on our experience operating OpenStack for customers like AT&T and VW, we plan to continue introducing new container services to our managed open cloud portfolio as open source projects behind them become more mature.”

PREVIOUS AND RELATED COVERAGE

Mirantis enters the Kubernetes game and ups its OpenStack play

Besides managing OpenStack clouds, Mirantis is adding cloud container management to its skillset with Kubernetes.

How to get the Kubernetes help you need

As Kubernetes cloud container orchestration grows ever more important, so does the need for qualified Kubernetes administrators.

Enterprise container DevOps steps up its game with Kubernetes 1.6

The popular enterprise container DevOps program, Kubernetes, is now ready to handle up to 5,000 nodes in a single cluster.

Tech

'Star Trek: Discovery' Is Worth the Price of CBS All Access—Maybe

Last night, CBS finally took the wraps off its oft-delayed new show, Star Trek: Discovery. The two-part debut (“The Vulcan Hello” and “Battle at the Binary Stars”) gave fans the first new TV Trek since Star Trek: Enterprise ceased subspace transmission in 2005. And they were ready for it—last night’s premiere set a single-day record for new signups for CBS’ All Access streaming service. Those who ponied up for an account got both parts of the debut; those who didn’t only got the first episode, which aired on broadcast like something from the 1990s.

Is it worth the money? Was it worth the wait? WIRED writers Adam Rogers and Brendan Nystedt, two life-long Trek fans, boldly agreed to discuss the newest venture. Shields up! Red alert! Spoilers ahead!

Related Stories

Adam Rogers: All right, Brendan. My mind to your mind; my thoughts to your thoughts. How are we feeling? On the one hand, I am glad to have some Star Trek to watch, and while I got all aflutter watching a Klingon armada get #disruptive on the United Federation of Planets, some part of my brain was definitely spinning on the story problems and possible solutions I wrote about last week. Like, it spent two hours on the kind of character deployment and story set-up that Deep Space Nine could’ve knocked out in a single cold open. And this definitely wasn’t explore-strange-new-worlds-seek-out-new-life Trek. This was dark Starfleet at war, with a captain who meets her Kobayashi Maru and a promising officer who ends up sentenced to life in the stockade for mutiny.

Hey, relatedly, there is no piece of culture I can embrace wholly where Michelle Yeoh dies an ignominious death. I didn’t like it in Sunshine and I don’t like it here. She was in Heroic Trio, for pete’s sake. She coulda taken that Klingon.

Brendan Nystedt: I saw it coming from a lightyear away but still, ouch. What I didn’t see coming was that they’d also kill the Klingon cult leader, T’Kuvma.

Overall, even with my quibbles over the first two episodes, I’m still holding off judging it entirely. I think the two-parter backstory was an intriguing way to open this new show but it also worries me that the CBS All Access “first taste is free” thing means we don’t have a sense of what the bulk of the story will involve because the network is putting a lot of window dressing in the episodes people can watch for free. Maybe fans who didn’t like the introduction would learn to love where it pivots to next.

Was the opening dark? Yeah, it was. I appreciated that Michael Burnham wanted to get out there and check out the OUO (object of unknown origin) and that they bring up the balance between exploration and war. I think that darkness is something this time period can exploit more since we’re firmly in the “cowboy diplomacy” days of Kirk.

Even with my Star Trek brain fully engaged (heh), I was surprised that the drama worked on me. When Burnham disables the captain with a perfectly-executed Vulcan Nerve Pinch, I was stunned. When that Klingon ship took out the USS Europa while de-cloaking, I recoiled. As much as I was scrutinizing the uniforms and the Klingon makeup, the show worked for me on a basic level.

Rogers: Yes, yes. Me too.

But be honest. If the set up for this show was that it is set 100 years after Voyager rather than a decade before TOS, would it be any different? In what sense is this a prequel? The Klingons do not look like Klingons we have seen. The instrumentation on the ships is new. The uniforms are new. The pew-pew of the phasers and photon torpedoes are new. The Federation starships don’t look anything like the ships of the era—were no Constitution-class starships deployed at that point? Why don’t the Bussard collectors have the light-up pinwheel spinny effect? Why don’t the warp nacelles have to be as far from the crewed parts of the ships? What are these Star Wars communications holograms doing here?

Flip side, I loved seeing the rethought handheld phasers and communicators; they really are elegant. And I liked the bridge noises being the TOS bridge noises. But other than knowing Sarek is Spock’s dad, what’s prequel-y about this?

This isn’t necessarily a complaint. I like the story so far. I just feel about it the same way I did about the reboot movies’ alternate timeline. As a fan, I don’t need it. I dunno; maybe it’s all a set up for the last shot of the season being a TOS-authentic Constitution-class Enterprise heading off on Captain Pike’s five-year mission.

Nystedt: The look of the show is something I’m still reconciling, but Trek has been here before. Whether it’s the retcons of Star Trek: Enterprise or especially the 1979 Motion Picture, designs and tech change a bit to suit the time. I’ve never believed that the movie Enterprise was the same Enterprise as the TV show, and yet it’s known to be a “refit.” Unless it’s the ship of Theseus, the movie Enterprise just can’t logically be the same as the one from the show!

I digress … I’m also unsure why they decided to make this a prequel, especially if it’s going to try to do its own thing. I’d understand if it were for the sake of fanservice but as of yet there have been a limited number of references to the universe. I’m hoping they’ll at least hint at conforming to a style closer to what we know from TOS, but I’d be OK if that were a reinterpretation, too.

The Klingons were another sticking point: I was cool with showing this rogue gang of Kahless-worshippers but when the rest of the house leadership Skypes in to T’Kuvma’s sarcophagus ship I was disappointed. Enterprise tried to give the makeup and characterization changes of past Klingons some kind of sense, but I felt like even that explanation couldn’t remotely cover for why all these Klingons looked different. At least they were completely subtitled—that I really dug.

Rogers: I liked hearing all that Klingon, too—and then seeing the universal translator kick in when T’Kuvma called the Shenzhou. Cool starship names all around, actually. I loved the references to a USS Yeager.

Speaking of, though, you make a good point that we don’t even really know what the story of this show will be. We haven’t yet discovered the Discovery, presumably the ship we’ll spend the bulk of the season on. And despite my gripes, I’m psyched for it. I don’t know if a lot of people will spring for this show, but I’m glad it exists, and I’m looking forward to the season. Glad there’s more Star Trek in my life.

Can I tell you a separate story? I know that the first ep did great in the ratings, 9.6 million people. And CBS is staying that it got a big pulse of new subscribers to All Access, but not giving out numbers. So OK. Last night I watched the first ep on my DVR and then went to subscribe to All Access to watch the second.

First I tried to do that via Apple TV, but apparently my Apple TV is so old that it doesn’t really know how to do two-factor authentication. You have to get a verification code from your phone and then type it in along with your password, apparently, but timed with the deftness of a longtime gamer, which I am not. I gave up.

I went to the app on my iPad, which seemed ready to let me sign up, until it decided that my zip code was invalid. Several times. (Narrator: It was not invalid.) Finally I logged all the way out and then logged in with Google, which somehow convinced the app my zip code was real. At which point I learned that payment was going via my Apple account, which makes me wonder why I’m paying CBS instead of just Apple. This all took about 45 minutes to figure out, by the way.

This is not an onboarding process anyone should be proud of, is my point.

Nystedt: That’s a huge bummer! I had signed up for my All Access account earlier in the day through the website, but that wasn’t ideal either. Like, I’m happy to give my money over to Trek, but I wish it were more streamlined. One disappointment for me is that even though Discovery is a launch title for the service, the rest of the Star Trek offerings are a mix of HD and non-HD. Voyager and DS9 haven’t been restored (and they might not ever be) but only about a half of The Next Generation and none of the original show appear in their HD incarnations.

And so, even though we get a new show, Trek continues to get dissed. It’s a treasure of global popular culture but it just doesn’t get the respect it deserves, whether it’s from CBS or Paramount. I’d go so far as to say that MGM is giving Stargate better treatment with its upcoming streaming service, offering up just that show’s back catalog (and movies!) for a flat rate plus the promise of new content to come.

And when you have to look to Stargate to find a decent single-franchise online service, you know it’s gonna be a long road… But, I got faith of the hearrrttttt!!!

Rogers: No Sto’vo’Kor for you, pal. Eesh. Anyway, no matter what these streaming services show or don’t show, they can’t take the sky from me.

Nystedt: Awww man I was looking forward to seeing my ancestors in the afterlife. One thing I enjoyed seeing yesterday was how fandom reacted to the show. Definitely check Twitter for #OnFleet—some excellent, funny commentary there, particularly from nerds of color and women fans.

So, next Sunday, we finally get to see the titular ship. Somehow, Burnham gets out of her life sentence, and I guess we’ll get more Saru, too. I’m on the Discovery train, are you feeling optimistic?

Rogers: I’m with Ambassador Spock. There are always possibilities.

Nystedt: LLAP and tune in next week.

Tech

Linux distributor Red Hat reports 20.6 percent rise in revenue

(Reuters) – Red Hat Inc (RHT.N) reported a 20.6 percent rise in quarterly revenue as the Linux operating system distributor benefited from higher demand for its products targeting hybrid cloud.

Net income rose to $ 96.9 million, or 53 cents per share, in the second quarter ended Aug. 31, from $ 58.8 million, or 32 cents per share, a year earlier.

The company’s revenue rose to $ 723.4 million from $ 599.8 million.

Reporting by Munsif Vengattil in Bengaluru; Editing by Maju Samuel

Our Standards:The Thomson Reuters Trust Principles.

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