Mexico data protection body to investigate possible links to Cambridge Analytica

MEXICO CITY (Reuters) – Mexico’s data protection body said on Monday it had opened an investigation into whether companies possibly linked to political consultancy Cambridge Analytica broke the country’s data protection laws.

The nameplate of political consultancy, Cambridge Analytica, is seen in central London, Britain March 21, 2018. REUTERS/Henry Nicholls

INAI, the transparency and data protection regulator, said it was looking at Mexican companies that worked with cellphone app Pig.gi, which gives users free top-ups in exchange for receiving ads and completing surveys.

The app cut ties with Cambridge Analytica in Mexico after the British company was accused by a whistleblower of improperly accessing data to target U.S. and British voters in recent elections.

Pig.gi, which has 1 million downloads in Mexico and Colombia combined, said it had shared results of two election polls of Mexican users with the consultancy and other partners.

Cambridge Analytica has denied Facebook data was used to help to build profiles on American voters and build support for Donald Trump in the 2016 U.S. presidential election.

Reporting by Christine Murray and Lizbeth Diaz; Editing by Michael Perry

China joins HK-U.S. battle for Chinese tech listings

HONG KONG (Reuters) – When Charles Li, chief executive of the Hong Kong Exchange, last year announced plans to help the next wave of Chinese tech giants go public in the city, bankers celebrated.

FILE PHOTO: The name of Hong Kong Exchanges and Clearing Limited is displayed at the entrance in Hong Kong, China January 24, 2018. REUTERS/Bobby Yip/File Photo

At last, they felt, Hong Kong could compete against New York, its fiercest rival for initial public offerings, by starting to offer tech founders the weighted voting rights common in the United States they were demanding.

But in the past month a new rival has gatecrashed Hong Kong’s hoped-for IPO party: China itself.

On March 30, China’s securities regulator announced its own pilot scheme to encourage the very same group of companies to list in Shanghai and Shenzhen.

Beijing is also targeting the likes of Baidu, Alibaba Group, and JD.com by allowing them to list at home via secondary listings – business that has also been high on Hong Kong’s agenda.

At the heart of the three-way tussle lies an estimated $500 billion worth of Chinese tech firms expected to seek listings in the coming years – representing the biggest potential pool of IPO fees in the world outside the US tech sector.

For China, the hope is to see more of its tech companies list at home, where domestic investors can benefit from any success.

“China is encouraging innovation, but if all successful innovative companies rush overseas for listings, it would be embarrassing,” said Ronald Shuang, chairman of Balloch Group, a China-focused investment bank and private equity firm.

Last week the Baidu-backed iQiyi became the latest group to list in New York, raising $2.25 billion in the biggest international Chinese tech listing since Alibaba.

Both Xiaomi, the smartphone and appliances maker, and Meituan-Dianping, China’s largest provider of on-demand online services, are planning to float in Hong Kong this year, with Xiaomi seeking a valuation of up to $100 billion.

As Beijing steps up its efforts to attract Chinese tech companies, Hong Kong – which is expected to implement the weighted voting rights in the second quarter, reversing a long-standing one-share-one-vote principle – is playing down the competition.

“There is no doubt that many firms will actively consider listing in the mainland, but we expect a strong pipeline of firms interested in Hong Kong as well,” Li, the head of Hong Kong Exchanges and Clearing, told a panel of the city’s Legislative Council members on April 3.

He added: “Competition is always a factor, but the mainland and Hong Kong capital markets have some fundamental differences that do not make us direct competitors.”

FILE PHOTO: A panel displays a list of top active securities outside the Hong Kong Exchanges in Hong Kong, China February 28, 2018. REUTERS/Bobby Yip/File Photo

How far China will crash Hong Kong’s planned tech party depends, say bankers, on how it implements its rules for Chinese depositary receipts (CDRs) – which would allow investors in China to buy securities of companies already listed overseas.

CDRs are expected to trade in yuan, potentially creating an arbitrage opportunity with the dollar-denominated American Depositary Receipts or Hong Kong dollar-denominated shares they will be based on. Beijing is still in discussion with regulators, bourses and bankers on the issue.

Different trading mechanisms also present other issues. China has a 10 percent daily trading limit, up or down, on mainland stocks, which most expect would apply to CDRs.

“If Alibaba rises or falls more than 10 percent in the US in an extreme situation, but in China, existing rules cap its move,” said Wu Beihong, an investor who buys stocks in both China and overseas. “How do you solve this issue?”

Another question is how much tech champions would be expected to list at home, and how those shares would be sold.

If China’s biggest four internet groups – Tencent, Alibaba, Baidu and JD.com – were to sell 5 percent of their existing shares in the mainland, that would drain $55 billion from the market, equivalent to a fifth of all the funds raised in the onshore market in 2017, according to UBS analysts.

That could hit the pipeline of mainland IPO candidates hard – or prompt a sell-off in smaller shares if investors wanted to raise cash for the returning giants.

The sales might also prove difficult to execute. Last month, Naspers, the one-third owner of Tencent, sold a 2 percent stake in the tech giant, raising $9.8 billion in Asia’s largest-ever block sale and dwarfing any single sale in the mainland.

“Do Shanghai or Shenzhen have the expertise to sell $10 billion in Tencent or Alibaba?” asked one Hong Kong official who requested anonymity. “That is a big ask.”

The irony of potentially selling and trading shares in China based on offshore listings of Chinese companies domiciled outside the mainland – which they have to be to list overseas – is not lost on investors and bankers.

They are however already well versed in a universe of Chinese securities that includes several distinct onshore and offshore groups, including H-shares, A-shares, B-shares, red-chips and US ADRs among them, which already often trade at different valuations.

“Prices of the same company are different in Hong and China, and that’s because regulations and rules in the two markets are different, and that difference may persist for a long time,” said Tai Hui, chief market strategist for Asia Pacific at J.P. Morgan Asset Management. “So investors need risk-management when trading – and to understand the logic behind the price gaps.”

Reporting by Samuel Shen in Shanghai and Julie Zhu in Hong Kong; Writing by Jennifer Hughes; Editing by Philip McClellan

Buy This Oversold Blue-Chip Bank With A 5.4% Dividend

On April 4th, Bloomberg reported that HSBC (HSBC) is considering an exit or sale from smaller consumer operations such as Bermuda, Malta, and Uruguay. In addition, the bank plans to expand its asset management division and is currently looking at a potential merger with a rival.

In our view, the news confirms that the group’s management will remain committed to transforming HSBC into a more focused and more efficient banking institution. More importantly, even though HSBC’s operations in Bermuda, Malta, and Uruguay are small compared to the group’s total assets, we believe a potential sale of these units would have a positive impact on the bank’s capital position, supporting stock buybacks and special dividends.

The recent rise in LIBOR should support HSBC’s NIM

LIBOR has grown by more than 130bps since the beginning of the year. Such a notable increase is currently among the most widely discussed topics. Several analysts suggest that this is an early indicator of a bear market or even a severe financial crisis. In our view, the increase has been driven by idiosyncratic reasons, in particular, higher supply of short-term Treasuries and lower demand from corporates due to the US tax reform.

Source: Bloomberg

With that being said, despite the reasons of the rise in LIBOR, HSBC should benefit from higher short-term rates. As shown below, the bank discloses its NII (net interest income) sensitivity to a shift in yield curves. However, this analysis is based on a parallel shift, while yield curves in most global economies continue to flatten.

Source: Company data

What is important here is that HSBC has a variable-rate loan book. More importantly, a significant part of its credit portfolio is priced off short-term rates. This suggests to us that the rise in LIBOR should be a positive for the bank’s asset yields and its NIM.

Source: Company data

One may argue that higher short-term rates will also affect HSBC’s funding costs, especially given that wholesale sources and corporate deposits are generally tied to the short-end of the yield curve. The caveat here is that HSBC has a unique funding position. As shown below, the bank has one of the lowest LtD (loans-to-deposits) ratios among European banks. In other words, HSBC does not need expensive deposits in order to fund its loan growth. HSBC had been struggling from abundant liquidity for many years as a low interest rate environment has virtually crippled its NIM. Given that rates have started rising, the bank’s excessive liquidity is gradually turning into a positive that will protect HSBC’s NIM in a rising interest rate environment.

European banks: Loans-to-deposits ratio

Source: Bloomberg, Renaissance Research

Saudi Aramco’s IPO

Saudi Aramco (Private:ARMCO) has appointed HSBC as an adviser on its much-awaited IPO. JPMorgan (JPM) and Morgan Stanley (MS) will also act as consultants. As such, HSBC is the only non-US bank that will have a crucial role in Aramco’s IPO.

Anecdotal evidence suggests that while many US and UK investors are skeptical on Saudi Aramco’s IPO, as state-owned oil companies have been underperforming their private peers for quite a while now, Chinese investors would be interested in Aramco’s shares. Hong Kong Exchanges and Clearing (OTCPK:HKXCF) (OTCPK:HKXCY) plans to introduce the so-called Primary Connect program, which would allow mainland Chinese investors to participate in initial public offerings on the HKEX.

We believe Aramco’s IPO would strengthen HSBC’s position in the region. In our view, it would also underpin the fact that HSBC is a global banking group with unique access to Chinese investors.

Buybacks and dividends

HSBC pays a $0.51 dividend per ordinary share or $2.55 per ADR. That corresponds to a 5.4% dividend yield, based on the current ADR price. We believe that a 5.4% dividend from a global blue-chip bank with a strong presence on Asian markets looks very attractive.

Additionally, it is also worth noting that the bank has temporarily suspended its buyback program due to technical reasons related to the issuance of additional Tier 1 capital. We expect HSBC to announce a new buyback in the second half of 2018.

Final thoughts

The shares have fallen by almost 15% since January, and we believe this sell-off represents a great opportunity to buy a global bank with an attractive dividend yield. HSBC has excess capital, thanks to its US unit, and, as a result, we expect the bank to announce a new buyback program in the second half of the year.

If you would like to receive our articles as soon as they are published, consider following us by clicking the “Follow” button beside our name at the top of the page. Thank you for reading.

Disclosure: I am/we are long HSBC, JPM.

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.

Feds Seize Backpage.com, Site Linked to Sex Trafficking

Federal and state authorities Friday seized Backpage.com, an online classifieds site frequently accused of facilitating sex trafficking, and reportedly indicted seven people. A notice on Backpage’s website said the site had been seized by the FBI and other agencies.

Nicole Navas Oxman, a spokesperson for the Department of Justice, said Friday afternoon that the agency would issue a press release after charges are unsealed, but things did not go as expected. “The Court has ruled that the case remains sealed and we have nothing to report today,” she wrote in an email Friday evening.

The banner states that the enforcement action was a collaborative effort between the FBI, US Postal Inspection Service, the criminal division of the IRS, the Department of Justice’s child exploitation and obscenity division, as well as attorneys general from Arizona, California, and Texas.

CBS News reported that an indictment had been unsealed against seven people allegedly involved in running Backpage, containing 93 criminal counts including money laundering and running a website to facilitate prostitution. The indictment, which was filed in Arizona where Backpage is maintained, names 17 victims, both adults and children, who were allegedly trafficked, according to CBS News.

On Friday morning, the FBI raided the home of Backpage cofounder Michael Lacey, and there was some activity at the home of cofounder Jim Larkin as well, according to the The Republic, a newspaper in Arizona. A year ago, the paper reported that a federal grand jury had been convened in Arizona to hear evidence against Backpage.

The move against Backpage came just days before President Trump is expected to sign a new anti-sex-trafficking bill that passed both houses of Congress with overwhelming support. The bill initially was controversial because it alters a key internet law that protects tech companies from liability for user-generated content on their platforms.

Previous criminal and civil charges against Backpage had mostly been derailed by that law, the Communications Decency Act. The bill Trump is expected to sign creates an exception for sites that “knowingly” facilitate or support online sex trafficking and explicitly grants states and victims the right to bring criminal and civil action against websites like Backpage. The bill faced opposition from tech companies, free speech advocates, and sex workers, and has already prompted online forums like Craigslist’s personal section and Reddit sections like Escorts and Sugar Daddies to shut down, rather than risk liability. Advocates for sex workers say the closures will endanger those workers, who relied on the sites to share bad date lists and verify clients.

It’s unclear why the federal agencies acted now. The Communications Decency Act did not apply to federal law enforcement agencies, said Eric Goldman, a law professor at Santa Clara University who testified against the recently passed bill. “The question is why today and why not two weeks ago before the Senate voted?” Goldman said. “The DOJ can’t turn on or off a federal prosecution on a dime, so that seems unlikely, but still the timing is so perplexing.” On Twitter, Goldman said, “It’s almost as if the government is trying to prove that all the anti-Backpage rhetoric fueling #SESTA & #FOSTA was just political theater.” (SESTA and FOSTA are acronyms for versions of the anti-sex-trafficking bill.)

Senator Richard Blumenthal (D-Conn.), who cosponsored the bill, called the DOJ’s action to shut down Backpage “long overdue.”

A January 2017 Senate report accused Backpage of facilitating online sex trafficking by stripping words like “lolita,” “little girl,” and “amber alert” from ads in order to hide illegal activity before publishing the ad, as well as coaching customers on how to post “clean” ads for illegal transactions. Judges in California and Massachusetts previously cited Section 230 in dismissing cases against Backpage.

Still, some sex workers said the seizure could endanger them. “If the people who run Backpage have knowingly harmed people, they deserve to be held accountable, but the most immediate impact of the seizure of an entire website will be felt by independent consensual sex workers,” Liara Roux, a sex worker, political organizer, and adult-media producer and director, wrote to WIRED. “Without safe online advertising, which studies seem to show reduced female homicide rates nationally by 17 percent, sex workers are unable to screen clients based on emails and decide who is safe to see.”

Backpage was invoked frequently in the debate around SESTA and FOSTA. Members of the Senate were particularly moved by testimony from Yvonne Ambrose, whose 16-year-old daughter, Desiree Robinson, was killed after she was repeatedly advertised for sex on Backpage. Last year, Ambrose sued Backpage for facilitating child sex trafficking. The documentary “I Am Jane Doe,” followed families in their quest to hold Backpage accountable.

Berin Szóka, president of TechFreedom, a nonprofit that has received funding from Google, says, the timing of the enforcement shows that the vetting process for the bill was rushed. “The argument for SESTA was a sham all along.”

Free Speech or Human Trafficking?

  • Within days of the bill’s passage, Craigslist, Reddit, and others shut personals forums, as sex workers had feared.
  • The bill could have encourage tech companies to either stop moderating or censor content, opening the door to further attacks on Section 230.
  • The backlash against big tech played a role in the passage of the bill.

Japan's cryptocurrency exchanges face shortage of engineers

TOKYO (Reuters) – When cryptocurrency exchange Coincheck Inc explained how hackers made off with $530 million in digital money, it said part of the problem was beyond its control: Japan’s lack of software engineers.

Ryo Fukuda, a software engineer at Next Currency Inc, a company seeking to launch a cryptocurrency exchange, poses for a photo after an interview with Reuters at the company’s headquarters in Tokyo, Japan, March 30, 2018. REUTERS/Toru Hanai

Coincheck said that no matter how hard it tried, it simply couldn’t hire workers with the skills to seal gaps in security.

“We were aware we didn’t have enough people working on internal checks, management and system risk,” chief executive Koichiro Wada told reporters last month. “We strived to expand using headhunters and agencies, but ended up in this situation.”

Coincheck isn’t alone. Companies across Japan’s booming cryptocurrency industry are scrambling to hire engineers, including cybersecurity experts and specialists in blockchain, the computer code that underpins bitcoin.

Financial regulators are pressing exchanges to tighten security after the Coincheck heist even as a host of companies try to enter the booming market.

The resulting shortage risks blunting Japanese exchanges’ competitive edge as the country’s cryptocurrency industry matures, experts say. And it could leave the industry exposed to more thefts.

“It could put the brakes on everything,” said Alexander Jenner, a headhunter at Computer Futures in Tokyo. “The sector’s growing so quickly, and the better exchanges are surviving. But many of them will fail.”

HIRING TO SURVIVE

There are 32 exchanges operating in Japan. About 100 other companies have approached the watchdog that oversees the sector about applying for a license, a senior Financial Services Agency official told Reuters.

Demand is particularly high for engineers with skills that could help growth, from designing user-friendly interfaces to writing code that helps withdrawals of digital coins, as well as the security expertise needed to better protect consumers.

A man stands near an advertisement of a cryptocurrency exchange in Tokyo, Japan March 30, 2018. REUTERS/Toru Hanai

“The FSA is breathing down necks on security, compliance and risk,” said Mike Kayamori, chief executive of cryptocurrency exchange Quoine. “And if you don’t hire, you won’t be able to survive.”

Japan doesn’t compile data on blockchain or software engineers. In 2016, though, there was a shortfall of more than 15,000 workers in big data and artificial intelligence, which rely on software engineers, according to the Ministry of Economy, Trade and Industry. That number will rise to 50,000 by 2020, the ministry projects.

Headhunters specializing in cryptocurrency and blockchain say the supply of labor can’t keep up with demand. Hiring in the sector accounted for nearly six in ten placements at information technology recruiter Descartes Search in the year to March, company director Pascal Hideki Hamonic said, up from 15 percent a year earlier.

And exchanges are prepared to pay. Many are ramping up salaries and offering guaranteed bonuses to poach engineers from other businesses, two recruiters said. Base pay is up 20 to 30 percent from last year, they said, pushing salaries for engineers with five years’ experience to 11 million yen ($102,720).

“Exchanges are looking for people who can do the creative, thinking work – to create the architecture, not just do basic tasks,” said Mark Pink, founder of topmoneyjobs.com.

MARKET VALUE

One such engineer is Ryo Fukuda. A 21-year-old who taught himself how to code via YouTube, Fukuda in July joined Next Currency, a unit of online content and financial firm DMM.com that is seeking a cryptocurrency exchange license.

“I’d been doing nothing but crypto and my own projects, so I had the experience other engineers and companies couldn’t get,” he told Reuters. “Now the market has really taken off and there’s a shortage of engineers. That was when my value to the market soared.”

Slideshow (2 Images)

Fukuda said he got “many, many offers” before opting for Next Currency, where he develops web applications.

To be sure, Japan isn’t alone in lacking workers like Fukuda. Demand is high across the world, industry insiders say, as exchanges slug it out with financial firms to recruit skilled engineers.

In Hong Kong, for example, a spate of banks and insurance companies are looking at how to put blockchain to use in their own businesses, said Lawrence Ma, president of the Hong Kong Blockchain Society.

But structural factors elsewhere have helped exchanges secure the talent they need.

In Britain, cryptocurrency-related companies said a strong research sector produces enough specialists in fields central to blockchain like cryptography, while an ample supply of international workers also helps.

“The UK has quite a good environment for research, so we were able to pull people from universities,” said Nick Gregory, chief executive of London-based blockchain firm Commerceblock.

Other major cryptocurrency centers like San Francisco and New York have been able to hire from major concentrations of engineers well-versed in blockchain, said Jonathan Underwood of Tokyo cryptocurrency exchange Bitbank Inc.

Complicating matters in Japan is a culturally rigid labor market, where mid-career moves are rare, recruiters and exchanges said.

“The majority of Japanese that do understand blockchain and cryptocurrency already work for companies as lifetime employment, and have never considered the thought of changing jobs,” said Underwood, who is also head dean of Blockchain Daigakko, a firm that trains engineers.

Until that changes, the skills crunch will most likely deepen, recruiters say.

“It’s going to get worse before it gets better,” said Jenner of Computer Futures. “It’s a land grab – whoever comes out ascendant in the next year will win the market.”

Reporting by Thomas Wilson; Additional reporting by Taiga Uranaka in Tokyo and Fanny Potkin in London; Editing by Gerry Doyle

Australia begins privacy investigation into Facebook

SYDNEY (Reuters) – Australia on Thursday said it had begun an investigation to decide whether social media giant Facebook Inc breached its privacy laws, after the company confirmed data from 300,000 Australian users may have been used without authorization.

A 3D-printed Facebook logo is seen in front of displayed stock graph in this illustration photo, March 20, 2018. Picture taken March 20. REUTERS/Dado Ruvic

Personal information of up to 87 million users, mostly in the United States, may have been improperly shared with political consultancy Cambridge Analytica, Facebook said on Wednesday, exceeding a media estimate of more than 50 million.

In a statement, Australia’s privacy commissioner, Angelene Falk, said her office would “confer with regulatory authorities internationally”, given the global nature of the matter.

A Facebook spokeswoman in Australia said the company would be “fully responsive” to the investigation and had recently updated some privacy settings.

Facebook’s chief executive, Mark Zuckerberg, told reporters during a conference call that he accepted blame for the data leak.

Zuckerberg is due to testify about the matter next week during two U.S. congressional hearings, and the data breach has drawn criticism from lawmakers and regulators around the world.

London-based Cambridge Analytica, which has counted U.S. President Donald Trump’s 2016 campaign among its clients, disputed Facebook’s estimate of affected users.

It said in a tweet on Wednesday that it received no more than 30 million records from a researcher it hired to collect data about people on Facebook.

Australia’s investigation follows comments by New Zealand’s privacy commissioner last week that Facebook had broken laws in that country, a charge the company called disappointing.

Australia’s competition regulator is already investigating whether Facebook and Alphabet Inc’s Google had disrupted the news media to the detriment of publishers and consumers.

Reporting by Tom Westbrook; Editing by Michael Perry and Clarence Fernandez

Smart cities need the cloud—and vice versa

“Smart city” priorities and use cases are all over the place. Nonethless, IDC expects spending to accelerate over the 2016-2021 forecast period, reaching $45.3 billion in 2021.

So, what is a smart city and what does it have to do with cloud computing?  Everything.

Smart cities are cities that have embraced both the internet of things and the cloud technology to do what cities should do better. This includes intelligent traffic and transit management, surveillance such as body cams and GPS locators for police, intelligent water and power usage, and anything else that is automated and uses cloud-based procedural computing, cognitive computing, data retention, and analysis.

The real advantage of using mostly public clouds to create and run smart cities is not the capabilities of the various clouds to host basic compute and storage in support of city automation. It’s the ability to reuse common smart city services across cities, services that will be sold and managed by the public cloud providers.

The fundamental larger role of public cloud providers is to create sets of cloud services that will deliver best practices via services to all cities that want to become smart cities. The public cloud providers will essentially be the vehicle for sharing this technology. And they need cities to help define those services.

The larger piece of the puzzle is cost reduction. There is no real reason to become a smart city unless it’s going to reduce city operations costs, as well as deliver citizen services better than you did before. In other words, it’s not enough to become “smart”; you need to spend tax dollars in more effective ways.

Some cities are now successfully evolving into smart cities, paving the way for other city governments to follow. Of course, this is going to be an evolutionary process, with aspects of automation showing up at different times. After all not much happens fast with city governments.

Related videos: Smart cities

Why Apple May Dump Intel’s Chips For Its Own

When Apple announced a shift from IBM and Motorola’s PowerPC chips in 2005, competitors using Intel’s chips in their computers had a big edge in performance. Today, some of Apple laptops that are built with Intel chips are getting trounced.

And it’s Apple’s own mobile chips inside iPhones and iPads that are doing the trouncing. That’s why it makes sense for Apple shift again, away from Intel to chips of its own design.

On Monday, Bloomberg reported that Apple had decided to use its own chips in its computers starting as soon as 2020. The effort, code named Kalamata, is still in an early developmental stage, Bloomberg reported, but it has spooked Intel’s investors. Fortune reached out to Apple for comment and will update this story if a response is received. Intel declined to comment.

Shares of Intel plunged 6% to close at $48.92 on Monday. But even with the sharp drop, the stock’s price remains higher than it was just six weeks ago.

The would-be rationale for Apple’s new chip strategy is to allow its mobile products and computers to work together more seamlessly. But there’s also the increasingly embarrassing performance issue. Last year’s iPad Pro models using Apple’s homemade A10X processor (which is based on designs from ARM Holding) outperformed the company’s 13″ MacBook Pro laptops, which had Intel i7 chips, on some benchmark tests. Apple’s more recent A11 Bionic chip used in the iPhone X and iPhone 8 had even higher benchmark scores.

Intel’s many efforts to build chips for mobile devices have never caught on, despite billions of dollars of losses. And now it faces the prospect that its PC chips will also be surpassed by rivals spawned from the mobile arena.

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Apple has been growing its chip design capability since the Steve Jobs-era, when the company bought PA Semi for $278 million in 2008. Since then, Apple has built an all-star team of chip designers, currently led by Johny Srouji.

The homegrown chips allowed Apple to replace Qualcomm processor chips from iPhones years ago and more recently replace graphics processing chips in the devices from Imagination Technologies Group. Apple doesn’t appear to own the patents to make its own mobile modem chips, an area in which it has increasingly been shifting from Qualcomm (qcom) to chips made by Intel in an effort to cut costs.

But despite all of Apple’s chip switching, a complete transition from Intel would take time. In 2005, Apple’s biggest challenge in swapping chip designs was rewriting all of its software to operate better with Intel’s chips. This time around, in addition to having to tweak its software, Apple would also have to develop a line of chips for desktop and laptop computers. Its homegrown mobile chips are the equal of chips used in its slowest laptops, but the company has never publicly shown that any of its chips could run its most cutting edge laptops, let alone the 18-core Xeon Intel behemoth at the core of its iMac Pro.

Rumors of Apple dumping Intel have surfaced periodically, not coincidentally around times when the two companies negotiated new deals, industry analyst Patrick Moorhead, president of Moor Insights, noted on Twitter. “Doesn’t mean untrue but usually means it’s negotiation time,” he wrote.” I could imagine a few amped up iOS-based MacBooks, but not a wholesale 2020 change to all Macs.”

The loss of Apple’s (aapl) business alone should be manageable for Intel (intc). Macs accounted for less than $4 billion of Intel’s annual revenue, or less than 6% of the company’s $65 billion of expected sales this year, analyst Michael McConnell at Keybanc pointed out in a report on Monday.

NYSE sets Spotify reference price at $132

(Reuters) – The New York Stock Exchange on Monday set the reference price for shares of music streaming service Spotify Technology SA at $132.

FILE PHOTO: Headphones are seen in front of a logo of online music streaming service Spotify, February 18, 2014 REUTERS/Christian Hartmann/File Photo

Spotify is pursuing an unusual direct listing to reach the public markets in place of an initial public offering, and shares are expected to start trading on Tuesday.

The reference price is not an offering price for the shares, nor is it the opening public price for shares of the Swedish technology company.

The opening public price will be determined by buy and sell orders collected by the NYSE from broker-dealers, the exchange said. Based on those orders, the opening price will be set based on a designated market maker’s determination of where buy orders can be matched with sell orders at a single price.

But the reference price will play a part in Spotify’s eventual pricing.

Though Spotify has not hired traditional underwriters – a move that will save it millions of dollars in fees – it has hired Citadel Securities as a market maker to set the opening price on the NYSE, with help from Morgan Stanley.

While their roles will be limited, the reference price will be used while building the order book. Early on Tuesday, Citadel and Morgan Stanley will analyze investors’ buy and sell orders and then set an opening price for the stock.

Reporting by Stephen Nellis in San Francisco; Editing by Sandra Maler and Himani Sarkar